China's Building Boom Revives Northwest Log Export Debate

Nov 13, 2013

If you want to know how China’s construction market is reshaping the Northwest, a Rainier, Ore. log yard is a good place to start.

The Teevin Brothers yard along the Columbia River rumbles with activity while workers prepare half a million logs for the towering ships docked across the river in the Port of Longview. A yellow stacking truck opens its pinchers and sends its payload rolling out across the ground. The air smells like sap and sawdust. Scalers wearing neon safety vests inspect the logs, stapling each with a plastic barcode.

Nearby, another stacking truck feeds the logs into a machine that, with a loud pneumatic sigh, chips off their bark to ensure that Northwest insects won’t hitch a ride across the Pacific Ocean.

General Manager Eric Oien offers some numbers to put all this activity into perspective.

“This facility started out just 12 years ago with only 10 employees. And now Teevin Brothers employs over 120 people,” he says.

Hakan Ekstrom, an industry analyst, says China appears to have a long-term interest in logs from the Northwest. Smaller ports like like Grays Harbor and Olympia in Washington and Newport in Oregon are looking for a way into the business.

“Many of the ports that historically had been exporting logs to Japan, if you go back 10 to 20 years in time, have started to explore opportunities to see if they can update equipment, find land, and maybe get involved in log exports again,” he says.

Newport is a vibrant center of commercial fishing, marine tourism and research on the central Oregon Coast. Efforts here to revive the Port’s long-shuttered log export terminal have run into opposition from neighbors and environmentalists.

Back in 1948, a private company built Newport’s first log export terminal on top of a pair of sunken concrete barges left over from World War II. In 1996, one of those barges, the S.S. Paisley split apart and leaked fuel oil into Yaquina Bay; the terminal, already in decline due to reductions in timber harvest, became unusable.

In the years that followed, developers built condos and dozens of new homes with views of picturesque Yaquina Bay on the hillside overlooking the derelict terminal.

Now the Port of Newport has pulled the S.S. Paisley out of the bay and finished a major, award-winning renovation of the site. Teevin Brothers is negotiating a lease with the Port and a nearby landowner to build a log yard and use the renovated terminal to fill freighters with logs bound for Asia.

Hancock Timber Resource Group, an investment firm that owns about 1.8 million acres of forest in the Northwest, would provide the logs. The firm owns 225,000 acres of forestland in Oregon’s Coast Range mountains within driving distance of Newport. Hancock exports about 25 percent of the logs it cuts.

Retired teacher Ken Brant lives with a pair of black Chihuahuas in a three-story home filled with Asian antiques on the hill above the terminal. Brant is concerned the noise and log-truck traffic will lower the value of this home, and says the terminal detracts from Newport’s efforts to build an economy around tourism, fishing and the arts.

“This is a tourist town. The people that are for this say this used to be a logging town 30 years ago. Well, 30 years is a long time ago,” he says.

Brant is also concerned about the environmental impact of the terminal. He worries that ballast from the foreign ships could bring invasive species into Yaquina Bay.

“We have a pristine bay. We’re worried about our crabbing, we’re worried about our shrimping,” he says.

Some stats associated with a typical log-exporting vessel:

Source: Port of Longview

The project would route 50 loaded log trucks a day down the quiet neighborhood’s main street. An Alaskan timber company, Alcan, is negotiating a second log export deal that could double that truck traffic on some days. Many residents are irate. A few have listed their homes for sale.

Port Commissioner JoAnn Barton says she understands their concerns but Newport can’t afford to let prime industrially zoned land sit vacant.

“This proposal has really shocked a lot of people who didn’t realize they were buying their retirement dream so close to an industrial property,” she says.

Barton says the terminal would create roughly 40 jobs. Berthing fees would provide the port with cash it needs to spend on maintenance on the docks that serve its commercial fishing fleet and recreational boats. The local longshore union expects to create about 24 part-time jobs loading the ships. It’s been 14 years since the longshoremen loaded any cargo in Newport. Yale Fogarty, the president of his union’s local, supports the terminal. He says he’s been living on the road since the Port of Newport stopped moving cargo.

“We travel to Astoria and Coos Bay and load wood from our own county, and it makes us kind of sick. Because we know that our county could be benefiting from it,” Fogarty says.

For decades Northwesterners have worried that log exports disadvantage the region’s mills and undermine efforts to create local jobs.

As a result, only private or corporate landowners can export logs without processing them first; Congress banned log export from federal lands in 1968 and from state lands in 1990 and blocked timber companies that export logs from purchasing federal timber to supply their mills.

Today, some environmental groups argue that the export of logs from private lands has increased the pressure on federal forests to resume logging and provide a steady supply for local mills.

Lincoln County used to be home to dozens of sawmills and several veneer mills. Now just one studmill remains. On a recent evening in Newport, opponents of the log export terminal gathered to hear environmentalists and opponents of free trade discuss the export market.

Greg Pallesen, the vice president of the Western Association of Pulp and Paper Workers, said his union opposes export of most natural resources, including logs. Pallesen told the group log exports have risen as sawmills and paper mills in the Northwest have struggled to compete against mills in Asia that enjoy lax regulation and lower labor costs.

“It’s a short-sighted vision. If we had economic policies set to where there were incentives for us to use those logs here in the United States, we would be exporting products,” Pallasen said.

_Read EarthFix Conversation: What Chinese Demand For Logs Means For NW Mills

In fact, even some the supporters of the log export proposal say they’d prefer it if Newport was exporting milled lumber instead. Port Commissioner Barton says she thinks the US should reconsider its export policies

The argument that log exportation contributes to job loss is borne out, at least in part, by research.

“It would be better to export processed wood products - lumber, plywood, or pulp - than logs, thereby creating more domestic jobs and improving State and local economies,” wrote Gary Lettman, the chief economist for the Oregon Department of Forestry, in a report to the Oregon Legislature.

According to Lettman’s report, cutting 1 million board feet of timber creates roughly six jobs in forestry, logging, and transportation. Lumber and plywood manufacturing create an additional three jobs per million board feet, while logs that go to exporters create fewer than one port job per million board feet.

But Lettmen also concluded that the log export market provides a crucial option for forest landowners when the demand for lumber in the U.S. drops. That means timberland remains profitable and isn’t sold to developers and jobs are retained in the logging and forest management sectors.

It’s an argument that’s echoed by the managers at Hancock Timber Resource Group, the investment firm behind the Newport proposal.

“When we first started to do the export program in 2010, there wasn’t a lot of demand for domestic logs. Housing starts had crashed, and our ability to export helped us keep our logging crews together,” says Bill Marre, the Northwest general manager for Hancock.

And analyst Ekstrom says that while log exports may harm Northwest mills in the short term, he expects China to be increasingly interested in importing processed lumber from the Northwest in the future.

The challenge at present, he says, is that China don’t have a tradition of building houses framed with 2x4 studs and don’t build using standard dimensions or grades of lumber. That makes it very difficult for Northwest mills to market their products in China. But Ekstrom says the demand for western-style houses is increasing.

“Over time we’ll start to see more standard sizes, so it’s easier for the U.S. sawmills to export to China,” Ekstrom says, “so if sawmills on the west coast are into understanding how foreign markets work, I think there are some good opportunities."

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