Regional economic and employment impacts of industrial decline in the forest sector: Evidence from sawmill closures in Michigan

Basanta Lamsal, Jagdish Poudel and Raju Pokharel

Forest Policy and Economics, 2025, vol. 178, issue C

Abstract: This study investigates the economic impact of sawmill entry and exits in Michigan between 2019 and 2023, a period marked by ongoing structural changes in the industry, including the closure of several large mills and the opening of smaller or mid-sized operations. Using observed employment changes from the Michigan Department of Natural Resources (DNR) mill survey and Michigan state's Social Accounting Matrix (SAM), we applied an employment-based multiplier analysis to estimate how net sawmill job losses affected the statewide economy. The results show that while only 273 direct jobs were lost due to net changes from sawmill entry and exit during this period, the broader ripple effects were much larger, approximately 820 jobs and $211 million in output loss. These effects were most pronounced in labor-intensive sectors such as logging and transportation, as well as in downstream sectors like wholesale trade and real estate. The findings highlight the central role of sawmills in regional supply chains and states labor markets, with two-thirds of job losses occurring outside the mills themselves. Further, this study contributes new insight into how mill turnover impacts local economies and helps state agencies identify which regions and industries are most vulnerable to future mill closures and allocate economic development resources or transition assistance more effectively.

Keywords: Sawmill closure; Economic impact; Contribution; Multipliers; Supply chain (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:178:y:2025:i:c:s1389934125001807

DOI: 10.1016/j.forpol.2025.103601

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