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Know the West

The spotted owl made the rich richer


In Oregon lumber towns, a popular bumper sticker reads, "Spotted owl tastes like chicken."

But in the boardrooms of some of the nation's largest forest products companies, the rare bird has laid a golden egg. The scarcity brought about by the federal protection of the endangered owl helped double the value of many corporations' vast private timber holdings.

Despite predictions of disaster for the industry after federal logging was reduced in Oregon to protect endangered species, profits of the 12 largest publicly traded forest products companies in the Northwest were up 43 percent in 1994 compared to 1993, the Oregonian reported.

"I think the spotted owl ended up serving the companies quite well," says timber industry stock analyst Val Jensen of Jensen Investment Management in Portland.

Predictions about the effects of environmental regulations scared the market into a perceived shortage, according to Burrle Elmore, editor of Random Lengths, a Eugene-based newsletter that tracks wood prices. As a result, prices almost doubled between 1990 and 1994.

The millions of acres of private timberlands held by corporations such as Weyerhaeuser and Willamette Industries became very valuable. Net income for Willamette Industries nearly quadrupled from 1991 to 1994. For Weyerhaeuser, net income rose from a $101 million loss in 1991 to a $589 million gain in 1994.

The irony is not lost on Andy Kerr, director of the Oregon Natural Resources Council. "They should send us a thank-you note and a big check," he says.

Small is not beautiful

But what enriched some large corporations has crippled smaller, independent mills that still depend on federal logs. In April, the Cone Lumber Co. announced that it would lay off 60 workers and shut its 109-year-old mill in Goshen, south of Eugene. The Zip-O-Log mill in Eugene let 24 of its 54 workers go last year in response to a dwindling supply of old-growth logs.

Paul Ehinger, a Eugene timber industry consultant, says more than 150 mills in the Northwest have closed since owl restrictions were put in place and reduced federal timber harvests to 5 or 10 percent of their peak levels.

But the owl can't take all the blame. Log exports, an inability to adapt and competition with larger businesses and Canadian and southern U.S. mills are also big factors.

R.B. Cone, president of Cone Lumber, says competition with raw log exporters helped push his mill over the edge. Because of the weak dollar, the Japanese can come in on a federal timber sale and outbid all the local mills, according to Cone.

Smaller mills also have trouble competing with the high-volume efficiencies and market power of the big corporations. Cone says he thought about converting his mill from hemlock logs to more available Douglas-fir, but decided his small operation would get beat out by the big operators. "We would really be a small fish in a big pond," he says.

The adjustment of the timber industry away from public logs is a healthy trend, ONRC's Kerr says. With federal logs more expensive, the demand for recycling used wood and paper into innovative products has increased, he says, and wood products companies are redefining themselves as "fiber companies' that depend on a variety of raw materials.

Willamette Industries has pioneered this adjustment with a new particle-board plant that harvests "urban wood waste" for two-thirds of its raw materials, company spokeswoman Cathy Baldwin says. The plant employs 98 workers. Meanwhile, Weyerhaeuser is recycling record levels of paper to feed its pulp operation.

"The flexible companies, the creative companies, are the ones that are going to survive," Kerr says.

Workers' woes

While corporations adjust to the changing market and reap big profits, many workers are left jobless.

Some of the workers that Cone Lumber laid off were second-generation employees with 30 years at the mill. "We sure feel bad for the employees," Cone says.

Lane County has lost 700 lumber and wood products jobs since 1991, according to Brad Angle, a regional economist with the Oregon Employment Division. Although employment levels held steady last year, Angle estimates the sector will lose 350 jobs in 1995.

Since 1991, the county has added many jobs in the service, high-tech and RV manufacturing industries, and unemployment has fallen to 5 percent, says Angle. But many are either lower wage jobs or are beyond the reach of former millworkers who lack training or live in rural areas where few new jobs have been created.

While timber corporations point to jobs lost to owls, they may have actually added jobs in 1994 to respond to increases in lumber prices, says Angle. The jobs don't show up in the employment statistics, however, because many workers were hired through temporary companies that pay less and offer little job security, he says.

Although still far above their 1980s levels, lumber prices have begun to fall from their 1994 record high. Analysts are concerned that timber corporations will be tempted to over-harvest their private lands to cash in on short-term profits. "The hue and cry is that timber is a renewable resource," analyst Jensen says. "But the truth be known, they're trying to make their profits right now just like anybody else."

Environmentalist Kerr says the over-harvesting has already begun. "Greed is greed, and that's exactly what they're doing."

But if greed is the driving factor in the wood products industry, why don't the big timber corporations lobby for less federal logging to drive the value of their private timberlands even higher? The smaller mills still "addicted" to federal timber are the ones pushing the hardest for dramatic increases in salvage logging, says Kerr.

And whether federal logs are available or not, the big corporations are positioned to reap big profits.

A version of this story appeared in the Eugene Weekly in Eugene, Oregon, where Alan Pittman works as a staff reporter.