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Timber industry growth predicted to increse

JACKSON – The Molpus Woodlands Group is one of only 12 companies of its kind in the country. Started in 1996, the company is a timberland investment management organization (TIMO) and is part of what`s happening in the timber business, according to president Dick Molpus.

“TIMOs buy timberlands from forest products companies who are divesting their lands,” he said. “We sell this land to investors and manage it for them.”

Those investors include pension funds, endowments and insurance companies. The TIMO purchases timberlands on their behalf and under long-term contracts, manages all phases of these lands including harvest production, dealing with hunting club leases and sale of timber. The TIMO sends checks to owners who in most cases never see their land.

Molpus Woodlands is currently managing one million acres, all in Southern states. It is the only TIMO that focuses on a geographic area. It currently has 100 employees, 65 of whom are foresters and technicians, and has 12 offices from Texas to Alabama. The executive office is in Jackson and the operations office is in Hattiesburg.

“There is an 8% to 10% return on timber investments because of timber`s rate of growth,” Molpus said. “Back in 1999 it was considered boring. Now it looks good. We sell it and market it like a private landowner.”

He says his clients are investing for the long term, knowing the timber business is cyclical and recognizing that it`s driven by biological growth. What he`s doing in the industry was not possible before 1985. That`s when the first TIMO was started.

“Some of the smartest, most sophisticated investors in the world are investing in timberlands to reduce the volatility in their portfolios,” he said. “Timber grows at 6% to 12% a year. If you’re borrowing money on 5%, you’re ahead.”

Trees, unlike other natural resources, do renew. They are good for the environment and the economy.

“I like buying pine plantations from paper companies and turning them into saw timber to create manufacturing jobs down the chain,” said Molpus, whose family has been in the business for 100 years. “I can do well and do some good, too.”

Recent years have been stressful for the timber industry in general. A strong dollar allowed imports but no exports. He says the situation is just the opposite now.

“Timber prices plummeted from the end of 1997 to 2003 and are just now starting up again,” Molpus said. “Prices have gone up significantly and right now things are looking up for timber. For the first time in five years, we’re hearing of plant openings and expansions. That`s totally different from the last several years.”

While prices for the lowest value timber product, pulpwood, remain low, prices for the higher value saw timber that`s used in building and manufacturing are up. Molpus is optimistic about the industry`s future.

“Wood usage is tied to population growth, which will continue to dramatically increase, and tied to economic expansion,” he said. “Countries around the world will start using more products as they grow.”

Dr. Ian Munn, a forestry economist at Mississippi State University, shares that optimism. He believes the industry`s future looks very good for the short run, due to the massive rebuilding program in Iraq, and stable for the long term.

“Obviously wood is and will continue to be an important building material as the population grows,” he said. “That`s clearly what`s driving the timber industry right now. I think we`ll see restrictions on the use of land and that will increase the value of timber.”

The Molpus family entered the lumber business in 1905 and grew to become the 10th largest independently owned lumber manufacturer in the United States. They have operated lumberyards, sawmills and manufacturing plants. As timber resources grew, the focus moved away from lumber production. The plants were sold and for a time the family marketed timber all over the U.S.

Dick Molpus graduated from the University of Mississippi in 1971 with a degree in business administration. He served in the state administration of Gov. William Winter and went on to be elected secretary of state, a post he held for three terms. In 1995, he was the Democratic Party`s nominee for governor.

Asked if he has any plans to re-enter the political arena, the 54-year-old said, “No, I’m focused on what I’m doing and having too much fun doing this to get back in politics.”

Contact MBJ contributing Lynn Lofton at mbj@msbusiness.com.

About Lynn Lofton

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