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Milder temperatures in Minnesota bring a new challenge to timber industry

Don Wille, owner of Wille Logging Lumber and Timber in Puposky, leans on timber he logged out of Itasca State Park after storms this past summer. Forum News Service photo

BEMIDJI, Minn.—Minnesota has experienced unusually high temperatures recently, even breaking records in some areas. However, while many have seen this as a relief from the state's harsh winter, the timber industry has viewed it as a dilemma.

Ray Higgins of the Minnesota Timber Producers Association put it simply, it's just been too warm.

"Any time you have an industry that's based on natural resources and weather, you're going to have ups and downs. I think the industry overall is good, but this winter is presenting a bunch of challenges," Higgins said. "We harvest two-thirds of the lumber in Minnesota in frozen ground conditions. We do better work in that weather, it's easier for us to get work done since you can get your equipment in the woods without doing more damage."

The higher-than-average temperatures is the latest challenge for an industry that's faced more than a decade of fluctuation, from changes in the number of mills to the amount of people working in the business.

As an example, Higgins said the price of timber, or stumpage prices, are too high at the moment, as there's not enough wood in the market, creating more costs for those in the industry. At the same time, though, there's more of a demand for wood with more homes under construction.

"We're building more houses than we were some years ago. Before the housing crisis occurred, we were building about 2 million homes in the United States, then after that hit, it went to 500,000 or 600,000 homes. So, we had a big drop," Higgins said. "Now we've recovered, as we're building more homes. That part has certainly improved, because of the rebound things are better than they were a few years ago."

Businesses large and small

Changes from employment to business costs are nothing new for Don Wille. The owner of Wille Logging Lumber and Timber in Puposky has been in the business since the 1970s and sees a very different logging world than the one he started in.

"It's basically all mechanical now. There's a lot less hands on labor these days," Wille said. "The industry, I'd say, is very healthy, but it's changed so much. It's gone from so many people doing it to a much smaller number. They can do 200 cords a day and back in the day we thought 10 to 12 cords was a good day."

Additionally, Wille said competition from larger companies have also brought difficulties for smaller logging businesses.

"Obtaining the wood product to be logged has become challenging," Wille said. "Your bigger mills, larger companies, they bid against private loggers in buying the stumpage and that has been an issue for us smaller loggers. Not being able to compete when the company is bidding against you."

"What we're seeing is logging companies that have gotten bigger, where they've had two or three operations and now they have three or four," Higgins said. "In Grand Rapids with Blandin (Paper Company) and PCA (Packaging Corporation of America) in International Falls on the other hand, they will go out and buy stumpage and hire a logger to cut it for them, but it's on a contracting basis."

For Potlatch Corporation, a forest product company with 1.4 million acres of timberland in Minnesota, Alabama, Arkansas, Idaho and Mississippi and which operates a mill just southeast of Bemidji, the past year resulted in an income of more than $10 million.

In a press release issued Jan. 31, Potlatch reported a net income for 2016 of $10.9 million on revenues of $599.1 million. The number, according to the release, excluded the after-tax loss of $36.7 million on the sale of 172,000 acres in Idaho. When accounting for that number, the net income comes to $47.6 million.

In total, that number exceeds the one from 2015, as Potlatch reported a net income of $31.7 million on revenues of $573.3 million in the same release.

By the numbers

According to data provided by the Minnesota Department of Natural Resources, the state's timber industry in total had a $17.8 billion value in gross sales and was responsible for 8.5 percent of all manufacturing employment in 2015, the latest year figures are available. Additionally, the industry in 2015 ranked as the fifth-largest manufacturing sector in the state by employment.

Since 2010, the exact employment number has fluctuated, but has remained close to the 30,000 mark:

• 2009: 31,000 jobs.

• 2010: 28,500 jobs.

• 2014: 30,000 jobs.

• 2015: 30,500 jobs.

When accounting for and combining the 2015 number with indirect jobs, the figure comes to 64,000, the DNR said. The DNR's report shows timber or timber-related employees work at a number of facilities, too:

• Primary pulp and paper mills. There were four of these mills in 2014 and 2015.

• Recycled pulp and paper mills. There were three of these mills in 2014 and 2015.

• Converted paper product facilities. There were 104 in 2014 and 100 in 2015.

• Lumber and wood product facilities. There were 331 in 2014 and 325 in 2015.

• Wood furniture and fixture facilities. There were 416 in 2014 and 399 in 2015.

• Renewable energy facilities. There were 14 in 2014 and 12 in 2015.

As with the number of facilities in the industry, the amount of lumber harvested has also seen some decline. Referred to as a cord, the unit used to describe lumber harvested is a pile of wood with 4-foot long pieces stacked 4 feet high and 8 feet long, containing 128 cubic feet of space.

Since 2000, the number of cords harvested has changed, too:

• 2000, 3.72 million cords were harvested.

• 2003, 3.6 million cords harvested.

• 2006, 3.15 million cords harvested.

• 2009, 2.73 million cords harvested.

• 2010, 2.7 million cords harvested.

• 2012, 2.93 million cords harvested.

In 2013, the number hit 2.9 million cords, with the majority used for pulpwood. That sector of the industry utilized 2.1 million cords, while sawlogs and specialty products used 0.5 million and fuelwood used 0.3 million.

Working with the government

For the Minnesota Timber Producers Association, the industry's issues have been the topic of discussion at the state capitol, with a major focus on the future.

"Our main issue legislatively has been a stakeholders group examining the sustainable timber harvest in the state," Higgins said. "In Minnesota each year, the state consumption of timber is 2.6 million cords. Of that, a bunch comes from the county land departments, some of it is from federal forests and others comes from private land and the DNR."

The DNR, Higgins said, has traditionally offered 800,000 cords, but recently, there's been a movement to have the agency offer one million cords.

"Gov. Mark Dayton wants to make sure that's sustainable, and we do too, because our people live in towns surrounded by the woods," Higgins said. "There've been a couple of meetings already over the last couple of months and they'll likely meet again on the subject once the session is over."

Through all the changing times in timber, though, Wille said the industry will keep going in the coming years.

"As long as we have the product to log and places to utilize it, there's going to be the mills and logging companies in Minnesota," Wille said.

Matthew Liedke

Matthew Liedke is the city, county and state government reporter for the Bemidji Pioneer. He also covers business, politics and financial news.

(218) 333-9791
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