Timber industry needs increased wood supply to stay afloat

The timber industry is in turmoil; in need of an economic bailout. But it needs wood, not cash.

Hubbard County is faced with the issue of coming to the aid of a vital industry, balancing economic needs against those of environmentalists, recreational groups and residents living near forested areas.

A series of countywide meetings this fall has included tours of Potlatch Corp., and involved economic development and elected officials.

Recently two county board members toured Potlatch Corp., which has cut back shifts lately and is in need of more lumber.

Potlatch officials pleaded with the county to revise its forest master plan, to get more wood to market. The mill only has three weeks worth of supply, it told the county.

That request received mixed blessings from Hubbard County board members last week.

"People living next to it don't want to see the forests go," board chair Cal Johannsen said, characterizing what he's heard from his constituents.

"We have a plan," said board member Don Carlson. "Why wouldn't we stick to it?"

"They feel a lot of good timber is going to waste in Hubbard County," replied commissioner Dick Devine.

The 10-year plan and upcoming sale

The county's master plan calls for three timber sales annually, harvesting 2,600 acres a year, said county forester Bob Hoffman. "We've been exceeding that by a little bit," he said, harvesting around 2,800 acres in 2008.

The county's tree stands have been inventoried and computerized. "We go by age and condition of the stand, whether there's disease present," Hoffman said. "It's called the 'worst first' list. We've got a cutting plan for every species and there's more than 10 species, but our main ones are aspen, birch and jackpines."

Hoffman, at the county's urging on behalf of Potlatch, agreed to take a look at the master cutting plan to see if more wood can be harvested. But commissioners expressed some misgivings about whether Hubbard County should flood the market with wood now at risk of jeopardizing the future.

"In our plan we took into account the feelings of all the people and the public and the wildlife managers and so forth, aesthetics, the soils of the county," Hoffman said.

"Some soils are better suited to hold timber a little longer than the poorer soils so we took a lot more into account rather than just an economic rotation," Hoffman said. "But we'll look at it to see if we can accelerate our cuts a little bit, especially the aspen and jackpine, to help get more wood to the market."

"It has to be sustained," commissioner Lyle Robinson told his fellow board members.

"They're willing to cut the whole doggone county," Carlson said. "I'm not."

Hubbard County will hold its first timber sale of 2009 on Jan. 6. It will consist of 23 parcels of land encompassing 1,000 acres of woods. Two more comparable sales will be held later next year..

The logging market

Potlatch's request comes amid seismic upheavals in the lumber industry in northern Minnesota.

Ainsworth Lumber Co., in Bemidji, announced this week it would stay closed indefinitely, putting 140 workers out of jobs. The oriented strand board plant shut down suddenly in October, for what locals hoped was temporarily to save money.

Ainsworth permanently closed its Grand Rapids plant in August and shut down its Cook plant, too. But that doesn't mean a glut of wood is out there.

"The housing market has been so poor with all the foreclosures that there's no demand and what building products are needed they can get cheaper in other states, other countries, so they decided to close down," Hoffman said of the Ainsworth closings.

The sour housing market caught up with Potlatch as well. It took downtime at three of its sawmills earlier this fall.

County coordinator Jack Paul went on the company's tour Dec. 1.

"I asked the question, 'If no one is buying why do you need wood?'" he recalled asking Potlatch officials. "And they said, 'It's very simple - to keep the plant open.'"

Commissioner Greg Larson went on the Potlatch tour and was impressed by the plant's automation and dedication to recycling every wood chip.

"They stress they're a vital part of the community," he said. "They employ 80-some people and they pay substantial wages and benefits. Their average compensation is $75,000 and that includes salary and benefits, so it's a significant benefit to the community" to keep the plant operational.

Plant manager Pete Aube declined to comment further on Potlatch's plight.

"I'm sorry but right now we're in a press blackout," he apologized. "We're going into a spin-off within our company and so I'd be happy to talk at a later time."

Aube did say logging "is a terribly important issue. It's very important that we make informed decisions about this whole thing. That's why we had the county board here."

The price of wood

There are conflicting reports of the prices mills are paying for wood and whether that's affecting availability and the supply.

Hubbard County Regional Economic Development Commission director David Collins recently told a roundtable of politicians and business leaders it takes more than 5 million cords of wood to sustain the mill industry, but only 3.6 million cords are currently being harvested.

Potlatch uses only pine in its stud mill.

"We have a lot of Norway plantations that need to be thinned," Johannsen suggested at last week's board meeting.

"The bottom line - they're not paying enough so the wood's sitting," Robinson said. "They'll have to pay more money to get more wood... There's lots of things you can do to get more wood... We have a lot of loggers sitting on wood waiting for the price to go up."

Hoffman said 30-some loggers show up at the timber sales. Bidding starts 1 percent above the appraised price and goes up in 1 percent increments.

"Sometimes the bid doubles over the appraised or estimated price," Hoffman said. "We've been wondering for years and years how they make a profit. I don't know what-all goes on behind the scenes. It eats up a big share of their profit because they've got trucking and all the equipment costs, gas, insurance, so yeah, many people have asked those questions."

Loggers bid for the right to harvest the wood; they have a two-year window to complete the work. Currently Hoffman said 50 sales are outstanding in his files, but it's possible loggers are waiting for frozen ground to harvest on the softer soils.

Paul wonders if cutting more wood will actually get it to market.

"I think a lot of these guys are saying, 'Well, I've got my equipment paid for, I can make my payments; I'm just going to wait until the price comes back up and I'm not going to take that wood down there for that price,'" he said of the loggers.

The competing interests

Larson acknowledges environmentalists may take issue with any plan that would accelerate cutting the forests more aggressively.

"If you over-cut now you aren't going to have enough for later," he said. "There's other needs for the natural resources, there's recreation, and just having it there. It's all those things we have to balance," he said.

"We're very serious about our forest plan, what we plan to cut," Paul said. "And the idea is we change that and cut more now there's going to be a lull later, so we've planned this out so we cut an equal amount per growth year so it doesn't get over-cut."

Hoffman will study the department's computer models to see if he can devise a plan that will keep the mill running and balance any potential economic loss from another plant shutdown with the rate of forest regeneration. He will then present a revised plan to the board to vote on.