Last month at its Presidents Forum, the American Forest & Paper Association celebrated 10 years of service to the forest products industry. Its predecessor organizations have roots going back to 1861, but it was just a decade ago that wood and paper industry leaders decided to unite.
Forming AF&PA was an explicit statement that whatever differences between paper and wood, both segments of the industry were inextricably linked by the same natural resource. It was also an acknowledgement of another commonality—the industry was threatened by rising costs of environmental compliance, growing pressure on fiber supply (both virgin and recycled), and challenges and restrictions to fair trade of forest products.
Through AF&PA, the industry has developed an increasingly effective voice. By coming together and speaking with one voice, the industry has achieved regulatory, legislative and marketplace successes saving billions of dollars. For many companies, those wins have been key to remaining in business.
Over the past decade, AF&PA has aggressively changed its structure to better serve the industry. We slashed the budget, cut staffing levels, and took steps to increase member participation, while simultaneously remaining an effective advocate for the industry. We have held the line on spending, and implemented the innovative Value Based Dues system, which makes sure members pay only for activities related to their lines of business.
In 1995, we established the Sustainable Forestry Initiative program, a comprehensive system that combines economic and environmental considerations in forest management. The SFI program contributes to a stable and cost-effective fiber supply, and makes sure forests will be around for future generations. The program has grown to encompass more than 136 million acres. Recently, the program has introduced on-product labels, which have begun appearing in the marketplace.
Four years ago AF&PA developed the industry's first strategic plan identifying the key factors of competitiveness. The research compared the U.S. industry to overseas competitors and offered a list of opportunities to pursue improving the industry's competitiveness. We have continued to focus on these issues that matter most to our industry.
That focus is paying off. Our past wins have been significant, although most could be characterized as defensive. In other words, we've stopped bad things from happening to the industry. Recently, we have changed the existing rules to actually improve our ability to compete. For example, we spearheaded major reforms to the New Source Review program, which was fundamentally broken. NSR regulations were confusing and contradictory, and the program was actually an obstacle to achieving cleaner air. This year, EPA has implemented common sense reforms AF&PA had been advocating for years. The new rules will save the industry millions in compliance costs and will permit companies to initiate much-needed maintenance.
We also successfully supported changes to the U.S. tax code that will ease the burden on forest products companies and make our industry more attractive to investors. And, in 2002, we convinced EPA to allow the turpentine byproduct of kraft mills to be burned as a fuel, saving kraft pulp mills $5 million per year.
Despite our many successes through the years, we still have a long road ahead to return the industry to sustained profitability. Achieving that will require sustained effort over a long period. A key step on that road is to level the playing field by defending U.S. markets from unfair overseas competition. We take another step each time we make progress on our domestic strategic objectives or move closer to full participation from all segments of the industry.
The industry's success through AF&PA is testament that forming the Association a decade ago was a smart move. A strong and unified voice can create the changes we need to make our industry healthier. The Association has been critical to the industry for the past 10 years, and I believe it will continue to be for the foreseeable future.
