Last time, I took a little victory lap. Now let’s share a walk of shame.
When I was growing up, fully half the jobs in Flathead County were forestry-related. In one form or another, half of us “worked in the woods” while everyone played, hard, in those same woods, across all of western Montana. Remember those Carsonite panels announcing “Land of Many Uses.” Gosh, it was awesome.
That began to die after environmental groups got the hang of using the Endangered Species Act and friendly federal judges to latch onto effective veto power over federal land management decisions.
Twenty-five years later, Montana’s forest products sector is gutted, reduced two-thirds while Montana grows. Recreation options don’t match demand, except those few with the Green stamp of approval. When you do get out there, much of it is torched or at risk of burning.
Could Montana have trod a different path? A few years ago, perhaps. Most rational citizens would agree that through the years, Montana’s state forests/trust lands host good forestry practices and pleasing recreation options. I’m proud of that, proud of Montana DNRC and wish we had more.
Montana has actually had several chances to grow our state forest system. But our leaders have squandered every chance, repeatedly failing to understand and react appropriately to Plum Creek/Weyerhaeuser’s exit strategy, best described as the four R’s: Rape, Reinvest, Rob and Run.
Plum Creek itself isn’t an old company, but was created in 1989, when investors bought Burlington Northern Railroad’s mills, trees and 1.7 million acres of land for somewhat under $180 per acre, worth about $380 an acre in today’s money. Not bad, right?
Plum Creek might have started as a long-term play, but when eco-lawyers put the Forest Service out of the forestry business in the early 1990s, Plum Creek’s mills stayed hungry. Worse, Plum Creek was also under litigation pressure, with assets at risk of de-facto seizure. Plum Creek decided to seek a future elsewhere, starting by agreeing to a Habitat Conservation Plan with lawsuit “safe harbors,” then concentrating on cutting at-risk Montana wood, reinvesting in forest lands in “safer,” more-productive regions.
Critically, in 1999, Plum Creek reincorporated as a tax-advantaged Real Estate Investment Trust, the first integrated wood-products maker to do so, under a charter that prevented hostile takeovers – but allowed very friendly mergers with other integrateds whose stockholders wanted to ride the tax-goodies bandwagon. Boom! Plum Creek grew to 6.5 million acres in 19 states, then was finally gobbled up by Weyerhaeuser in 2016 for $8.4 billion. Thing is, almost none of that value remained in Montana, having been chopped down.
With their wood safely reinvested out of state, Plum Creek focused on selling their dirt, or at least conservation easements. But nobody in the forest business pays much for dirt. They want trees. What then? Government, the dumber and richer the better!
Plum Creek started with the Thompson River “conservation easements” in 2001-2, $33.5 million on 142,000 acres, $236 an acre while retaining harvest rights and fee title.
The low point was probably the Montana Legacy Project, 310,000 acres for $490 million in 2008, right at the beginning of the Great Recession. The average price for MLP was $1,580, but the Forest Service share went for $2,778 an acre. How stupid was that?
I bet you’re curious how much those lands are really worth to a rational private investor, or a rational government entity wanting to invest, um, wisely.
Well, reality slapped us dummies in the face January of last year, when Southern Pine Plantations out of Georgia was announced as the new owner of 630,000 acres, paying Weyerhaeuser $145 million, a comparative pittance of $230, actually a decent deal.
Keep in mind the Thompson CE lands are included, meaning on those acres, Weyerhaeuser realized over $450 per acre.
SPP quickly flipped 291,000 acres to Green Diamond for an undisclosed amount, and 126,000 acres more to billionaire Mark Jones, again, undisclosed.
Man, why didn’t Weyerhaeuser approach Montana with the deal SPP got? Did Weyerhaeuser feel Montana would, again, squander this last, best chance too?
Obviously – shame on us.