Riding out the slump

major employer: Boise Cascade employs about 700 workers in Union County, and supports related businesses like logging companies. Above, a log truck is unloaded recently at the La Grande mill. - The Observer/CHRIS BAXTER

But tough times have already begun, and Insko looks for them to be around awhile.

“Overall the industry is in a major downturn,” said Insko, who oversees four wood products manufacturing plants in Union County and one in Kettle Falls, Wash. “This is the worst I’ve seen it in a number of product markets. It’s probably the worst in the last 40 or 50 years.”

Boise is the largest private employer in Union County, providing about 700 jobs at the La Grande sawmill, the Island City particleboard plant and the stud mill and plywood plant in Elgin.

The company is a main player in the local economy. But its problems are big ones: housing starts around the country are down and the market for all the products produced in the Inland Region has suffered accordingly.

The stud market is a case in point, Insko said.

“That started trending south nine or 10 months ago, when the housing starts went down,” he said. “There was a sharp turn-off on the demand side, and then on the supply side, prices were up.”

Insko said the crisis worsened about the middle of 2007. Then prices fell for pine lumber products, including windows, doors, and boards sold at Home Depot, a major Boise customer. Demand for particleboard also took a downhill tumble.

“We’ve seen the markets that are tied to housing drop off, and it’s ongoing and worsening,” Insko said.

Plywood held its own until just recently, in part because of Boise’s dealings with Home Depot. But that market also is worsening, said Insko.

“So we’re down now in everything,” he said. “We’re in the mode of determining where to cut costs.”

Insko said the pinch is tightest at the particleboard plant, which is running somewhere between 75 percent to 80 percent of capacity, and likely will continue at that level for the next several months. The La Grande sawmill also has scaled back operations.

There have been no long-term layoffs, but many employees are working less than they’re used to.

“It’s a day or two down at a time. It’s impacting everyone, with reduced work schedules,” Insko said.

The Elgin facilities have been running at or near full strength. Insko said it is important to keep the stud mill working because it produces shavings used to make particleboard.

By keeping costs down, Insko hopes his company will be able to avoid widespread layoffs. There’s no guarantee it won’t happen, however.

“We’re not planning layoffs, but that could change. Our feeling is 2008 is going to be very tough and 2009 very difficult. Right now, assuming we get a little improvement, I don’t see mass layoffs taking mills out for months on end,” he said.

As gloomy as the picture appears, it is not totally bleak.

For one thing, logs haven’t been as difficult and dear to come by as they have in the recent past.

STOCKPILE: Boise’s log supply problems were eased somewhat by the recent closure of the Wallowa Forest Products mill in Wallowa. Markets for value-added wood products remain sluggish, however. - The Observer/CHRIS BAXTER

“You never want to hear about a mill going out of business, but for Boise that was huge in terms of access to log volume,” Insko said. “People need to sell logs, and the closure has pushed prices down.”

Closure of a Boise Cascade mill at White City also is helping the Inland Region stay competitive, he added.

“We’ll get some value-added customers from that. In the short term it won’t take us into the black, but it positions us better,” he said.

Also on the plus side, Boise, a business with worldwide dealings, remains successful.

“There is a benefit of being part of a bigger organization,” Insko said. “Boise has a strong balance sheet. We’ve performed well and we’re financially solid. I like our position compared to our competitors.”

Insko said the mills he oversees are blessed with employees who know how to weather tough times. He said he has confidence in them.

“We’re staying focused on the future. The market will come back,” he said. “We’ve got a work force that’s always risen to the challenge, and I see it doing that again.”