Loss of Minnesota's OSB mills, 40% decline in tree harvest over three years, drives exodus of state's loggers to taconite mines; mills that paid US$60 for a cord of aspen before housing crash now pay US$20
November 26, 2012
– Scott Pittack grew up in a logging family and has made his living in the woods.
But as he climbed down from a timber harvester at the end of a winding road in the hills, the forest behind him aflame with October color, he admitted he has his doubts about the business.
Nowadays, the industry that's hiring on the west end of the Mesabi Iron Range, where Pittack has been cutting down trees for more than two decades, is taconite, not logging.
In the past 18 months, Pittack's six-man operation has lost two truck drivers to mineral companies.
"I don't blame them guys for going to the mines," Pittack said. "There's some days it looks pretty appealing to me."
Lumberjacks are the foot soldiers of the forest industries, and in recent years they've been pounded on two sides. Not only have more than a hundred U.S. paper mills shut down in little more than a decade, as demand for paper declines in the Western world, but the collapse of the American housing market eliminated demand for building products made from trees.
As of July, the tree harvest in Minnesota had plummeted 40 percent in six years, mostly because of the departure of companies that make oriented strand board by fusing pieces of wood with glue under high pressure.
In August, two more mills announced closures, erasing a tenth of the demand that remained. Verso Paper closed its mill in Sartell two months after an explosion and fire that killed a man, saying the tepid market for its brand of magazine paper didn't justify the expense of repairs. A few days later, privately held Georgia-Pacific announced it would shutter a plant in Duluth that made a thin, hard product called Superwood.
Over the past 10 years, 22,500 jobs in logging have disappeared in the United States, a 32 percent decline, according to the Bureau of Labor Statistics.
The economics of logging are regional. Minnesota mills mostly use Minnesota trees cut by Minnesota loggers, because shipping timber from a distance is expensive.
As mills have closed, loggers from Baudette to Bigfork to Bemidji have found themselves in a dogfight to find customers and turn a profit. Loggers in Minnesota haven't harvested less than 2.5 million cords of timber for 30 years, but this year they might.
"The mill closures are a tough blow no matter where you're at in the state, because it all has a ripple effect," said Dale Erickson, 57, a second-generation logger based east of Baudette. "It's tough right now."
Modern logging involves large machines that look like tractors, with climate-controlled cabs. The roughly 3,000 loggers in the state use joysticks and computer monitors to cut down, de-branch and in some models immediately chop the logs to length.
Pittack, 44, swung his $550,000 cut-to-length harvester into action one day this fall. It's a John Deere tractor with tracks and what looks like a giant steel fist on the end of an arm.
The fist seized the base of an aspen tree and gave it a quick shake. A chainsaw whipped out and hacked the tree off at the base. The fist tipped the tree over and traveled the length of the trunk, shaving off branches with fixed steel blades. Then it cut three logs to length and dropped them in a pile on the ground. It all took about 20 seconds.
Pittack keeps a handheld chainsaw inside the harvester in case a tree's branches are too big for the machine, but he rarely uses it.
His niche is harvesting diverse sections of the forest and sorting the logs for different customers. What had been a stand of 60-foot tall trees -- much of it aspen -- had become a debris-strewn meadow.
The elm and red pine were spared for the sake of birds, the other trees were cut and stacked by type and quality next to a road Pittack built, ready to go when there was enough to justify a trip to a mill. Pittack's drivers hauled timber from the stand to UPM Blandin in Grand Rapids, Sappi Fine Paper in Cloquet, Hawkins Sawmill in Isle and Savanna Pallet in McGregor.
"You have to do it because you can't market everything to one mill," he said. "This day and age, that's the name of the game."
In the past few years, the fortunes of timber and taconite have moved in opposite directions.
One growing company on the western range is Magnetation, an upstart based in Grand Rapids that transforms waste ore into a higher concentrate with the help of magnets.
The company opened its first plant in Keewatin in early 2009 and has grown quickly, attracting investment from Cargill. It now has 218 employees, a second plant in nearby Coleraine and a joint venture with Steel Dynamics near Chis- holm.
The mining workforce is aging and retiring, part of the reason companies are hiring, said Joe Broking, the company's chief financial officer.
"All these plants are turning over their workforce," he said.
The logging workforce is not turning over as quickly. The market for timber s too weak.
Before the housing crash, mills would pay $60 for a cord of aspen -- a stack of wood 4 feet high, 4 feet wide and 8 feet long. Today, the same amount of wood fetches $20.
Prices are so low, private landowners aren't selling logging rights on their land. Over the past decade, logging on private land has fallen by more than half, from 2.3 million cords in 2001 to an estimated 990,000 in 2011.
Much of this is due to the exit of Vancouver-based Ains- worth Lumber Co., which closed mills in Cook, Grand Rapids, and Bemidji that made strand board for roofing, siding and concrete forms. Weyerhaeuser closed a strand lumber plant in Deerwood in 2007.
The strand board industry has moved to other states.
"It might come back, but the production is not going to be probably in Minnesota," said Steve Vongroven, a forester for the Minnesota Department of Natural Resources based in Willow River.
The reason, Vongroven said, is that the biggest, newest and most efficient strand board plants are in the Southeastern United States. Minnesota mills may have pioneered the concept of using high-pressure and glue to turn scraps of wood into boards, but other parts of the country copied the idea and did it better. When the housing market improves, strand board production will ramp up elsewhere.
Commercial logging in Minnesota started in 1839 when settlers from Illinois opened a sawmill at Marine on St. Croix. After the spring thaw, white pine logs floating down the river to the sawmills were so thick that logjams in the narrows below St. Croix Falls could back up for miles.
By 1900, Minnesota sawmills produced 2.3 billion feet of lumber -- enough to build a 9-foot-wide boardwalk around the Earth along the equator, according to the Minnesota Historical Society. The growing nation demanded wood for homes, schools, factories and railroads, and by the mid-1920s loggers had pretty much wiped out the state's majestic white pine forests.
But the forest came back, and continues to come back, in a mix that includes red and white pine, maple, spruce, balsam, birch and aspen.
Erickson, the logger from Baudette, grew up on a farm where the prairie meets the woods just below the Canadian border, about 30 miles west of International Falls.
It was a thriving Scandinavian cooperative where three large families raised wheat and grass seed in the summer. In the winter, when they weren't milking cows, the men drove into the snowy forest to cut down trees for the paper mill in International Falls.
The mill is still there today, a steel blue collection of warehouses and towers that looks across the Rainy River toward Canada. The mill is still the Erickson family's biggest customer.
"I've made my living and my wife and I have raised our family off the land," Erickson said. "I'm actually to a point now that I could go back and start cutting some of the areas that I can remember were some of the first areas I ever helped cut when I was back in school."
But loggers like him are becoming rare. Startup costs for the business today easily surpass $1 million -- the harvesters, tracks for the machines so they don't get stuck, $50,000 steel trailers that haul timber and only last a few years, semi trucks that pull the trailers, and $4 per gallon diesel fuel that powers it all.
Erickson's dad founded his business in the 1930s, and Erickson started working for him full time when he graduated from high school in 1974.
"That's what the boys up here did, for the most part," Erickson said. "Back in them days it was easy to do. But now, for somebody to start a business, if you are not in a logging family or a line of succession somehow -- whether you're family or a valued employee --you're not getting in the business."
Adam Belz --612-673-4405 Twitter: @adambelz
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