11/20/2000

KUFM / KGPR

T. M. Power

Another Western Montana Mill Closure: What Does It Mean?

The closure of the lumber mill in Seeley Lake has shocked that small community and left many in Western Montana’s small cities and towns wondering what the future holds for them too. The loss of 120 jobs in a community of only about 2,000 people is not easy to digest without some serious dislocation. If the Pyramid mill had been the only lumber mill to close recently, it might not be as disturbing for the larger region, although for the workers, their families, and Seeley Lake it would be no less painful.

But some 14 lumber mills in Western Montana have closed during the 1990s according to the count the lumber industry keeps[1]: three in the Flathead, three in Missoula County, and eight others in more rural counties. Approximately 1,500 workers had been employed in those operations. The impact of those closures on our local communities and our ability to earn a living has to be troubling. If wood products is our economic base, one would expect very serious consequences and that has always been what the timber industry has predicted. But that has not been the case.

If we look at the 10 Western Montana counties that have lost mills since 1990, we find ongoing job and population growth, not decline. While employment at these mills was falling, 63,000 jobs were being created elsewhere in those counties, 45 times the number of jobs lost at all those closed mills. Because heavily urbanized Missoula and Flathead Counties are included in the list, having lost six mills between them, someone might argue that the 40 percent job growth in those area despite the mill closures were obscuring what happened in the more rural counties. But that isn’t the case either. Job growth in the rural counties that lost mills, like Sanders, Lincoln, and Ravalli, was also almost 40 percent during the 1990s, adding in total about 14,000 jobs. Population growth was also similar in both the rural counties and the whole set of counties including the urban trade centers; population expanded by a fifth, not explosive growth, but far removed from stagnation and decline.

The explanation for this ongoing economic vitality despite the closure of mills was provided by the Seeley Lake business community and some of the laid off workers when reporters asked them how they were going to cope with the disaster of the largest employer in the town shutting down. The business community pointed out that the Seeley Lake economy has been diversifying throughout the 1990s; Seeley Lake was no longer just a timber town. As one 20-year veteran of the mill put it, “I’ll go to school—I’m a little apprehensive about it, but hell, it’s a big world out there...”[2]

Of course, a mill could not be allowed to close without blaming those trusty, all-purpose scapegoats, the federal government and environmentalists. As one of the more vocal anti-government folks put it, “If the national forests were selling what they should, we’d always have some volume [of timber] to go to during hard times.” At the same time, timber industry representatives admit that it is the over-supply of lumber, not inadequate supply of timber that is the source of the problem. As Plum Creek Timber put it: “Lumber prices are at 10-year lows…This industry has gone from a regional business to a global one, and we are feeling that. The driver for these low prices really has to do with an abundant supply of products on the market. It comes from the U.S. and from Canada and from European lumber imports.”[3]

This is a bit disorienting. If the National Forests were to do what its critics urge and dump a lot more timber on the market so that lumber production was even higher, then lumber prices would be even lower and even more mills would be shutting down. It is strange to find business leaders arguing that the appropriate response to oversupply and low prices is to increase supply and drive prices still lower.

When supply exceeds demand, the standard market response is for firms to reduce output by laying off workers, eliminating shifts, or shutting down mills altogether. That has been what the lumber industry has done for a century or more, long before there were any politically convenient scapegoats to blame these basic market adjustments on.

Finally, if we want to mistakenly focus on timber supply rather on lumber demand, we should look at the source of that supply in the Seeley Lake area. The majority of the timberlands there are not controlled by the US Forest Service. Plum Creek controls 35 percent, the State of Montana controls another 15 percent, and 10 percent is owned by non-industrial private landowners.[4] One might wonder why those who control the majority of the forestland are exempt from criticism when a mill closes.

Fortunately, folks in Seeley Lake and Missoula County are not wasting emotional energy chasing after scapegoats and gnashing their political teeth. It is ideological outsiders who are trying to use other people’s misery to promote their own special interests. On the ground, where the pain is being suffered, folks are focused on coping as productively as possible with difficult circumstances. They know their community will survive this blow partly because the long time workers at the mill are committed to the community and they, the local business community, and local government are confident that collectively they can re-deploy their skills, energy, and resources in ways that keep Seeley Lake a vibrant community and economy.

[1]Western Wood Products Association, Missoulian, 11/16/2000, p. A12.