Warm Springs, Okkgon
July 31, 1987 PAGE 3
Spilyay Tymoo
From Warm Springs Lumber Company to WSFPI
Twentieth anniversary of mill purchase passes
The twentieth anniversary of the
Tribes' purchase of the Warm
Springs mill from Jefferson Ply
wood passed April 12. In those 20
years, many changes have taken
place that have shaped reserva
tion economy and mill operations.
Striving to improve living, social
and economic conditions among
tribal members, while at the same
time efficiently and exclusively
using the tribal timber resource
was, and remains, a paramount
goal of the Tribes.
On August 19, 1966, tribal mem
bers, through referendum, granted
the Tribal Council the authority to
"borrow, not to exceed $15 million
for the purpose of buying, leasing
or constructing and operating tim
ber processing facilities...." In a
letter to voters, Council explained
that the "woods products com
plex.... probably would replace the
sawmill of the Warm Springs Lum
ber Company...." After allowing
for closure of the existing mill, it
was estimated that an additional
550 jobs would be available at the
mill with hiring preference being
qiven to tribal members.
The letter of explanation also cited that economic condi
tions in Madras would improve, tribal net income would be
$1 5 million to $2.3 million and there would be a continued
market for tribal timber. The letter assured voters that the
decision to go into the lumber business was not made in
haste. "The development of this proposal follows several
years of planning and investigation, including a detailed
feasibility study" by experts in the field, including "engi
neers and planners, as well as by the BIA and others."
What the Tribes gained through the referendum was the
right to process their own timber with their own woods
products complex.
However, 24 years prior to the referendum, the Wilsons
built the Warm Springs Lumber Company after purchasing
the Schoolie Logging Unit. The Schoolie Unit, totalling
70,000 acres, consisted primarily of ponderosa pine. This
was the first successful timber unit sale since the Metolius
Unit was sold in 1923.
To process the timber, the Wilsons constructed the saw
mill which was purchased from West Fork on the Colville
Reservation. Eventually, the entire complex consisted of
four boilers, two turbines, electrical equipment, planing
equipment and six dry kilns. Starting in the summer of
1943, the plant was processing 48,000 to 55,000 board feet
of lumber daily,, six days a week
,The Wilsonvs, according to the "Historical Perspective ,
written in conjunction with the 1981 Forest Management
Plan, were in the business for "short term gains, not public
relations" since there was "no guarantee that when the
logging on Schoolie ended their mill site lease would be
extended or that another timber block would become avai
lable. ...the company was managed as if it would operate for
a relatively short period of time."
Logging was time consuming and difficult. Some prob
lems to be faced included short logging seasons, no pave
ment north of the Agency and the poor forest roads. Scal
ing was done under "hot-logging" conditions, which re
sulted in rather inaccurate log measurements. Also, slash
treatment was found to be inferior, with many "small, loose
piles", some being passed by with others only partially
treated.
Work at the mill was halted with a strike in November,
1944, because of alleged labor contract violations. The
Lumber and Sawmill Workers Union gained jurisdiction
over the labor contract at the mill and the contract had the
effect of "freezing" Indians out of better paying positions.
Even though better-paying jobs were offered on a seniority
basis, Indians did have employment preference in all entry
level positions.
In 1946 the Wilsons received a small salvage sale of about
1.5 milion board feet and their next large sale was the
Whitewater unit in 1947.
The Simnasho sale in 1949 was the last unit to support
the construction of an on-site sawmill. Phil Dahl, who was
the sole bidder on the unit which included an estimated 101
million board feet of ponderosa pine and over six million
board feet of other species, was awarded the contract. Dahl
Pine Mill was built on Beaver Creek and was owned jointly
by Dahl and Harold Barclay. Dahl Pine Mill, envisioned to
handle mostly fir, burned in 1962 and was never rebuilt.
Various other sales made it popssible for Warm Springs
Lumher ComDanv and other area mills to harvest tribal
timber. The Warm Springs mill cut was limited almost
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1968 photo shows much larger log pond than exists now.
entirely to pine because the mill was not designed to handle
other species as efficiently. And, because other individuals
recognized that same problem, an excellent opportunity
arose to build a plywood plant in Madras to process other
species. As a result, Jefferson Plywood was built in 1956.
Just as Jefferson Plywood was to begin operations, Bob
Wilson "threatened to build a plywood plant in Warm
Springs" if the Wilsons were not included in the plans. The
threat worked since there was only enough raw material to
support one plywood plant.
Prior to 1 965. Sam Johnson, major shareholder in Jeffer
son Plywood, bought the Dahl and Barclay interests in the
plant. On December 28, 1965, Johnson bought the sawmill
from the Wilsons for $1,250,000.
The fire at Jefferson Plywood in August, 1 966 created the
opportunity for them to help the Tribe venture into the
wood products business. Johnson thought it was a good
opportunity for the Tribes to get started and it was a good
time for them to get off the reservation and to help the
Tribes.
On April 12, 1967, after months of deliberations, the
Tribes bought the sawmill from Johnson for $1,250,000
plus the plywood plant and equipment in Madras. Also
included in the deal was all the log handling, veneer mill
and layup equipment for an additional $900,000. Jefferson
Plywood also agreed to deliver, install and put into opera
tion a veneer mill in Warm Springs for a cost not to exceed
$1,050,000.
To finance the purchase, the Tribes took out two term
loans; one for $1.8 million at 7 percent interest and the
other for $1.4 million at 6V2 percent. According to the May
16, 1967 Warm Springs Forest Products Industries board of
directors minutes, "Jefferson" bought the $1 .4 million note
from the bank. "The $1.8 million note would be repaid first
by payments of 50 percent of the cash flow or $45,000,
whichever is greater, per quarter. A $1.5 million working
capital line of credit is available....
The bank note was for ten years
with the first three quarterly pay
ments to be interest only.
The $1 .5 million working capital
required the pledging of accounts
receivable and inventory, plus a 20
percent participation by WSFPI.
Johnson proposed to personally
put up $300,000 to cover the 20
percent. WSFPI agreed to replace
his deposit out of the difference
between the $45,000 minimum
payment and the 50 percent of the
cash flow.
The other 50 percent of the cash
flow was placed in a reserve
account for construction and in
stallation of a plywood plant either
at the mill or at a site at Dry Creek.
Funds were to be deposited in this
account until $1.5 million was
accumulated. After this, 100 per
cent of the cash flow was applied
to the amount owed Jefferson Ply
wood. WSFPI and the Tribes had
the choice to build the plywood
plant or not. By the end of 1972, the entire debt had been
repaid and the mill belonged to the Tribes free and clear.
Also a part of the sale agreement was the leasing of the
Jefferson Plywood site for $3,000 per month. WSFPI also
reimbursed Jefferson Plywood for taxes and insurance
costs. Jefferson Plywood agreed to allow WSFPI to use its
lumber shed and loading dock on the railroad in Madras for
shipping while WSFPI agreed to maintain the facilities and
furnish labor and equipment.
Persh Andrews became a partner of Jefferson Plywood
when the Tribes bought the mill. At the same time, the
Tribes enteed into a 20-year management agreement with
Andrews and Johnson who would provide management
services and skills to help smooth the way for the Tribes'
success. The management team received 10 percent of the
annual net profits, payable twice a year, as an incentive.
The profits were to be shared, in suibstantial part, with
"executive personnel."
According to Andrews, the management team approach
was successful, for in the first six years (from 1967 to 1973)
the mill showed a $9 million net profit. "We took pride in
helping the thing go," said Andrews.
The management agreement between the Tribes and
Jefferson Plywood was terminated December 31, 1972 to
"eliminate the 10 percent of net profits paid to Jefferson as
incentive fee and to enter into a contract with" Andrews in
lieu of the original contract. Andrews received an annual
salary plus 2V4 percent of the net profits for 1973. Further
bonuses were to be determined by the board of directors at
the end of each year. Andrews served as general manager
of WSFPI until April, 1978, when he retired due to failing
health.
Through resolution dated April 17, 1972, the WSFPI
board approved an administrative assistant position that
was filled by Bob Macy. Macy, a graduate of Oregon State
University with a degree in Forest Management, worked
closely with Andrews. Macy was involved with pre-commer-cial
tree thinning, writing salaried employee job descrip
tions and another incentive program while fulfilling Tribal
Council obligations at the same time.
After Andrews tendered his resignation October 31,
1977, the WSFPI board contracted with Foster Associates
to begin a search for a new general manager. In just over a
month, the candidates' field was narrowed down to three
men. After all interviews were over, Ralph DeMoisy was at
the head of the list and selected to be general manager.
Demoisy was on the job March 20, 1978. At about the same
time, Macy moved into the operations manager position.
Next: WSFPI and the changing forest
Researched and written by Donna Behrend
1 yit - ran j
One-log-loads are a thing of the past
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Lumber stacks at government Seekseequa Mill.
Loaaina oractices "primitive" in early years
I . , tpH lands groundwork for the economic loun-
. ... .: ,1,. u,rm i. .u -...,. ;n mill anHthpimrertainirv of a timber 1.04()acreso the sale contained 18 lc"ld""s- , . , ...... 5... r..u.o-rj,i-j t-jw
Logeing practices on the Warm
Springs reservation in the mid
1860s were, by today's standards,
primitive. Logs were hauled to the
government mills with horses and
iron-tired handmade trucks. Mill
workers were receiving top
wages $3 per day.
According to the "Historical Pers
pectives" written in conjunction
with the 1981 Forest Management
Plan, the first government sawmill
was built on Mill Creek in 1861.
The mill was to produce lumber for
housing, outbuildings and other
needs of tribal members and govern
ment employees. The mill produced
30,000 board feet the first year and
280,000 board feet the second year.
Ten years later, the mill was in a
state of disrepair and located too
far from good timber. The govern
ment took no action to move the
mill, so it was repaired. The mill
was only producing five to 10.000
board feet per day by 1879 and an
additional mill was built 13 miles
from the Agency in 1 88 1 . again on
M ill Creek. B v 1 890 there were 1 50
hnnsps on the reservation
In 1909, the government entered
into a contract to supply timber for
culverts to Porter Brothers, con
tractors for the Oregon Trunk rail
road. However, the railroad con
tract was short-lived, as sales ceased
in 1911. The mill burned the same
year.
Two more mills were built in
1915, one at HeHe and another at
Seekseequa. The mills were identi
cal and each produced five to 10.000
board feet daily. The Seekseequa
mill, because of its location and
lack of water, did not produce well.
It operated only during May and
early June, often for a half day and
then layed idle until the next day so
enough water could be stored to
run the mill for another half day.
There was virtually no fire protection.
It was recommended that the
HeHe mill be sold to River Log
ging and Lumber Company ( R LLC)
for $3,800. The request for sale was
denied for three reasons; because
the selling price was too low, the
poor location of the Seekseequa
mill and the uncertainitv of a timber
contract to R LLC. The R iver Com
pany had proposed to build a large
electric facility at the mouth of the
Warm Springs River. The pro
posal by RLLC never materialized.
Both the Seekseequa and HeHe
mills were auctioned off in 1 942 for
a total of $350.
The first timber sale, the Meto
lius Unit, covering 84.000 acres
with an estimated 656 million board
feet, was finalized in January, 1923.
The purchaser was RLLC who
apparently bought the unit for spec
lative reasons. Because RLLC never
met their contract obligations, the
government sued on behalf of the
Tribes. The Tribes were awarded
nearly $230,000 in addition to
$173,000 in performance bonds,
advance payments and deposits.
Followingthe failure ofthe Meto
lius sale in 1923 there was very little
forest activity. The first successful
commercial sale did not occur until
1942. The Schoolie Sale included
70.000 acres containing 400 million
board feet of pine and 125 million
board feet of other species. Another
3,040 acres ofthe sale contained 18
million board feet of pine on allot
This first successful sale laid the
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Early logging practices included horses, wagons and handmade trucks.