Business Q&A -- The Timber Industry
EdCox, 54, is a former lawyer who has been involved in the timber industry for 24 years. He was raised inEureka, Calif., and attended Humboldt State University before serving a three-year tour of duty in Vietnamwith the Marines. He earned a degree from Humboldt State in 1974 and went on to earn his law degree in 1977from the University of the Pacific's McGeorge School of Law in Sacramento. He began practicing law inCalifornia the following year. Cox moved to Southern Oregon a decade ago, lives near Johns Peak and is anadvocate for revamping land-use laws on timberlands.
Q: What's the state of the timber business in light of foreign competition?
Foreign competition, primarily Canada, has been shipping in cheap wood. The Canadian government pretty much gives away their timber to industry in order to create jobs. They sell stumpage at a very low price compared to the United States. Now, it's evolved into something quite a bit larger than that. It's a transitionary problem as I see it. Our government has put a 29 percent penalty on Canadian lumber. But I don't think you'll see a disruption at all in supply. Other countries will step in and fill the void, because their labor is so cheap. The developing countries are beginning to put together the infrastructure to tap their resources, and every year their exports are increasing to us.
I sold high-quality logs to the Japanese for six years for $1,000 per board-foot; it's half that now. If we were to block imports, then we'd be back in business immediately. Of course the infrastructure is gone. There's a plus and a minus to this situation. Wood is very cheap right now, compared to what it was six years ago. If it wasn't for cheap imported wood, lumber would be about double. If you're just paying standard wages and stumpage costs, that wood would cost twice as much as it does right now.
The timber business has always been cyclical, and I was looking for it to bounce back, then started noticing some real changes. The Russians are starting to develop a real infrastructure to move their timber. They've gone out to capture the Chinese and Japanese markets, and I don't think we can get them back. There used to be 45 ships a month from Coos Bay to Japan. Then after Japan's economy went south four or five years ago, it dropped down to about three ships a month. The Japanese found they could get the same product and pay less by getting it from the Russians.
What has been the impact here in Southern Oregon?
In this valley, there's only one mill - Boise Cascade in White City - that you can deliver a log to. There might be some mom-and-pop place where you can deliver some hardwood or a small specialty plant employing four or five people. There are plants that make secondary products, but only one spot to deliver a log. There are none in Grants Pass, and my understanding is that there is one mill in Klamath Falls that will accept a log, and that's a small operation.
All the major companies are shut down. You have to go either to Gilchrist, Glendale, Roseburg, or Rough & Ready (in O'Brien) or South Coast in Brookings. But as you go farther from your source, the more expensive it gets to deliver.
Boise gets all the logs it wants dirt cheap right now because timber owners need money. You're not going to see the price of logs go up. If the forest service put up 10 percent of what they're supposed to put up in timber, it would swamp Boise.
Q: Do you think new mills will eventually replace old ones?
The infrastructure to process logs, the mills, the fallers, the skilled workers have gone off and gotten other jobs. Once they move into a new line of work you don't get them back. It would be very difficult to start a new mill.
If this change is permanent, and I think it is, no one is going to put up that huge amount of capital. This isn't the 1950s; now you have to go out and get all the permits and run the gantlet. I'm worried that we're losing our ability to become the maker and manufacturer of things and that we'll be more and more dependent. But the standard of living in the developing countries that are providing goods and services is going up, and that's a positive.
Q: What's the next step for timberland owners if harvesting isn't an economically viable option?
The land is so restricted now for the timber industry, we should be asking 'What are we protecting it for? What's the rationale for this protection?' I believe our political leaders and Southern Oregonians need to start looking at zoning laws. If I cannot sell the product that grows here and there's no market for my trees, why is it in the public interest to keep it zoned so that nothing else can be done with the land?
When they adopted Goal — and Goal 4 of the state zoning ordinances, they did so to protect agriculture and timber because they were such important components of the state's domestic product. That component - at least timber - has diminished each year. I used to do 14 to 20 transactions per year, buying property, logging and sending it to the mill. Last year I did none. The three preceding years, I did one, and they were minor.
Q: What is your suggestion for change?
I don't pretend to have all the answers, and I hate to copycat California. But if you have unimproved mountainous land in California, you can build on it. We have a lot of land in the general vicinity of urban areas. I believe we should rezone it into rural residential land. That would allow the economy to build up for everyone getting involved in that chain of events. It would also create a higher tax base for the county.
I'm sure there are other uses out there that would be valid. A lot of people skeptical of developing things are going to go through a learning curve where they'll see it's in their best interest.
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