There was understandable anxiety when news broke last November that Weyerhaeuser Company was merging with Plum Creek. The former competitors would create a new timber giant and word soon spread that overlapping jobs would be eliminated. The question was how many.
Company officials said they wanted to save at least $100 million. At the time, Plum Creek employed 750 employees in the Flathead Valley and, while cuts loomed for administration jobs, Weyerhaeuser said local mills would remain open.
“Once the merger is complete, Weyerhaeuser plans to continue manufacturing operations as they are in Montana right now. That’s the good news,” Tom Ray, vice president for Northwest resources and manufacturing at Plum Creek, said at the time. “It will remain business as usual for all of the mills.”
Cedar Palace, Plum Creek’s headquarters where about 100 people work in administrative positions, wouldn’t be so lucky. Those jobs would be cut or transitioned to Seattle. Still, Plum Creek’s plywood plant and stud mill in Evergreen and its board mill, plywood plant and medium density fiberboard plant in Columbia Falls would remain humming. Or, so many of us thought.
A lot happened between then, when Weyerhaeuser spent $8.4 billion on Plum Creek, and now.
For one, Weyerhaeuser began shedding parts of itself. Last month it sold its pulp business to International Paper Co. for $2.2 billion. This month, the company agreed to sell its liquid packaging unit to Nippon Paper Industries for $285 million.
As Seeking Alpha pointed out, these moves were just the latest in a string of changes at the company since 2012, when it owned 6 million acres, but less than 50 percent of its assets were devoted to timberlands. Today, it controls 13 million acres and it is mostly a timber company.
Following its recent pulp company sale, Doyle R. Simons, president and chief executive officer of Weyerhaeuser, acknowledged his goal concentrating the business’ holdings.
“This transaction delivers compelling value for Weyerhaeuser shareholders and further focuses our portfolio as we work to be the world’s premier timber, land, and forest products company,” Simons said at the time.
So why bank on timberland and permanently shut down mills it just acquired? Simons pointed to the shortage of logs, saying, “For some time now our operations in Montana have been running below capacity as a result of an ongoing shortage of logs in the region.”
Other regional mills back him up, and none in the state are running at full capacity. But demand for and supply of logs has waned before.
In 2009, Plum Creek Timber Company, already running with a skeleton crew, laid off its remaining staff and shut down its Evergreen plant. The recession lingered long after and the mill remained quiet for years.
When it reopened in 2013, there was a level of optimism in the industry as the proud timber tradition in the Flathead began to regain its footing. Housing starts were up, and so were lumber prices. The ebb gave way to the flow.
Now this. Instead of lack of demand, the company says it’s the lack of logs. And instead of temporarily shutting down a mill, the new owner will permanently shutter two of them. Perhaps it’s a lack of logs. Perhaps this was inevitable and just another way to save money. Perhaps we should be thankful hundreds of people still have jobs at the mills.
Nonetheless, it’s sad all around.