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Economy: New plant would continue wood board, may expand

Bemidji's former Ainsworth Lumber Co. plant would continue to make a wood products building board, if a Vancouver, British Columbia investor group successfully buys the plant, says Sen. Mary Olson.

The new plant would continue to make an oriented-strand board-like product used primarily in the housing industry, Olson, DFL-Bemidji, said Tuesday in a telephone interview.

Monday she sent a letter to Ainsworth officials urging them to continue negotiating with Vancouver engineer Terry McSweeney, who represents a group of investors. Talks are stalled while Ainsworth determines a fair market value for the plant's assets.

Ainsworth's Bemidji OSB plant was closed last fall, idling about 150 workers. It announced the plant's permanent closure earlier this year, as well as plants it owns in Cook and Grand Rapids.

"In terms of the Bemidji plant, it's important we get a primary forest-related industry back into that location," Olson said. She offered concerns about Ainsworth's marketing targets for the plant to "green" industries that make use of wood processing byproducts for bio-energy businesses.

That's what it has proposed for its former Grand Rapids plant site, with an Eco Industrial Park of smaller business involved in biomass energy.

"From what I understand, from what Terry McSweeney said, that might be very appropriate for Grand Rapids but he seemed to think that Bemidji was the most viable OSB location of the three plants," Olson said. "That would be consistent of what I heard from the plant's management staff before it closed, that this was a very efficient model for producing OSB compared to some other plants, not just among those Ainsworth owns."

The Bemidji plant offers special attributes to continue as an OSB manufacturer, she said.

"Apparently the plant in Bemidji has a permit to be able to use 40 percent of other kinds of species than the typical aspen," Olson said, "and apparently the group (McSweeney) represents has another plant where they've been very successful in using those other species integrated into the board they make."

Meetings have also been held with state Employment and Economic Development Commissioner Dan McElroy, Olson said. While the state can't offer subsidies, given its current budget situation, it may be able to offer loan guarantees.

"Their plan would be to reinstate some of those people who were in management" at the former plant, Olson said. McSweeney "seems to feel that the plant was being well-managed and well-run by the people who were employed by Ainsworth locally.

"But he does feel that there would be some changes locally that would need to be made, an d ultimately over the course of the next several years as the housing market turns around and as their ability to build equity and build value in the plant, they would be looking to expand the plant and potentially quite dramatically increasing the output of the plant," she added.

McSweeney talked about financial assistance with McElroy and Sen. Tom Bakk, DFL-Cook, chairman of the Senate Taxes Committee, Olson said.

"They talked about some of the financial assistance that's available, not really in the form of grants but more in the form of guaranteeing the loans or guaranteeing a certain percentage of loans to try to make it easier for the group to obtain a portion of the financing for the purchase because the market has tightened up so much," she added.

Much of the traditional bank sources -- American or Canadian -- are more difficult to tap in today's economy, Olson said, making state loan guarantees a needed vehicle.

"The federal government has available some loan guarantee programs that will help to make it easier to access the kind of financing that would be needed," she said. The purchase price would only cover part, she added, as the group plans "a considerable amount of updating and expansion."

In her letter, she urges the two sides to retain a mediator to help negotiate if they can't resume talks.

"I don't have a preference of one party over the other or any idea what an appropriate purchase price should be, but I do know if you try to encourage people to sit down at the table together, if there appears to be an impasse ... and maybe bring in some neutral third party to help you move those discussions along, then I think that might be potentially helpful," Olson said.

Will there be a deal?

"We'll see where that goes," she said. "All of us who are legislators from that area are very interested in doing anything we can to be helpful. Our goal is to try to get those jobs back in our area."