SPI Arcata, Mary’s River Lumber to Close Mills

Both of these companies say a shortage of logs from federal land (in Oregon and Calif., respectively) is a main reason for closing:

Mary’s River Lumber Co. closes

Sierra Pacific Announces Permanent Closure of Arcata Sawmill; More than 100 Jobs Lost

But the demand for lumber will not change, of course, so lumber will come from other places.

16 Comments

  1. But, of course, the demand for lumber (and paper) has changed. And as the head of the Montana Wood Products Association said a few months ago, the markets are terrible. And the supply is more and more coming from places like Canada now thanks to trade deals like NAFTA (which we warned about) and the expiration last fall of the U.S.-Canada Softwood Lumber Agreement (which nobody in industry or any of the ‘more public lands logging’ politicians seemed to alert the public about…nope, they simply said “MORE PUBLIC LANDS LOGGING”). Plus, there is the fact that now not only does Canadian timber get dumped into the U.S. tariff free, but because of the current exchange rate, essentially a Canadian timber company makes 40% more simply shipping their (tariff-free) lumber into the U.S. markets

    But of course, those global economic realities have nothing to do with this mill closure announcement.

    Finally, it looks like Mary’s River Lumber produced cedar siding, decking and boards for trim. Could it be, perhaps, that consumer trends and choices have changed? Could it be that consumers today would rather put a long-life, next to zero maintenance composite deck, or vinyl siding around their house, rather than an expensive cedar decking or cedar siding that may require more maintenance? Hell, my dad was a house painter for 35 years and you know what? He even put vinyl siding on his house because he was sick and tired of painting the wood siding!

    Clearly if we just asked the U.S. Taxpayers to fork over more $$ to pump out more industrial logging projects on federal public lands everything would be great, just great! Right?

    • Matthew, Are you suggesting that these two mills would be going out of business even if there were plenty of federal logs available?

      For what it’s worth, Sierra Pacific is building a new 500 MMBF/year mill in the Seattle area, precisely because the logs are available — from private and state lands.

      Steve

      • Hi Steve, I suggest that the major issue facing these and other timber mills in the U.S. right now are the global economic realties (including consumer/consumption realities) that I mentioned. I don’t put much stock in business owners basically always asking for more, more, more…for less, less, less.

        I would, however, be curious to see you response to the pretty clear (and stark) global economic realities that I mentioned, including NAFTA, expiration of Softwood Deal, exchange rate and changing consumer demand, tastes, preferences, etc.

        Also, for the record, when private businesses ask for more from taxpayers and our public resources I’d like to see the businesses actually provide a detailed business plan. I mean, if I were to ask for a loan to buy a house it’s not like the bank asks me “Can you afford it” and I simply respond “Yep” and they approve me for $500,000. If the American people are being asked to subsidize private businesses, or dramatically change our bedrock laws and regulations, it seems like a little really world documentation and transparency (like a business plan) would be in order.

        • Matthew, I don’t not say that the “real world global economic realties” you mention played no role. But a log supply is the most basic requirement for any mill. No logs, no mill. SPI tried importing logs to keep the mill running. If these mills had a steady, predictable supply of logs, they’d still be making sawdust — and employing people.

          • But don’t the mills actually lose money ‘making sawdust?’ Don’t they actually make money when they are able to sell a product for more (in some cases much more) than they put into producing the product? I fail to see how simply giving mills more taxpayer subsidized timber sales on National Forests or BLM lands solves the problem, which again are all about global economic realities. But perhaps I fail to see things from the timber mill owner perspective because they can make all sorts of claims but never have to provide any evidence. That’s why I mentioned a detailed business plan would be nice to see. I’d love to see how it all pencils out in their mind. Small price to pay if you want the American people to subsidize more public lands logging, don’t you think?

            • I repeat: No logs, no mill. With logs, from whatever source, a mill has a chance, not a guarantee, to survive and thrive “real world global economic realities.” No logs, no chance.

              • I repeat: These mill owners should show taxpayers a detailed business plan (if they expect taxpayer money and publicly-owned resources) so we know just what type of a chance we’re talking about here. Otherwise we’ll just continue to throw good money after bad. I also repeat that the real issues are the global economic realities I’ve mentioned above, but nobody in industry ever wants to talk about that (outside the board room or office).

  2. This is a typical zero cut argument against public land logging – throw a bunch of random economic/global factors up in the air and provide zero evidence that these factors are in play.

    Sometimes the simplest explanation is the correct one: inability to acquire logs =mill closings.

    • Frankly, Bob, if you think the real world global economic realties I brought up (which, honestly, are just a sampling) are just ‘random’ and there’s no evidence that these very real global economic realities are in play, that’s cool by me. Go on thinking that way and let’s chat again down the road and see how that turns out.

  3. I’ve driven past the Mary’s River mill several times a week for many, many years. For a long time, they had an ample supply of logs. The past few years, however, they’ve had to periodically shut down due to a shortage of logs.

    I’ve long admired this mill because they carved out a market niche with western red cedar. When the housing market tanked, people would build a new deck, replace the backyard fence. etc. Through thick and thin, they just kept trudging forward.

    Now, this county has just two mills left; one a small, family-owned mill (much like Mary’s River) and the other part of a large, nation-wide conglomerate. The other dozen or so that went out of business the last 2-3 decades (mostly during the 1990’s and mostly due to log shortages) now exist in the history books.

    I suppose Mary’s River’s 80 employees will be added to the unemployment/welfare roles.

  4. So Matt, if your theory about the global economic realities hold water and log supply is a second order control, why then are some mills thriving? Could it be that they have ample supply of logs?

    • Hi ‘Smoke Dog.’ “Global economic realities” are hardly my theory. I also think it’s hardly true that “some mills are thriving.” Keep in mind that my understanding of the word thriving is “grow vigorously…prosper, flourish.”

      So, which timber mills are thriving right now? What products do they produce? Where are they located? Where do they get their raw materials? Is the mill union? What do they pay their employees?

      It could be that some timber mills are able to get more cheaper logs than other mills. It could be that some mills have long-term contracts with big retailers or customers. It could be that some mills are willing (and able) to run longer at a loss or marginal profits for a variety of reasons, including snuffing out the competition. It could be that some (most?) of the big players in the timber industry have re-formed into REIT (Real Estate Investment Trust) that help them pay far less taxes and give far more money to shareholders. It could be a number of things, some inter-related, some not.

      But this incessant fixation on getting more taxpayer subsidized logging on public lands as the only solution, or even the most important solution, is just bizarre to me. Fixate on that at your own peril, is sort of my opinion of the matter. Fact is, USFS has meet it’s timber harvest goals the last few years. Fact is, right now the USFS has the authority to conduct an unlimited number of 3,000 acre CE logging projects (“Categorically excluded from the requirements of NEPA” according to the language of the Farm Bill) on over 40 million acres of public national forest lands. What’s stopping all this logging? Pretty much the fact that the GOP-controlled Congress won’t fund it, and the “markets are terrible” (to use the word of the head of the MT Wood Products Association).

      Another thing, we are seeing a historic collapse in the coal industry and oil and gas industry in this country. Is the reason a lack of coal mining or oil and gas drilling on public lands? If so, does anyone really think if we gave these industries more public coal, or oil and gas, etc that they would be ‘thriving’ right now?

      Anyway, that’s why seeing a detailed business plan for these mills saying that they need more public logs to stay in business seems like a good idea. Of course it will never happen, but a boy can dream, right Smoke Dog?

      • I know “taxpayer subsidized logging” is often mention. I think it should be call taxpayer subsidized NEPA document costs. We asked the Forest Service and BLM to do lots of things besides just sell timber. I think the taxpayers are generally willing to pay for this.
        Timber sales do create revenue for the taxpayers.. If they are below the cost of putting the sales together it has more to with how the FS and BLM go about it then it does about subsidizing the big bad timber companies. Once the timber sales are sold I think you would be amazed at the amount of economy that is created.
        Most of the current volume of timber that is sold from federal lands are thinnings of small diameter logs that are expensive to harvest and are only suitable for high production automated mills. If we had a more stable sustainable flow of timber of all ages and species from our federal lands there would be more mills. If we had small salvage sales of what is available on our federal lands we could have small family owned mills in just about every watershed in the West.
        It is not a good thing to see these mill close.

  5. ​​I find it strange that Marys River Lumber (and/or the reporter) chose to highlight federal land restrictions instead of the fact that private landowners generally don’t replant cedar.

  6. Here in the Oregon Coast Range and Willamete Valley foothills (the location of Marys River Lbr.), many private landowners do plant western red cedar as well as western hemlock, ponderosa pine, and grand fir to go along with Doug-fir. [By doing so, one might say we are creating an unnatural diversity.] The problem is that the housing market wanted Doug-fir so, for many years, Doug-fir was king and that was about all that was planted. The cedar (and other species) planted in recent years is not yet of a marketable size so, hereabouts, the best but unavailable source of merchantable-sized cedar is off federal lands.

    The claims of subsidized public logs continues to baffle me and seems so illogical. Public logs put up for sale will go to the highest bidder just as they do with private logs. The only way I can see that public logs are being “subsidized” is if, even at the going price, the cost of production by the public agency is so high that the market price will not make the logs profitable. Here locally, I once figured it took the Forest Service something like ten times the manpower to produce a million board feet as local private landowners. Maybe the federal land managers need to be a tad more efficient and, just maybe, operate a little more like a business with a business plan that a CEO, a board of directors, and stock holders could approve.

    It shouldn’t be all that difficult to profitably produce logs, especially when one considers that federal agencies do not pay taxes which gives them a huge competitive advantage over privately produced logs on the market. While they continue to use local roads, schools, fire departments, libraries, etc., federal lands have become a burden to the local communities since they do not pay taxes or produce much of any real economic value.

    I think it fair to say that public agencies are heavily subsidized by the taxpayer!

  7. I got the following information in my in-box a few days ago but just got around to posting it here now due to a house full of various spring-breaking family and friends. It comes from Larry Edwards in Alaska.

    I was just reading the comments on ANCFP to “SPI Arcata, Mary’s River Lumber to Close Mills,” and thought you might find these attachments interesting. They regard Don Young’s HR-3650, which would allow any state that has national forests in its borders to select up to 2 million acres from them.

    The first attachment is a critique of testimony to the House Federal Lands Subcommittee, prepared last November regarding testimony that the State of Alaska gave that September on a panel before the committee. In part, it shows the role that global economics combined with rapid forest liquidation on the Tongass National Forest caused a huge one-time boom followed by a big bust that closed mills. The state’s testimony was essentially about the above bill, which Young introduced that same day, although not referenced directly. That hearing was about so-called federal overreach. See pp.9-11.

    Just to round things out, the second attachment is comments to the committee on a hearing about HR-3650 (and three other bills) about testimony by Don Young and the VP of the largest remaining mill (Viking Lumber).

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