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Lumber production in Montana continues to slide, and with it go the industry's wages and jobs.

The national housing decline, particularly in new starts, is having a significant effect on Montana lumber producers, said Todd Morgan, director of forest industry research at the University of Montana's Bureau of Business and Economic Research.

"Most of the problems are related to housing, and it's sawmills that are hurt the worst by housing-related issues," Morgan said last week.

Montana has about 200 facilities that produce some sort of lumber product, from sawmills to log home manufacturers, and plywood to linerboard. About 50 of those facilities are sawmills, and only a dozen of those are what Morgan describes as major employers.

Linerboard, produced at the Smurfit Stone Container Corp. mill west of Missoula, is about the only industry product that hasn't seen major problems.

"Cardboard has held up relative to sawmills, but as the recession wears on and less products are produced and boxed, there will be effects there as well," said Morgan.

While log home producers and post and pole plants have seen some decline, sawmills that produce the lumber needed for homes have taken the primary hit.

"Sawmills have really been hit hard by three straight years of rough housing markets nationally," Morgan said.

Lumber production from Montana mills declined by 12.2 percent from the second to third quarter of this fiscal year.

And compared to 2005, when lumber markets were strong, production is down by 31 percent, the BBER reported.

With production down, so is employment. About 2,865 people are employed by Montana mills, down 700 from 2005 and down 6 percent from a year ago.

Those numbers reflect closure of Stimson Lumber Co.'s East Missoula mill and the Owens & Hurst mill in Eureka, said Morgan.

Total wages at mills came in at $28.8 million during the third quarter, compared with $30 million for the same period in 2007.

None of that is good news. But worse, it's not over.

"This next year is probably going to be worse than 2008, and it looks like there may not be a light at the end of the tunnel until later into 2010 and possibly 2011," Morgan said.

Many economists believe that any rebound from the current global downturn isn't likely to surface until late 2009 at the earliest.

Morgan said good times will bring slow improvement to the wood products industry, but there will always be difficulties, including timber availability and competition from Canadian mills, which already supply about 35 percent of the softwood lumber used in the United States.

"Right now, though, the market is the major factor, and it doesn't look good for a while to come," Morgan said.

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