Understanding the adoption of new technology in the forest products industry

In anticipating future rates of adoption of new technology in forest products, several uniquely important factors come into play. In this respect, the role of innovations imported from other industries, the effect of raw material shortages, the importance of economic factors in adoption of innovations, and the problems presented by the heterogeneity of wood raw material and finished products are discussed. The nature of the adoption process and reasons for long lags between innovation and adoption are also addressed. Certain observations carry. implications for how research and information gathering should be conducted and what priorities should be accorded activities related to technology development and research in forest products. Many times in this century, serious timber shortages have been forecast for the forest products industry. Although the economic scarcity of some wood materials is apparently increasing (the real price of sawlogs has been rising for a long time (17)), other wood materials seem unaffected (pulpwood prices have remained relatively stable over the last four decades (28)). Thus, although numerous wood-saving technological improvements are reportedly “on the shelf ” and others are adopted rapidly by the industry, slow adoption rates for some major innovations undoubtedly reflect an appropriate response to economic conditions rather than conservatism. This paper addresses the following questions: What are some of the principal and unique influences on technological change in the forest products industry that must be understood to anticipate future rates of adoption of new technology? Do these influences currently elicit appropriate rates of technology adoption? The paper has five major sections: 1) the importance of innovations imported from other industries (interindustry flow) and other countries; 2) the effect of raw material shortages; 3) the effect of the economic performance of innovations; 4) problems presented by the heterogeneous nature of wood raw material; and 5) problems presented by the heterogeneity of finished products. It is taken as axiomatic that the impact of technological change is not felt at the stage of invention or innovation, but when improved technologies are actually used in production. For this reason, we pay particular attention to the determinants of the adoption of new technologies. Interindustry technology flow Prospects for technological change in forest products are heavily shaped by 1) commitment of resources to research and development (R&D) within the private and public institutions that comprise the forest products industry and its suppliers; and 2) developments in industries that are remote from forest products. For example, the forest products sector has made considerable use of sophisticated electronics components, including computers, lasers, and computerized axial tomography scanners (on an experimental basis). Many industries depend upon other sectors of the economy for the expansion of their technological capabilities. In the United States, five sectors account for more than 75 percent of total R&D: aircraft and missiles, chemicals and allied products, electrical machinery, nonelectrical machinery, and motor vehicles. Moreover, even within these sectors, many of the most important new technologies are acquired from The authors are, respectively, Fairleigh S. Dickinson, Jr. Professor of Public Policy, Dept. of Economics, Stanford Univ., Palo Alto, CA; and Research Forester, Research Forester, and Forester, USDA Forest Serv., Forest Prod. Lab., One Gifford Pinchot Dr., Madison, WI 53705-2398. Research for this paper was funded by the Forest Prod. Lab. under cooperative agreement No. USDAFP-86-0877. This paper was received for publication in November 1989. © Forest Products Research Society 1990. Forest Prod. J. 40(10):15-22. FOREST PRODUCTS JOURNAL Vol. 40, No. 10 15 outside. For example, the aircraft and missiles sector accounts for the largest amount of total R&D spending of any industrial sector. Yet, that industry is a massive importer of computer technologies from other sectors. Although aircraft and forest products may seem to be very remote from one another, both have greatly benefited from metallurgical improvements and electronic and computer innovations. Perhaps of greater relevance to the forest products industry has been the experience of another “traditional” industry that has been regarded as technologically conservative — the clothing industry. The clothing industry is also being shaped by the importation of high technologies. Computers have taken over many manual operations (e.g., the use of robots) and are used to monitor the manufacturing process (21). For several decades, the chemical industry has been expanding the range of synthetic fibers, which are now a more important input into the clothing industry, in dollar terms, than are natural fibers. In addition, the clothing industry is absorbing a number of innovations from electronics and laser technology. In a study on the interindustry flow of new technologies, Scherer (24) revealed the sources of recent innovations in the forest products industry (Table 1). He developed a technology flow matrix for the U.S. economy for the year 1974, based upon company-financed R&D expenditures (that is, excluding inventions from government and university laboratories). By combining data on R&D expenditures with patent information on anticipated uses of inventions, Scherer constructed a matrix showing the “exchanges” of new technologies among industries. He found that the forest products industry was heavily dependent upon outside sources of technological change. In contrast, the computer and farm machinery industries were large-scale technology exporters. Lumber and wood products firms were identified as the main user of $67 million of R&D performed in other industries and $64 million of R&D performed inside the industry (1974 dollars). For the pulp and paper sector, the figures were $120 million. and $86 million, respectively. In addition, many important forest product innovations have originated abroad, especially in Scandinavia and Germany. Significant innovations may come from Japan in the future. Several countries have been increasing their financial support for forestry research more rapidly than the United States (12). The significance of external sources of technological change needs to be understood. At the very least, an enlarged monitoring activity should examine new directions and developments in other industries and countries for their potential relevance for forest products. The forest products industry might benefit from institutional innovations that would make such monitoring and evaluation more systematic and explicit or more readily available to the industry as a whole. A step was taken in this direction in 1982, at a meeting of corporate R&D managers to discuss future technological developments (27), but much more is needed in this area. In Wood Use: U.S. Competitiveness and Technology (29), the Office of Technology Assessment (OTA) offered the following reasons for the low level of R&D expenditures by the forest products industry: 1) The industry is mature in the sense that wood products are well developed and have been used in essentially the same form for a long time; and 2) Wood products are not high technology and, therefore, are not likely to be subject to revolutionary technological breakthroughs in their manufacture and use. Such reasoning is parochial and unconvincing. The world is full of old. “mature” industries and products that have been completely revitalized by “revolutionary technological breakthroughs,” as suggested by the adoption of robots, synthetic fibers, and lasers in the textile industry — surely a mature industry. Agriculture and medicine are also mature industries, and yet they have both been transformed by revolutionary technological breakthroughs within the past 50 years. Improving the monitoring and searching activities at the interfaces between forest products and high technology industries and between domestic and foreign industries may facilitate forecasting as well as the transfer of valuable technologies in the years ahead. As we will discuss, the problem in the forest products industry is not maturity. Rather, many of the industry’s difficulties in achieving technological improvements stem from the heterogeneity of raw materials and the wide variety of requirements for finished wood products. Moreover, the adoption of new technologies is often precluded by economic considerations. Response to raw material scarcity The direction of technological change in the forest products industry, as elsewhere, is not a purely random or exogenous phenomenon, even though the industry may be affected by events that originate entirely outside the industry. Rather, technological change is influenced by the changing structure of costs of manufacturing (labor, capital, and raw materials) and the prices of competing products (plastics, steel, and concrete). Technological innovations in the forest products industry tend to have a strong labor-saving bias (11,25), suggesting that the industry tends to increase its competitiveness through improvements in labor productivity. We acknowledge that labor and capital scarcity must be considered because they strongly influence technological change. However, many innovations unique to forest products have been triggered by raw material shortages. In this section, we focus on