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Timber Firm's Plan for Mexico Mill Draws Fire : Forest Products: The new plant, which could employ 1,000, goes against the grain of many of Louisiana-Pacific's employees in California.


UKIAH, Calif. — When he heard the news, Walter Smith, a 40-year-old, second-generation logger, stood with environmentalists and union leaders on the county courthouse steps to attack the major source of his livelihood, Louisiana-Pacific Corp.

This "latest assault is the most painful," he said, "since it comes from the very people who should be most concerned for our welfare: our employers. The workers I've talked to feel betrayed."

The "assault" is Louisiana-Pacific's plan to build a new mill at the port of El Sauzal, near Ensenada, Mexico.

Louisiana-Pacific, the world's largest producer of redwood lumber, has managed to bring a new level of bitterness to the ongoing arguments about Mendocino County's dwindling forests. Now even some traditional timber industry supporters, who had long cited the threat of lost employment when environmentalists called for slower cutting and more preservation, have become exasperated over the company's Mexico plant, with its potential to create 1,000 jobs across the border.

Jim Eddie, chairman of the Mendocino County Board of Supervisors, says a budding effort by some local lumbermen to modify the industry for long-term survival on the North Coast has been overshadowed by Louisiana-Pacific's move. "It's all blown up," he sighs.

"They're ruining it," choes Raymond Flynn, president of Windsor Mill, a much smaller company and sometime competitor of Louisiana-Pacific. "Instead of saying, 'Let's solve the problems. . . . Let's put the investment in our own country,' they've taken the short-term outlook . . . for short-term profits."

For its part, Louisiana-Pacific blames much of the furor on misinformation and a parochial view of sweeping changes coming to the forest-products industry.

Company spokesman Shepard Tucker dismisses as "ludicrous," for example, legislation proposed by state Assemblyman Byron Sher, chairman of the Assembly Natural Resources Committee, that would ban the export of whole logs from California.

In the larger picture, says Tucker, "we're making a transition from an old-growth to young-growth forest and also in the type of product (marketed)."

As happened generations ago in southern U.S. forests, the California timber industry is changing in part to accommodate smaller new-growth trees as old-growth trees have been cut.

"You can't cut a 2-by-12 (board) out of a tree that is only 8 inches in diameter," says Charles Jourdain, vice president of technical services for the California Redwood Assn.

Timber companies have lately developed alternative wood structures to meet builders' needs, and Jourdain and other industry observers consider Louisiana-Pacific to be at the forefront of these "engineered wood products."

The products come from low-value wood material--smaller trees, tree species that have heretofore been considered non-commercial, shavings, chips, flakes, wafers or particles--which are bonded with adhesive under high pressure. They can be formed into panels similar to plywood, made into wooden beams or even formed to resemble such dimensional lumber as the common 2-by-4.

The processes involved, however, are often labor-intensive, which critics cite as a big spur to forest-products manufacturers to open operations in Mexico.

Louisiana-Pacific's new mill will operate as a maquiladora, a manufacturing plant exempted by the United States and Mexico from import-export duties and designed for both countries to take advantage of low Mexican labor rates.

Tucker insists that Louisiana-Pacific is merely expanding, not moving its operations south. The company plans to first open a drying and final planing facility in Mexico to finish rough redwood, primarily for the Southern California market. Currently, Tucker says, these rough planks are sold to other firms for processing. Louisiana-Pacific wants to add the value of further processing as one response to industry changes. And the less humid Mexican climate will allow drying in open air instead of in energy-consuming kilns.

Louisiana-Pacific also sees an advantage in moving its lumber south by barge. It now depends on trains that Tucker says can be unpredictable in winter.

(Such concerns were a surprise to the railroads. "I'm not aware of any major rail difficulties that have been conveyed by (Louisiana-Pacific) in connection with service either provided by Eureka Southern or Southern Pacific," says Tom Brueckheimer, assistant vice president, lumber products, for Southern Pacific railroad.)

If this first $12-million investment in Mexico is successful, a $100-million project is likely.

Louisiana-Pacific expects the first plant to create 60 new jobs, the larger complex, if approved by its board, will mean 1,000 jobs.

Typical wages in the California mills run $12 to $13 an hour. For similar work in El Sauzal, where the minimum wage is 79 cents an hour, wages might run $1.10 to $1.50 an hour, according to Kristin A. White, a Chula Vista attorney who represents owners of maquiladora plants.

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