The industrial establishments of the forest industry are often concentrated in distinct regions, in which they employ a significant part of the labor force. This paper presents a model which provides a means to analyze and evaluate investment patterns and programs in such regions. The model contains two integrated parts: one describes the obsolescence and renewal processes in the industry sectors of a region. This part of the model is formulated within the framework of a regionally specified multisectoral model. The other part is an optimization model which generates investment and production for regions, given national and regional constraints on production and employment levels.