Agricultural Marketing

The U.S. forest products industry has traditionally sold most of its solid wood products, such as lumber and plywood, domestically. However, the industry recognizes that foreign markets have significant potential for growth, while domestic markets have only moderate potential for growth. This report examines approaches used by government and industry to sell solid wood products overseas, particularly in view of marketing theory's current emphasis on the importance of meeting customers' needs. GAO discusses the efforts of the Agriculture Department's Foreign Agricultural Service to support the U.S. industry in promoting its solid wood products in Japan, the United States' largest customer for these products.

GAO found that: (1) the forest industry-FAS approach to marketing solid wood products in Japan has focused on reducing trade barriers while increasing demand; (2) FAS has lowered trade barriers by helping negotiate less prohibitive building codes, easier product certification, and lower tariffs on processed products; (3) the industry and FAS have supported demonstration projects showcasing U.S. solid wood products and timber-frame construction techniques that have greatly increased Japanese customers' awareness of and demand for such construction; (4) the industry-FAS approach has not emphasized customers' needs which may prevent full development of opportunities in the Japanese timber-frame market and penetration of the larger Japanese post-and-beam construction market; (5) some U.S. wood products companies do not show adequate commitment to understanding and meeting Japanese customers' needs and providing after-sale services; (6) domestic barriers, such as restrictions on the supply of federal timber, difficulty in obtaining financing, industry failure to consider export options, and an inadequately trained workforce, may make foreign competition difficult; and (7) the Department of Agriculture has developed a long-term trade strategy that emphasizes customer needs in promoting exports and ameliorating factors that make exporting difficult and put U.S. companies at a competitive disadvantage in international markets.