Local Timber Industry on Life Support

by Mark Scaramella, July 1, 2009

And the IV is about to be yanked out.

The recent decision by Calfire not to award a timber sale in Jackson Demonstration State Forest to the only (very low) bidder has sparked a controversy that reveals how fragile the entire Northcoast timber industry has become. Not only has the number of operating mills on the Northcoast dwindled to a few, those remaining are so specialized that they can't handle the variety of logs from a large-scale timber cut.

Harwood’s Branscomb mill was the last all-purpose mill in the County. When it closed a year ago and its separate parts auctioned off, much of Mendocino County's once thriving timber industry had already disappeared into the pockets of the big outside corporations like L-P and G-P. The big boys cut our forests down and ran off with the money. That decades-long overcut was followed by the housing market collapse.

Accumulated redwood logs are stacked on landings unmilled at the few remaining mills. The area’s only remaining Doug Fir mill, Schmidbauer Lumber in Eureka, can only handle small trees but has no small Doug Fir to mill because the price of lumber doesn't cover the costs of milling it. Schmidbauer, however, was willing to make a minimum bid for the relatively few logs available from in Jackson State Forest even though demand is weak to non-existent for lumber these days. Why? They say they want to keep their mill up and running to employ long-time workers and in anticipation of a revived demand for lumber.

Calfire’s Jackson State Forest managers put up three sales for bid but only got a bid on one, the “North Fork Spur.” The North Fork Spur was estimated to be 60% fir and the rest mostly redwood. The minimum bid was very low – $108,000. It met the minimum bid for the Douglas Fir at $10 per mbf, and offered $50 per mbf for the redwood in the sale area (for which there was no minimum bid). That’s $108,000 for timber that until recently, according to Calfire (formerly the California Department of Forestry) would have fetched hundreds of dollars per board foot or, in the case of this sale, up to $2 million for the State.

According to Schmidbauer’s log procurement manager, Larry Holmgren, Schmidbauer only cuts small Doug Fir. Willits Redwood said they'd buy the big circumference redwood from Schmidbauer and Sierra Pacific said they’d buy the big Doug Fir, but at somewhat of a loss to Schmidbauer.

Schmidbauer would then pay $1.4 million to Anderson Logging in Fort Bragg to cut the logs and truck them to Schmidbauer's Eureka plant. Anderson Logging says their gross payroll on the job would be about $700,000, most of the rest going to equipment operations and trucking.

Schmidbauer must get at least $300 per thousand board feet (mbf) for the milled lumber to break even. At present Schmidbauer sells Doug Fir lumber out of their mill at $310 per mbf “and we’re not getting many takers at that,” said Holmgren. (These are all obviously very fragile economic arrangements.)

Mike Anderson, owner of Anderson Logging in Fort Bragg told the Supervisors, “Doug Fir has become a byproduct of redwood harvests. Basically it has no value. The only mill that will saw it is in Eureka. And by the time you cut it and haul it, it has essentially no remaining value.” In other words, it can't be sold at any significant profit.

With the depressed lumber and construction market, combined with the relatively high cost of logging, trucking (long distances are involved) and milling on the Northcoast, it’s hard for local mills to make any money when imported lumber sells so cheap.

Holmgren said that Schmidbauer was nevertheless willing to bid for the  Jackson State trees. “Out of $1.5 million we might make a profit of $23,000,” said Holmgren. “But without these logs our sawmill will be shut down in November. This is five weeks' worth of wood. We’re looking to Oregon and Washington for logs just to keep our sawmill going to stay open. We are the only small Doug Fir mill available in the area.”

The only reason Schmidbauer would make even that $23,000 on the job is that Willits Redwood offered Schmidbauer $700/mbf for the large redwood “which carried the sale,” said Holmgren.

Mike Anderson pointed out that the other two sales that recived no bids required road and restoration work in addition to the logging; the cost of getting those logs out would cost substantially more than Anderson could get for them as lumber. As mentioned, Calfire received no bids on those two sales.

Local timber people blame Caspar’s Vince Taylor, a long-time critic of the way Jackson State is managed, for Calfire’s failure to put any Jackson State Forest timber up for sale over the last six years. Taylor, once cited himself for an illegal clearcut, filed a series of successful lawsuits saying that the State wasn’t managing the forest properly. The upshot of Taylor's litigation is that Jackson State's forestry staff is only now getting around to putting up these three relatively small sales only to find the lumber market so saturated that the only bid they got was well below the agency's apparently lofty expectations.

Last week, Taylor told the Board that it was “lunacy” to sell this prime timber for pennies on the dollar. He also said that the Board should postpone asking Calfire to reconsider the bids until after the Jackson Advisory Group (JAG) met (last weekend).

When it was clear that many in the room were annoyed at him, Taylor added, “Your ire should go to bankers and the mortgage industry. They created the housing bubble and the subsequent crash. That's where the blame lies.”

But these villains weren’t in the room. The people in the room wanted the logs to keep a few loggers and millworkers going for a few more months.

Taylor, unfazed, added that giving the job to Schmidbauer and Anderson Logging is “nothing more than a give away of your [the public’s] timber to help out Mike Anderson’s logging company and his employees” which, Taylor said, is “political posturing — to be seen as helping out the workers.” Taylor thinks that Calfire should wait to put the sale out to bid again when the market improves.

The timber stand in question has not been logged since the early part of the last century; some of the trees are pretty big, hence lucrative in a decent market.

Calfire forester and Jackson State forest manager Mark Jamison told the board that when they set up the sale and assigned the minimum bid, Calfire “simply didn't see collapse. We knew there was a decline in value. But we still thought the value would be up to ten times more than [the bid] we got. The redwood [which had no minimum bid] especially came in very low.”

And that, Jamison said, was why they didn’t award the contract to Schmidbauer.

Supervisor David Colfax asked Jamison why the State couldn’t use some of the estimated $2 million per year allocated to “managing” Jackson State forest to hire out of work loggers to do some road or restoration work. Calfire, of course, being a large bureaucracy, does not have that kind of local flexibility.

Anderson Logging Company's Mark Leroy complained that Schmidbauer met all the bid requirements but was still denied the work. He said that many local loggers would be out of unemployment insurance soon and more work would extend their benefits. “These are the same people who helped with the lightning fires last summer,” said Leroy. “Loggers have three options: 1. don't work and be a burden, 2. become drug dealers under the guise of ‘medical marijauana’ — and we’re too proud to do that. Or 3. Get back to work, pay taxes, and be contributing members of the local economy.”

Mike Anderson summed up: “Redwood mills have logs, they don't need logs. But the only Doug Fir mill has no logs, and is having to lay off people. This work will renew unemployment claims for loggers and buy time until 2010 when we hope the market recovers.”

Supervisor John Pinches agreed with Leroy and Anderson. “We can't lose that Doug fir facility. We’re on the verge of losing the last fir mill on the Northcoast. This will bridge the gap until the market comes back,” adding, “Remember, without the help of loggers who came to the aid of Calfire in the lightning fires, Calfire would be in bad shape. Some of them went to work fighting those fires knowing their pay from the State would take a long time. This is just one small way to say thanks to loggers.”

Overlooking Taylor’s objections, the Board agreed unanimously to assign Supervisors Carre Brown and Kendall Smith to draft a letter to Calfire asking them to figure out a way to award the job to Schmidbauer. Exactly how Calfire will handle such a request contractually, much less economically, remains unclear.

* * *

Having semi-balanced the budget with layoffs and wholly mythical County “reserves,” the Board of Supervisors is taking a couple of weeks off; they'll be back in session on July 14 just in time for more bad budget news from the state. Next week we’ll have a report on the status of the budget and the Board’s latest attempt to move toward privatizing trash hauling in the southern half of the County.

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