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Sawmills fall silent as lumber production drops

September 30, 2007|Genaro C. Armas | Associated Press

ralston, pa. -- Flecks of fine sawdust float like powdery snow around Bill Brooks' lumber yard after his saws slice through fresh logs.

That is, when the saws are in use. Workers operate them just three days a week now because many longtime customers -- furniture- and cabinet-makers -- have moved their plants to China, lightening demand.

Though he's had to cut his full-time staff from 50 to 24 in the last 18 months, Brooks considers himself fortunate. Dozens of other mills in Pennsylvania, the nation's largest producer of hardwood lumber, have closed or been purchased in recent years.

Production nationally is down 25% since 2000 to just over 10 billion board feet, according to the Hardwood Review, a Charlotte, N.C., publication regarded by many in the industry as authoritative for economic forecasts. The publication predicts production will fall to 9.5 billion by the end of 2007.

Pennsylvania mills produce just over 1 billion board feet of hardwood lumber, or roughly 10% of the U.S. total, according to the state Agriculture Department. The state's hardwood industry generates more than $5 billion in sales.

Production since 2000 has been fairly constant in Pennsylvania, which is considered to have some of the best hardwood forests in the country. But the number of mills has declined by about 20% since 2001 to just more than 300, according to a state estimate. The smallest operations may simply be several workers sawing in a spare barn when times are good.

"There are so many of these small ones that I don't even know about," said George Barrett, editor of the Hardwood Review. "Many of those have disappeared."

Standing in a warehouse filled with neatly stacked piles of lumber waiting to be sold, Brooks, 66, said he had owned his mill since 1980. "To give up a business is like giving up one of your children. That's tough. It's really tough," he said.

The lean times are largely blamed on the trickle-down effect of dozens of U.S. furniture and cabinet manufacturers in the last several years moving overseas, particularly to China, where wages are lower, said Paul Lyskava, executive director of the Pennsylvania Forest Products Assn.

Wood must be exported to China, and the United States is not the only supplier -- nor the cheapest. Forests in the Amazon and parts of Africa supply some timber to China. Legislation to crack down on illegal logging has been introduced by Sen. Ron Wyden (D-Ore.).

"China and Asia have completely changed the landscape of the forest products industry in Pennsylvania and the United States," Lyskava said. "The sawmill sector is losing a tremendous amount of its customer base."

Other factors are taking a toll too.

Sawmills must pay for tracts of timber to harvest long before they sell the resulting lumber, meaning they can overpay. Nearly 60% of lumber production costs are in the costs to buy timber -- tying up capital on logs that may not be harvested for a year, the Hardwood Review said.

Practicing price controls is important, many business owners said, and the cost of timber could fall with demand declining and more unbought lumber sitting in warehouses.

Many mills hope to make money with more efficient practices, and by selling every part of the log.

At Brooks Lumber, the best wood is cut into different-size boards. Lesser-quality timber might be used to make pallets or railroad ties. A conveyor carries large shavings to a mulch pile. Finer, smaller shavings are captured to sell to farmers as barn bedding.

"We can't afford the waste," said Ron Andrews, president of Deer Park Lumber Inc. in Tunkhannock, Pa.

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