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Sealaska bill's impact on SE timber industry, pt. 2 of 6

KETCHIKAN, ALASKA
Phoenix Logging is one business that could be immediately affected if Sealaska stops timber operations.

Owner Linda Lewis says her company cuts trees and builds roads for Sealaska. Right now the regional Native corporation is its sole client. Lewis says the 80 to 90 workers that Phoenix directly and indirectly employs could be out of work in the next few years.

“Unless this legislation comes through we anticipate this site we move to will be our final logging site for Sealaska,” she says. “They have no more significant land holdings that would justify the expense of a move of a company like ours. So when we finish where we are, we’ll not have another job.”

The Sealaska lands bill would allow it to select up to 85,000 acres of Tongass National Forest lands. If the lands legislation is approved, the corporation estimates it could sustain logging operations of 40 million to 50 million board feet a year into perpetuity.

Sealaska Executive Vice President Rick Harris says the bill is essential to the company’s timber operations.

“There is a point in time that if we don’t get this legislation, our timber operations will begin a slow but certain wind-down. What we’re talking about is the loss of a lot of jobs, there’s over 300 direct and indirect jobs in the region,” he says.

A Sealaska logging shutdown could have a chilly affect on the Prince of Wales economy in particular.

A recent McDowell Group study found Sealaska logging contributed to approximately 210 jobs on the island.

Sealaska expects to cut around 50 million board feet of timber this year. That compares to a peak harvest of around 100 million board feet four years ago.

The industry group Alaska Forest Association has been supportive of Sealaska’s efforts to pass a lands bill.

“Right now, the Sealaska operations support about 40 percent of our timber industry. And without this legislation, Sealaska says it’s going to have to soon start scaling back operations. And we don’t want that to happen,” says AFA Executive Director Owen Graham. “The infrastructure for the logging industry is at a critically low level. And we can’t afford to lose anybody, certainly not somebody who’s as important as Sealaska.”

Tucked away in a former Ketchikan Pulp Company warehouse, Tongass Forest Enterprises employees are creating decking, a special order greenhouse and other value-added products out of Southeast Alaska timber.

With only two full-time employees, this operation is miniscule compared to the massive pulp mill that preceded it. That said, this company is doing something that Sealaska and many of the remaining timber operators left in Southeast aren’t doing – manufacturing. 

Tongass Forest Enterprises owner Larry Jackson says he would like to see Sealaska manufacture at least a portion of its timber in the state in exchange for passage of what he sees as a favorable lands bill.

“From my observations, I haven’t seen Sealaska put in any manufacturing capacity,” he says.

Concern about Sealaska’s lack of processing in the region was brought up during multiple town hall meetings.

Pacific Log and Lumber Mill owner Steve Seley says he wouldn’t go so far as to require Sealaska to process its logs in Southeast. But he says the corporation should be encouraged to do so.

“The cost to export round logs is substantial just with shipping. It’s easy to invest a million to a million and a half dollars just to load and transport, which provides an advantage to the local manufacturer, if they have the tools and the market to allow them to pay a higher price for that log,” he says. “And I think it’s in Sealaska’s best interest to diversify their market as well.” 

He supports Sealaska’s efforts to pass the lands bill and says the corporation provides the necessary volume to keep the remaining contractors servicing the industry in business.

Seley’s Ketchikan Sawmill has been and remains closed as he seeks to come up a timber supply. Ultimately, he says litigation over federal timber sales and decisions made in Washington D.C. will determine whether he is able to re-open his mill – not the lands bill.

Sealaska has resisted any attempts to require manufacturing. CEO Chris McNeill says his corporation is only one of a number of companies exporting whole logs out of the region today. He says the state and federal government are allowing extensive round log exports.

“The truth is that these timber sales have been long driven by exceptions that allow significant export,” he says. “You take export completely out of the timer sales, our analysis is that they become uneconomic on their own terms.”

“The only response to that is, why does the local manufacturing base need a cheaper product? Is it because of the general cost here?” asks Tongass Forest Enterprises’ Jackson. “Obviously, the logging cost isn’t the problem, because somebody else is willing to export it and pay those costs. It has to do with manufacturing. The industry needs to get together and say, why aren’t we competitive?”

Jackson says the timber manufacturing base in Southeast isn’t tapping into the right international markets and needs to become much more efficient and competitive.

Meanwhile, Phoenix Logging’s Lewis worries that without the lands bill she’ll soon be letting go of her employees.

“We have employees and subcontractors we’ve grow old with. We’ve been doing this for 30 years almost, 25 for Sealaska. And some of them are not retirement age,” she says. “And so it would be very difficult for us mentally, emotionally, to say to these guys, OK guys, we’re done.”

Staff of primary bill sponsor Senator Lisa Murkowski say more field hearings on the Sealaska lands bill will be held in Southeast Alaska in 2011. The timber industry is expected to remain supportive of the legislation.

Hear all the reports in the Sealaska land bill series:

Part 1: The Sealaska bill debate: Select land inside or outside the box?

Part 2: Sealaska bill's impact on SE timber industry

Part 3: Critics target Sealaska bill's environmental impacts

Part 4: Sealaska futures sites promise new opportunities,

Part 5: Sacred sites included in Sealaska legislation

Part 6: Sealaska bill faces challenges in Congress
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