Rebounding Market Meets Workforce Challenge

SEELEY LAKE - For years Pyramid Mountain Lumber Inc. (Pyramid) thought the availability of logs was going to be their limiting factor for profitability and capital improvements. This winter they are up six million board feet in their log yard compared to a year ago. The future is looking bright for Pyramid but they are facing a challenge they were not expecting: lack of qualified employees.

In 2015 lumber markets went south. All Montana sawmills were operating on overpriced timber and losing money like never before.

"We were the first ones to really jump out and say this is a real train wreck and the train is already off the track. We need to stop and we need to get the train back on the track," said Pyramid's Chief Operating Officer Loren Rose.

Pyramid laid off workers, cutting back to a barebones operation. They cut log prices and asked loggers to take their logs to other mills so the loggers could survive.

In June of 2016, Weyerhaeuser made the announcement that they were going to close their sawmill and plywood plant in Columbia Falls, Mont. The sawmill was a pine board mill and the plywood plant took peeler-sized logs.

"When they made that announcement, we knew our world was going to change pretty dramatically," said Rose. "All of the sudden our only competition for pine logs was going out of business. We are the only mill left in the state that will produce ponderosa pine on any kind of volume."

Three primary loggers in central Montana were taking their ponderosa pine logs to Weyerhaeuser. After the mill closure, those logs were available. Also the Confederated Salish and Kootenai Tribes has an active forestry program and they needed a place to take their pine after the Columbia Falls mill closure.

Pyramid signed an agreement in November 2016 for two million board feet with the tribe. This will run the mill for about one month.

"That was just one deal," said Rose. "It looks like we are going to get upwards of three months of sawmill production in pine that we weren't getting in the past. That creates opportunities that you would just love to take advantage of."

When the Columbia Falls Mills closed, 110 employees lost their jobs. Only two were hired by F.H. Stoltze Land & Lumber Company in Columbia Falls. Pyramid specifically targeted these employees and didn't get any to apply.

When the Softwood Lumber agreement was not renewed in 2015 there was a one-year stand down for legal action. The day after Thanksgiving in 2016 the United States filed a trade case against Canada.

The International Trade Commission (ITC) found in favor of the United States with five commissioners voting in favor of the US and zero against.

"Each member of the commission not only votes but tell why they voted which is as powerful as their vote," said Rose. "They said it's clear that Canada undersold the market and that they have taken market share from the Americans. Not only were they selling at a price that was below market, it's caused more harm than that because it's stifled production on this side of the border."

The ITC will offer a determination to remedy the situation April 24. Rose also attributes the new federal administration's trade philosophy as another strike against the Canadians.

The Canadians have increased the price of their lumber more than 20 percent. Rose said that what they are expecting is a 30 percent duty retroactive Feb. 1. This has floated the entire market, creating much better market opportunities.

"We know that everyone that can is going to take log and lumber production up but this problem we have with a lack of employees is a universal problem," said Rose.

Next week Part II will address options Pyramid is exploring to help fill the employee void.