In October 1966, directors of the Weyerhaeuser timber company decided their firm had a problem: not enough dollars, and too many trees.
Ever since 1900, when Frederick Weyerhaeuser purchased vast tracts of land from railroad magnate James [WORD ILLEGIBLE] Hill's Great Northern Railroad, the company had boarded its forest resources.
It was said that more Weyerhaeuser trees died a natural death every year than met the cutting edge of a chain saw. But in 1966, great-grandson George H. Weyerhaeuser became chief executive. He decided that the time had come to turn the trees into money - money badly needed for diversification, growth and expansion of the company's "land base" in the United States and abroad. On Oct. 16, the board abandoned the conservative old policy and ordered a rapid acceleration of tree cutting.
Twelve years later, that decision in a corporate boardroom has had far-reaching impact:
The supply of harvestable timber in the Pacific Northwest's stands of Douglas fir and hemlock has declined and will continue to do so. A 1975 Forest Service projection said that the supply of usable timber in California, Oregon and Washington would drop 17 per cent by the year 2000.
To supply a homebuilding boom in Japan, about 2.7 billion board feet of logs from the Northwest are shipped there a year, and about one third of the lumber in all new Japanese housing comes from the United States.
The American trade balance has been helped by the log and lumber exports, which bring in nearly $1 billion a year.
The Washington state public school system, which receives taxes and payments for timber cut on county, state and federal land, has benefited by the accelerated pace of cutting. This year, the revenues will be $40 million, more than double what they were in 1972.
The rising prices of western timber - a result of dwindling supplies and increased demand - have enabled private owners of forest acreage all over the southeast United States to raise their prices as well. This has affected the South's economy.
The economy of the southeast United States has been affected indirectly as companies acquire softwood holdings there to expand their supplies of timber.
The new policy also achieved many of George Weyerhaeuser's goals for the company. Annual sales of logs, wood chips (for pulp mills), and timber rose from $44 million to $495 million in the first 10 years after the 1966 decision. The money flowing into the company's treasury financed new investments in paper and pulp mills to turn out linerboard, white paper newsprint, and mill cartons.
At the same time, the company moved to expand its access to timberlands - the basic resource of all the "multipulps" (the giant international timber and paper companies).
In one of the largest single land purchases in history, the company paid $350 million for 1.8 million acres in Arkansas and Oklahoma in 1969. The company also obtained leases or timber cutting concessions an another 700,000 acres in Malaysia and the Philippines and 1.5 million acres on the island of Kalimantan (formerly Borneo) in Indonesia.
The negative side of this rapid growth was that it plunged the company into the thick of an emotional public debate over log exports, timber supply and the environment - issues that affect communities, jobs, and the future of the Northwest itself.
In one sense, the Weyerhaeuser company is an unlikely target for the critics. Even they say that the company's forestry practices are superior to other companies, and possibly to the National Forest Service's. Along with the policy of cutting more trees the company also committed itself to rapid reforestation of its lands.
The company contends that it is committed to rebuilding the woods it is now leveling so that sometime after the middle of the next century it will be operating a man-managed "target forest" made up of smaller, but more vigorous and faster growing trees, Forbes magazine recently criticized the company for spending so much money on research and quoted one source as saying, "If Weyerhaeuser has a fault, it's that they're loyal to their towns - they hardly ever close out a location."
Other companies have "cut and run," but Weyerhaeuser says it has invested $509.4 million in mills and facilities in the Northwest in the last four years. Company officials defend their long range policy.
"There's a real paranoia about the timber supply," says vice president Jack Wolf. "But the statistics don't justify it."
Nevertheless, there is no doubt that the policies of the "Big W," as the company is nicknamed, have been felt for better or worse in hundreds of communities across the Northwest.
The critics say that in speeding up the conversion of trees into money, the timber companies are pushing up American lumber prices and threatening the long range timber supply as well as the jobs and business which relay on it.
The whole timber supply is shrinking," said a representative of independent saw mills who asked not to be identified. "The companies have driven the sawmill capacity out of the State of Washington in the Puget Sound area. They can't compete for high priced timber."
And according to Keith W. Johnson, president of the International Woodworkers of America, representing 120,000 loggers and sawmill workers, "Our study shows that there will have to be a fall-off in the rate of cutting. We don't want to look down the road and see thousands of people out of work - truckers, dockers and sawmill operators."
What has been occurring in the Northwest has much to do with the structure and economics of the American timber industry - and with the economic imperatives to which huge corporations such as Weyerhaeuser respond.
In the 1960s, Pacific Coast Lumber companies lost their markets on the East Coast, Cheaper Canadian railroad rates gave lumber from Canada's British Columbia an edge. Regrown southern pine forests that had been cut out at the end of World War II provided a lumber source closer to the East, and a law requiring the use of expensive American shipping from west coast to east coast ports was another disadvantage.
Multipulp companies are tree processors that must keep trees moving off their lands or through their facilities, or lose ground.
As Weyerhaeuser adopted a more aggressive tree cutting policy, it built paper plants and seized a commanding share of the Japanese log market to keep its resources moving. Between 1971 and 1975, the company's sales of logs, chips and lumber to Japan leaped from $92 million to $347 million.
Today, the company counts on this market for 10 per cent of its annual sales of more than $3 billion. The advantages are that exported logs earn a profit without milling costs, and federal law permits deferral of some profits made from such exports.
The Japanese market helped the company increase the flow of trees. In 1966, the company cut 494 million cubic feet of wood. By 1976, it had reached 900 million cubic feet. At the same time, the company's inventory of harvestable trees declined on its owned lands from 14 billion cubic feet in 1970 to a present 12.5 billion cubic feet.
Weyerhaeuser's promotional efforts and japanese need both played a part in expanding log exports. Some of this wood might not have been adaptable to local lumber needs, the company says. Weyerhaeuser argues that the exports are not the main reason for higher timber prices. If the company had not sold the logs, it has been argued, Japanese bidders would have pushed the price even higher than it now is on western commerical timberlands.
But in as much as the exports reduced the overall supply of western timber, they have increased prices. Domestic mills and Weyerhaeuser millers now have to bid against the Japanese for the timber on Weyerhaeuser lands. Economists say it is clear that strong Japanese demand has raised timber prices.
Weyerhaeuser's two-mile-long port and processing facility at Longview, Wash., on the Columbia River is the ultimate in "multipulp" diversification. Most of the trees arriving there come from company forests on the western slopes of the Cascade Mountains.
Hour after hour, trucks rumble into the facitlity carrying the day's harvest. Many of the trees are "old growth," with diameters of six feet or more. According to the company, these trees are old and sometimes "decadent" - rotting or diseased at the core. The large, old trees have top priority in the cutting schedule.
Weyerhaeuser has invested a total of $750 million in the Longview facilities, which include a dock for handling exports, sawmills, pulp mills, linerboard plant, milk carton plant and, coming soon, a newsprint plant (a joint venture with a Japanese company). Once at Longview, the trees are sorted and channeled to their best use according to their quality, grade and size.
Weyerhaeuser has so much timberland in the West that it seldom bids for trees auctioned from federal and state lands. But federal officials say there is no question that the company's stepped-up lumber and log output has had an impact on the prices of trees sold at public auctions.
The reason is that land-poor timber companies that compete with Weyerhaeuser for the Japanese log market have had to rely on a diminishing supply of trees on public land and on uncut private lands.
Weyerhaeuser officials say that the main reason for the higher prices that are bid at timber auctions is the strong domestic market, not log exports. But owners of plywood mills and independent sawmill operators with no timber supply of their own say the reason is a shrinking timber supply caused, in part, by the log export boom.
Statistics about tree cutting and tree inventories are highly controversial in the Northwest, and projections are even more so. Much will depend on unknown variables, such as the rate at which public forests are harvested, and the future reforestation practices of timber companies.
But private and public estimates agree that the overall timber supply is currently declining, and is likely to do so until seedlings and new plants reach maturity soon after the turn of the century. (Douglas firs planted in 1966 will mature in 2016.)
According to the National Forest Service, the supply of harvestable softwoods in five southwest Oregon counties declined from 176.7 billion board feet in 1963 to 123.8 billion board feet in 1975. As "old growth" trees are replaced by secondary growth, the average size of logs reaching sawmills has also declined noticeably.
On driving through hundreds of miles of the West Coast, the impression is of almost limitless forests. But east of the mountains, the forest lands quickly give way to wheat lands in Washington and scrublands and desert in Oregon. Substantial parts of Washington are protected in National Parks, and the Federal government is considering expanding wilderness areas.In satellite photographs of Oregon and Washington, white areas one mile square, as well as larger divots of clearcut forest land are numerous from the Canadian to California border.
Officials at Fort Vancouver Plywood Co., a plywood cooperative owned by its 310 employes at Vancouver, Wash., claim log exports are the culprit in the rising costs of timber auctioned from the Gifford Pinchot National Forest, the company's main source of wood.
The average cost of 1,000 board feet taken from the federal forest rose from $107 in 1969 to $276 this past January. Fort Vancouver's records show that it has sometimes been outbid by as much as $60 per 1,000 board feet by companies specializing in Japanese exports. "The Japanese give them a blank check," says assistant timber manager Don Anrys.
"As long as they can export and the demand is there, we can't compete," says general manager Roland Mill. "We're always riding on the brink. You've got to overbid because of the high competition. It raises the price in the U.S."
Logs destined for exports have been floated down the Columbia River from as far upstream as Idaho. However, Weyerhaeuser officials say there is no shortage of timber, and cite the fact that sawmills and plywood companies have 2.8 years supply under cutting contracts now - the biggest backlog in history.
A leading proponent of log exports is Washington State Land Commissioner Bert Cole, who could not disagree more with Weyerhaeuser's critics. He says the log exports have helped finance state schools and created 17,000 jobs in forestry trucking and dockworking. "There's nothing bad about the fact that we're making money after 50 years," he says.