Sawmill blasts Port over logs

The new owner of the Warrenton sawmill says a log export operation at the Port of Astoria would put the mill at risk by cutting into local timber supply.

Steve Zika, CEO of Hampton Lumber Mills, Inc., sent a letter to Port Commission President Bill Hunsinger this week to express his company's "disappointment" with the Port's plans to negotiate a lease with log exporter Westerlund Log Handlers of Bremerton, Wash.

Zika's company bought the Warrenton sawmill from Weyerhaeuser Co. in December, not long after Weyerhaeuser sold 140,000 acres of its industrial timberland in Clatsop County to the Campbell Group LLC of Portland. The mill is shut down this year while the company upgrades the facility, but Zika said it will employ 200 people once it starts back up.

"As you may be aware, reliable timber supply is the number one determinant of a sawmill's ability to be successful," Zika wrote. "Promoting a nearby log export facility that creates minimal jobs and competes for a diminishing log supply puts the Warrenton mill at risk."

The Port of Astoria Commission voted in February to start lease negotiations with Westerlund for 15 acres of central waterfront property for a log export operation that would store and debark logs on Pier 3 and ship them off of Pier 1. The 90-day window to draw up a lease closes in two weeks.

Zika follows a long line of established businessmen who have criticized Port leaders for shifting their business strategy back toward the log business - a longtime moneymaker for the agency until 1996. 

Until this week, most of the critics of the Port's log export plan have been Astoria-based business owners worried about the impact of log truck traffic, noise and mess on current tenants at the Port, as well as the Port's neighbors.

But Zika said the log export business would also affect a vital aspect of the Warrenton sawmill's business - timber supply - after his company committed to investing millions in upgrading the facility. 

The log export industry "ships production jobs offshore," he wrote, and there is already an export facility in Longview, Wash.

"I do not see a mention of a raw material export business in your strategic plan, and it does not seem like good business to compete or work against other local employers," wrote Zika. "I understand the need to search for additional revenue during these difficult economic times. However, it seems like your revenue sources should also provide meaningful new jobs and be consistent with the local area business climate."

The Westerlund deal could pour $1 million a year into the Port of Astoria coffers - boosting revenue by 25 percent. It is expected to create 65 jobs, although it hasn't been determined yet how many of them will go to unionized longshoremen. Port leaders say if they want to take advantage of the extra revenue and job creation they have to do it now while the market conditions are favorable.

The change in Clatsop County private timberland and sawmill ownership last year has shifted the landscape of the local log business - opening the door for the Port to return to exporting logs after years of focusing its business strategy on marine services and tourism. Growing demand for timber in Asia, meanwhile, is picking up the slack in U.S. lumber sales. Industry analysts say Astoria has a few years to tap into the log export business while it's still growing - before the housing market rebounds and drives up demand for lumber.

Westerlund company executives say a lot of the logs being exported out of Longview, Wash., are coming from the four northwest counties of Oregon, and shipping them from Astoria would shorten the trucking route. 

They also say the overseas market will remain viable even as the domestic lumber market rebounds. The company started negotiations seeking a 10-year lease term from the Port.

Hunsinger, a member of the International Longshore & Warehouse Union Local 50, has championed the export operation. He says the only reason the Port isn't still exporting logs is because of previous changes in Clatsop County timberland ownership. Cavenham Forest Industries was the port's main exporter in 1996, and the log shipping business was lost when the company sold a large swath of Clatsop County timberland to the nonexporting Willamette Industries. Weyerhaeuser bought Willamette in 2000 and focused its export operations in Longview. 

Now, the Port of Astoria spends half a million dollars on dredging and does not recoup its expenses from the cruise ships and research vessels that use Port docks, Hunsinger argues.

Gordon Culbertson, a Pacific Northwest industry analyst with Forest2Market in Eugene, said Russia shares a similar concern to Zika about losing log manufacturing jobs in exporting timber. In fact, that's one of the factors driving Asian demand for Northwest logs, he said.

Russia, a big supplier of timber to Asia, placed a tariff on its export logs in 2008 and has threatened to raise it.

"That has made people uneasy about the availability of Russian logs in the future," said Culbertson. "The goal of the Russians was to use an export tax to encourage logs to be manufactured within Russia. But it created some unintended consequences."

Culbertson said while it is widely recognized that the log export market to Asia is growing, there is still a lot of competition from New Zealand, Russia and Canada to supply that market - especially because housing starts in the U.S. are stagnant. 

"There is quite a bit of competition," he said.