A different bailout

Timber industry aims to saw through housing slump


An old wives’ tale prescribes to feed a cold and starve a fever, but into which category does an industry depression fall? Dick King says the former.

King’s group, the Missoula County Economic Development Corporation, published a series of recommendations Sept. 25 calling for efforts to boost the timber production coming out of Montana’s National Forests from last year’s level of 90 million board feet to nearly 300 million by 2011. The increase counts among a wish list of state and federal policy suggestions compiled after King and his associates consulted with management at Montana’s remaining wood mills.

“Our hope is that this won’t become something political,” says King, who adds he wanted to get some ideas out there before runoff from the subprime mortgage crisis claims more industry jobs. “We hope it will be a strong show of support for the timber industry—what’s left of it anyway.”

In short, millers believe they could weather this unprecedented slump in lumber demand if granted more access to live growth contained within Montana’s wealth of federally managed forestland and if the state government would give them a break on some regulations. The concept is, of course, predicated on an assumption that environmentalists aren’t fully accepting—that the Pacific Northwest timber depression isn’t actually an outright collapse.

If the industry can snap out of its current funk, the upswing could still be a ways off. Presently, the U.S. housing market is suffering its worst outlook since the Great Depression. Starts on new homes plunged another 6.2 percent in August compared to last year, according to a recent U.S. Census Bureau report, and timber prices per board foot recently dipped to less than half of what they were during the last presidential election season. Diesel prices are also up and, along with them, the costs of doing timber business.

On the bright side, the demand for some wood fiber products—like those manufactured at Frenchtown’s Smurfit-Stone plant—remains unaffected by bleak housing market conditions. Economists and industry leaders hope that spark of life could buoy Montana’s wood products industry until construction eventually rebounds.

“I wouldn’t call it a corpse yet,” says Todd Morgan, a University of Montana wood products industry researcher. “There’s still a market for affordable timber.”

King’s suggestions jibe with the message broadcast by industry groups nationwide and supported by like-minded elected officials within Montana. Based on the initial response, environmental groups are likely to support some recommendations and oppose others—with the increase to 300 million board feet probably landing in the latter bin.

Some opponents call the industry’s “log, baby, log” response to economic dire straights another government handout. Conservationists say that attitude isn’t necessarily an indictment of any local efforts, but a product of the Bush administration’s longstanding—and largely successful—campaign against many Clinton-era protections at the prodding of industry interests.

“It’s corporate welfare is what it is,” says Michael Garrity of the nonprofit conservation group Alliance for the Wild Rockies. “It’s the same thing that’s happening on Wall Street.”

Critics principally wonder why the industry—and its Washington and Helena supporters—want more public wood when mills continually close, unable to sell the lumber they’ve got.

“It’s kind of a futures market—they can sit on these contracts for five to 10 years,” says Matthew Koehler of the Wild West Institute. “Otherwise why would the government be bailing out the timber industry when there isn’t any demand for these materials?”

Advocates don’t dispute the characterization of a public subsidy, but maintain the market will need a steady timber supply when it begins to rebound. In the meantime, King argues, it’s important to float Montana’s milling infrastructure if for no other reason than to ensure the future of wildland fuels management.

“If there’s any way to keep this industry alive, we have to try,” he says. “There is some optimism that we’re seeing a trend [politically] toward active management—that’s the supply side.”

As logging interests call for more access, saving wood production jobs also constitutes a pivotal talking point. The latest Montana casualties occurred with Tricon Timber’s Sept. 17 release of its St. Regis night crew and Plum Creek’s decision to slash 35 jobs at its medium density fiberboard plant in Columbia Falls, effective Sept. 29.

Industry leaders maintain they can stop the bleeding with a little deregulation. King points out that even a small change in road tonnage limits can save millions of gallons of diesel with bigger truckloads—multiply that volume by the current diesel prices and the savings equal no small sum. Every bit, they argue, prevents the shedding of statewide infrastructure and sector jobs.

Critics of this approach point north of the border, where regulations are already considered light. According to an ongoing count by the Vancouver Sun, timber jobs cut since Jan. 2007 in the province of British Columbia alone now exceed 11,000.

“It’s the timber industry’s wet dream up there,” Koehler says. “If they can’t keep 11,000 forestry workers employed with low stumpage fees…then what do we have to do in the U.S.?”

Many of King’s wish list recommendations are currently under review by the Interim Committee on Fire Suppression, created during a special session of the state legislature after 2007’s costly wildfire season. Only the U.S. Forest Service can increase logging access to federal forestland, but a strong show of deregulatory support in Helena could trigger movement in Washington.

One of the state line items irking environmentalists is a provision to shore up funding that would allow Montana to join the Forest Service in litigation over controversial timber sales contracts. The provision’s author, state Sen. John Cobb, says the $200,000 per biennium fund—reduced from $500,000 by the committee—is not meant for every lawsuit, just ones with a clear state interest.

Koehler complains the sum is still seven times his group’s annual budget.

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