FORESTS FOREVER ALERTS

April 20, 2009

SPI Shuts Mills, Blames Environmentalists

Counter SPI’s propaganda with the economic facts

Timber giant Sierra Pacific Industries (SPI) recently launched a public-relations media blitz to lay blame on environmentalists for SPI’s own management mistakes.

In recent months the company has cut back work hours at several of its California sawmills, and closed mills at Quincy, Sonora and Camino. At first the company accurately attributed the cutbacks and closures to economic forces. More recently, though, SPI has taken to shifting the blame to environmentalists.

ACTION:

Contact SPI spokesperson Mark Pawlicki (P.O. Box 496028, Redding, CA 96049-6028. Phone 530-378-8000) and let him know the company’s attempts at shifting blame are transparent. Urge him to stick to the truth: that California’s economic downturn has forced the work slowdowns and mill closures. Mill closures and timber job losses are not the fault of environmentalists and forest-protection measures.

Also contact local California media and ask editors to report accurately on the economic downturn’s effect on the state’s forest products industry. Let them know it isn’t enough to run SPI press releases unedited without investigating the truth behind SPI statements.

BACKGROUND:

When SPI announced it was shutting its small-log sawmill in Quincy in March, the company issued a press release attributing the cause in large part to litigation by environmental groups.

"The challenging lumber market combined with litigation over timber harvests on
nearby national forest lands were the primary drivers behind the decision to close
the plant," the company announced (see http://www.spi-ind.com/html/spi_news.cfm).

SPI Area Manager Matt Taborski was quoted as saying: "The reduced availability of national forest timber resulting from litigation forced SPI to transport logs over long distances at greater cost to keep the mill running. Today's lumber prices are not sufficient to cover these increased costs.”

When SPI subsequently announced it was closing an additional two sawmills in Sonora and Camino, as well as a biomass-fueled electric power plant in Sonora, SPI blamed the difficult lumber market combined with “reduced timber harvests on nearby national forest lands” and “state regulatory burdens.”

SPI’s comments mask the shortsighted managerial missteps that forced the company to rein in its operations.

In the case of the Quincy mill, the company apparently failed to grasp the speculative nature of its small-log processing enterprise. Had they read up on the prospects for small-log processing, they might have known of the difficulties ahead.

For instance they could have learned from University of California Cooperative Extension (an arm of UC Agriculture and Natural Resources) that “The costs of gathering and processing multiple small trees to produce a unit of product are much higher than the costs associated with larger trees. As a result the transport of this low quality, low value raw material much more than 50 miles is major challenge requiring creative transport solutions.”

Yet SPI neglects to fault itself and instead attempts to shift the blame outward.

The fact is SPI speculated on the availability of material, gambling that it could run a sustainable small-log mill without a ready supply of biomass and in the face of an economic slump.

The real issue was acknowledged forthrightly by SPI in January after the company cut back production and laid off 24 workers at its Anderson sawmill–– and cut back work weeks at its mills in Burney, Quincy and Sonora, at that time affecting some 670 employees.

Company spokesperson Pawlicki told reporter David Benda at Redding.com (the Record Searchlight online) that the cause was the state's slumping housing market.

"The circumstances allow us to work through our inventory, which has increased due to the slowdown in demand," Pawlicki said, not attempting to blame environmentalists. "Of course, the reduced demand is dictated largely by the drop in home construction."

The fact is that SPI’s mills are overloaded with logs and product in large part due to the nation’s economic downturn. Mill closures and cutbacks in California are part of a national trend having everything to do with market conditions and little or nothing to do with environmental litigation. The cause is market forces.

HEADWATERS BREAKING NEWS UPDATE:

Our old nemesis MAXXAM CEO Charles Hurwitz reportedly goes to trial on Apr. 20 in Oakland “in a lawsuit filed by a former state forestry director accusing him of defrauding the federal government into paying $250 million for the pristine Headwaters Forest.”

According to the Mar. 18 San Francisco Chronicle, plaintiffs in the lawsuit are "Richard Wilson, the state Department of Forestry director who approved the plan in 1999, and Chris Maranto, a state forester who detected the alleged fraud several years later. They are suing under a whistle-blower law that would entitle them to 15 percent or more of the damages awarded to the government."

(see http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/18/BURB16GOHM.DTL)

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