Zinke Discusses Timber Industry Issues with Pyramid

SEELEY LAKE - The one-year stand-down after the expiration of the Softwood Lumber Agreement (SLA) Oct. 12, 2015 is now over. Since there has been no resolution, those in the timber industry are asking if there is going to be a trade case filed by either the Americans or Canadians or if an agreement can be reached. This SLA along with other issues was a point of discussion with U.S. House representative Ryan Zinke when he visited Pyramid Mountain Lumber, Inc. Oct. 14.

According to Pyramid's Chief Operating Officer Loren Rose, the Americans have been trying to get the Canadians to the table to negotiate another agreement but things have been so favorable for the Canadians that they are not very interested.

"For every dollar of product Canadians can sell down here, they have a 32 cent margin just because of the strength of our dollar," said Rose. "It's not conducive for them wanting to negotiate."

Mills that felt they have been disadvantaged over the past year due to unfair competition could file a trade case. That disadvantage would have to be quantified and then the case would be adjudicated.

"There is some risk doing it. The court could say [to the mills] you haven't been disadvantaged. Then the Americans have shot themselves in the foot and they will never get the Canadians to the table," said Rose.

Rose said Pyramid has been negatively impacted over the past year but feels there are too many variables to point to just one cause. He said Pyramid's product mix insulates them some since studs are the main Canadian import along with random length dimension. While they don't make studs, random length dimension is less than 35 percent of their product mix. However, Pyramid is indirectly affected by timber prices because they compete with all the other mills for logs.

Zinke said there is not a consensus within the industry about the SLA. While U.S. officials have been talking with the Canadian ambassadors and trade representatives, it's going to be a slow process.

In a letter written to United States Trade Representative Michael Froman that Zinke signed reads, "Without an effective agreement to counter this subsidy, Canadian trade practices would yield ever increasing market shares for Canadian product and producers, displacing and harming U.S. manufacturers, mill workers, loggers and many local businesses and jobs in their communities."

Pyramid's Operations Manager Todd Johnson told Zinke the single most troubling thing for a mill owner is log supply.

"We've been living on borrowed time on private timber," said Johnson.

Johnson said Pyramid is running at 80 percent capacity, running four, 10 hour days. A year ago they were running five, 10-hour days. Thirty years ago they ran 80 hours, two shifts.

Johnson said with so much uncertainty in the log supply makes the decision to invest in the future of the company very difficult.

"Everyone is running fewer logs but it makes your margin that much harder to attain when you are dealing with that much fixed cost," said Rose. "Industry as a whole in Montana needs some consistency in lumber pricing and not get carried away and force the log prices up."

Zinke also discussed the need to maintain the existing infrastructure in the timber industry. He acknowledged, that while tourism helps boost the economy in Seeley Lake, the mill needs to exist because it is "the main effort."

"The more we compress and contract the infrastructure the harder it is to maintain the system. When we lose our smaller mills, we don't compete among each other, we compete to survive," said Zinke. "If we lose any more infrastructures we may have a catastrophic collapse."

"[Pyramid] needs to be here for [Seeley Lake] to have the vitality it has," said Rose. "If anyone disputes the notion that the infrastructure continually shrinking can get to a collapse, you only need to look at Colorado or Arizona. Both used to have a fairly vibrant forest product industry."

Rose said that many of the mainstream conservationists in the area recognize the good work that Pyramid's loggers and foresters do and called it a "great alliance."

Zinke said the problem is the two extremes. "Neither [extreme] represent a healthy forest. Neither one of them represent traditional Montana conservation ethics [including: removing dead and dying timber, logging sustainably, maintaining road and access]," said Zinke.

Zinke continued, "The timber industry is critical to our nation's wellbeing as any component. You have to protect the industry. One of the greatest challenges I have is articulating western values and how they are all connected. The experiences [visitors to Montana] have, has a lot to do with maintaining a healthy forest."