More Should be Done to Stop Mill Closures

By Beacon Staff

At what point should a community support the businesses operating in and near it? Should city and county officials publicly state appreciation for the tax dollars and many other contributions businesses, large and small, make to the well-being of a town and its residents? Or, should they all wait quietly until a closure happens and then lament the loss? Unfortunately, way too often the last statement is the reality.

A case in point is the latest mill closure in Bonner. Stimson Lumber Company announced shutdown of its stud mill with the very remote possibility of reopening in the future. The reasons given for the closure range from lack of fiber supply to a historic low in lumber markets to high stumpage prices and all are true.

The detractors of the timber community use stumpage prices and markets as the only reasons for the shutdowns in an attempt to divert attention. However, the lack of fiber due to appeals and litigation has played a huge role in this unfolding drama and it certainly did not happen overnight. Two-dozen Montana mills have closed since the early 1990s with more closures predicted unless the current wood supply increases.

In a 2005 study prepared by Charles Keegan and Todd Morgan of the University of Montana at the request of Montana’s congressional delegation, the underlying issue and cause for closures is clearly a lack of wood supply caused by a 70 percent reduction of federal timber harvested since 1990.

The somber details of the study were three points. First, in order for Montana’s integrated wood manufacturing infrastructure to operate efficiently and competitively, 800 million board feet must be processed annually. With the 70 percent decline in timber harvested from national forests over the past 15-plus years, capacity milling has proven impossible. The study stated that with no change in harvest levels, Montana would likely see the closure of more than one of its largest timber processors, along with the shutdown of several smaller mills.

Second, a 15 percent decrease in annual timber harvest from that level of 800 million board feet would cause closure of four to six of the largest timber processors and lead to substantial operational reductions for facilities processing mill residues like Smurfit-Stone Container and Roseburg Forest Products, both located in Missoula.

And the third point in the study was a 15 percent increase in annual timber harvest would sustain industry capacity and the businesses would continue to operate. Obviously, the increase has not happened and the result was the 2005 shutdown of Owens and Hurst in Eureka and now the Stimson plywood plant and stud mill at Bonner.

During the same 15-year period of decreased federal fiber supply flowing to Montana mills, dozens of lawsuits were filed to stop activity on the ground. The result of the serial litigation has been a loss of jobs in Montana not only in the timber community, but in the many businesses that rely on the health of the industry for their survival, like truckers, parts suppliers, and fuel providers. Using the multiplier factor, economists estimate there are three indirect jobs provided for each direct job, so the Bonner mill loss is a much greater hit to the community than the 102 direct jobs with the latest announcement. In 2005 the facility employed upwards of 350 Montana families with well-paying jobs. This closure is no small loss for Montana’s economy and our citizens.

The mills and employees in Montana are part of each community where they are located – donating to the local food bank, buying 4-H critters at the county fair, and sponsoring everything from Little League to school events. There never seems to be a hesitation by entities to hit up these companies for a contribution. It seems to me this should be a two-way street of support.

It was a kind gesture for the Missoulian to run an editorial indicating support for the Stimson employees and families and encouraging the community to rally behind these folks. However, it would be of greater benefit if the media and community leaders would step up and support the businesses while they still exist. And this would include the support of what the business needs in order to survive. For example, public officials should openly support active management on national forests to ensure a supply of wood fiber for the remaining timber infrastructure. This proactive approach of support could prevent reactive lamenting of yet another mill closure.

Ellen Engstedt-Simpson is executive vice president of the Montana Wood Products Association