Beltrami County Board: Tour highlights state of forestry industries
Beltrami County netted about $1.6 million this year from sales of timber. Local processing plants - specifically Norbord oriented strand board plant in Solway and Potlatch stud mill east of Bemidji - need timber supplies to stay in business.
The goal on both sides is a balanced use of the county's natural resources. However, the recession and steep drop in housing starts mean forestry industries are scrambling to stay in business.
Being able to obtain logs from a close radius of the plants is key to success for both Norbord and Potlatch, plant managers said during tours by Beltrami County officials Tuesday. Present were Commissioners Jim Lucachick, Joe Vene, Quentin Fairbanks and Jack Frost; Natural Resources Manager Greg Snyder; and County Administrator Tony Murphy. Commissioner Jim Heltzer was excused from the tour.
Jack Wallingford, manager of Norbord, said 70 percent of OSB goes into new home building. Although the trend seems to be looking more positive in recent months, he said the recent building bust is probably the worst since World War II. He said 28 OSB plants in North America have closed, either permanently or indefinitely.
Pete Aube, manager of Potlatch, offered similar numbers. He said 45 percent of lumber is produced for housing, but the production for 2009 is one-fifth of the 2005 production and one-half of the 2008 production. He added that 350 Bemidji-size lumber mills have closed down since 1995.
Previous recessions caused the weaker members of the forestry industry to fail, he said. "We're seeing this recession take out the strong. We believe things can be good again for those who survive."
He said he expects improvement in the economy, but also expects people in the future to build smaller homes and more multi-family residences, which require less lumber.
Wallingford said positive trends he sees include new home prices more in line with incomes and reasonable interest rates.
"Nearly all forecasts suggest we're at the bottom," he said. "The angle of the curve going down is much steeper than the curve going up. Slow growth is what we're looking for."
Aube said Potlatch business strategies include finding and keeping customers, never refusing an order, making products that sell, limiting inventory, reducing costs, focusing on innovation, avoiding raw materials shortages and a 20 percent increase in productivity.
He credited Beltrami County for helping keep the plant going last spring when Potlatch needed a supply of nearby timber.
"It literally saved our lives," Aube told county officials. "You stepped up when we needed you to."
Both managers cited the impact their businesses have on the area economy.
Wallingford said Norbord employs 141 people with a $7.5 million annual payroll and $3.5 million benefits package. Log and services purchases also add to the northwestern Minnesota economy.
He also described the plant's efficiencies: all bark and excess wood are burned for operations heating rather than gas, ashes are sifted and sold to farmers as a soil treatment and a biological treatment cleanses the exhaust before it is released.
"For our air, it's like a giant septic system," Wallingford said.
Aube said the 87 Potlatch employees are all salaried; the annual payroll is $4.7 million with an additional $1.7 million in benefits .
Aube demonstrated that nothing from the logs is wasted. Chips go for paper pulp; bark for landscaping, plant fuel and compost; sawdust and planer shavings for poultry bedding; and cellulose flour to keep products like powdered cheese from caking. Ashes also are sifted and sold as fertilizer. The water that is extracted from the logs during drying goes into the boilers so Potlatch doesn't have to tap into ground water and the plant uses zero fossil fuels.
"We use every piece of the log, and I mean every piece," Aube said.