Is lumber industry going under?
Lumber mills and timber companies are losing money as the recession hits the homebuilding business. Scott Jagow speaks with Andrew Miller, CEO of Stimson Lumber Company, about the decline of the timber industry and how it's affecting the Northwest, where lumber is big business.
Andrew Miller, CEO of Stimson Lumber Company (Courtesy of Oregon State University website)
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TEXT OF INTERVIEW
SCOTT JAGOW: I'm afraid there's still no good news about the housing market. New home building is especially not happening.
Housing starts are down 70 percent from two years ago. And the fallout of that can be seen at any lumber yard in this country. Stacks and stacks of wood.
Lumber prices are their lowest in 18 years. And so, in small towns all over the Northwest, plants are closing and people are losing their jobs.
We're joined now by Andrew Miller, the CEO of Stimson Lumber in Portland, Ore. Welcome to the program.
ANDREW MILLER: Hello. Thanks.
JAGOW: I'm afraid to ask, but how's business?
MILLER: Um, it's very poor. I could use some, you know, more colorful language . . .
JAGOW: Well, not on the radio.
MILLER: . . . but, you know, it's very depressed. We've closed five facilities in the last 18 months. All in reaction to declining economics as a result of reduced demand, reduced pricing. Just really preparing for what we believed was going to be a long and deep recession.
JAGOW: And how many jobs is that?
MILLER: A specific mill, it's probably been 80 or 90. I think as a company we're probably down about 900 jobs from three years ago.
JAGOW: Is this all about the housing market?
MILLER: For the most part. You know, we've had a couple mills, maybe their long-term viability was in question. But the immediate decision to close the mills was based on poor economics.
JAGOW: And when you close these plants, what is the trickle-down effect beyond just the closures?
MILLER: They're pretty significant because our facilities operate in small, rural communities where we're often the major, or a major, employer. So, just due to geographic isolation there are not many comparable job opportunities. So, beyond economics, it puts a lot of stress on these small communities. You know, if the mill doesn't start up again, it's unlikely that there's going to be another major industrial employer that would locate in that town.
JAGOW: So, are you expecting to see a new wave of ghost towns in the upper Northwest?
MILLER: No moreso than probably already exist. I just think there probably are some communities that this just kind of exacerbates an already difficult economic situation.
JAGOW: Andrew, besides closing plants, what else is your company doing to make it through the recession?
MILLER: Everyday you've got to just be on your toes. I mean, I think for the first time in a long time, people are going to get paid for the quality of their management, their decisiveness, [their] business plan. I think for 10, 15-plus years we've been living in an environment where the tide was coming in and you just put your boat in the water, showed up, turned the power on, and you generally made money. You know, everyone was doing OK. And, I think now the difference is going to be people who really know their business and also are willing to make some tough decisions about preserving capital. They're going to be the survivors and the people who prosper. The folks who were just sort of in the water because the tide was coming in, they're being swept out to sea.
JAGOW: Andrew Miller, the CEO of Stimson Lumber Co., thanks for joining us, and best of luck.
MILLER: Thank you.
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