Top Line: The reduction of surplus production capacity continues to result in lumber mill shutdowns, though the contributing factors cited have changed as times have changed.
Figure 1. A virgin stand of old-growth ponderosa pine in 1947 on Oregon’s Malheur National Forest. Source: Russell Lee/Library of Congress.
Two more Oregon sawmills are shutting down. The Malheur Lumber Company mill in John Day in Grant County and the Western Cascade Industries mill in Toledo in Lincoln County are “the latest in a long line of closures,” according to the Oregonian. Michael Lang of the Wild Salmon Center astutely noted that Hampton Lumber gets most of its logs from private timberlands.
In January 2024, Hampton closed its mill in Banks in Washington County. Hampton partially blames prospective reductions in log supply from state forests as a new habitat conservation plan is finalized. Yet, Hampton is expanding its mill in Willamina in Polk and Yamhill Counties, a hour’s drive by log truck. Hampton also has mills in Tillamook and Warrenton in Tillamook and Clatsop Counties respectively, not to mention three mills each in Washington and British Columbia.
In February 2024, Rosboro Co. shuttered its Springfield mill in Lane County. Its business model of making commodity studs was squeezed by higher log prices and lower lumber prices.
Also in February 2024, Interfor closed its Philomath sawmill in Benton County. Interfor noted the same reasons for closure as did Rosboro.
In August 2024, the 135-year-old paper mill at Willamette Falls in Clackamas County announced its closing permanently, unless a new buyer is quickly found.
In what to me is a refreshing and telling change, no mention is being made of the dwindling supply of federal logs as a contributing factor. These closures are part of the lumber industry’s long restructuring, which includes larger and faster small-log mills crowding out older and slower large-log mills, as well as lumber production shifting from the Pacific Northwest to the American South. A grand bargain between the conservation community and the timber industry that helped to save mills ca 2010±5 may no longer make sense this time around.
The Continuing Rationalization of Supply, Production, and Demand
The general manager of Western Cascade Industries’ twenty-five-year-old Toledo mill told the Lincoln County Leader that the lumber market has “just kind of been down across the board.” (The owners were avoiding the media so made no comment.) He also noted that the mill had stopped buying logs well before the announced closure.
In the Blue Mountains of northeastern Oregon, Malheur Lumber Company ran the sawmill in Grant County. The mill was a subsidiary of Ochoco Lumber in Prineville. According to the Blue Mountain Eagle:
In a letter provided to the Blue Mountain Eagle, company officials said that the lumber industry had been struggling for years and noted that many other wood products manufacturers had been forced to close.
“The current cost of operating a small manufacturing business in the rural part of the state seems no longer sustainable,” the letter stated.
It went on to cite a number of factors that contributed to the decision to close up shop:
• Lack of a willing and drug-free workforce.
• Lack of housing to recruit workers from outside the area.
• Unfavorable market conditions for lumber in recent years.
• High manufacturing costs due to inflation.
• Low and inconsistent production due to workforce issues.
• Continued layering of government regulations on small business in Oregon.
Figure 2. Happier days at Malheur Lumber Company in John Day, Oregon. Source: Western Wood Products Association (Facebook).
The closing of these sawmills is the latest in the continuing rationalization of wood supply, production, and demand. After the imposition of the Northwest Forest Plan for federal forestlands in the western Pacific Northwest and of the “eastside screens” for such lands in eastern Oregon and Washington in the mid-1990s—which significantly reduced the supply of logs from such lands—the remaining mills had to get bigger and faster (more efficient) or die. There was an orgy of retooling of old mills and building of new ones. These modern computerized and laser-driven mills didn’t need as many workers, and the industry didn’t need as many mills. As I noted in 2013:
While the number of all Oregon primary wood product manufacturing facilities and lumber and wood products jobs both decreased 53% between 1995 and 2010, between 1995 and 2012 the timber-processing capacity of the remaining large softwood sawmills increased 25% above the industry's 1995 levels. Large-capacity Oregon softwood sawmills have a milling capacity far in excess of current and likely domestic demand. These mills also are generally failing to compete with mills in China and Japan for Oregon private logs. Because they are being buffeted between low product prices and high supply prices, these mills seek to increase federal logging levels (federal logs cannot be exported and are thus significantly less expensive to domestic milling operations) from federal public forestlands. Production (utilized capacity) has declined dramatically with the collapse of the American housing bubble, but milling capacity has not (yet). [emphasis added]
Can a Grand Bargain Save Mills This Time?
Uncharacteristically, I supported a deal brokered by Senator Ron Wyden (D-OR) in 2012 to keep the Malheur Lumber mill in John Day operating. The essence of the deal was that the Forest Service issued a ten-year “stewardship” contract to a local logging company that did “stewardship” work (removing unnecessary roads, reducing stand density to give the residual old-growth trees a fighting chance, and such), and the logging company sold the logs it received in exchange for the work to Malheur Lumber. Other lumber mills several hours away couldn’t compete, as hauling costs were high and log values were low. These timber companies believed Malheur Lumber got a special deal not available to them, and they were right. Of course, these companies weren’t willing to live on the diet of small- and medium-size logs yielded by the ecological restoration thinning, and Malheur Lumber was. Had the others, they could have consummated similar deals for themselves.
I supported the Wyden deal because many ponderosa pine–dominated dry forest stands were in danger of losing their remaining old-growth trees due to competition from younger trees that were growing up under their canopies. This was a result of the previous logging of the largest trees, past and current livestock grazing, and past and current fire suppression. Reducing stand density by removing small (not large) trees followed by prescribed fire could restore the ecological function of such forest stands.
Wyden has pledged again to try to save the mill. This time I am more ambivalent, for two major reasons.
First, economically, the company’s stated problems today are different from 2012. Then it was primarily inadequate log supply. Now it is workforce issues, poor market conditions, high costs due to inflation, and low and inconsistent production due to workforce issues and government regulations.
As for regulations and inflation, these constraints apply to all of Malheur Lumber’s competitors as well.
Back in the day, many a lumber producer solved the worker housing shortage by creating company towns of company-owned housing. The Oregon Encyclopedia notes:
Nearly all of Oregon’s company towns, which once numbered more than thirty-five, were created for logging or lumber production. While such towns were located in every quarter of the state, most were east of the Cascade Mountains.
To name a few, Hines (now greater Burns), Brookings (saved by US 101), Valsetz and Wendling (both long ago razed and planted with Douglas-fir), Shevlin (located in three different places in Deschutes and Klamath Counties as it moved when the local forest was cut over), and Gilchrist (last company town in Oregon) were all lumber company towns.
I’ve not kept up, but back when I was a teenager and not choosing a career as a logger or millworker, a lot of workers used speed (amphetamines) to keep up with the speed of the production line and/or dope (marijuana) to blunt the boredom of the job. Pulling and stacking lumber on the green chain has long been automated, but apparently the demand for such drugs in the workplace continues.
Second, the fundamental grand bargain has changed. The elements of the bargain were:
• The mill would live on small- and medium-size logs, not old growth.
• The Forest Service would sell such smaller—but nonetheless still commercially valuable—logs as a by-product of scientifically sound ecological restoration thinning designed to give the residual old-growth trees a fighting chance to survive a couple more centuries without dying out due to competition with smaller trees or from uncharacteristic wildfire. The agency would also utilize prescribed fire after each logging treatment, as the thinning had no significant ecological benefit without fire being reintroduced into the ecosystem.
• The conservation community would support the “projects” (the agency no longer calls them “timber sales”) because the forest restoration would result in once again having more and larger old-growth trees.
For economic reasons, many of the mills that subscribed to the deal (in several other places in the West besides John Day, including Lakeview, Oregon) can no longer uphold their end of the bargain. For bureaucratic reasons—including an irrational fear of fire—the Forest Service has consistently failed to hold up its end of the bargain. The bureaucracy delivered the wood to the mills but has fallen down on doing prescribed burning after mechanical treatment (i.e. “logging”), thereby negating most of the benefit of ecological restoration thinning.
Such a deal can only work if all sides uphold their ends of the bargain.
Changing Times, Changing Relationships
The owner of Ochoco Lumber Company, which owns Malheur Lumber, is John Shelk. During the timber wars of the 1990s, Shelk and I were bitter enemies, each viewing the other as an existential threat. His mills were consuming old-growth trees, and I was trying to stop it.
After the Clinton administration imposed the “eastside screens” on the national forests in eastern Oregon and Washington, generally the threat of logging trees larger than 21 inches in diameter at breast height ended. This allowed the conservation community to pivot from a totally defensive posture to a more proactive restoration posture as many old-growth stands in frequent-fire forest types were in bad shape due to previous logging, livestock grazing, and fire suppression. In the isn’t-life-ironic department, more logging (albeit of much smaller trees) could be helpful in ecologically restoring forests that had suffered from too much logging (and grazing, and fire suppression).
Shelk realized that the industry’s social license to log old growth had expired and would not be renewed. To survive, his remaining mill (his Prineville mill closed in 2001) would have to live on a diet of smaller logs from smaller trees that were, to conservationists, ecologically problematic if they continued to live in the woods.
In January 2008, at the prompting of Wade Mosby of Collins Pine and Tim Lillebo of Oregon Wild, I went to see Shelk in his office in Prineville. The conversation was difficult at first, but by the end we had agreed to meet again, this time in the forest. Eventually, we each realized that the other was not (or was no longer—I leave it to others to judge) a total asshole. We actually, I daresay, came to like each other, and we agreed on many things, mostly having nothing to do with forests. While our fundamental beliefs did not change, our respective circles in a Venn diagram did shift. We could be useful to each other. Unfortunately, the crap John used to take from conservationists was replaced by crap from his lumber baron colleagues. Shelk suffered from the curse of being ahead of his time. His cohorts hung him out to dry. Yet Malheur Lumber survived while many of their mills did not.
Ochoco Lumber Company is one hundred years old this year. Looking toward the future, it built a new headquarters in 2023, less than half the square footage of the old one. Shelk still owns 47,507 acres of private timberlands in two separate blocks near Prineville and John Day. While I’m not a fan of industrial timberlands per se, John’s stewardship focuses more on long-term productivity and somewhat takes into account other values than just board feet. He’s not bent on maximizing net present value (making as much money as possible today, and screw the future).
The Forest Service’s circle in this Venn diagram is also changing. The agency’s fire fixation is resulting in the bureaucracy logging big and old trees in the name of preventing forest fires. Actually, all the Forest Service is doing is preventing forests.
The next Public Lands Blog post, to be titled “Rethinking Commercial Thinning as a ‘Tool’ to Ecologically Restore Forests of the Frequent-Fire Type” will argue that such grand bargains made (including by me) decades ago between Big Timber and the conservation community no longer make sense economically, socially, politically, or—most important—ecologically.
Bottom Line: For reasons having nothing to do with the supply of federal logs, timber production from federal lands in the interior American West will continue to decline.
For More Information
Kerr, Andy. 2013. Oregon Softwood Lumber Industry 1995–2012: Fewer Mills and Jobs, But Larger Timber-Processing Capacity. Occasional Paper #19. The Larch Company, Ashland, OR, and Washington, DC.
Figure 3. Old-growth ponderosa pine logs in 1942 on their way to the now long-closed Edward W. Hines Mills in Hines, Oregon. Source: Russell Lee/Library of Congress.