A Mid-Recession and Post-Recession Comparison of Chain-of-Custody Certification in the U . S . Value-Added Wood Product Manufacturing Sector

In this paper we examine changes in perceptions, attitudes, and participation in chain-of-custody (CoC) certifi cation in the U.S. value-added, or secondary wood products sector between the period of the Great Recession (2007) and post-recession (2014). Data were collected for two studies conducted in 2008 (for 2007 annual data) and 2015 (for 2014 annual data) using web-based surveys administered by various value-added wood product associations on behalf of the researchers. Results show that understanding of CoC certifi cation, purchases of certifi ed raw materials, and costs to sell certifi ed products increased over this period. The primary reasons for getting involved in certifi cation changed from market driven (growing markets, increasing sales, and expanding market share) to customer driven (customer request) suggesting that respondents were attempting to use certifi cation to become more competitive during the recession when many companies in the U.S. went out of business and employment in the sector declined. Nearly 100 % of respondents in both studies said that they planned on continuing sales of certifi ed wood products.

Ključne riječi: CoC certifi kat, fi nalni drvni proizvodi, SAD management (SFM) criteria of PEFC are based on internationally recognized standards and indicators developed as a result of joint effort of government agencies all over the world.Thus, this organization functions like an umbrella that incorporates diversity of certifi cation systems that pledge to meet its rigorous criteria under the same roof (Bowers et al., 2014;Espinoza et al., 2012;Moore et al., 2012;PEFC, 2015).
In addition to the forest management component of certifi cation, most certifi cation schemes also provide chain-of-custody certifi cation (CoC).The main purpose of CoC is to ensure that certifi ed product is being processed in accordance with the guidelines and rules of specifi c certifi cation program throughout the supply chain, from forests to the fi nal consumer, by tracking and monitoring the material as it is formed into a pre-decided end item such as upholstered furniture, kitchen cabinets or wood fl ooring materials (Berg and Lovaglio, 2012;Espinoza et al., 2012;Vlosky et al., 2009).
Annual progress reports of FSC and PEFC show the trends of Chain of Custody (CoC) certifi cates issued by these certifi cation programs.The most recent reports of FSC indicates that 5,257 CoC certifi cates have been issued to companies in U.S. and Canada as of end of 2015, a 5 % increase from the previous year (FSC, 2016).In addition, 439 CoCs, 260 in U.S. and 79 in Canada, have been issued by SFI by the end of 2014 (SFI, 2015a(SFI, , 2015b)).
This paper focuses on certifi cation in the context of downstream members of the wood products supply chain that includes value-added or secondary products.Secondary products use primary products as input for re-manufacturing and include furniture, cabinetry, doors, fl ooring and millwork, whereas primary products are produced directly from logs such as lumber and plywood.The largest demand sector for both primary and secondary wood products is new home construction, also termed housing starts.Housing can be single family or multifamily, including apartments, condominiums and townhomes.The secondary wood product sector follows because new homes include fl oors, doors and millwork.Also, when people move into new homes, they typically purchase new furniture.
According to Federal Reserve Economic Data (FRED), seasonally adjusted annual housing starts in the U.S. reached a peak of 2.2 million in the 2005-2006 period.Accordingly, the wood products industry was extremely healthy with record production and employment.However, the "Great Recession" of 2007-2008 marked two consecutive years of signifi cant reductions in housing starts, severely harming the U.S. forest

UVOD
Concerns regarding tropical deforestation and the need for sustainably managed forest resources led to the emergence of forest certifi cation programs in the early 1970s (Espinoza et al., 2013(Espinoza et al., , 2012;;Marx and Cuypers, 2010;Vlosky et al., 2009).Since that time, several factors such as government regulations, environmental activism, corporate social responsibility, and "green" investors, have infl uenced the growth of forest certifi cation around the world (Cashore et al., 2004;Maletz and Tysiachniouk, 2009).
Forest certifi cation primarily aims to confi rm that management of a specifi c forest area conforms to standards set by third party organizations.The major programs used by U.S. forest landowners and wood products manufacturers are Forest Stewardship Council (FSC), Sustainable Forestry Initiative (SFI) and Program for the Endorsement of Forest Certifi cation (PEFC), and to a lesser degree, Scientifi c Certifi cation Systems (SCS) (FSC, 2016; PEFC, 2014; SFI, 2015b; Vlosky et al., 2003).In addition to third-party certifi cation, the existence of fi rst and second party certifi cations are acknowledged and often classifi ed under selfregulation title (Marx and Cuypers, 2010).
Forest certifi cation standards can be summarized under the three main categories, namely, performance based standards, system-based standards, and the ones that are a combination of the fi rst two types.For instance, FSC is a performance based system in which forest resource is being compared to pre-set performance indicators, while within the scope of a system-based standard, the primary focus is on the adoption of predefi ned procedures.On the other hand, PEFC and SFI schemes employ combined certifi cation standards and expect applicants to conform to the requirements of them (Espinoza et al., 2012).Dovetail Partners has released a report addressing various aspects and differences of FSC and SFI programs.The authors concluded that the differences between the standards of these two certifi cation schemes are present and varying from region to region (Fernholz et al., 2015;Fernholz et al, 2010).However, the distinction ratio has been degrading to a lesser degree in recent years, especially after last revisions of both FSC and SFI standards occurred in 2012 and 2010, respectively (Fernholz et al., 2015;FSC, 2016;SFI, 2015b) .It is also emphasized that the choice between FSC and SFI program totally depends on casespecifi c considerations involving economic, social and environmental factors (Fernholz et al., 2015;Fernholz et al., 2012;Fernholz et al., 2010).Sustainable forest products sector, both primary and secondary.Housing starts have never fully recovered.As such, we wanted to see if there may be any underlying effects of the recession on certifi cation adoption and structure for the value-added, secondary wood products sector.

MATERIJALI I METODE
In 2008 and 2015, we conducted studies (for annual data from the previous years, 2007 and 2014) to identify value-added wood industry perspectives and participation in certifi cation and to see what has changed in the industry since the "Great Recession".The data are from the previous years from when the studies were conducted, i.e., 2007 and 2014.We used SurveyMonkey® a web-based survey program.The data are presented for the previous years (the years that respondents were asked to report on).The questionnaires were sent by partner associations to their members on our behalf1 .These associations required anonymity for their members and as such, controlled the dissemination of the surveys.Hence, only one "mailing" was sent for each time period.The associations did include a cover letter encouraging the recipients to participate in the studies.

Demografska slika ispitanika
There were 464 and 251 respondents in 2007 and 2014, respectively.Due to the methods used, we could not determine response rates for the studies.In addition, although the same sector was surveyed, respondent companies, key respondents and response rates were different for each period.However, frequencies of respondent geographic locations (Figure 1) and frequencies of raw materials used by respondents (Figure 2) in the two time periods are not statistically different.For both years, the majority of respondents were in the South and North/Central regions of the U.S. and composite panels were the most used raw material followed by North American hardwood lumber and North American plywood and veneer.The pattern of respondent company size shifted between 2007 and 2014 from smaller companies.Sixty-one percent and 41 % of respondent companies had 50 or less employees in 2007 and 2014, respectively.In 2007, 27 % of respondents had more than 100 employees and increasing in 2014 to 46 % of respondents.

Understanding and knowledge -certifi cation concepts and certifi ers 3.2. Razumijevanje i znanje -koncepti certifi ciranja i certifi katori
We fi rst asked respondents to rate their level of understanding of forest management and Chain-of-Custody certifi cation using a 5-point Likert scale anchored on 1 = Do not Understand at All; 3 = Somewhat Understand; 5 = Completely Understand.Using 2-tailed t-tests, we found that with regard to Forest Management certifi cation, the overall level of understanding was high and there was no statistical difference in mean responses at α = 0.05 level of signifi cance (4.1 and 4.2 for 2007 and 2014, respectively).The level of understanding of Chain-of-Custody certifi cation did see a statistically signifi cant increase at α = 0.01 from 3.9 in 2007 to 4.2 in 2014.This is the type of certifi cation that value-added wood products manufacturers are involved in.
We then asked about respondent understanding of the three major certifi cation programs' objectives, Forest Stewardship Council (FSC), Sustainable For-  We also wanted to know what all respondents thought about their certifi cation business practices and perceptions in general.Using Likert Scale anchored on 1 = Strongly Disagree; 3 = Somewhat Agree; 5 = Strongly Agree, the level of agreement from respondents that seek out suppliers of certifi ed wood raw materials has increased marginally from 2007 to 2014 (Figure 3).The level of agreement regarding the belief that their customers would pay a premium for certifi ed wood products decreased marginally (2.6 to 2.5) and the level of agreement that they would pay a premium for certifi ed wood raw materials remained fl at at 2.5.The fi nal question posed to all respondents was whether they have actually purchased certifi ed raw materials over the previous year.In this case, the average levels of agreement were higher than the midpoint and the increase in the level of agreement was signifi cant at α = 0.01, increasing from 3.3 in 2007 to 4.0 in 2014.

Respondents with certifi cation 3.3. Ispitanici s certifi katom
The percent of respondents that sold certifi ed wood products increased from 12   responded), a signifi cant increase at α = 0.01 using Pearson Chi-Square test (χ 2 = 0.000).As certifi cation becomes an increasingly important part of the business structures for respondents, their level of understanding of CoC certifi cation processes increased commensurately.Using a 5-point Likert scale of understanding (1 = Poor, 2 = Fair, 3 = Good, 4 = Very Good, 5 = Excellent), in 2007, 65 % of respondents said they had a Very Good or Excellent understanding of certifi cation.
In 2014, 80 % of respondents had this level of understanding.This difference was signifi cant at α = 0.01 (p = 0.000) using a 2-tailed t-test.
For the respondents that indicated that they did not sell certifi ed wood products at the time that the surveys were conducted, we asked what their plans were for the future (Table 1).The vast majority of respondents for both studies said they were going to monitor the situation and obtain Chain-of-Custody (CoC) certifi cation if necessary (2007: 58 %; 2014: 60 %).The percent of respondents that said they were planning on getting CoC within one year was similar for both 2007 and 2014 as was the percent of respondents that said they were simply going to ignore certifi cation completely.The response with the biggest disparity was for respondents that were going to obtain CoC within two years, decreasing from 10 % of respondents in 2007 to 2 % in 2014.
Why did respondents get involved in certifi cation? Figure 4 shows that responding to customer requests became the primary reason over time, a shift from attempts to build markets and sales.All of the other possible reasons declined from 2007 to 2014.The authors suggest that this is due to the "Great Recession" that prompted respondents to try most anything to be more competitive during these turbulent economic times.These pressures appear to have waned in the intervening years since the recession.
The percent of respondents with Chain-of-Custody certifi cation jumped almost 600 % from 2007 to 2014 with 12 % and 83 % of respondents stating that this was the case, respectively.This was a signifi cant increase at α = 0.01 using Pearson Chi-Square test (χ 2 = 0.000).For both years, Forest Stewardship Council (FSC) certifi cation was most prevalent for 83 % and 85 % of respondents in 2007 and 2014, respectively (Figure 5).Other certifi cation programs used by respondents were Sustainable Forestry Initiative (SFI), Program for the Endorsement of Forest Certifi cation (PEFC), Scientifi c Certifi cation Systems (SCS), or combinations of these programs.

Certifi ed raw material purchases 3.4. Nabava certifi cirane sirovine
On the wood raw material supply side, on average, the percent of wood products purchase costs attributed to certifi ed products increased from 20 % in 2007 to 33 % in 2014, a statistically signifi cant difference at α = 0.05 (p = 0.012) using a 2-tailed t-test.The percent of respondents requesting that their wood raw material suppliers become certifi ed increased marginally from 50 % to 51 % in 2007 to 2014.As shown earlier, customer demands for certifi ed wood products are increasing, so it is no surprise that respondents are pressuring their suppliers to provide certifi ed raw materials.With multiple responses possible, over the two time periods, respondent sourcing of certifi ed raw material internationally (27 % to 35 % of respondents) and direct purchases from domestic suppliers (61 % to 73 % of respondents) increased with a decline sourced from U.S. brokers/wholesalers (50 % to 46 %).In addition, in 2007, 74 % of respondents said they paid a premium for certifi ed wood raw materials increasing to 89 % of respondents in 2014.
Respondents were asked about the problems or challenges they face when purchasing certifi ed wood product materials.Table 2 shows that Overpriced Products and Inconsistent Supply have been ranked #1 or #2 for the three time periods.Supplier Service, Delivery, and Contracts as well as Product Quality do not appear to be signifi cant issues.

Selling certifi ed products 3.5. Prodaja certifi ciranih proizvoda
On the sales side of the supply chain, the percent of total company sales, on average, attributed to certifi ed products increased marginally from 21 % in 2007 to 22 % in 2014.The volume of certifi ed products sold by respondents generally decreased over the previous fi ve years for each study period.In 2007, 4 % of respondents said sales had decreased in the previous 5 years, while in 2014, 18 % of respondents said sales decreased.The percent of respondents saying that certifi ed wood products sales increased in the previous 5 years declined from 56 % of respondents in 2007 to 40 % in 2014.The percent of respondents that saw no change was 40 % and 42 % of respondents in 2007 and 2014, respectively.
The customer base for certifi ed wood products remained fairly consistent between time periods with Institutional Customers, State Governments, Custom Woodworking Jobs, and Municipalities ranked highest (Figure 6).With regard to the geographic market profi le, the only major change (signifi cant at α = 0.01 using a 2-tailed t-test) was the decrease in the percent of sales to In-State markets, which declined from 27 % to 11 % of respondents (Figure 7).Local Markets and those in Other States increased, while Export markets remained the same at 8 % of respondent markets.
In 2007, 61 % of respondents received a premium for certifi ed wood products relative to the noncertifi ed alternative.In 2014, this had dropped to 42 % of respondents receiving such a premium.When asked if their company incurred any additional costs  to provide certifi ed products to their customers, the percent of respondents saying this was the case increased from 77 % of respondents in 2007 to 90 % of respondents in 2014.
The fi nal questions asked respondents to look ahead into the future with regard to their plans to sell certifi ed wood products.Overwhelmingly, respondents in both years said they planned to continue selling certifi ed products (97 % and 98 % of respondents in 2007 and 2014, respectively).However, in 2007, 84 % of respondents saw their sales volume of certifi ed products increasing in the future, while in 2014, only 45 % of respondents felt this to be the case; in 2007, 14 % of respondents saw sales as remaining the same in the future, while 43 % in 2014 believed this to be true.This suggests a slowing in the rate of growth for certifi ed wood products for existing companies.

ZAKLJUČAK
The U.S. forest products industry has not fully recovered from the recession of 2007-2008.In this comparative temporal study, we found that certifi cation understanding, awareness and participation increased between this recessionary period and 2014.In examining possible effects of the recession, results show that the primary motivational factors for certifi cation participation shifted from market driven to customer driven.In the quest to fi nd new markets, expand existing markets, or simply remain in business, the provision of certifi ed "green" products may have been part of respondent competitive strategies.This strategy seems to have created pressure on margins for the sale of certifi ed products.For example, the percent of respondents receiving premiums for certifi ed wood products declined by 31 %, while the percent of respondents paying a premium for certifi ed raw materials increased by 20 %.Certifi cation has matured and expanded since its inception.Results suggest that certifi cation continues to be an important part of doing business for the valueadded wood products sector in the U.S. with almost all  respondents in both studies having plans to continue selling certifi ed wood products.

Table 2
The