Profitability
Cash in on a profit margin averaging 5.2 percentage points higher, based on a comparative analysis of operating costs and profitability for a typical value-added wood products establishment in West Virginia, as compared to our competitor states.
| Profitability |
U.S.
|
Region
|
W.Va.
|
W.Va. advantage
vs. region
|
| Wood Products |
| NAICS 3212: Engineered wood products |
2.7%
|
3.7%
|
2.5%
|
-1.2%
|
| NAICS 32191: Millwork |
2.4%
|
3.2%
|
6.1%
|
2.9%
|
| NAICS 337110: Wood kitchen cabinets |
2.7%
|
2.6%
|
7.3%
|
4.7%
|
| NAICS 321991: Mobile homes and prefab housing |
2.4%
|
1.7%
|
7.7%
|
6.0%
|
| NAICS 33712: Wood household and institutional furniture |
1.5%
|
0.7%
|
8.2%
|
7.5%
|
| NAICS 337211: Wood office and store fixtures |
1.3%
|
2.8%
|
14.1%
|
11.3%
|
| Average |
2.2%
|
2.5%
|
7.7%
|
5.2%
|
Source: West Virginia Development Office Cost Model
Labor costs
Labor costs represent more than 25 percent of total production costs in the industry.
Top occupations in the industry include:
- team assemblers
- cabinetmakers and bench carpenters
- carpenters
- woodworking machine operators
- laborers and material movers
- sawing machine operators
 The state is well-positioned to meet the needs of the cluster, with more than 45,000 people available in key occupations. West Virginia offers a variety of programs to assist employers in training employees. Specific occupations employed by the industry and West Virginia’s supply of skilled workers follows.
Labor-related costs in West Virginia are very low. A typical company in West Virginia could expect to save an average of $1,877,926 in payroll and related expenses in comparison to our competitor states. This is directly attributable to West Virginia’s low average annual wage for the industry cluster, which was $25,949. This is less than 78 percent of the national average of $33,357 and 80 percent of the competing state average of $32,535.West Virginia’s low cost of living helps to keep labor costs low.
| Labor Costs |
U.S.
|
Region
|
W.Va.
|
W.Va. advantage
vs. region
|
| Wood Products |
| NAICS 3212: Engineered wood products |
$11,154,753
|
$10,616,710
|
$11,794,713
|
$1,178,003
|
| NAICS 32191: Millwork |
$10,153,241
|
$9,617,064
|
$8,480,224
|
($1,136,840)
|
| NAICS 337110: Wood kitchen cabinets |
$9,539,698
|
$9,495,421
|
$8,103,852
|
($1,391,569)
|
| NAICS 321991: Mobile homes and prefab housing |
$10,168,203
|
$10,235,037
|
$8,372,158
|
($1,862,879)
|
| NAICS 33712: Wood household and institutional furniture |
$9,036,495
|
$9,203,418
|
$6,855,366
|
($2,348,052)
|
| NAICS 337211: Wood office and store fixtures |
$11,653,635
|
$10,748,726
|
$5,042,506
|
($5,706,220)
|
| Average |
$10,284,338
|
$9,986,063
|
$8,108,137
|
($1,877,926)
|
Source: West Virginia Development Office Cost Model
Labor costs are defined as the combined annual costs of wages, workers compensation, unemployment insurance and other fringe benefits for a national average operating establishment in the indicated NAICS group.Wages are based on 2004 BLS data for the U.S. and the respective states.
Utility costs
The cost analysis reveals that a West Virginia facility would achieve utility cost savings averaging $99,885 annually compared to the competing states. West Virginia’s electric rates are among the lowest in the nation.
| Utility Costs |
U.S.
|
Region
|
W.Va.
|
W.Va. advantage vs. region
|
| Wood Products |
| NAICS 3212: Engineered wood products |
$2,684,296
|
$2,465,329
|
$2,065,844
|
($399,485)
|
| NAICS 32191: Millwork |
$413,148
|
$396,611
|
$354,683
|
($41,928)
|
| NAICS 337110: Wood kitchen cabinets |
$349,402
|
$337,522
|
$302,405
|
($35,117)
|
| NAICS 321991: Mobile homes and prefab housing |
$319,415
|
$306,630
|
$274,214
|
($32,416)
|
| NAICS 33712: Wood household and institutional furniture |
$362,688
|
$350,357
|
$313,905
|
($36,452)
|
| NAICS 337211: Wood office and store fixtures |
$624,258
|
$614,864
|
$560,950
|
($53,914)
|
| Average |
$792,201
|
$745,219
|
$645,334
|
($99,885)
|
Source: West Virginia Development Office Cost Model
Approach
To confirm the viability of the value-added wood products cluster as a target industry for West Virginia, a comparative analysis of operating costs and profitability was prepared for a national aver-age operating establishment in West Virginia versus the 10 surrounding states considered to be the state's principal competitors: Ohio, Pennsylvania, Maryland, Virginia, Kentucky , Indiana, Michigan, Tennessee, North Carolina and South Carolina.
The national average operating establishment was based on industry average operating and financial characteristics derived from the most current Annual Survey of Manufactures, published by the U.S. Census Bureau; Annual Statement Studies, published by Robert Morris Associates, and national input/output coefficients for various factor costs. This information was used to develop a detailed annual operating expense statement, which served as a baseline for estimating costs for West Virginia and the comparison states. These national baseline costs were adjusted by state-specific cost differentials for various factors (wage rates, utility rates, etc.) to derive operating costs for West Virginia and the comparison states.
|