Credit availability: a possible barrier to growth for the Alaska forest products industry?

Abstract

Historically, the Alaska forest products industry has been driven by pulp production and the export of logs and cants primarily to Japan. Economic stagnation in Japan, the closure of Alaska's two pulp mills, harvest restrictions, and increased competition have severely impacted the industry. To survive, the industry must make significant investments in capital equipment, which requires adequate access to business credit. This article examines whether credit availability is a barrier to the future growth of the industry. Data were collected through a mail survey in spring 2002. Our results show that credit rationing is prevalent throughout the industry. Lack of experience and low collateral are identified as the two main causes. An educational program and loan guarantees are offered as policy prescriptions to help alleviate credit rationing.

Citation

Donovan, Geoffrey; Hesseln, Hayley; Garth, John. 2005. Credit availability: a possible barrier to growth for the Alaska forest products industry?. Western Journal of Applied Forestry. 20(3): 177-183.