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MailTribune.com
  • End of an Era

    The closing of the Rough & Ready sawmill takes with it a way of life central to Oregon's economic history
  • The band saw hanging on the wall in the saw filing shop at the Rough & Ready Lumber Co. sawmill is twisted tightly into an impenetrable steel tangle.
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  • »  RELATED CONTENT
    • Decline of an industry
      There were 63,700 timber industry jobs statewide in 1990, a figure that dropped to 25,300 by 2010, according to statistics kept by the U.S. Forest Service, U.S. Bureau of Land Management and the Or...
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      Decline of an industry
      There were 63,700 timber industry jobs statewide in 1990, a figure that dropped to 25,300 by 2010, according to statistics kept by the U.S. Forest Service, U.S. Bureau of Land Management and the Oregon Forest Resources Institute, a Portland-based industry group.

      In 1988, there were 165 sawmills statewide, falling to 69 last year.

      In Jackson and Josephine counties, 22 traditional sawmills were operating in 1975. The Rough & Ready mill was the last one of its kind operating in the two-county area, according to the Southern Oregon Timber Industries Association.
  • The band saw hanging on the wall in the saw filing shop at the Rough & Ready Lumber Co. sawmill is twisted tightly into an impenetrable steel tangle.
    "When they come flying off the saw, they wrap themselves up into a ball," explained company co-owner Jennifer Krauss Phillippi. "There is so much tension. It flies off almost like a balloon that is losing air. The guys run when it happens."
    "Sometimes the band saw hits an insulator or something in a log," said her husband, Link Phillippi, the company president. "It's dangerous. Pieces will fly all over."
    The Gordian knot of steel serves as a metaphor of sorts for the major problem facing the family-owned firm, which ceased operation this month. The owners could not unravel the logjam that tied up the flow of logs from local federal lands to the plant.
    After 91 years, the company has closed, leaving 88 people, mostly Illinois Valley residents, without jobs. The firm's payroll in 2012 was about $3 million, said Jennifer, a 1978 graduate of Illinois Valley High School.
    The lion's share of the crew is already gone. The small-log sawmill and the conventional sawmill are both silent. The planer crew was laid off Monday.
    A lone forklift driver moved the last of the finished lumber for shipping early next month. He drove quickly and efficiently, seeming to defy the fact his final day on the job is near.
    It was the last operating traditional sawmill in Jackson and Josephine counties, said Dave Schott, executive vice president of the Southern Timber Industries Association based in Medford.
    "It's real sad — they gave it their best go, but they couldn't keep it going without a reliable log supply from the local federal forestlands," said Schott, who is also a member of the Southern Oregon Forest Restoration Collaborative. The group includes representatives of both the industry and environmental camps.
    Critics within the conservation camp say much of the mill's problem was self-created because it shut down the small-log mill, a charge the owners reject.
    "My heart goes out to the workers being laid off — I have a lot of sympathy for the folks who have lost their jobs," said Joseph Vaile, newly appointed executive director of the Klamath-Siskiyou Wildlands Center in Ashland.
    "We do need a small-diameter mill in the Illinois Valley that can handle the by-products of the important restoration work that needs to happen in the woods," said Vaile, a member of the collaborative with Schott. Much of the harvest now coming off federal timberlands is from small-diameter material from thinning projects, he said.
    Today the only footfalls heard on the steel catwalk inside the buildings within the mill are those of Jennifer, 52, and Link, 57.
    The Phillippis — she has a degree in accounting; he is an engineer by training — spent nearly a quarter of a century working for the family firm. During that time they invested millions to computerize equipment and improve efficiency, including $6 million in 2007 to build a biomass cogeneration facility.
    They, along with her younger brother Joe Krauss, 51, who also works for the firm, are third-generation employees. The couple have three children, none of whom they expect to go into the timber industry.
    Link paused under the band saws hanging on rafters in the saw filing shop, reflecting on the closure.
    "This mill could be productive, offering employment and doing work that needs to be done for forest health and restoration work," he said. "It's too bad we couldn't figure it out in time to make this place work."
    He was referring to efforts by U.S. Sen. Ron Wyden, D-Ore., members of Oregon's congressional delegation and others to resolve the impasse over logging on federal lands. Wyden, chairman of the Senate Natural Resources and Energy Committee, last week announced a proposal aimed at increasing the harvest on federal land, but the Phillippis aren't holding their breath that anything will be forthcoming to save the Rough & Ready mill.
    If there is a legislative breakthrough, it would have to occur soon and provide a substantial source of timber for the mill to re-open, they say.
    "We waited and waited," she said. "During the recession, we thought this wood is never coming, but we couldn't imagine putting our employees out into an economy like that. So we kept going. We thought maybe the economic stress would force a solution."
    During that time she served on the Oregon Department of Forestry board and on Gov. John Kitzhaber's timber task force. Her husband was also involved in public policy trying to find a solution.
    "The problem has always been the wood supply," Link said. "Probably 90 percent of our wood used to come from federal timberlands. Now it has flip-flopped.
    "Mills have competitive advantage if they have a log supply in their backyard," he added. "We don't have that now."
    With roughly 80 percent of the forestland in the Illinois Valley owned by Uncle Sam, that leaves precious little federal timber available for the operation, Link said.
    Beginning with the listing of the northern spotted owl as a threatened species in 1990, logging on federal land has been drastically reduced to protect old-growth habitat and salmon-spawning streams.
    The family owns about 20,000 acres of forestland locally, with another 5,300 acres in northeastern Oregon.
    "At best, our local forestland would provide 10 to 12 percent of what Rough & Ready needs to survive," she said.
    "We have had to go out farther and farther every year to find enough wood to run one shift here," Link said. "Everything is being eaten up in transportation costs."
    They have hauled logs from as far away as Orville, Calif., some 300 miles distant.
    That's a far cry from the original operation known as the Krauss Brothers, which began in Selma in 1922 when her grandfather Lou Krauss Sr. and great-uncle Fritz Krauss logged with little more than a steam engine and some horses.
    "They moved the mills to the timber back then because the transportation system wasn't fully developed," Link said, noting they employed a steam-powered portable mill.
    In 1943, the family bought a small mill at the company's present location near Rough and Ready Creek.
    "The business started really growing in the 1940s," she said. "The family philosophy was always to reinvest profits back in the mill. We were always very aware growing up that you saw money coming out of the mill because it was always being reinvested."
    Early in the 1970s, the family invested millions of dollars into a small-log mill, she said.
    "They were probably kicking and screaming a little bit, but dad (Lou Krauss Jr.) was smart enough to know that's where things were going."
    She figures her family had one of the first computerized small-log mills in the region.
    "We were thinking that's where the future was," she recalled. "That's when all the timber battles were going on. Those environmental protests were a good thing to wake everybody up to see you had to have some rules and restraints to take care of the land."
    However, she would argue the pendulum has swung too far.
    "It's been interesting that in the past 10 years, the conservation groups — the more reasonable ones — have recognized there is a need for a manufacturing infrastructure," she said, citing an agreement by many in the debate that thinning the small-diameter trees in forests overstocked by decades of fire suppression will increase forest health and reduce fire danger.
    At one point in the late 1980s, some 225 people worked in the plant, which included two shifts at the small-diameter sawmill and one shift at the conventional sawmill that cut larger logs.
    "But that was "pre-owl days," Link said.
    In the 1990s, the company laid off one shift at the small-log mill, cutting the crew to about 145 people, he said.
    By 2002, Rough & Ready's owners shut down their small-log mill and upgraded the conventional mill to serve a niche in appearance-grade lumber for exposed beams and high-quality windows and doors. The conventional mill relied largely on 80- to 100-year-old trees that were 2 feet or less in diameter at chest height.
    "It's important to me that people understand we did retool," Jennifer said. "Continuing in the small-log mill would just mean more logs being needed. The reason we went to our conventional mill was that we could use fewer logs and could bring them in from the outside. They were not old-growth. These were medium-size logs."
    "We ran the small-log mill for over 30 years, but there just wasn't enough wood being sold — small or big — to justify the investment to keep those mills competitive," Link said.
    Before deciding to close the mill, the Phillippis had considered sinking $2 million into a sawmill upgrade, Jennifer said, adding they ultimately decided they couldn't justify the action.
    "You need a reasonably high certainty there would be the logs to run through the mill to repay the investment," Link said. "It just wasn't there."
    Before making the decision to close the mill, the Phillippis talked to everyone they knew in hopes of discovering something to give them optimism for a brighter future.
    "When we made the decision to close, it was on a Friday," Jennifer said. "We had made some calls to some political people. We realized it (keeping it open) wasn't in the cards. The following Wednesday we made our announcement."
    There is little chance another firm could buy the mill and restart it, they say.
    "We have had lots of interests, from auctioneers who want to piece it out and get a cut of that all the way to companies who maybe want to buy it and run it," she said.
    "They would face the same issue we faced," Link said. "The lack of a log supply is driving this."
    Before walking back to his office, Link looked back at the now-quiet sawmill.
    "Our operators were key in this mill," he said. "They made cutting decisions to get the most value out of the logs. Those were decisions that could not be made by computers.
    "Most of them learned from guys who had been doing it for generations," he added. "Now it is the end of the road. There will be no one to teach that skill now."
    Reach reporter Paul Fattig at 541-776-4496 or email him at pfattig@mailtribune.com.
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