At an April 5 meeting in Missoula, various parties interested in purchasing Pyramid Mountain Lumber — Seeley Lake’s largest employer, which announced its closure on March 14 — gathered to learn about potential funding mechanisms available for buying the mill and modernizing its operations.
A couple of options emerged as paths forward: the mill could be purchased and modernized — costing somewhere upwards of $40 million, the low-end of the current estimate — or employees, loggers and various land owners could form a cooperative.
Like many, when Walter Schweitzer, president of the Montana Farmers Union, heard about the mill closure he was worried about the implications it would have on state forest health and the economy. He was also getting calls from members of the farmers union who were worried about how they would be impacted. Farmers often have off-farm jobs to make ends meet, Schweitzer said, and for quite a few of the farmers union members, that job is in logging.
The Montana Farmers Union supports a variety of co-ops. Schweitzer, who is also the brother of former Montana Governor Brian Schweitzer, said the mill really lends itself to a multi-ownership cooperative. Co-ops are owned by their shareholders — in Pyramid’s case maybe the employees, loggers and land owners, Schweitzer said — and benefit said stakeholders.
Schweitzer knew of another cooperative in the wood industry, a place called Ward Lumber in northern New York.
There are some big differences between Ward Lumber and Pyramid, the most notable likely being what Ward Lumber sold for — $3.5 million in March 2021. Ward Lumber is also not a mill, but a retail lumber and building supply company. Ward Lumber did own a pine mill until 2017, but the mill now operates as a separate company. However, some of the reasons Ward’s transitioned to a cooperative and the benefits keeping the business open provided for the small, rural community share parallels with Seeley Lake.
Ward Lumber has been in business as a family-owned operation since 1890. The last owner of the company, Jay Ward, was looking for an exit strategy after 35 years when the idea of a cooperative came up, said Kevin Kennedy, IT manager at Ward Lumber and treasurer of the company’s board.
Kennedy said the idea of the workers owning the company and being in control of its future appealed to Ward. The other paths forward included selling to a private buyer, which Kennedy said was easier said than done in their rural, spread out part of New York, or liquidation, which would mean about 50 people losing their jobs.
“This allowed us to maintain jobs in the area,” Kennedy said. “The community loved the idea because obviously they don’t want to lose that economic boost and it would still continue to be owned by people who lived and worked in the community.”
All 56 employees at Ward Lumber are locals, Kennedy said, and 41 are members of the cooperative, which means they own an equal share of the company.
Being a member required a $1,000 buy-in, which could be taken out of a person’s paycheck $10 at a time, said Debby Straight, Ward Lumber CFO and member of the board. A majority of the money that made up the initial purchase came from Jay Ward, which involved long and short term paybacks, and the remaining balance came from a lender that specialized in cooperatives.
The members benefit from how well the company is doing. Each year members have received a portion of the company’s profits, which in some cases have been life changing, Straight said. This can be set up in different ways depending on how the cooperative structures its bylaws, Straight said. Some companies pay out a portion of the profits to retirement accounts.
Kennedy said the biggest learning curve was getting the governance straightened out. He described it as a big circle — employees own the company and elect a board, the board serves the employees, makes decisions and hires the CEO, who reports to the board.
“It’s really strengthened our team. The way everyone watches each others’ backs has grown. Just the attitude, everybody’s happy. It’s really an amazing thing,” Kennedy said.
Schweitzer, with the Montana Farmers Union, said he’s talked to loggers and land owners who have positive feelings about the co-op idea, but hasn’t talked to many Pyramid employees yet. He’s intending to get all the pieces together, hoping for some patience from Pyramid’s owners and interest from employees, before finalizing a decision with the farmers union on whether or not the cooperative is worth pursuing.
If they get the go-ahead, the farmers union could help put together a steering committee, which would create bylaws and articles of incorporation for the co-op, and could provide funding for purchasing and upgrades.
Todd Johnson, current general manager of Pyramid Mountain Lumber, said a co-op seems more complicated than someone coming along and purchasing the mill outright. A soft deadline for proposals has been set for May 15, which would allow for production to continue at the mill without interruption.
“The idea seems like it could work, it just seems like a lot of balls in the air to get all in line,” Johnson said.
Keeping the mill running would require a lot of money or a change in the way it operates, Johnson said — both reasons why the current owners don’t want to hang onto it.
The only way to keep it going is retooling to a different operation — one with more modern equipment that runs faster and produces more per minute with less manpower — something that is happening across the country, Johnson said. He estimated a cost between $50 and $70 million to modernize Pyramid’s operations.
“If we want to keep this place open, that’s what we’d do,” Johnson said, acknowledging that others might want to do things differently.
Part of the benefit of the April 5 meeting for interested buyers was connecting them with individuals at different levels of government who might be able to offer financing options.
Missoula County Commissioner Josh Slotnik said after the meeting to reporters that the way to change the dynamic at the mill is to replace the need for labor with capital, capital that leads to better gear, which allows the mill to be more productive with fewer workers.
“What was talked about here were mechanisms in the federal government, state government and even county government where we can help new investors access cheaper money (loans) to borrow, so not taxpayer money but cheaper money to borrow, to do the investments in the mill that would make the mill productive and keep at least a portion of the workforce employed,” Slotnik said.
To learn more about Ward Lumber’s cooperative, watch a video on the company's YouTube page, Ward Lumber, titled Ward Lumber Worker Owned Cooperative.
Contact the Montana Farmers Union if interested in pursuing the co-op idea at 406-452-6406.
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