[MCN] Context & Questions on Weyerhaeuser's decision to close 2 mills & admin office in Montana:

Matthew Koehler mattykoehler at gmail.com
Thu Jun 23 10:02:09 EDT 2016

6-months after buying Plum Creek for $8 Billion, Weyerhaeuser to close two
mills & administrative office in Montana

By Matthew Koehler

There’s a reason the Montana Public Radio story
<http://mtpr.org/post/two-mills-columbia-falls-close-year> on
Weyerhaeuser’s announcement that they were closing two mills and an
administrative office in Columbia Falls opens with “One of the world’s
largest private owners of timberlands….”

Weyerhaeuser owns 880,000 acres of private timberland in just Montana, and
in total they owns/controls 13 million acres of private timberlands. The
company is worth $25 billion dollars. As Montanans will recall, they
purchased Plum Creek Timber Company in November 2015 for $8 billion, a move
that surprised many people in Montana, including our entire Congressional
delegation and the governor.

Does anyone think that maybe, just maybe, the corporate executives at
Weyhaeuser and Plum Creek knew that these closures were coming?

Some of us weren’t very surprised. I agree with Dave Skinner about very few
things, but I agree with much of his December 2015 analysis of something
called Real Estate Investment Trusts (REITs), and specifically how it
pertains to the Weyhaeuser-Plum Creek Deal. Give Skinner’s “The New Timber
Beasts <http://flatheadbeacon.com/2015/12/02/the-new-forest-beasts/>” a

“That Weyerhaeuser and Plum Creek are merging might have surprised some
Montanans. Not me. Why not? Well, I guess it’s time to remind everyone
America’s timber beasts are dead, replaced by a new kind of beast – Real
Estate Investment Trusts (REITs)….

REIT’s must pay 90 percen of untaxed annual profit to shareholders, who are
then taxed 15 percent on their capital gain. All things being equal, a
dollar in a REIT pays back 35 percent more to an investor than a dollar in
an otherwise-identical integrated company. In the Wall Street universe,
where billions chase hundredths of a point, that was a big fat hairy deal….

Significantly, America’s all-time greatest integrated timber barony,
Weyerhaeuser (Weyco for short), held out the longest … in fact, lobbying
Congress for tax treatment that would render the company equivalent to a
REIT in terms of tax burden and shareholder return. For that effort, in
2008 Weyco scored a reduction in income tax to 17 percent, saving $182
million. Nonetheless, with REITs paying zero – Weyco kept spinning off
mills (and people) in order to get under the REIT manufacturing-asset
threshold, converting to REIT in 2010….

REITs aren’t focused on timber, except as a means of generating what
stockholders crave – cash.”

Let’s also not forget that just 8 months ago the U.S.-Canada Softwood
Lumber Agreement expired. Almost immediately Canada starting flooding the
U.S. markets with lumber and wood products. The fact that the Canadian
dollar has been so weak compared to the U.S. dollar also made the dumping
of timber into the U.S. much more profitable for the Canadian timber

Did anyone in Montana’s Congressional delegation or Gov Bullock do anything
about the expired Softwood Lumber Deal? Nope. Is it a part of their
campaign ‘stump’ speeches? No. The Missoulian actually did a very good
editorial on the issue last October

So far – and so very predictable – all the breaking newspaper stories on
Weyerhaeuser’s pending mill closures feature Montana’s entire Congressional
delegation and Gov Bullock singing the same exact tune: We need more
National Forest logging.

Zinke even went so far as to blame Weyhaeuser’s closure on “activists.” Not
to be outdone, Senator Daines was positive the closure was the “result of
frivolous lawsuits by fringe environmentalists and excessive regulations.”

For the past two years the U.S. Forest Service’s Northern Region, which
includes all the National Forests in Montana and the National Forests in
Northern Idaho, met their annual timber harvest goals. A Washington Post
U.S. Forest Service timber sales in Montana (following Sen Tester lying to
Montanans <http://mtpr.org/post/sen-tester-lawsuit-claim-error#stream/0>on
 Montana Public Radio) found that only 4% of all U.S. Forest Service timber
sales in Montana were unable to be logged because of litigation.

Also, in March 2015, the Flathead National Forests Joe Krueger said this on
MT Public Radio:

“A big factor that constrains how much wood products is coming off the
[Flathead National Forest] is our existing budget. So that number of 28
million board feet of timber that we’re projecting as our timber sale
quantity is constrained by budgets.”

Has anyone in the Montana Congressional delegation introduced a bill or
calling on the rest of Congress to increase the U.S. Forest Service’s
timber budgets? Nope.

Fact is, for the past two years in Montana the U.S. Forest Service could do
an unlimited number of 3,000 acres timber sales on 5 million acres of
National Forest land in Montana via a Farm Bill provision [and Gov.
Bullock’s secret, no public notice, no public input nomination process
These timber sales would be “categorically excluded from the requirements
of NEPA” and there would be no opportunity for the public to object, or
appeal, these timber sales?

How much of this 5 million acres of National Forest lands in Montana
available right now for ‘fast track’ logging have actually been logged? I’d
put the number at about 5,000 to 10,000 acres actually logged, but that’s
just a rough estimate.

Have Zinke, Tester and Daines called for more Congressional funding for
this potential 5 million acres of Farm Bill logging in Montana? No they
have not.

Finally, here’s one other thing. Does anyone know how many National Forest
timber sales Weyhaeuser bid on in Montana? Clearly they must have bid on a
ton given all the rhetoric, right? But again, my guess would be that’s a
very low number.

Perhaps it’s time for Rep Ryan Zinke, Sen Steve Daines and Sen Jon Tester
to “put up, or shut up” when it comes to their complete failure to give the
U.S. Forest Service the budgets they would need to do all the additional
public lands logging they claim they want. Perhaps it’s time to admit that
global economic realities, NAFTA, boardroom decisions by $25 billion
corporations and other economic forces far greater than a handful of
“activists” might really be at work here.

The workers who were laid off and the people of Montana deserve to know
what’s really going on here and we deserve some answers to some of the
questions posed above. Hopefully the Montana news media will dig a little
deeper in the coming days and weeks and provide some answers.
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