EIGHT The Gazette-Times, Heppner, Oregon, Thursday January 4, 1979
Forest Industries Council attacks Paiilus statements
Oregon Forest Industries
Council believes allegations
made by the Secretary of
State's office concerning the
prices industry pays for state
timber sales are unjustified
and unsubstantiated.
"Secretary of State Norma
Paul us, in her news release,
went far beyond the facts
included in the state audit of
timber sale operations in
alleging the timber industry is
buying state timber sales at
prices too low and harvesting
more timber than they're
paying for," stated Nat Gius
tina, OFIC Chairman and
President of Giustina Bros.
Lumber Co., Eugene.
Dick Angstrom, OFIC Dir
ector, has formally requested
the Trade and Economic
Development Committee of
the State Legislature to do a
comprehensive review of
these allegations.
"We are very concerned
that the news release sent out
by the Secretary of State is
unfair to the Department of
Forestry, but further, through
inferences in this release, the
integrity of the forest industry
in Oregon has been chal
lenged." said Angstrom. "We
believe a review by the State
Legislature will completely
clear the reputation of the
industry and the Department
of Forestry," lie said.
The audit, conducted by the
Secretary of State's office
every two years, discusses
three main points:
1) Most state timber sales
attract much competitive bid
ding among buyers and are
eventually sold for up to twice
the minimum acceptable bid
established by the Forestry
Department.
2) A small percentage of
state timber sales are sold at
or near the minimum price set
by the Department with little
or no competitive bidding
occuring.
3) The estimate of timber
volume made by the Forestry
Department prior to the sale is
much less than the amount of
timber actually being re-1
moved by the buyer.
The allegations made in the
news release which accom
panied the audit are that the
sales receiving close to the
minimum bid are being sold
at a price much too low and
the state is thus losing money.
Also it is alleged that because
more wood is being harvested
than was estimated to be
present at the time of sale, the
state is not being paid for all
the timber it sells.
"What has happened is
statisticians have run a bunch
of timber sales and prices
through a computer and given
little consideration to the
unique difference of each
site," said Giustina. "And in
the case of the Forestry
Department underestimating
the timber volumes, the audit
has gone clear back to the
years 1971 through 1973 to find
this data. Volume estimates
from timber sales sold from
1974 on have been very close to
the actual harvest amounts.
The audit has ignored data
from the actual audit period,
1975-1977," stated Giustina.
"If anything the industry is
actually paying too much for
state and other public tim
ber," claimed Giustina. "The
logic and reasoning in the
minds of buyers must be
considered before anyone is
accused of stealing timber,"
he said.
"Mills have been going out
of business much too often
recently because they can't
find a source of logs,"
explained Giustina. "An Ore
gon State University report
pointed out a possible 22 per
cent decline in timber supply
in western Oregon by the year
2,000. And the federal govern
ment is tying up commercial
forests in wilderness areas
and thus closing them to
timber harvest.
"All these things are on the
minds of timber buyers. They
know if they want to keep their
mills in operation they must
buy limber and they have to
bid very competitively to get a
sale.
"Because timber buyers see
the price of timber continuing
to increase in the future they
have been willing to pay far
more for a timber sale now
than they would actually
like." he said.
"Most timber sales are not
logged for two or three years
after they are sold, some are
delayed longer. The buyer
realizes this and is actually
bidding at a price he expects
will be reached two or three
years down the road, rather
than at today's market value.
So the state is receiving 1981
prices for the sales sold in
1978.
"If the price of timber does
not continue to increase, these
speculative bidders will have
paid far too much for this
public timber. There are
probably as many different
reasons why a company bids
high as there are bidders. But
there are also a number of
reasons why a company may
choose not to bid at all,"
explained Giustina.
The influence made in the
news release from the Secre
tary of State is that sales
which are sold at or near the
minimum bid with little com
petitive bidding are being sold
at prices much too low.
"If the Secretary of State
had analyzed these low bid
sales, she would have found
they are low quality sales
and-or highly expensive to
log," said Giustina.
Almost all of these low bid
sales either contained low
value tree species, like alder
for which there is very little
market; or expensive logging
problems such as extensive
road building, specialized log
ging techniquies which many
companies are unable to do,
long hauling distances to
mills, etc.
"These sales, which were a
small part of the state's total
number of sales, were sold at
or close to the minimum bid
because that is all they were
worth," said Giustina.
The Secretary of State also
alleges that the Forestry
Department has virtually
been giving away timber
because its estimate of vol
ume has been much less than
the amount of wood actually
harvested.
The only years the Depart-,
ment underestimated the a
mount of wood on the sale
were 1971 through 1973. This
was prior to the actual audit
period which was 1975 through
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