The daily Astorian., April 07, 2020, Page 3, Image 3

A3
THE ASTORIAN • TUESDAY, APRIL 7, 2020
Virus undercuts timber industry
Hampton Lumber will
shut down two mills
By TED SICKINGER
The Oregonian
When Republican law-
makers walked out of the Ore-
gon State Capitol and brought
an abrupt end to this year’s
legislative session, a massive
request from the Department
of Forestry fell off the table.
Not even halfway through
Oregon’s two-year budget
cycle, the agency had blown
through most of its money for
the entire period and claimed
it would run out entirely by
May. State Forester Peter
Daugherty says the agency
needs between $52 million
and $132 million.
The request would main-
tain the agency’s current pro-
grams and gird it through the
upcoming fi re season. How-
ever, the millions wouldn’t
cover the expanded for-
est cleanup and wildfi re pre-
vention work that Gov. Kate
Brown has pushed for based
on recommendations from a
wildfi re council she empan-
eled last year.
It also doesn’t account for
the coronavirus. The pan-
demic’s impact on the agency
could be considerable, both
fi nancially and operationally.
The agency’s state and
private forest divisions
are funded almost entirely
through harvest revenues
from state forests and taxes
on private logging. And with
the pandemic’s vast economic
fallout, Oregon’s wood prod-
ucts industry is already begin-
ning to tank, erasing some of
the best paid jobs in rural Ore-
gon and dragging the agen-
cy’s revenues with it.
“April will be bad com-
pared to March, and May will
be a disaster,” said Andrew
Miller, president of Stimson
Lumber, one of the largest
buyers of state forest logs.
Moreover, the concept of
social distancing is antitheti-
cal to logging, not to mention
wildland fi refi ghting, where
initial attack is almost always
carried out by hand crews
working closely together and
living in tightly packed fi re
camps. Large fi res often draw
crews from around the coun-
try, even internationally, a
potential risk in the current
environment.
The pandemic is also hap-
pening in the heart of train-
ing season. Washington has
already cancel ed all three of
its interagency fi re acade-
mies, and it’s unclear what
will happen with six weeks
of fi re academy scheduled to
start in Salem during the fi rst
week of May.
Bobbi Doan, a spokes-
woman for the forestry depart-
ment’s fi re division, said plan-
ning for fi re season is well
underway, and the division’s
leaders — largely working
from home — are grappling
with those questions.
“We’re looking at all these
issues as part of the readiness
planning,” she said. “Public
safety is priority No. 1, but we
do know we’re going to have
to respond.”
Beth Nakamura/The Oregonian
Hampton Lumber sources most of the logs for its Tillamook Mill within a 100-mile radius.
“I’d be surprised if you
didn’t see some form of cur-
tailment for almost every-
one,” he said. “You can only
stack your lumber for so
long.”
‘APRIL WILL BE
BAD COMPARED
TO MARCH, AND
MAY WILL BE A
DISASTER.’
Andrew Miller | president
of Stimson Lumber
Seneca Sawmill, which
employs 470 in Eugene and
Noti, is curtailing hours at
its three mills in Eugene and
closing down its log yard.
The company is trying to get
employees 30 hours a week,
but in some cases that means
bringing crews in to power
wash and paint, not process
logs. It has handed out bags
of groceries to employees and
is paying all health care pre-
miums for April and May.
“We’re just trying to stay
nimble,” said Casey Roscoe
a senior vice president. “We
have a meeting weekly. It’s
that touch and go right now.”
The Swanson Group sus-
pended production at its
Glendale plywood plant, lay-
ing off about 300 people who
work there. It is still operat-
ing its Roseburg and Spring-
fi eld facilities, where it has
a combined 400 employees.
But “we are evaluating the
situation daily and will adjust
as needed,” said Steve Swan-
son, the company’s chief
executive.
Miller, at Stimson Lum-
ber, says many mills will con-
tinue operating at a loss for
some time to maintain cash
fl ow, the workforce and the
infrastructure. When you
wind down, he says, it’s tough
to bring it back up.
Miller said his company’s
mills typically carry four to
six weeks of log inventory,
but he says they could shut
their yards today and operate
for months without running
out. They also don’t want to
sit on material that will dete-
riorate over the summer
months.
That reality is felt imme-
diately upstream by loggers
and truckers, who tend to be
smaller, family owned busi-
nesses that operate on thin
margins, carry signifi cant
debt on their machinery, and
struggle to maintain good
crews even when times are
good.
Mike Pihl, who employs
19 at his logging outfi t in Ver-
nonia, says the market for
cedar and utility poles is still
good, but he’s running out
of jobs that have that mate-
rial. He typically has fi ve or
six jobs going at once, but by
Monday several of them will
be fully on hold.
“There’s no place to sell
the logs coming off those
jobs, so we just have to put
‘em in a deck and let ‘em lay,”
he said. “It costs us about
$5,000 a day to run an active
logging site. I have a high
debt load like every other log-
ger, so it doesn’t take long to
take me down. We’re pay-
check to paycheck. We need
cash fl ow.”
With social distancing,
the logging that is happening
can be more expensive, too.
Instead of sticking six loggers
in a truck and driving into the
woods, you might need six
separate vehicles to comply.
“Some of that is going on,
but typically these guys don’t
have the margin to absorb
that, so they lay ‘em off and
they’re not working,” said
Rex Storm, interim execu-
tive vice president at Associ-
ated Oregon Loggers. “Once
you lose that employee, they
may never come back to you,
State forestry woes
Sooner or later, the indus-
try downturn will fold back
on the Oregon Department
of Forestry and exacerbate its
ongoing fi nancial problems.
The state typically markets
tracts of timber on state for-
ests in good times and bad,
which is good for mill own-
ers who rely on that depend-
able supply. But beyond the
deposit it requires from win-
ning bidders, the agency
doesn’t get paid until the trees
are actually cut.
If mills shutter their log
yards, those buyers are likely
to leave the trees stand-
ing, further undermining the
agency’s revenues and cash
reserves it relies on to fl oat
other expenses, such as wild-
fi re costs. Some buyers are
already asking the agency
for extensions on their timber
purchases, which require the
winning bidder to cut the trees
within two to three years.
Agency offi cials had pro-
jected total harvest reve-
nues of $125 million in 2020.
They fi gured the state would
break even on its expenses
after sending two-thirds of
the money to counties where
the logging takes place — the
standard revenue split. In the
fi rst quarter, timber revenues
were actually running 23%
ahead of projection.
But in a memo to the leg-
islature’s budget committee
chairs this week, Daugherty
said “the likelihood of these
projections staying fi rm are
questionable due to current
events.”
Revenues in the state
forest division will likely
decrease as timber prices fall,
and as buyers make decisions
on how much of the tim-
ber they’ll go ahead and cut,
Daugherty said. Meanwhile,
the private forest division
will “undoubtedly see reduc-
tions in the harvest tax reve-
nues” as timber operations are
affected.
A STORIA , O REGON
Together we’re slowing
the spread of COVID-19
In these extraordinary times, Columbia Memo-
rial Hospital and its caregivers are proactively
working to slow down the spread of COVID-19
in our communities. Some of these changes
may affect you or your loved ones.
Industry slowdown
The wood products and
logging sectors limped
through the month of March,
fi lling existing orders and
supplying product for con-
struction already underway.
Brown has deemed them
essential industries. But that
does little good if there’s
nowhere to sell your product.
The construction industry
has been shut down in Wash-
ington, in New England, in
parts of Michigan and Cal-
ifornia — big markets that
absorb a lot of wood from
Oregon.
Steve Zika, the president
of Hampton Lumber, says his
company sells into several
distinct markets. The home
improvement store market
for premium wood is still
strong, he said, while demand
for regular wood for building
sites has collapsed.
“We were going to have
an amazing housing year, but
when all this started our order
fi le began to evaporate,” he
said. Hampton is shutting
two of its nine mills , and will
reevaluate on a week-to-week
basis.
so you’re without the most
important asset, a produc-
tive, well-trained crew, when
things get going again.”
Greg Schmitz, whose Sil-
verton logging company has
about 25 employees, says
he typically runs two crews
working for Weyerhaeuser,
his largest customer, and
another that logs for small
woodland owners.
Before COVID-19, he
says he had lots of work lined
up for small landowners. But
he said those jobs have dried
up completely as landown-
ers, who count on a big pay-
day after decades of growing
trees, are unwilling to accept
the low “gate prices” that
mills are currently offering.
Commodity lumber prices
have dropped by 45% since
the end of February. Gate
prices, which fl uctuate daily,
have not seen that level of
decline, but are also down
signifi cantly.
Schmitz says he hasn’t
had to lay anyone off — yet.
He’s doubling up crews on
some jobs and putting people
to work in the shop repairing
equipment. Weyerhaeuser is a
lifeline.
“We’re on quotas with
them. They’re doing every-
thing they can to keep us
working. They understand the
importance of keeping a sta-
ble workforce.
“It’s day-to-day,” he said.
“You can’t make any long-
term plans.”
R Everyone entering a CMH facility
must be screened for COVID-19.
R No visitors are allowed for most
hospitalized patients*.
R Patients may not bring a companion
to appointments, except for minor or
dependent patients.
R Check your symptoms with a nurse
on the CMH COVID-19 Community
Hotline at 503-338-4699.
* For the most recent information about the visitor policy, see
columbiamemorial.org/visiting-a-patient.
2111 Exchange St., Astoria, Oregon • 503-325-4321
www.columbiamemorial.org • A Planetree Gold-Certified Hospital
Easter Sunday
Service at
10:45 a.m.
broadcast live
on
facebook.com/astoriafirstbaptist/
7 th & Commercial, Astoria
(Across from the Courthouse)
503-325-1761