Plywood problems 

The bigger picture behind Bonner’s closure

When Stimson Lumber Company announced May 7 that it will permanently shutter its Bonner plywood plant in early July—putting some 140 employees out of work—it attributed the closure wholly to chronic log shortages in Western Montana. But the complete story is much more complex.

Log supply is a factor, as evidenced by the fact that the plant imports 60 percent of its wood from the West Coast and Canada. But the stalled U.S. housing market, declining preference for plywood and international competition all play key roles in the story of why and how Stimson’s plant is being boarded up. And while local families and communities will bear the impacts of the closing Bonner mill, many causes of the shutdown itself are anything but local.

Jeff Webber, Stimson’s vice president for manufacturing, says log supply is the “driving issue” behind the company’s decision.

“It’s become too difficult to get enough wood fiber to run the plant,” says Webber, explaining how the most recent announcement is one more in a string of downsizings and cuts at Bonner over the last 15 years. In 1980, when Webber first began managing the Bonner plywood plant, he says it employed about 1,200 workers. Now it’s down to about 240 employees, and after the plywood plant closure, only about 100 workers at the stud mill will remain.

But Bonner is hardly alone in its struggles. Plywood plants across the nation have been hurting for years, and not just because of supply stresses.

“[Supply] can be an issue, but I think the larger story right now for the industry at large is the housing market,” says Jack Merry, spokesman for the Engineered Wood Association, formerly named the American Plywood Association. “Half of the structural wood panels produced go to the housing market, so when the market nosedives like it has, that’s a pretty big impact.”

Tom Power, chairman of the University of Montana economics department and a longtime observer of the wood products industry, helps pinpoint the market nosedive Merry references.

From March 2006 to March 2007, the number of residential construction projects dropped by almost 25 percent, Power says, which translates into a significant drop in building material demand. The year before, housing starts were down 13 percent, and Power concludes that this one-third drop in new construction nationally over two years can’t be overlooked.

“The housing market is an overriding issue right now because there’s a lot more production capacity than there is demand,” says Merry.

Then there’s the fact that a relatively new kind of wood panel, oriented strand board (OSB), has outstripped plywood’s popularity. Before 1980, says Merry, OSB wasn’t even available and now it makes up more than half of the market for structural wood panels. OSB’s rise, in some ways, has marked plywood’s fall. Even the American Plywood Association’s name change to the more-encompassing Engineered Wood Association speaks to its declining fortunes. For the six years spanning 1999 to 2005, despite the fact that a national building boom was on, plywood production was down 20 percent while OSB production increased by 30 percent, Power says.

Even plywood mills fed by private forests not subject to the changing tides of federal policy on Forest Service lands have struggled in this chilly climate, and plywood plant closures stretching from Texas to Alabama to Maine are evidence of that, Power says. At Bonner, the plywood mill has been systematically downsized over the last five years or so, Webber says, including last year’s elimination of 145 jobs. And over the last two years, Merry says he’s watched the demise of about eight different plywood plants in the West.

“So for Stimson to act as if all plywood-producing facilities could keep on operating when the demand for housing has temporarily dried up and the demand for plywood is in permanent decline is just make-believe,” Power says.

International competition also exacerbates the crunch facing plywood plants and the lumber industry as a whole. Mike Woodworth, who represents Bonner mill workers as business manager of Lumber Production and Industrial Workers Local No. 3038, says the 140 or so workers to be laid off have qualified for a federal Trade Adjustment Assistance grant, which goes to companies impacted by international imports. Considering the flood of subsidized Canadian products that beat out American plywood in the marketplace along with increasing competition from Asian countries, Woodworth says the Bonner mill workers definitely deserve the grant, even if it only helps take the edge off the shock of unemployment. He says the grant will fund two years of retraining or schooling for workers who apply, as well as unemployment benefits and health care to help keep households running in the meantime.

While Stimson’s Webber maintains “the main issue with Bonner is the log supply,” he does acknowledge other factors play significant roles.

“It is a big, complex issue, and there are some macro things going on here with plywood and OSB and housing but articulating how all that affects Bonner’s plywood plant is very difficult,” he says. “There are a lot of factors playing into this, and [breaking them] down into a few sound bites for an article is very difficult.”

Power and others recognize that it’s complicated and not always easy to explain how and why Stimson recently found itself announcing the impending closure. But Power, for one, insists it’s important to try, especially in a state frequently divided on issues of resource extraction and environmental concerns. He says attributing a major plant closure to log supply shortages alone—particularly in the face of other critical factors—doesn’t help those struggling to wrap their heads around the issue, particularly when it reinforces long-standing conflicts.

Regardless of the causes leading to the closure, Woodworth says the impacts will be the same. He’s worried about how affected workers and families will cope, and about the future of the industry as a whole.

“This company has been there for over 120 years and supported many, many families in this area,” he says. “It’s a devastating blow.”
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