Weaver blames timber
Bill gives industry hope
Although a fallen
timber industry is
closing down some
companies and forcing others
to reduce their work force,
some firms stand to make a
great deal of money, says
John Atkins, representative
for U S Rep Les AuCoin,
D-Ore
AuCoin presented a bill to
Congress similar to one
introduced by Rep Jim
Weaver, D-Ore., that would
allow companies to terminate
federal timber contracts
High interest rates and
inflation have made timber
bought from the U S Forest
Service unprofitable to
harvest. Atkins says Most
timber companies operating
in Oregon depend on federal
timber and would be forced to
make employee cutbacks or
fold altogether if the AuCoin
legislation isn't passed, he
adds
The Western Wood
Products Association which
represents timber companies
in 11 Western states, says 503
of the 756 companies in the
region have been forced to
shut down or reduce their
work force
If left unchecked this trend
would seriously hurt Oregon's
chances of obtaining a large
share of the market when
interest rates drop, Atkins
says
“If we don't act to maintain
as much of our mill capacity
as we can, we in Oregon are
going to be very hard pressed
to meet a large demand
(AuCoin's bill would) control
the damage done to Oregon s
economy "
The AuCoin legislation
would allow companies to
terminate their contracts with
the U S Forest Service
without penalty The contracts
would be resold, but the
original owner of the contract
would not be allowed to
re-bid, Atkins says.
By allowing other timber
companies to re-bid on the
contracts, companies would
again find it profitable to
harvest the timber, he says,
adding that the number of
employee cutbacks and mill
closures would decrease
Some large timber firms
don't depend on U S Forest
Service contracts because
they have their own forests
These companies — and the
Congressmen they influence
— oppose AuCoin's proposal,
Atkins says
Atkins points out that large
firms aren't forced to absorb
huge losses because they can
wait to harvest timber when
it’s profitable
“If you’re not dependent on
(federal) timber sales, then
you're out of the jam that
everyone else is in "
If the AuCoin legislation is
cut down, large companies
would reap Redwood-sized
profits when interest rates
drop and demand for timber
increases, Atkins adds
Competition would be
reduced because many
companies would have gone
bankrupt
"It’s going to be
counter-productive for
everyone if the mills stay
closed," he says
However Atkins says that
AuCoin and Weaver will need
to amend their bills to
compromise with the
opposition in Congress
Rep Tom Foley D-Wash
and Sen James McClure,
R-ldaho are likely to be key
opponents. Atkins says
Neither Foley or McClure are
prepared to comment on the
legislation
“We re going to have to find
a way to get their interests
involved in this also We re
not going to give up in
pushing for a consensus "
Bill Moshofsky. a vice
president of Georgia-Pacific
Corporation, admits most of
the timber used by GP is
owned by the company
“We don't buy that much
(federal) timber," Moshofsky
says "But we are aware of
the problems involved with
federal timber contracts." If
the timber was privately
owned, contracts would be
terminated, he says
"The reason for the
difference of opinion is some
believe by (terminating a
contract) you abandon the
sanctity of a contract It's
wrong for people to know they
can bail out of a contract if
they get caught with a loss
AuCoin is wrong in
accusing large timber
companies of opposing
federal contract terminations,
Moshofsky adds
"He has attempted to drive
a wedge between the big and
small timber companies —
he's just bad-mouthing the
large companies ”
Joyce Nichols a
Weyerhaeuser press
representative says
Weyerhaeuser executives are
aware of current legislation
concerning contract
terminations, but will make no
comment on the effect it
would have on their company
Sen Bob Packwood
R-Ore , says the timber
legislation such as proposed
by AuCoin and Weaver
doesn t get at the heart of the
timber industry's problem —
high interest rates He is
asking the International Trade
Committee to conduct a
four-month study of the
industry's plight
"The outlook is rather
bleak " says Moshofsky
"We re all looking for the
economy to turn around
Stories by CHRIS COURTNIER
Photos by BOB BAKER
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T he timber industry
itself is largely
responsible for
Oregon’s worst timber market
since the 1930's, says Rep
Jim Weaver, D-Ore
High interest rates and high
inflation that cause
unemployment and economic
hardship in the wood
products industry are "the
timber industry's own fault,”
Weaver says
'They’ve driven the price of
timber up so high, with these
Forest Service and BLM
(Bureau of Land
Management) sales, that they
can't compete with the other
industries ”
Speculators are used by
some of the companies to
force prospective timber
buyers to bid higher than they
normally would, Weaver says
As a result 35 billion board
feet of overpriced timber has
been sold — but not harvested
— from the National Forests
Lumber companies have
found it unprofitable to
harvest the expensive timber;
instead they have chosen to
either default on their
contracts, or to ask for
contract extensions. Weaver
adds
' Contract extensions are
the worst possible solution to
the problem," Weaver says
Harvesting the timber is the
answer, not letting it sit for
another two or three years "
Weaver has proposed a bill
that would allow the timber
industry to make a profit from
harvesting the timber The bill
allows timber companies to
terminate contracts, at a
penalty, and then re-bid for
the timber at current market
prices
County revenues would be
reduced becalise timber
would be re-sold at a lower
price. Weaver says, but at
least revenues wouldn't be
deferred several years due to
Jim Weaver
contract extentions.
"For the good of all — even
though we re letting some
people off the hook that
shouldn’t be off the hook —
I'd wipe the slate clean from
this high-priced timber, and
let them re-bid immediately for
a short-term harvest,” Weaver
says
“This way we ll at least get
our share of the reduced
market, and we can put the
loggers, millworkers,
treeplanters, and truckers
back to work.”
Even if timber in the
National Forests is harvested,
Oregon timber companies still
face tough competition from
the Canadian industry,
Weaver says
Canada sells its timber at
lower rates than the Pacific
Northwest, Weaver says The
U S -Canadian exchange rate
automatically gives Canada a
20-percent edge in the United
States They incur their costs
in cheaper Canadian dollars,
and market in U S dollars
The Canadian industry,
subsidized by the Canadian
government, is able to pay its
employees higher salaries,
and sell the timber at cheaper
prices
“What's happening is that
the Canadians are coming in
and taking over the Southern
California market," Weaver
says
Nevertheless, Weaver
maintains that Oregon's poor
timber market is due to
actions taken by the
Northwest industries and not
to Canadian competition
"I wasn't going to do
anything until I realized that
we were just about ready to
collapse We could just let
them hang, but that's our
industry, you know.”