Union County’s battered economy took another hard blow Wednesday, as Boise Cascade announced it is shutting down its La Grande sawmill.
closure imminent: A Boise Cascade worker goes about business as usual this morning at the La Grande sawmill, but not for much longer. The company announced Wednesday business as usual at the sawmill will be coming to a close in June. - The Observer/CHRIS BAXTER
Boise spokesman Steve Lyon said the company is curtailing operations at the La Grande plant and one in Kettle Falls, Wash., for an indefinite period starting in June.
Lyon said a depressed pine lumber market and an inadequate timber supply are to blame.
“We don’t know when our operations might come back up again, but it is not any time in the foreseeable future,” he said. “Obviously, the effect of this on our employees, their families and the communities is regrettable but unavoidable.”
The La Grande sawmill is expected to cease operations by the end of June, once it has run through the existing log inventory. The extended curtailment will affect approximately 120 employees.
The Kettle Falls small log mill is expected to cease operations in early May. Approximately 18 employees will be affected by the curtailment.
Boise’s particleboard plant near Island City and the stud mill and plywood plant in Elgin will continue to run.
Some sawmill employees may have bumping rights into other facilities, but the overwhelming majority will be on layoff, Lyon said.
“We’ve tried everything we can think of to keep these facilities operating, but we have run out of options,” notes Lyon.
Lyon said that in the first quarter of this year, turmoil in financial markets, continuing foreclosures, elevated inventories of unsold homes, falling median home prices, rising unemployment and low consumer confidence all contributed to a weak demand for the building products made by Boise.
He said housing starts in the United States alone decreased 50 percent in the first quarter as compared to the first quarter of 2008.
“We have challenges in all aspects of the business right now. We simply cannot continue to sustain the losses these facilities are experiencing,” he said.
Boise has been struggling with poor market conditions the past several years, cutting back production and reducing the work force at the La Grande sawmill, the particleboard plant and the facilities in Elgin.
Boise employees are represented in labor negotiations by the Carpenters Industrial Council. In a last-ditch effort to cut costs, Boise recently asked locals in the Inland Region to approve an amendment to the collective bargaining agreement.
The amendment called for deferral of wage increases and temporary reductions in vacation and holiday provisions. It was rejected in a vote this month.
Union representatives said employees voted against it mainly because Boise could not guarantee the mills would continue to operate. They also said workers had already made significant sacrifices in wages and health insurance benefits.
While pine lumber markets have continued to worsen, Boise’s raw materials costs have not gone down, Lyon said. In order to get logs for its sawmills, the company has had to travel hundreds of miles.
In the Northeast Oregon mills, less than 8 percent of the annual volume comes from federal forests, Lyon said. He added that 35-40 percent of the log volume comes from more than 175 miles away.
“The Forest Service has effectively shut down logging on our local national forests, and we are forced to bring in logs from far outside the areas in which we operate,” Lyon said.
He said there is little evidence that availability of logs from local national forests will increase in the foreseeable future.
At last report, Union County unemployment was 14.4 percent, with the manufacturing sector particularly hard hit.
Earlier this year, Fleetwood Enterprises closed its recreational vehicle plant near Island City. Northwood Manufacturing, a recreational vehicle maker located at the Union County Airport industrial park, continues operations but with a reduced work force.
Boise Cascade manufactures engineered wood products, plywood, lumber, and particleboard and distributes a broad line of building materials, including wood products manufactured by the company.
The company is privately owned and headquartered in Boise.