Small Northwest Businesses, Towns Hit Hard By Timber Compromise

PRESIDENT Clinton's attempt at a grand compromise between loggers and environmentalists in the Pacific Northwest is not going down easily with the business community in this timber-rich region.

"Clinton promised a balanced approach, and an 80 percent reduction [in logging on federal lands] certainly does not represent a balance," says Butch Bernhardt, spokesman for the Western Wood Products Association in Portland, Ore. "It's going to be a very destructive plan for the forest products industry."

"Every component of it is fraudulent" charges Larry Mason, executive director of the Washington Commercial Forest Action Committee, a grass-roots organization based in Forks, Wash.

Despite the industry's general frustration with the plan, which the president outlined July 1, the economic hardship is far from evenly spread throughout the industry, analysts say. The big losers are small companies dependent on federal lands for timber and their home towns. Rural logging towns have already been devastated by the court-ordered shutdown of logging on federal lands in 1991 to protect the northern spotted owl. "My family lost their sawmill," which had employed 40 people in 1988, Mr. Mason says. A number of men from the town are now working in Alaska or other states and sending money back to their families.

Some large companies may benefit if the limited amount of logging Mr. Clinton plans to allow pushes wood prices up, says Dan Nelson, a securities analyst with Ragen MacKenzie, a Seattle investment house. These include Weyerhaeuser Company, in Tacoma, Wash., and Louisiana Pacific Corporation of Portland. Both have big holdings of uncut timber.

Analysts also say the Clinton plan signals a continuation of the trend of decreasing reliance on the Northwest, which now supplies roughly one-third of the wood used in the United States. This trend could be favorable for mills in southern states and foreign countries.

Clinton promised to do what President Bush had failed to achieve: to come up with a solution that blended environmental protection while giving a boost to an industry that provides the economic base for many communities from Northern California to the Canadian border.

After holding a "forest summit" to listen to various views, the administration has proposed:

* Allowing about 1.2 billion board feet of timber a year to be logged from federal lands in the region - a level far below the pre-court-order amount but above that of the last two years.

* Providing $1.3 billion in aid for economic adjustment and job creation in hard-hit towns over the next five years.

* Setting aside areas to protect endangered species, but allowing selective "thinning" or "salvaging" activity by loggers.

The logging decline in the Northwest had already caused mills in the southern US and Canada to step up production somewhat this year as the industry prepared for an expected recovery in homebuilding, says Shawn Church, assistant editor of Random Lengths, a Eugene, Ore., trade publication. But house construction has been lackluster, so there is no sign of any wood shortage at present, he says.

The longer-term result might be an increase in imports or in the use of alternative building materials. US firms are already staking out operations in New Zealand, Russia's far east, and Chile.

Mason laments that prolific Northwest forests will go unused while US consumers pay to ship logs from Siberian forests with much lower productivity.

Clinton's relief for towns like Forks, in Washington's Olympic Peninsula, must be approved by a Congress that wants to be seen as a frugal tamer of the budget deficit. "How can he state with certainty" that Congress will approve $270 million for 1994, and similar amounts later, asks Mason.

Even if the money comes through, Mason says it will be very difficult for communities like Forks to develop new industries. "It's not only remote, but it rains 160 inches a year here," he says. The plans for logging 1.2 billion board feet a year, and for allowing salvaging and other experimental practices, will take time to win approval, Mason adds.

The administration must convince US District Judge William Dwyer that its plan complies with environmental laws - a process that is slated to begin July 16.