Subscribe Archives Calendar ContactLogging & Sawmilling JournalMadison's Lumber DirectoryAdvertise Media KitHomeForestnet

 

Bookmark and Share  Or CLICK to download a pdf of this article


Economic Stimulus

By Bob Bruce

So will the stimulus money reach the forests? Of the $787 billion stimulus package, a relatively small portion has been allocated toward timber industry-related activities.

Since it"s federal money, it"s handed out to federal agencies to be spent -- $1.15 billion to the Forest Service and another $320 million to the Bureau of Land Management (BLM). And these funds are in addition to the country"s annual budget.

Before the stimulus money, Melcher Logging was doing about 150 acres of thinning. Now he says they are doing about 800 acres.

For the additional dollars provided by the stimulus package, the Forest Service portion breaks out as follows: $650 million for road and trail maintenance/decommissioning; facilities maintenance; abandoned mine remediation; and watershed/ecosystem restoration and enhancement. The remaining $500 million is for fire management activities, primarily hazardous fuel reduction. Up to $50 million of that last amount can also be used to promote wood-to-energy projects.

A much smaller percentage of the BLM"s money is earmarked for strictly timber-related projects -- only $15 million is allocated for thinning and hazardous fuel reduction. $125 million is set aside for maintenance and repair of facilities, lands, and trails, and the remaining $180 million goes to decommissioning and repair of roads, bridges, trails, and facilities, along with energy retrofits.

Creating Jobs

As a whole, the stimulus package is expected (or hoped) to generate, or maintain, more than 3.5 million jobs nationwide. In the timber industry of the Pacific Northwest, it may be more a case of simply helping people hold onto the jobs they already have, or return to jobs from which they were laid off when the economy first went sour.

Oregon Senator Ron Wyden authored a letter that first urged the stimulus package to include $1.52 billion, all of which was to be set aside for hazardous fuel reduction over a two-year period. The letter was co-signed by essentially every senator from every western state from California to Montana. That money was intended to create up to 50,000 additional jobs.

According to a spokesperson from Sen. Wyden"s office, $10 million of the stimulus money has already been distributed to the Forest Service specifically for projects in Oregon. Those dollars are being spread out over six counties in the state. "The Forest Service got going pretty quickly on a number of projects," said the spokesperson.

One of the first projects identified by the Forest Service in a March 17 press release is a $1.4 million contract to Melcher Logging for thinning work on the Sisters Ranger District in Jefferson County. Based on the dollar amount of the contract, the staffer said, "I assume that"s going to employ more than 10 people."

Reality on the Ground

The reality on the ground is a little different. Robert Melcher, one of the owners of Melcher Logging, says there has been confusion about the size and scope of the contract even in his hometown. "A lot of people are of the assumption that we [have] the $1.5 million in the Melcher Logging account. Our phone"s been ringing off the hook in the office from people wanting to go to work. But the money went to the Forest Service."

He also points out that it"s not a "new" contract. Melcher already held an 8-year, 3500-acre stewardship contract in the Camp Sherman area, and the stimulus money simply made it possible for the Forest Service to ramp up the schedule a bit.

"Before the stimulus money, we were only going to do about 150 acres of thinning; now they"ve upped it to over 800 acres," he says.

But that does not translate into a need to hire more workers. The thinning work is all hand thinning in riparian areas and mowing down the underbrush. With the mills sitting idle, and the timber market essentially at a standstill for the time being, the thinning work is a way to keep his rigging crew employed when the yarder is not running.

The original 150 acres of thinning represented only a couple months of work for his 5-man rigging crew. Now he can keep them working for almost a full year. "The bottom line is the guys are glad to be getting a paycheck, and as owners, we feel good that we can keep providing work for them," says Melcher.

Weyerhaeuser"s Kevin Godbout, believes we"ve made an adjustment that is a new standard of operation. "We"re not going back to the way it was, we"re going back to something different."

Confusion & Concern about the Package

While it might be difficult to find anyone who strongly disagrees with the need for a stimulus package for the timber products industry, there does seem to be a fair amount of concern and confusion regarding exactly what benefits the current package will provide. It all has to do with the basic nature of the timber industry.

Think of the timber industry as the caboose of a very long train. It"s simple supply and demand. With newspapers and magazines closing on a regular basis, there"s less demand for pulp. With new home construction at a near standstill, there"s less demand for lumber. With biofuel still years away from general practical implementation, there"s little demand for hog fuel.

Even if the stimulus package provides money to pay for contracts to reduce hazardous fuel loads or open up more federal land to commercial logging, the logs will simply pile up in already over-crowded mill yards if there"s no current need for the timber.

As Carmen Smith of R.L. Smith Logging in Olympia points out, "The mills are already overflowing with logs. There"s no place to put more, and the price of logs is way down. So even if the money was used to subsidize the price, now you"re just throwing the money away to pay people to store the logs. And then how long can those logs last before they get pine beetle rot or get all dried up? Even if you put people to work cutting trees, the wood"s still going to sit there."

Kevin Godbout, director of External and Regulatory Affairs for Weyerhaeuser"s Western Timberlands Division, essentially agrees with Smith.

"The benefits of the federal stimulus package are going to be different ways of keeping people employed," he says. "The timber industry is able to implement projects quickly -- we have permits in hand so we can meet all of their criteria in terms of putting people to work and doing it quickly."

Wood as Energy

But instead of logging timber for lumber, Godbout thinks the best opportunities will be in the "wood to energy" projects. "I think we"re going to have to focus on biomass and wood to energy rather than moving wood into a manufacturing capacity as in the traditional sawmill approach."

The potential snag, however, is going to be finding a market for the biomass -- or more correctly, finding a market that is within an economically sensible distance from the biomass material.

"In Oregon particularly, through the Business Energy Tax credit program, multiple facilities have been constructed in the last five to seven years to promote co-gen. Our Longview pulp paper facility also has co-gen capability and burns a lot of biomass. In some respects, the name of the game for the timber industry is that we"re looking at a glorified hog fuel strategy called biomass, and we"ll try to move it into the co-gen facilities."

Sounds good -- except for one thing. "I don"t know if the capacity is large enough to take as much federal thinning wood as will come," he points out. "Quite frankly, the east side of the state is going to have the disadvantage of a lack of facilities. On the west side, where we probably don"t need as much forest help, you"re going to have energy facilities and paper mills and other energy-intensive facilities that can take the biomass, but the transportation costs to bring it over the mountains could be excessive."

The bottom line is that there aren"t any easy answers. "It does look like, for the foreseeable future, that we"re in a downward market," he says. "There seems to be a little bit of hope with some of the housing starts in the last month or two, but our market is dependent upon California. And as California and Las Vegas go, so goes lumber production in Washington and Oregon. So until we see a recovery in the housing market, we"re going to continue to have downward pressure on production and price."

It"s almost always risky trying to look into the crystal ball, but Godbout is fairly sure about one thing. When the economy recovers -- and it will eventually, "We"ll all be different from where we started. Any time you go through a major re-set like this, and you make major adjustments, my experience has been those adjustments stick around for a long time. Once you make the adjustment, that"s the new standard of operation. So we"re not going back to the way it was, we"re going back to something different."



Untitled Document

July/August TimberWest

Sustainable Harvesting
Gustafson Logging -- making themselves as productive as possible

Economic Stimulus 2009
Lots of Money, Lots of Questions

Hawaiian Island Hardwoods, LCC
Reinventing the Timber Industry in Paradise

Woody Biomass Column:
Wood is Good Again

The Nation Rediscovers Basic Biology-- with the New Carbon Credits Focus

Your Report Card on Performance
The Importance of a Tire Management System

Where"s the Logger?

Guest Columnist
Variable-Density Thinning – What the heck is it, and why should I care?

2009 Buyers Guide PDF

 

 
Untitled Document