Use of georeferenced data to study clustering in the primary wood products industry of the US South

Abstract

Forest business clusters offer a unique opportunity to improve competitiveness of the forest products sector and stimulate economic development in rural areas. This study utilized georeferenced data on the location of primary wood products manufacturers in the US South to examine spatial clustering within this industry. Independent spatial analyses, F-hat and L-hat, and a χ2 statistic provided evidence of regional clustering. A count data model was used to determine location preference of primary wood-using mills and identify factors promoting industry clustering. It was determined that access to a labor pool, low cost of primary inputs, presence of related industries, adequate transportation infrastructure, and low land values positively influenced clustering among primary wood-using mills. A marginal analysis indicated that counties with adequate transportation infrastructure and presence of related industries were most likely to attract new primary forest products manufacturers. These two factors increased the predicted number of sawmills by 26.83% and 22.65%, respectively. Increases in prices of logs and energy can deter the spatial aggregation of wood-using mills. Results provide evidence that public investments in infrastructure can have an important role in attracting wood products industry firms.