Logging cuts topple North Coast, Oregon economy

Jul 31, 2009. /Lesprom Network/. The North Coast's timber industry is still scraping by as the national housing market struggles to recover, The Daily Astorian reported. Oregon Department of Forestry is projecting grim timber sales through mid-2010. This month, the state slashed its expectations for Clatsop County's next 12 months of timber revenue by another $500,000. Revenue projections are constantly changing based on market conditions. In the past six months, the county's expected share of timber revenues from the Clatsop State Forest for this fiscal year dropped from $11 million to $9 million. If the current projection is on target, that's about half the timber revenue the county received the past two years. And for 2011? It gets worse. Right now, Ron Zilli, assistant Astoria district forester for ODF, is predicting only $6.7 million in timber revenues to Clatsop County for fiscal year 2011, a 20 percent drop from the already dismal 2010 numbers. For the immediate future, log prices at lumber mills are still at 20-year lows, and hard times for loggers and millworkers will stay hard. With slumping demand for lumber, local logging companies have cut staff and many are scrambling for work to stay afloat. Lumber mills are still curtailing production across the region. But the Weyerhaeuser Mill in Warrenton is still employing 93 people, according to company spokesman Greg Miller. And local logging companies report after making layoffs they are still hanging on. Since announcing the July revenue forecast, Zilli said he's seen a bright spot on the horizon for the industry. Last week, three timber sales on state forest land drew several bids apiece - and at prices much higher than the minimum bid. Zilli concluded that the timber industry sees a light at the end of the tunnel, and they're buying timber now so they can sell it at a higher price within two or three years. "Although prices aren't what we like to get, they were bid up from the minimum," Zilli said. "They were a lot better. Because our contract terms are for two to three years and log prices are a little low now, they're paying a little more for them now. And they'll wait maybe a year to log them. It's buy low, sell high." Zilli said just adding the recent sales to his projections for 2011 will bump up the expected revenue. On one sale of high-quality timber, some of which can be used for utility poles, the appraised price on the stand was $173 per thousand board-feet of Douglas fir. Bighorn Logging Corp. of Banks bid $275, and Olympic Forest Products, Stimson Lumber Co. and Hampton Tree Farms also put in bids. "We had four bidders. That's a good sign," he said. "That means, one, it sold. Then, it was bid up by almost 50 percent. That's almost starting to get respectable." Zilli said three or four years ago, when the lumber markets were booming, the state would have collected $475 per thousand board-feet for the same stand. "The value the mills are paying for wood being delivered right now is the worst we've seen in 20 years," he said. "The sales that are being sold now have contract dates out to calendar year 2011. They're speculating things are going to get better, and they'll be able to get more than this for these trees by the time the contract is over." Some of the state's older contracts will expire in October of this year, so timber companies will have to harvest some trees before then. But Zilli said the companies will likely choose the cheapest sales to cut first while they wait for the markets to turn around. Meanwhile, the revenue delivered to counties from the sales will probably stay near the 20-year lows for awhile yet. Mark Gustafson, co-owner of Astoria's Gustafson Logging, said his company is operating at about 60 percent capacity since December. Only recently did he pick up enough work to boost that number temporarily to 80-90 percent. A year ago, Gustafson had 25 employees on its logging crews. Now he has 16. "Fortunately, one of the companies we work for has a short-term market for export hemlock, which has created some temporary demand," he said. "We're hearing this market is not going to last for more than a few months. It's likely just a glimmer for us. ... We're very fortunate to be working at all." Local logging companies that do most of their work on Weyerhaeuser timberland have seen jobs come to a near standstill. Rumors have flooded the industry that Weyerhaeuser has sold its timberland holdings in Clatsop County, but all lips are sealed within the company. Earlier this year, Weyerhaeuser transferred a long list of its assets in the county to a subsidiary, Weyerhaeuser NR. Similar moves triggered speculation across the country about whether the company was preparing to sell its timberland to a real estate investment trust, which would manage the land for its highest and best use and cut down associated corporate income taxes. For the past month, the company has not answered questions about its future plans. "We've made no recent announcements about timberland sales in Oregon," Shannon Hughes of Weyerhaeuser's public affairs office told The Daily Astorian. "And as a matter of policy, the company does not comment on rumors and speculation."