By Jeff McDonald -- The Bulletin, Bend, Ore.
WARM SPRINGS, Ore. (MCT) - The Warm Springs Forest Products mill hasn't seen any work over the past few months, so even a small order of large logs cut for the housing industry brought excitement among mill employees March 10.
But the lumber order is too small to bring much hope for the 58 employees who will be out of a job April 29, after being given two months' notice at the end of February.
A large pile of small and large logs sat uncut at the lumberyard, signs of the struggles with plummeting orders and money lost for the company that started as a tribal enterprise in 1966.
The mill employs 115 people today, 77 percent of whom are tribal members or married to tribal members, according to Mark Jackson, the CEO of the company, which is owned by the Confederated Tribes of Warm Springs.
The logs from the pile will either be sold off to other mills or ground into chips that will be sold to paper and pulp companies, Jackson said.
''It would be difficult to support all those people on revenue from chips,'' Jackson said. ''We saw the need for a large layoff to make it through this downturn. I hope it's the only layoff this year.''
The plan is to keep the mill in ''conditional shutdown'' mode, Jackson said, meaning that essential workers will be kept on staff who can start up the mill when an order comes for more log processing, as it did March 10.
''The company is in jeopardy,'' Jackson said. ''If it wasn't in jeopardy, you wouldn't have seen the layoffs.''
The layoffs will especially hurt the tribes, which have a near 30 percent unemployment rate and up to 50 percent when including unemployed adult tribal members who have stopped looking for work, Jackson said.
''It's a terrible blow for the entire community because you may have a single employee who supports his own family or two families,'' Jackson said.
The falling price of lumber, which dropped nationally from its peak of $475 per thousand board feet in 2004 to $250 per thousand board feet in 2007, is expected to drop further this year and next, Jackson said.
The company's aging technology and rising costs of production are also making it difficult to compete with larger mills, he said.
Most of the soon-to-be laid off employees are seeking other jobs and receiving training from WorkSource Oregon and the Oregon Employment Department, said Tommy Fuentes, production manager.
Fuentes, 58, has been with the company for 22 years and will keep his job, he said.
Two of his sons, ages 26 and 32, are among the workers who will be laid off, Fuentes said.
''They saw what was coming,'' he said. ''It was probably harder for me than it was for them. They're already looking outside of the reservation.''
His sons will both likely stay on the reservation, but find work off of it, Fuentes said.
Another employee, 58-year-old Frank Smith, has already found work as a lifeguard and identification checker at the Kah-Nee-Ta High Desert Resort & Casino, which also is owned by the tribes, he said. His position of log sorter operator will be cut in April.
''I worry about the younger people who have families,'' he said. ''There are some that don't have education or job skills. Those are the ones that I worry about.''
The work stoppage at Warm Springs Forest Products means that three-year employee Frank Fuiava, 24, will also be out of a job.
The father of two, while painting an office for the company, said he was ''not sure'' what he was going to do.
''I'm worried about how I'm going to pay my bills,'' said Fuiava, who said jobs are scarce in the county.
The Warm Springs mill, which produced 43 million board feet of lumber last year, has seen the prices fall for its premium products to the point where the company operates at a loss, Jackson said.
Its premium lumber is certified sustainable by the Forest Stewardship Council for the way it's harvested and manufactured into timber products, he said.
''We can't afford to make the product we are making now because builders aren't willing to pay for a certified [sustainable] product,'' Jackson said. ''It's a huge disappointment because I thought the green community [nationwide] was much more serious about sustainable building.''
At Warm Springs, the future of the company depends on the ability to retool and change direction, he said.
The drop in lumber prices also has lowered profit margins at one of Warm Springs Forest Products' largest customers - Bend-based The Miller Lumber Co. - but the slowdown has not resulted in any layoffs, said Harry Miller, vice president and co-owner.
Miller Lumber buys finished lumber from Warm Springs Forest Products and resells it to commercial contractors, who are paying less for their products than they have in the past, Miller said.
Strong custom home remodeling and commercial markets have helped Miller Lumber avoid layoffs, Miller said.
''There are just fewer homes being built,'' Miller said. ''The price of lumber is at a historic low. It just doesn't pencil out for [Warm Springs Forest Products] because it costs too much to extract the logs.''
The drop-off in business also could hinder the Warm Springs company's plans to expand its existing biomass facility, Jackson said.
The $50 million biomass expansion project would rely upon an adequate supply of wood waste that ideally would come from the adjacent sawmill, he said.
But the project, which would protect the forest's health by removing wood waste, add jobs and create a potential revenue source, still could happen without an operating mill, Jackson said.
''We're still very positive about biomass,'' Jackson said. ''But it would be very difficult to make it work without a mill. The mill and the biomass plant would be synergistic together.''
Copyright (c) 2008, The Bulletin, Bend, Ore. Distributed by McClatchy-Tribune Information Services.