DEER LODGE — It is spring break-up in the mountains, where wet, muddy conditions prevent loggers and haulers from working for the next few weeks.

However, Sun Mountain Lumber, in Deer Lodge, has an adequate supply of timber in its yard to keep the sawmill running during this period.

Sherm Anderson, Sun Mountain owner and CEO, said recently that the biggest challenge continues to be the lack of available timber. Most of last summer and fall, Sun Mountain logging crews and haulers harvested a state timber sale in southern Idaho and trucked the logs to the local mill.

The market for studs — boards used to frame walls in residential houses — picked up a little bit during 2012, making it a decent year, Anderson said, but when lumber prices go up, so does the cost of logs. Log costs represent 70 percent of the total production cost of lumber.

Anderson blames a part of the problem on the U.S. Forest Service that owns 70 percent of the timber in Montana on 17,048,125 acres, but supplies only 5 percent of the harvest. Meanwhile, private landowners, Montana State Lands, Bureau of Indian Affairs and Bureau of Land Management provide 95 percent of the timber needed to supply the remaining 11 large mills in the state, he said.

INDUSTRY CHALLENGES

According to the Forest Service website, from the 1960s through 1980s, the national forest timber harvest in the country averaged about 10 billion board feet per year. After environmental groups won a series of lawsuits in the 1980s and 1990s for more habitat protection for threatened, endangered, and sensitive species, the Forest Service timber harvest plunged to about two billion board feet per year.

“We have gone from 38 large mills in Montana to 11 today and most of those have disappeared in the last 20 years,” Anderson said. He expects there could be more to go.

“It is a sad state of affairs,” he said. “Long term we are going to get into a supply-and-demand problem because there will not be enough lumber produced in the U.S. For years I’ve been talking about gloom and doom in the timber industry. It’s no larger in the distance, it’s now. Unfortunately, it is all about survival.”

This year about 900,000 single family units are slated to be built in the U.S., still significantly below the normal average of 1.2 million to 1.5 million homes, statistics show.

“Already we are seeing lumber supply issues because inventories held by wholesalers and retailers are nearly zero. A lot of mills have gone out of business in the United States and Canada that supply the domestic market. The mountain pine beetle problem throughout the northwest and British Columbia has created an even bigger problem when it comes to the lack of timber resource,’’ Anderson said.

Research compiled by the International Wood Markets Group indicates “there is no way North American stud lumber sawmills will be able to keep up with the recovering U.S. housing market.”

The report, published in the Vancouver Sun, states “the shortage of studs is expected to lead to record lumber prices and make construction lumber profitable enough that European sawmills will likely make inroads into North America.”

“The export bubble is likely to burst any time, but we don’t know when,” Anderson said.

According to Madison's Lumber Reporter's market analyst Earl Heath, the Chinese market is picking up. Studs are favored by Chinese buyers because they “love ripping them up and re-manufacturing them into furniture, trim and other value-added products.”

EMPLOYEE NUMBERS

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The Sun Mountain Lumber sawmill employs 165 workers, but there are an additional 50 employees at Sun Mountain Logging with an annual combined payroll of about $16 million. In addition, there are 100 contract loggers and haulers that supply the mill. In total, approximately 300 workers keep the mill running, but they support an additional 1,500 other jobs in the area – groceries, fuel, parts, equipment, medical, etc.

“We have survived the last five to six years, but it’s been very painful,” Anderson said. “We are hoping to see some brighter years in the future, to try to recoup some of the losses. But we know that in order to keep up and stay competitive, even though revenue is short, we must continue to upgrade our equipment.”

After shutting down the finger joiner in 2008, Sun Mountain just reopened one line with one shift in the plant and hired10 employees.

“We are only cutting our own material at this time,” Anderson said. “The decision to restart the finger joiner was prompted by an increased demand in the market for finger-joined lumber.”

In the sawmill, installation of a new dust collection system was started just six months before two horrific sawmill explosions, caused by dust, occurred in British Columbia last year.

“We recognized the danger of combustible dust,” Anderson said. “Now each piece of equipment has a dust collector that goes into the sawdust bin and is used for particle board.”

Beyond the primary product of lumber, Sun Mountain Lumber produces approximately 15 large truck loads of by-products per day. Bark is trucked to processing plants in Clancy, and Hyrum, Utah; shavings and sawdust are trucked to the particle board plant in Missoula; and chips are trucked to paper producing plants in Washington.

In mid-April the head rig, that processes large timber in the mill, will be shut down for five days to install new computerized optimization updates, for better utilization of each log.

— Pat Hansen may be reached via e-mail at phansen@blackfoot.net

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