Latest Mill Closure Threatens Northwest Montana’s Timber Traditions and its Forest Health

The decision to close Pyramid Mountain Lumber is rooted in a complex set of problems, including the steep costs of living and a depressed demand for lumber

By Tristan Scott
An F.H. Stoltze employee inspects logs that have been delivered to the Half Moon sawmill in Columbia Falls in November 2022. Justin Franz | Flathead Beacon

For as many Montana mills as Gordy Sanders has seen shuttered or sold during his 53-year career working in the woods, the loss of another local timber company hasn’t gotten any easier. But following the recent closure at Pyramid Mountain Lumber, Seeley Lake’s largest employer for 75 years, where Sanders has worked for nearly 30, he says this one feels like the end of an era.

It’s not just the 100 out-of-work loggers forcing Sanders to reimagine a future for the forest products industry while also pining for the past, nor is it the family owned and operated business’s demonstrated commitment to long-term sustainability and land stewardship. To finally lose Pyramid is to sacrifice a critical cog in the Seeley-Swan Valley that has powered the region economically and ecologically, and to lose it in large part due to the steep cost of living and labor in northwest Montana, as well as the depressed demand for lumber, just doesn’t sit right with Sanders.

“All the mills I’ve watched close have done so because of a lack of raw materials,” Sanders said. “But this is different. This is about not being able to keep enough employees on the payroll, which is tied to housing costs. There’s a lot of creative thinking happening right now to figure out a future, and there’s a lot of support from this community. But I just have no idea what the future looks like.”

Sanders isn’t alone in his struggle to puzzle out a path forward for Pyramid. The forces straining the forest products industry are bearing down on every other family-owned sawmill in Montana, of which only a half-dozen remain. They’re all grappling with a slumping commodities market that’s compounded by underlying factors like labor shortages, lack of housing, an aging workforce, plummeting lumber prices, rising costs of living, an increasingly complex set of land management directives, and a lot of outdated infrastructure, which is more cost effective to replace with automation.

In announcing the closure, Pyramid’s management group and board of directors said the company’s owners have worked for years “to try and find a way to address these difficult issues.” But recently, the confluence of challenges has “crippled Pyramid’s ability to operate” and, “despite their best efforts, they see no way out of this situation,” the board members and shareholders wrote in a March 14 letter.

“It is with the heaviest of hearts that the Board of Directors and Shareholders voted unanimously to close the mill and shut down Pyramid’s operations,” the letter states.

In the month since Pyramid issued that somber notice, however, industry stakeholders, community boosters and the conservation community have rallied around the company to craft a long-term solution. But with so many factors working against it, the reality is stark – either a new buyer comes forward by next month and makes a substantial investment in Pyramid’s infrastructure, to the tune of $60 million, or the owners continue a strategic wind down of operations and auction off the mill equipment. Pyramid already cut off logs on March 31, running the last of its inventory through the sawmill, and surfacing and selling the final loads of lumber.

Despite the long odds, Sanders is emboldened by the show of support, and remains fully invested in helping Pyramid President and General Manager Todd Johnson through the transition. But he can’t say for sure whether that transition leads Pyramid toward a bold new chapter or through a graceful exit.

“My commitment to the owners is that I am going to stay as long as I can help them be as successful as possible in the transition ahead of them and that would include if someone else acquires the mill,” Sanders said. “How that evolves over time, I don’t have a real clear picture of that. I’ve been in this industry since 1971, and one thing that’s clear is that you accomplish very little by yourself. The true benefit of collaboration develops over time. And we might yet benefit.”

When Sanders started out in the industry, he worked for the Anaconda Company, which sold its mill in Bonner to Champion International in 1972. By 1976, Sanders recalled that Champion employed 1,000 workers at the mill with a payroll of $1.2 million, but it sold the mill to Stimson Lumber in 1993 and its 867,000 acres of timberlands to Plum Creek Corporation. The mill in Bonner closed for good in 2008, ushering in a new kind of industrial use at the 28,000-acre site.

“When I started working for the Anaconda Company, I was treating logs one at a time, dragging them from the log pond into the sawmill,” Sanders said. “That log pond is now the Kettlehouse brewery. There’s been lots of changes over time, and there’s always been downsides and upsides, but generally upsides, and that’s what carried us through. Until now.”

Pyramid Mountain Lumber in Seeley Lake on Aug. 16, 2016. Beacon file photo

The problems facing Pyramid are all too familiar for Paul McKenzie, the vice president and general manager of F.H. Stoltze Land and Lumber Company in Columbia Falls, a 112-year-old family-owned mill on Half Moon Road that holds 39,000 forested acres in Flathead and Lincoln counties. McKenzie said falling lumber prices and a constricted log supply on National Forests are significant sources of pressure on Stoltze; without a dependable and affordable pipeline of raw material it’s hard for traditional family-owned businesses to adapt and keep pace with the dramatic changes upending the timber industry. But employee retention in a prohibitive housing market has also hindered Stoltze’s ability to operate at full capacity, McKenzie said, which is directly tied to the depressed demand for lumber.

“Competition for labor and the cost of living has changed dramatically since the pandemic,” McKenzie said. “Whereas in 2018 and 2019 a $25-an-hour job was at least a living wage and you could afford to buy a house somewhere in the Flathead Valley, today it’s hard to find a rental you can afford at that same pay scale.”

Sam Scott, a forest economist at the University of Montana’s Bureau of Business and Economic Research, where he runs the forest industry research program, said stakeholders’ concerns over log supply aren’t misplaced, but it’s clear that the larger onus on most remaining mills has shifted to labor supply, an aging workforce and the affordability crisis.

“It’s all tied back down to housing, especially in Seeley Lake, where housing is both unavailable and expensive,” Scott said, noting that community leaders have blamed the dearth of new developments on septic restrictions imposed by the county. “There is nowhere to live, and out of 100 Pyramid employees, 20 are at retirement age, and another 20 will be at retirement age in a couple years. So nearly half of their workforce is at or approaching retirement age, and right now in communities in western Montana, you can’t replenish your workforce when that kind of attrition hits you.”

But the true costs of another closure will only be realized over time, Scott said, with Seeley Lake and the trees that surround it paying the steepest price. He likens a company like Pyramid to a critical piece of community infrastructure, not so different from a wastewater treatment plant.

“In some ways, you have to view them as a public service,” Scott said. “Using the comparison to a wastewater treatment plant, if it starts losing money, shutting down isn’t an option. As we look at the landscape of northwest Montana, shutting down forest treatment isn’t an option. We need sawmills. We need to figure something out as a community.”

Fortunately for companies like Stoltze and Pyramid, they remain beloved institutions in their respective communities, where taking care of their employees is a non-negotiable part of doing business. But that employee investment stretches thin an operations budget that’s already lean due to the low cost of lumber that nobody’s buying because the housing market is unaffordable.

“The only thing that hasn’t changed is our cost of production,” McKenzie said. “And looking to the future we’re thinking, ‘well, how long is this going to last?’ That’s the space we live in — how do we get through the tough times so when they need us again we’re here for them in the future?”

Paul McKenzie, vice president and general manager of F.H. Stoltze Land & Lumber Co., is cautiously optimistic about the future of his industry after years of challenges. Beacon file photo

The latest saga involving Pyramid isn’t the first time the company has faced a crossroads, having come close to shuttering in 2000, 2007 and 2015. But they rode out those recessions out of a dedication to their community.

“Money was tight. Pyramid’s owners were advised that their best option would be to close the mill,” according to the shareholders’ letter. “Yet, they decided to ride it out. They couldn’t stomach the idea of letting down their employees, neighbors, friends, and fellow members of the community. However, today’s crisis is much worse.”

With only six mills of consequence remaining in Montana, it’s a crisis that Julia Altemus, executive director of the Montana Wood Products Association, said should not be underestimated. Just one week after Pyramid announced its closure, Roseburg Forest Products in nearby Missoula said it was closing its particleboard plant, which employs 150 workers and bought residual wood like sawdust, chips and bark from Pyramid.

“This is a problem that we have to solve. There are so many ripple effects,” Altemus said. “When that many people are going to be out of work, it has a huge impact, both directly and indirectly. And the forests are going to be a mess.”

Indeed, nearly everyone agrees that the most significant indirect impacts of the closures will be absorbed by the forests, especially parcels that fall in the Wildand Urban Interface (WUI), where state and federal governments have made historic investments in fuel reduction treatments to mitigate the intensifying risk of wildland fire. Last year, the Department of the Interior (DOI) allocated $780 million in funding for wildfire mitigation under the Bipartisan Infrastructure Law, and it recently announced an additional $79 million for the same purpose.

Both the Flathead and Kootenai National Forests have already proposed a multitude of forest treatment and fuels reduction projects in the WUI that would benefit from the funding.

Meanwhile, the Montana Department of Natural Resources and Conservation (DNRC) last month awarded $3.1 million to fund 13 projects to reduce wildfire risk to communities and improve forest health. Funding for those projects comes from the State Fire Suppression Fund, which was bolstered by a significant increase in funding through House Bill 883 during the 68th Montana Legislature. The allocation dedicated $15 million annually to reduce wildfire risk and improve forest health through targeted fuels treatments across the state. 

“We have all this money coming in from the feds and the state for forest treatment and now we don’t have someone to haul it out of the woods or take the products,” Altemus said. “It is going to require a concentrated effort to find a solution. But we have to find a buyer for Pyramid. These are good workers, and we need them in the woods not going to work at Amazon. These mills need to stay here. We need to get this work done. We need the products. We need to work in the woods.”

F.H Stoltze Land and Lumber Co. Beacon File Photo

DNRC State Forester Shawn Thomas has spent his whole career working in the woods, a path forged during his childhood growing up in Columbia Falls.

“It’s a sawmill town. When I was growing up there in the ‘80s there were quite a few mills in town, and now they’re down to two. It’s sad to lose another one, especially when your forests are so dependent on it for sustainable management.”

He understands firsthand the significant role a mill like Pyramid plays in Montana’s forest treatment landscape; of the roughly 376 million board feet the state produces annually, down from 412 million board feet a decade ago, Pyramid processes about 40 million board feet, with between 25% and 30% coming from National Forests. The rest of Pyramid’s wood comes from the state, the Bureau of Land Management, and from private parcels and tribal lands, including the Confederated Salish and Kootenai Tribes, which harvests about one-third of the volume the state contributes.

The blueprint for Montana’s management puzzle is the Montana Forest Action Plan, a statewide initiative guiding collaborative forest management across federal, state, tribal, and local jurisdictions, while partnering with private landowners and conservation groups. One of those conservation groups is The Nature Conservancy (TNC), whose forest treatment projects spanning western Montana are primarily aimed at restoring fire-adapted ecosystems, not producing revenue. But the value of the trees TNC removes helps cover the cost of the restoration work, and in the Seeley-Swan Valley, Pyramid was a critical partner.

Mike Schaedel, forest restoration and partnership manager with TNC, said Pyramid’s closure will have “profound effects on the ability of TNC and other partners to do forest restoration and fuels reduction work in western Montana.”

Performing forest restoration work in the low-elevation dry-forests usually involves leaving the largest, healthiest trees of fire-adapted species, like ponderosa pine and western larch, and selectively harvesting smaller, less fire-resistant species like Douglas-fir. That said, the projects do produce some ponderosa pine, and the loss of Pyramid, one of the last two major mills to process ponderosa in the state, reduces the economic value of these projects.

“On TNC-managed lands most of the large and medium sized trees were removed by the previous industrial timber landowners,” Schaedel said. “This means we will need more grant funding to complete our projects and we can do less work. On private lands, it may mean that the work may not happen at all.” 

Zach Angstead, federal legislative director for Wild Montana, said members of the conservation community are working to identify grants that might help Pyramid over the hump because, he says, “to potentially lose them is devastating.”

“The forests in our state need active management, especially in the wildland urban interface, and we need places like Pyramid in order to do meaningful restoration work,” he said. “They were partners in that. And there’s still more to do.”

Former Montana Gov. Steve Bullock shakes hands with Loren Rose, COO of Pyramid Mountain Lumber, after introducing the National Forest and Rangeland Management Initiative on Aug. 16, 2016. Beacon file photo

Having more to do isn’t what Loren Rose had in mind when he retired as Pyramid’s COO, but he’s been plucked out of retirement to help the company forge a path forward, if one exists.

“I’ve told everybody who’s inquired about the mill and the opportunities going forward that the current model doesn’t work. If it did, they wouldn’t be getting out of the business,” Rose said. “The model that would work would be a more streamlined, more efficient sawmill and those are readily available. But it would cost $60 million plus or minus to do something like that. But ifyou did that, in my way of thinking, not only would you be able to participate in the market, but you would also buy a little time to figure out what else is next.”

Banking time to figure out what’s next isn’t merely a strategy that can help Pyramid, but the Montana forest products industry writ large.

“This really isn’t about Seeley Lake and it’s not about Pyramid; it’s about forest health in Montana and the infrastructure required to maintain forest health, and by just about every metric in Montana the forest health is poor and it’s only going to get poorer,” Rose said. “If you remove the ability to process 30 to 40 million board feet and with it 150 workers then the jobs of our land management agencies just got a lot tougher.”

Ask Pat Clark what’s next, and he’ll tell you about his partnership with F.H. Stoltze to build North America’s first mass timber production facility aimed at using small-diameter trees to build large format, cross-laminated timber panels. Called Stoltze Timber Systems, the concept represents a strategic move to bolster the value of small-diameter timber coming out of Montana forests, which holds little value at the lumberyard, by producing large-format mass timber, or composite wood.

Samples of new timber products created from small diameter trees at F.H. Stoltze Land & Lumber Co in Columbia Falls on August 18, 2020. Hunter D’Antuono | Flathead Beacon

Despite the relative success of Stoltze Timber Systems, including a recent $1 million U.S. Forest Service grant, Clark said the mass timber industry remains out of reach for most mills of Stoltze’s scale. That’s due in part to risk-averse shareholders who are reluctant to bet it all on a product that doesn’t yet hold value, at least not in the way Clark envisions it will one day, having based his company Wooden Haus Supply, on the widespread applications of mass timber in Europe.

“These family-owned mills are understandably risk averse, and they’d prefer to keep doing what they’ve been doing for 112 years,” Clark said. “But there’s no magical way to optimize a sawmill. And if the industry keeps going down the same old path, well, just look at what happened to Pyramid. It didn’t work. I understand that it’s difficult to believe that mass timber is the future of the business because it’s totally different. The mass timber business is like a tech business that uses wood.”

Dan Claridge of Thompson River Lumber Company, the only other Montana mill that processes ponderosa pine, which is also Montana’s state tree, said the downstream consequences of Pyramid affect the whole industry.

“I consider them like family, and with the reduced capacity, it is going to put more strain on the industry as a whole in order to meet the demand of what needs to be done to properly treat the forest,” Claridge said, adding that every mill owner he knows is thinking about how to remain relevant in the coming years.

“Everyone suffers when something like this happens, and everyone is thinking about the future. Obviously, the immediate impact is to the town of Seeley Lake, but we’re all going to feel it. Someone told me a while back that if you’re not moving forward, you’re moving backward, and we can’t afford to stand still. I truly believe that.”

F.H. Stoltze Land and Lumber Company General Manager Paul McKenzie discusses forest management during a tour of F. H. Stoltze land in Haskill Basin. Beacon File Photo

McKenzie said the owners at Stoltze recognize the need to keep moving forward, which is why they’re focused on building better markets for wood products like small diameter timber in order to remain relevant in the future. But the key, McKenzie said, “is we have to find a use that has enough value that is going to pay its way out of the woods.”

“That’s the kind of stuff we are looking toward in the future,” McKenzie said. “How do we generate the kind of wood that Montana needs? We don’t grow timber very fast, but we do a good job in forest management and forest stewardship. But it’s not the cheapest way to do things.”

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