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Smurfit Closure Echoes Through Flathead

By Beacon Staff

Whitefish logger Floyd Quiram was not surprised when Smurfit-Stone Container announced it would be closing its Frenchtown linerboard plant by the end of the year.

Quiram said he knew the linerboard plant was heading this direction for a long time, but the timing could still be devastating to the already suffering logging and timber industry in Northwest Montana.

A logger since 1979, Quiram owns his own company and employs six people. His company was working with the Department of Natural Resource and Conservation’s Jump Start program, which produces piles of small-diameter trees, slash and other wood waste through forest thinning and fuel reduction projects.

Quiram sold these products to Smurfit-Stone, like many other companies in the Flathead. The linerboard plant was the state’s biggest buyer of small trees, slash and mill residuals and could handle over a million tons of these woody products a year.

But the plant’s delivery gates officially closed Dec. 14 with full closure planned for Dec. 31, and loggers like Quiram are stuck with finding a profitable alternative for their products. In many cases this excludes shipping the logs further than Missoula, he said.

And though he knew the closure was imminent, Quiram said little was done to ensure the industry would stay afloat after Smurfit was gone.

“We’ve kind of always thought this wasn’t economical, but it was a place to go,” Quiram said. “We knew they were going away anyway and we probably sat on our hands too long to come up with some alternatives.”

Smurfit’s role was more important than usual during the recession because many landowners and forestry companies used it as part of their survival plan, according to Keith Olson, executive director of the Montana Logging Association.

The MLA represents over 500 family forestry businesses across the state, and Olson said Smurfit’s closure was felt from east to west.

“These are all family owned businesses; their boardroom is the kitchen table,” Olson said. “The announcement from Smurfit was a two-by-four right between the eyes of these people.”

Olson said many companies saw an opportunity to clear out the forests through fuel-reduction efforts and the Jump Start program. A vast majority of the wood was going to Smurfit, he said, and shipping it any further cut into profits.

“Right now it’s looking fairly bleak,” Olson said. “The fear I have for the folks that I represent is they can’t wait two years for biomass to come around. Some of them can’t wait three months. They are really going to be scrambling.”

Smurfit’s closure means 417 employees immediately lose their high-paying jobs, but the repercussions in the logging and trucking industries could result in higher losses, according to Todd Morgan, director of forest industry research at the Missoula-based Bureau of Business and Economic Research.

Bigger companies such as Plum Creek and F.H. Stoltze Land and Lumber Company could sell their woodchips and sawmill residuals to Smurfit, Morgan said, offering them another source of income when timber prices were down.

The closure also means landowners will have one less product to sell, Morgan said.

“Sawlog markets are down quite a bit, and without an in-state pulpwood market, it will be increasingly hard to conduct forest management activities,” Morgan said.

Many in the industry are worried that the Smurfit closure could be the undoing of what’s left of Montana’s forest industry, Morgan said, but there could be a solution brewing for the long-term.

The state has expressed increased interest in the Fuels for Schools program, he said. This program uses woody biomass waste created by forest management treatments for energy generation for public facilities.

This could mean five to 10 cogeneration plants in the future, but those facilities would not provide any help for companies struggling right now, Morgan said.

Quiram acknowledged the role cogeneration plants could play in the future and said they could eventually save the forest industry. However, even if a local power company agreed to buy some of the electricity, it would take at least 18 months to build and open a fully functional plant, Quiram said.

“That could be the end of the forest industry here in about 18 months,” Quiram said. “The reality of it is that we’re in a fix. It’s not an easy situation.”

At Quiram Logging, all forest work has stopped until there is somewhere for the wood to go. Net revenues are down 50 percent from two years ago, and Quiram hopes to work toward local answers. It cost him an average of $500 to send a truck full of wood products to Smurfit, so a closer alternative would be preferable.

“We hurt ourselves by not having local markets,” Quiram said.

For the Flathead forest industry to survive it needs time to adapt, Olson said. This could be a possibility in several years with the potential biomass evolution, but for now immediate solutions are still proving elusive.

“I think you’re going to see a different industry,” Olson said. “This industry is going to be around in one shape or another.”