SEELEY LAKE – Pyramid Mountain Lumber Company, Inc. has maintained 140 employees and kept their doors open through the worst year financially the mill has ever experienced. Pyramid’s Chief of Operations Loren Rose said the mill intends to persevere and keep their employees on the payroll despite economic challenges.
Rose said the biggest reasons for the loss of revenue are log costs and the drop instead of rise in market prices in the spring.
Pyramid was the first of the Montana mills to adjust spending to account for poor lumber prices. About a year ago, Pyramid cut spending. That sent local loggers to other mills where they could get more for their timber.
“What mills were paying for logs wasn’t making sense for what they would get out of them,” said Rose. “We recognized that was not sustainable for us. We [the mill and the loggers] had a better chance to survive if the loggers would take their expensive logs somewhere else.”
Now that the timber prices have moderated, Rose estimates log prices are down a third from where they were in the beginning of 2015. He said a $500 lodgepole log was not uncommon a year ago and would only bring $350 today.
The market prices have dropped primarily due to foreign economies faltering and not importing wood products. Lumber producers from around the world are bringing their products to the United States. That increases the supply in and decreases the price.
“No one can really afford U.S. products and everyone wants to bring their products here because our dollar is so strong,” said Rose. “Prices fell when they would have normally risen.”
While Pyramid is sitting better than other mills with log yards full of expensive logs, they currently do not have the log inventory that they need to keep the mill at full operation through the spring.
Rose said that along with sending loggers to other mills and the lack of available timber, the early spring break up took a toll on the number of logs coming into the log yard.
The mill typically brings in 50 to 60 loads of logs per day from January through the middle of March. This March there was nearly a week when no logs were hauled because loggers could not move them.
Rose said that on several of the timber sales, loggers have not been able to get their equipment out. On one sale, they have been able to keep working but all the timber has been decked on site until the roads dry out enough to load and haul to the mill. There are also several sales in the Blackfoot, Lewistown, Mont. and Judith Gap that will supply Pyramid with logs through the summer.
“There are a lot of balls in the air but it is a really bad time of year to be short of logs,” said Rose.
To avoid layoffs, Pyramid has not rehired open positions and reorganized their workforce. They reduced the hours the sawmill runs from 50 hours to 40 hours and increased the hours on the planar from 60 to 80 hours.
“Our production is better than we thought,” said Rose. “We have our best employees on the floor and we are running at 60-70 percent of production instead of 50 percent like we thought. We have one eye on production cost and one eye on our log inventory and how do we balance what we have for logs with number of employees knowing that we have to keep everyone working as best we can.”
Two unknowns for the future are changes in the Softwood Lumber Agreement with Canada and the merger of Plum Creek Timber Company with Weyerhaeuser Company.
The Softwood Lumber Agreement (SLA) between the United States (U.S.) and Canada ended Oct. 12, 2015. The SLA imposed export restrictions on Canadian softwood lumber to the U.S. The fear was that a wall of lumber would flood the market and force U.S. mills out of business.
“So far it has been a non-event but it is still on everyone’s mind and needs to be addressed,” said Rose. “As far as moving the markets, it really hasn’t done anything.”
As of Feb. 19, Weyerhaeuser announced the completion of the merger with Plum Creek. The combined company owns more than 13 million acres of diverse and productive timberlands and operates 38 wood products manufacturing facilities across the country. According to Rose this may have huge implications to the industry but only time will tell what this will look like.
“Our goal is to make boards, keep everyone employed and eventually be profitable. Right now we are making a few boards, keeping everyone employed and we are not profitable. That needs to change,” said Rose. “Right now, closing the mill is not being talked about. The owners stay committed and without that commitment the answer to [closing the mill] may be different. Part of the reason for the owners’ commitment is the employees and how committed they are.”
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