Timber towns and the tariff

Times in the timber industry are about as rough as Brian Peters has seen in his 10 years as a logger.

The world market is flooded. Mills are closing. Timber prices are down, even during a sustained housing boom. About the only good news he's heard lately is that tariffs were slapped on Canadian softwood.

The tariffs, an outcome of longstanding allegations that the Canadian firms rely on unfair subsidies to compete with US industry, won't resolve all the challenges faced by Mr. Peters and other loggers from Maine to the Columbia River mouth.

Trade sanctions certainly won't restore the timber industry to its former prominence in towns like Forest Grove, which used to depend totally on the log-laden trucks that poured down the mountains, bringing money with them. Even within America's forest-products industry, some companies express ambivalence or outright opposition to the tariffs announced by the Bush administration last month.

But for Peters, who owns a small company of about 10 people here, the move promises to be a real help in hard times.

"I do know that, as a logger, timber prices are going up slightly," he says. "And when I asked why, they said 'the Canadian tariff.' And that's good enough for me."

But today, even as Peters cuts Douglas Fir and Western Red Cedar in the low coastal range to the east, and the Cascades to the west, Forest Grove is increasingly evolving away from its timber-town roots.

Log trucks still rumble into town, but now they mingle with trucks full of circuit boards and semiconductors and SUVs carrying commuters to nearby Portland.

These days, the bounty of the so-called "silicon forest," has become more vital than that of the real one. In 1970 Oregon had 950 mills that put out 6.7 million board feet. By 2000, 278 mills were left, putting out 5.9 million board feet. During the 1990s alone, wood products went from 6.1 percent of Oregon's economy to only 2.1 percent.

During those decades, the transformation of Portland – which was once called "Stumptown" because of all the logging – has helped to buffer nearby towns from dependence on trees. In more isolated areas, rural towns have been economically ruined by mill closures.

Even so, timber remains vital to the regional economy. The lumber mill is one of Forest Grove's biggest employers, and the tiny nearby town of Banks relies heavily on a mill that has managed to survive – so far.

Mark Laukkanen, a timber buyer for Banks Lumber, one of the last family owned mills in the area, sits in his pre-fab office and lists a legion of lumber-industry woes.

Across the railroad tracks from his office stand giant piles of logs waiting to be cut into boards for new homes. Just beyond the mill is a massive new housing project for Portland commuters.

For a long time, Mr. Laukkanen says, there was less wood for sale because of protections for the endangered spotted owl and other litigation that reduced federal timber sales. Then the Asian market dried up. Meanwhile, machinery to stay competitive costs more every year. Such factors, coupled with low-cost Canadian lumber, have been like a vise-grip. Banks Lumber lost money at least three months last year, he says.

"If somebody [in Canada] is getting stumpage [the landowner's fee] for $73 dollars, how can we compete when we're paying the state $414? There's just no way," Laukkanen says. "If we're going to stay in this business, we have to have something to equalize that out."

That just happened – thanks to the controversial tariff. For the past two decades US lumber companies have formally accused Canada of subsidizing its industry. Recently, when a deadline for a resolution passed, the US Commerce Department hit Canadian softwood with a 19.3 percent subsidy penalty and a 9.7 percent tariff, totaling an average duty of 29 percent, effective in May.

The irony that President Bush is implementing tariffs on lumber (and steel) even as he promotes new international free-trade agreements is not lost on enraged Canadians. In British Columbia, which sells 70 percent of its wood products to the US, Forests Minister Michael de Jong called George Bush a "gutless wonder" for not standing up to American "lumber barons," and said the US was a "hostile foreign power." Montana Sen. Max Baucus sniped at Canada's "Soviet-style" timber system.

But, if the reaction in Canada has been sharp, it is generally muted here in the US, even among major timber companies.

In part, this reflects how of how integrated the two nations' economies have become. Firms like Weyerhaeuser, with operations on both sides of the border, have issued statements lambasting the tariffs, warning it will cause a flood of Eastern European timber. (European imports or not, Weyerhaeuser stands to lose money shipping timber south.)

US consumers, too, stand to lose. Groups like the National Association of Home Builders and Home Depot, who enjoy cheap Canadian boards, say the duties could add $1,500 to the price of a new home.

"Canada is complaining that these duties will put all their people out of business," says Deborah Regan of the Coalition for Fair Lumber Imports, which represents 270 US timber firms. "but it will equalize the mill closures on both sides."

That retribution comes too late to save outfits like Taylor Lumber & Treating, a small mill in Sheridan, Ore., that went bankrupt last May.

But Sheridan, too, has been diversifying. With a casino that employs 1,500 and a 400-job federal prison, the mill closure affected mainly the 90 people who lost jobs. At the Green Frog Bar & Grill, a good-size lunchtime crowd gathers at tables and video poker machines. People in the old logging town focus more on the tariff's effect on the cost of new homes – springing up for 50-mile Portland commuters – than on jobs.

"Twenty years ago," says City Manager Mike Sauerwein, "a mill closure would have devastated a town like this. But we've diversified to the point where, sure it's a hit, but it's not a death sentence."