Changes sweep over logging industry giants

PACIFIC COUNTY, Wash. After a year and a half looking for a buyer, in February once-dominant logging giant Weyerhaeuser sold 82,000 acres of hemlock forestland in Pacific County and in neighboring Grays Harbor County for $200 million to a Boston insurance companys timber subsidiary.

The move was the latest in a long paring-down process by Weyerhaeuser, which is transitioning into being a Real Estate Investment Trust. In Pacific County the firm now owns about 139 fewer square miles of forest than it did a century ago in 1911.

Its still a significant player in the region and operates two small interconnected sawmills that employ more than 100 in the economically imperiled timber town of Raymond    45 miles and a world away from the tourist and retirement haven of the countys southern beach communities. But the days when it signed a large fraction of all the paychecks in the county are over forever.

Although the massive old-growth trees are mostly gone, this remains one of the worlds best places to grow trees. In fact, foresters note that the rich volcanic soils, hospitable climate and ample rainfall of Southwest Washington and Northwest Oregon are uniquely suited to growing the highest quality fine-grained Douglas fir, fine-grained red cedar and hardwoods such as maple and alder.

Just as some of these species await the fall of a giant tree to open up a space for their own growth, a profusion of small companies and landowners are looking for new opportunities now that Weyerhaeuser doesnt cast such a long shadow.

What comes next?

So what changes are afoot in Southwest Washington as the timber behemoth of Weyerhaeuser dwindles? What opportunities does this market restructuring provide?

Kirk Hanson, director of Northwest Certified Forestry for Northwest Natural Resource Group (NNRG), explained one of the ideas taking root, if tentatively, in Western Washington soil.

Hanson is a new breed of forester. He is a landowner with a 30-acre tree farm near Oakville, where he is developing experimental agroforestry systems and sustainable management practices that he feels may lead the way for a new timber industry in the Pacific Northwest.

The Northwest Certified Forestry for NNRG is one of the relatively new forces in the industry, assisting timberland owners in becoming certified with the Forest Stewardship Council. FSC is an independent nonprofit established to promote sustainable management of the worlds forests. Individuals or organizations can register with the organization and, if certified, can sell FSC-certified wood to FSC-certified mills, which make products that ultimately make their way to consumers, builders and contractors.

Both private and commercial landowners can participate in the program (in fact, some of Weyerhaeusers Uruguay holdings are FSC-certified, a standard they have fought in the U.S.). This third-party verified system produces timber, which can be traced back to its source and provides a product stream that ensures that sustainable management and environmentally friendly practices have been used in its growth and harvest.

Building and construction professionals vying for green building certification can gain points by using FSC-certified lumber. In some cases, consumers are demanding sustainably grown lumber for their building and home-improvement projects. Artisans are seeking out sustainably grown local woods for furniture and other uses.

All the small local mills in Southwest Washington have become FSC-certified in order to take advantage of this product stream.

New products, new processes

Donna Robbins, second-generation owner/manager with husband Bill of Alexander Mill outside of Chehalis, talks about how they have managed to stay in business as one of the longest running mill operations in the Northwest.

Well, I cant say its been easy, she said by phone. Its definitely been a struggle. My father, Dale Robbins, bought the property in 1948, the mill was on it, and the guy that sold it to him just said, You should keep this mill going.

My dad had been a Boeing employee so he didnt know anything about the industry    he didnt plan on getting into the lumber business. At the start we didnt realize what was really going on in the industry, and things started going downhill really fast.

But weve made a go of it by working hard and being adaptable. I got dragged into it and then I dragged my husband into it, she laughed. But I like wood, so that helps    its renewable, its reusable.

Alexander Mill has adapted to economic hard times by specializing in custom millwork and, because they operate a small mill, they have an FSC-certified lumber stream that they can cut and track in a way that would be difficult for a larger mill.

Local wood

Green Tree is another specialty mill with a yard in Graham, just outside of Spanaway, with a marketing office in Seattle. Just as the local food movement has risen out of the awareness that industrial agricultural practices can harm the environment, local sourcing of sustainably managed wood promises the same ecological and locally grown advantages.

Green Tree collaborates with regional landowners, businesses, and client partners to process locally grown hard- and softwoods, primarily from FSC-certified woodlots in Washington, to produce environmentally friendly building products. They promote a triple bottom line approach to their business: ecological and social accountability combined with economic value for themselves and their community.

In this case, Alexander is milling and surfacing locally grown maple to size so that Green Tree can make it into furniture. This raises the value of the timber to its higher and best use and keeps the financial resources at home.

The old industrial model ships raw wood out for manufacturing elsewhere, taking wealth away from the source. As Jerry Franklin, professor at the School of Forest Resources in the College of the Environment at the University of Washington, commented, Were not very competitive in the global marketplace. The only thing were competitive in is selling raw logs not in manufacturing common wood-based products.

Value-added timber management

Maple, juniper, alder, hickory, and myrtle often made into firewood or pulp in the past, are now finding a use in high-end products like veneers, flooring, cabinets and furniture. Many are arriving from FSC-certified timberlands, either privately or commercially owned.

FSC-certified wood is not big business yet and may never be, but it provides another market for wood products that did not exist a decade ago.

Our FSC-certification hasnt made us a lot of money, said Robbins. We get a premium of a couple dollars on a log maybe    but it has kept us in business. Its just something that we can sell. This is a hard business to be in right now but we hope that there will be more demand    it goes in spurts.

Another FSC-success story involves Dennis Wilson and his wife Jill Merrill who live on 15-acres bordering Clearwater Creek in Naselle, property that Merrill bought 33 years ago.

We couldnt afford it now, said Wilson. But we really love it here and weve worked with NNRG to create a sustainable management plan to add value to the land. About four years ago, the Army Corps of Engineers were getting rock from the quarry behind us to repair the North Jetty and we started really looking at our property.

The future of forestry

The potential for FSC-certified wood is growing. Jake Robinson, Southwest Oregon regional director for NNRG in their Coos Bay office, said, Home Depot has created a market for FSC-certified stud-wood that is being provided by Roseburg Forest Products and Lumber Company in Dillard, Ore.

Roseburg, with 4,000 employees and 700,000 acres of sustainably managed timberland is beating the odds. They are turning toward sustainable harvest practices, which, with Home Depot stepping into the FSC-certified marketplace, could indicate a trend for the future of the industry.

It appears that a revitalized timber industry may require several business streams to be developed in combination with one another: sustainably grown and harvested (and therefore higher quality) raw materials; custom manufacturing processes for those materials; and increased market demand.

Implementing sustainable forestry management on municipal or government land, using an FSC-model, could increase the high-end material stream. Subsidies and small business loans to establish the training and equipment needed for small manufacturing sites could provide another piece of the puzzle.

In line with this thinking, Professor Franklin speculated that there are two ways the U.S. could compete in the new global marketplace for timber. We can develop and sustain local markets; and weve got to develop global markets for products that cant be produced in fiber farms.

He continued, They cant grow high-quality fine-grained Douglas fir of great strength in Asia, or fine-grained red cedar, or hardwoods. These are things you cant grow in fiber farms in the southern hemisphere.

A robust timber market

Knox Marshall, resource manager for the fourth-generation family-owned Murphy Company and manager of a veneer mill in Elma, brings the conversation home. This region of Southwest Washington and Northwest Oregon has one of the most robust timber markets on the Columbia corridor. You probably have some of the most sophisticated raw-materials producers.

That means your target area has higher-grade material    and Washington state has a robust program and a less-aggressive harvest approach. When we purchased the Elma veneer plant, Weyerhaeuser had 40 employees there. We have doubled it in size and now employ 90 people.

Murphy Company has proven the value of retaining manufacturing processes locally. Professor Franklin added, The commercial growers will continue to grow trees on their forest lands as long as it provides an adequate return and when it doesnt theyll look for better opportunities overseas.

But the majority of small and private forest landowners do not manage with the same objectives that Wall Street insists on    most forest landowners dont manage with an emphasis on maximizing their ROI or PNV.

Return on investment and present net value are business accounting terms that speak to a single bottom line, how to maximize profits. Small landowners can have multiple objectives since they are a part of a local society that recognizes other values. They can manage their lands with greater sensitivity with ecological, cultural and personal objectives.

An industrial forest production model is designed to maximize wood production and marginalize other values. Naturals systems are very integrated systems, they never have just one objective.