Felled by a one-two punch, Crown Pacific is in bankruptcy court. The Portland-based timber firm was brought down by debt and falling prices for the trees on its land. According to the Oregon press, Crown's debt became "crushing" when the market value of its timber assets fell. As of early July, investors had lost 96% of the money they'd put into the company, and its employees face an uncertain future.
Why? Crown Pacific owns its land and the trees growing on it. Crown was crushed when the value of its trees fell so far that it could not sell them for enough money to meet its obligations to its creditors. Oregon press reports indicate that, throughout the Pacific Northwest, timber companies that own their land and trees are in trouble because of oversupply and low prices.
Oversupply and low prices are actually two sides of one problem. When there is a glut of timber on the market, prices fall. Investment portfolios and jobs fall next.
But why has the market value of trees fallen hard enough to drive Crown Pacific into bankruptcy? Federal timber policy handed down from Washington is part of the problem, and the US Forest Service has known it at least since 2001. In an article for Forest Ecology and Management, Forest Service experts Lisa K. Crone and Richard W. Haynes reported that, "In eastern Oregon and Washington, each increase of 100 million board feet of federal harvest reduces stumpage prices 25% for private landowners."
One cruel twist here is that Crown's ownership of its timber qualifies it for the label of capitalism, wherein ownership of the means of production is basic. When federal timber sales endanger such companies, they put the government in a strangely anti-capitalist mode of operation. But that's not the only cruel twist in timber country today.
Crone and Haynes mentioned that it is not only publicly traded timber companies that take hits. For example, Indian reservations also face dropping value of their timber assets when federal sales help flood the market with wood. The two Forest Service experts cautioned that the agency should consider economic justice when planning to sell more trees.
But a third cruel twist comes from within the timber industry itself. By and large, the industry and its allies in Washington claim that federal timber sales are too little, and too slow in coming. For the past quarter century, they have lobbied hard to curb appeals by environmental groups who say that the government's timber sales are too many and too quick to proceed without careful analysis of their consequences.
In northwest Montana, for example, an appeal of Forest Service timber sales by the Missoula-based Ecology Center and the Spokane, Wash.-based Lands Council put the damper on Kootenai National Forest timber sales. After reviewing the environmentalists' appeal, federal district judge Don Molloy found that the government had neither done the required accounting for its own timber assets nor an accounting of the impact that its timber sales would have on wild species including Canada lynx, wolverines, flammulated owls and goshawks.
Molloy ordered the government to go do its legally required homework before proceeding with its sales. The Montana-based timber industry immediately warned of trouble for companies and jobs.
The Montana press immediately quoted Jim Hurst, co-owner of Owens and Hurst Lumber Co. in Eureka, Mont., as saying, "It's a black day in Eureka." A headline in the July 3 edition of the Missoula, Mont., daily, the Missoulian, stressed that theme in declaring "Ruling cripples Eureka." According to the Missoulian, the Owens and Hurst firm was worried that its employees would lose their jobs if a lack of logs from federal timber sales forced the company to shut down.
The Forest Service defended its sales, and slammed environmentalists‚ appeals. Kootenai National Forest supervisor Bob Castaneda told the Missoulian that he was "very concerned about the delay" and the "potential impact of this ruling on the economy of northwest Montana."
Capitol Hill has been issuing warnings of its own. In a news release of July 23, the House Agriculture Committee said that, ""The Forest Service has been plagued by cumbersome bureaucratic processes, and delays caused by environmental appeals and litigation."
The committee cited a timber industry spokesman who expressed the industry's frustration that, faced with environmentalists' appeals, the Forest Service has its hands tied. Crown Pacific, Indian reservations and other owners of timberlands might wish the agency's hands were tied more effectively than they are. And the cruelest twist in the tale is that a deep conflict within the timber industry itself may be more profound than any conflict between the industry and environmentalists.
Lance Olsen follows the globally interrelated circulation of money, logs and water from his home office in Montana. Email lance003@juno.com.