National forests can't meet needs of timber mills

It was the same old story year after year.

Jim Hurst would gather his employees for the lumber mill's annual meeting in a big equipment building next to the mill.

Each year, Owens & Hurst's co-owner told them: Environmentalists' lawsuits and federal policies keep interrupting the timber supply, and he might not be able to keep the mill afloat.

This ritual went on for at least 15 years.

"Every year, he gave us that times-are-tough speech. Then he'd still be in business after saying times are tough," former edger operator Tony Pacella said.

Former millwright Joel Sieler said: "Most people tuned it out. I tuned it out, and was going like: 'Yeah, Yeah.'"

Then Hurst's warnings came true.

On Jan. 27, 2005, he gathered his people and told them the mill must close because it could not depend on a reliable supply of timber.

That stunned most of Owens & Hurst's 90 employees.

"You could hear a pin drop. Not a word. Mouths open. People were in shock," Pacella said.

Some cried. Some just stared. One man stormed off, made it to the parking lot, and then turned around to rejoin his co-workers. Many wondered how they would provide for their families.

The mill sawed its last log on June 6, 2005. It auctioned off its equipment by August that year.

Today, Owens & Hurst employs one secretary and four others to handle the company's remaining obligations, including some logging contracts - maybe three years' worth of work.

Eureka - which has had one or more sawmills since 1905 - now has none.

That's despite the town being located within the 3,400-square-mile Kootenai National Forest and within a 20-minute drive of the 3,600-square-mile Flathead National Forest.

According to Jim Petersen, editor of the Bigfork-based forestry journal Evergreen: "What happened in Eureka is a microcosm of what's happened in mill towns throughout the West."

A town

built on timber

Jim Hurst and Lum Owens were the Tobacco Valley's last independent lumber-mill operators.

Only the national lumber giant Plum Creek Timber Co. still has a mill in the valley at Ksanka.

That's significant because timber and lumber defined Eureka and the Tobacco Valley for more than a century.

The histories, economies and characters of Eureka and the Tobacco Valley are so intertwined that they cannot be separated. Eureka, with roughly 1,100 people, is the hub of the Tobacco Valley's 5,500 souls.

The Tobacco Valley's first lumber mill was run by a water-powered turbine on an unnamed creek. The equipment was hauled in by pack horses in 1889.

Wandering lumberjack Joseph Peltier - a mischievous, dry-humored man who spoke French better than English - built the first house on the site of modern Eureka. It was a small log cabin still preserved by the town.

Eureka - which narrowly escaped being called Deweyville after one founder's wife - emerged as a hamlet about 1903. It became a railroad station and set up its first school in a vacated saloon in 1904, with the area still supporting 13 other saloons.

A town history book's earliest mention of a lumber mill within town limits is 1905. Eureka incorporated in 1909 with 602 residents. Numerous mills sprouted up, grew, underwent strikes, merged and died - a pattern the repeated itself frequently in the Tobacco Valley during the next 90 years.

Eureka's population hit 1,102 in 1917. It reached 2,000 before the 1930s Great Depression knocked it down to about 900.

In 1925, Eureka's biggest sawmill closed because, as a 1950 town history book said, "The timber that could be profitably logged at that time

was gone. All the best stands of timber in the Tobacco Valley were now slashings - ugly with stumps and dead debris of trees."

But other valley mills survived, collecting harvested timber from farther and farther away.

The mill that eventually became Owens & Hurst was founded as the Kennedy-Stevens mill in the late 1940s.

Later, Jim Hurst's father became owner of the Ksanka mill at Fortine. Jim Hurst, now 59, began working there the day after he graduated from the eighth grade, earning 50 cents an hour while the adults earned $1.25 an hour. He rose through the ranks to become manager, and Plum Creek Timber Co. kept him in that job when it bought the mill.

Hurst and logger Lum Owens had an itch to own their own sawmill. They borrowed heavily at a time of high interest rates and bought the Kennedy-Stevens mill in 1980.

"Everything I owned was on the line," Hurst said. "That's an excellent motivation to work hard. … It was a miracle we survived. We had an antiquated mill we had to modernize. We were deeply in debt. The workers agreed to cut their wages 20 percent. We survived on professionalism and pride."

The employees worked six days a week to earn the same take-home pay as they received five days a week before the wage cut. Only one employee quit because of the wages.

The mill maxed its employment at 180 in the late 1990s. It cut and processed its greatest output - 95 million board feet - in 2000.

Timber supply drops

Then the timber supply dropped and Owens & Hurst went through two layoffs.

Hurst and Owens constantly tried to adapt with new equipment, new timber supplies and political activism.

They bought more efficient equipment. They trimmed logs in smaller diameters than most mills to take advantage of industry niches.

In 2001, loggers from other communities trucked in logs to bail out Owens & Hurst when it suffered a shortage of wood. It was a thank-you for Hurst organizing a similar volunteer log haul to help a struggling Darby lumber mill in 1988.

Owens & Hurst trucked in burned and bug-infested timber from Alberta, Canada, for a few years until that supply ran out.

In 2003, environmentalists obtained a federal court injunction on five Kootenai Forest timber sales, including one going to Owens & Hurst. However, U.S. Sen. Conrad Burns, R-Mont., attached a rider to a 2004 appropriations bill that ordered the U.S. Department of Agriculture to go ahead with the sales - despite environmentalist protests that this blatantly bypassed having the courts decide litigation. In 2004, a federal judge lifted the injunction.

The mill cut and processed 45 million board feet in 2004.

In December 2004, Hurst met with U.S. Forest Service managers to discuss future timber supplies, and could not get any solid figures or predictions.

As he drove home, Hurst thought: "My God, they don't know what direction they're going. How can I make a business plan on that?"

That's when he decided to shut down the mill - hoping to close and take care of his employees on his terms.

Owens & Hurst obtained most of its timber from federal forests, and its success was intrinsically tied to that lumber supply.

A 70 percent drop in harvests from Montana's federal forests is the main factor in the state's overall annual harvest shrinking from 1.2 billion board feet annually to 700 million board feet annually in less than 20 years, a 2004 University of Montana Bureau of Business and Economic Research report said.

"A number of factors caused the declines in national forest timber harvests, including: Appeals and litigation of timber sales, threatened and endangered species protections, cumulative effects of past harvesting and reductions in U.S. Forest Service budgets," the report said.

That led to the national forests providing 20 percent of Montana's timber harvest in 2003. Meanwhile, privately owned forests provided 70 percent of 2003's timber supply, while other sources provided the rest. This is a contrast to when federal forests provided the most timber prior to the 1990s.

By comparison, Plum Creek's Ksanka facility - the only functioning lumber mill left in Lincoln County - gets a significant portion of its timber from private Plum Creek forests. Plum Creek declined to release specific Ksanka figures.

It's difficult to put numbers to the actual Montana mills that have shut down.

The University of Montana's economics bureau and Montana Wood Products Association use drastically different definitions of a mill. The university's bureau says Montana's mills dropped from 86 in 1993 to 55 today. The association says 43 mills in 1990 have shrunk to 22 today.

Cutting concerns

Owens & Hurst sits in the middle of about 7,000 square miles of forests - roughly the combined size of Connecticut and Rhode Island.

Many in Eureka look out their windows and wonder why the mill couldn't stay financially afloat in a sea of timber.

"It's sad to see an area with vast resources around us that's untouchable," said former mechanics supervisor John Suchy.

Jim Hurst said: "It's a waste of renewable resources. For God's sake, trees grow back."

But in the Missoula office of the Wild West Institute, Jeff Juel pulled out a satellite map of Northwest Montana.

Juel, the institute's ecosystems defense director, pointed to numerous clear spots among the green forests where trees have been harvested. To him and institute executive director Matthew Koehler, the timber industry has whacked down an unhealthy number of trees from the area for decades - threatening wildlife plus the forests' ability to grow back.

"The Kootenai is the most heavily logged national forest in Montana and the Northern Rockies," Juel said. "It's like asking a hemophiliac to give blood."

U.S. Forest Service figures show that 978 square miles of the Kootenai's 3,400 square miles of trees - almost 29 percent - have been harvested since 1945. And 622 square miles - 18 percent - have been harvested since 1975.

On the adjacent Flathead National Forest, 453 square miles out of 3,600 square miles - almost 13 percent - have been harvested since 1945. Since 1975, 239 square miles - almost 7 percent - have been harvested.

So enough trees have been cut in the two forests since 1945 to cover most of Rhode Island.

The Wild West Institute is a recent merger of the Native Forest Network and The Ecology Center - two longtime Missoula-based organizations with similar interests in wildlife and forestry issues. Both trace their roots to massive logging in the 1980s and 1990s, which they saw as out of control.

It is one of several environmentalist organizations that have filed at least 20 federal lawsuits and timber sales appeals since 1983 addressing the Kootenai and Flathead national forests, according to Forest Service figures.

The environmentalists' documents in U.S. District Court in Missoula usually make these arguments about Northwest Montana:

. The federal government's timber protection plans are ill-defined.

. The U.S. Forest Service routinely approves timber sales when it has not done an adequate job of studying and protecting the habitat needed to sustain dozens of species of animals, birds and vegetation.

. The Forest Service does not do a good job of keeping tabs on the sensitive species that it is supposed to protect.

. Old-growth trees make up 8.4 percent the Kootenai National Forest's trees while the Forest Service's legally binding plans require that at least 10 percent of a forests' trees be old-growth. The Forest Service has counter-argued - so far successfully - that old-growth trees make up 10.5 percent of the Kootenai Forest. Old-growth trees are the tallest and thickest in the forest, as well as being the oldest - sometimes reaching to 200 years old. Their leafy canopies and sheer size greatly influence how wildlife habitat grows beneath them.

. The Forest Service is too optimistic about how quickly younger trees will grow and replace cut-down old-growth trees.

. Overall, national forests in Montana have been over-logged and need time to grow back.

In its court filings, the Forest Service contests these arguments. The Forest Service has won the biggest chunk of the judicial decisions so far, although each case can take years to resolve.

Meanwhile, environmental organizations continue to contest in court almost every timber sale.

Pointing fingers

Hurst, lumber industry officials and displaced Owens & Hurst employees blame the steady stream of environmentalist lawsuits and appeals for creating an unpredictable flow of logs out of the national forests.

This unreliability doomed Owens & Hurst, they said.

"I hold some of those [environmental] groups directly responsible," said Ellen Engstedt, executive vice president of the Montana Wood Products Association.

Hurst said the constant litigation has made the Forest Service gun-shy about tangling with environmental organizations.

Bob Castenada, who retired as Kootenai Forest supervisor on May 30, said: "Jim's point is right on. … When you go to court, you don't know when the court will decide. You don't know how the court will decide."

But Juel countered that removing litigation "is the simple scapegoat solution that Jim Hurst desires. What he really needed was a better business plan."

In an e-mail, industry analyst Petersen has a sharp response to that:

"The fact is Jim's mill was ideally configured to handle trees with tops as small as 3 inches in diameter - the very trees the USFS would no doubt be thinning from the Kootenai National Forest were it not for endless appeals and litigation - all designed to delay thinning until the trees have no commercial value."

Juel and Koehler maintain that decades of over-logging turned out to be a bad industrywide business decision.

Koehler contended that the timber industry has had a free hand in over-logging Montana from the 1960s until a few years ago - and that it has powerful allies in Congress and the Bush administration. Consequently, the timber industry overwhelms environmentalists in money and political clout, he argued.

Aggressive litigation is the only way to level the playing field, Koehler said.

"The public needs to realize we will not waver in our commitment to make sure the federal government follows the law," he said.

Chuck Keegan said no academic study has measured the litigation's effects on lumber mills. Keegan is the director of forest industry research for the University of Montana Bureau of Business and Economic Research.

What about Canada?

Montana's lumber industry and environmentalists each partly blame Canada.

When the Canadian government makes a timber sale, it will allow a company to buy the rights to cut timber from a major chunk of land for decades at a time. This ensures a longtime, steady supply of timber to a company that can build and amortize a mill at that location for 10, 20, maybe 50 years.

Meanwhile, American companies compete for much smaller tracts that might take one or two years to harvest, not counting the time to wait through the inevitable legal challenges to the sales.

Bottom line: Canadian lumber is cheaper.

Koehler and Juel contended Hurst and other mill owners neglected - politically and business-wise - to deal with the imbalance between Canadian and American lumber prices, arguing that caused Owens & Hurst's downfall more than litigation.

"That's absurd," Keegan contended. American lumber prices were high in 2004 and 2005, which helped Owens & Hurst, he argued.

Hurst also argued that the trade imbalance issue is a red herring. "Unlike terrorists, these people [environmental organizations] don't want to take credit for the demise of family-owned sawmills," Hurst contended.

Kootenai a microcosm

Go back to the late 1940s, said Jack Ward Thomas, a retired University of Montana wildlife conservation professor who was chief of the U.S. Forest Service from 1993 to 1996.

That's when the end of World War II created a housing boom, and the Northwest's federal forests began to be significantly logged until the turn of the century. Meanwhile, logging decreased on private lands to give them a break. Until the 1990s, more federal timber was deliberately cut than could grow back. The idea was give trees time to regrow on private lands to eventually give the federal forests a break.

The problem is that federal timber now needs a break from logging, but large lumber corporations that own private forests are now selling much of their land for real-estate developments, Thomas said.

That increases the timber-supply burden on national forests where the U.S. Endangered Species Act must be enforced and where threatened wildlife have thrived the most - while private lands are exempt.

Meanwhile, Thomas said a predictable timber stream from national forests is impossible.

"The laws are very confusing. They overlap. … The tangled nature of the laws, they lead to unpredictable courts, unpredictable [federal] budgets, unpredictable philosophies, unpredictable court interpretations, the unpredictability of knowing what personnel you have available," Thomas said.

And throw in unpredictable politics, Thomas said, noting that the United States elects a president - with a potentially new approach to the 154 national forests - every four years.

Thomas said: "Every national forest in the country has undergone the same thing, or is undergoing the same thing. … [The Kootenai National Forest] is only a microcosm of the much bigger, more complex world."

Reporter John Stang may be reached at 758-4429 or by e-mail at jstang@dailyinterlake.com