Pablo sawmill closing down

Eighty-seven Plum Creek Timber Co. workers in Pablo learned Monday morning the company plans to permanently close that sawmill in 60 days.

"Even though our employees are very aware of the economic climate, it's a very impactful day when they hear the notice that the mill is going to be closed," Vice President of Montana Operations Tom Ray said Monday afternoon.

Closure of the Pablo pine-board mill was only part of the company's announcement.

Plum Creek also gave notice to 69 workers at the Evergreen stud sawmill and another 130 at the Columbia Falls pine-board sawmill that those plants could close if market conditions do not improve in 60 days.

The notices were issued under the federal Worker Adjustment and Retraining Notification Act. It requires companies that employ more than 100 people - Plum Creek presently has 940 workers in Montana - to give 60 days' notice in the event of a plant shut-down or if a mass layoff amounts to at least a third of the work force.

The Pablo mill will become the second Plum Creek facility to be shut down this year. Last month, the Ksanka lumber mill near Fortine was closed for good, eliminating 74 jobs and the last major sawmill in Lincoln County.

Both salaried and hourly workers are included at the three plants involved in Monday's announcement.

Rick Holley, Plum Creek president and chief executive officer, said last month's drop in housing starts, with no relief in sight, continued the waning demand for wood products.

"Unfortunately, we must once again take steps to attempt to match supply with the eroding demand," Holley said in a news release. "We regret that the Pablo mill closure will affect a number of our valued employees and their families."

The company's first-quarter earnings report listed a $22 million operating loss in its overall manufacturing segment, more than double its $9 million loss for the first quarter a year earlier.

Company officials say the medium density fiberboard plant in Columbia Falls and plywood plants in Columbia Falls and Evergreen are not at risk of closing.

With an abundant supply of wood chips for the fiberboard plant coming from local mills such as Stoltze Lumber and other mills from the Idaho Panhandle, across the Canadian border and in the Missoula area, Director of Communications Kathy Budinick said the plant has been able to stockpile chips and other fiber during the past month. There's still a steady market for fiberboard products.

Ray said the plywood plants have an adequate supply of logs in the yards, although production has been affected by low demand. Workers took some down time in the past month or two as demand continued to shrink. He hopes a recent small increase in orders will continue, but market prices and demand will call the shots.

"We're making no predictions at this point," Ray said.

"It's a very tough market to read. It depends on the economy and how well that comes back É We're down on board [prices' now. We saw prices move up toward the New Year, then back down in February. Demand has been fairly flat and there has been an oversupply of lumber in the market."

Ray had just come from morning meetings at the Pablo mill where he delivered the news alongside mill manager Glenn Flaget. Human resource officer Kayleen Rash offered information on retraining assistance.

Rash outlined help available under the Trade Adjustment Assistance Act, which offers career retraining and other options for workers who lose their jobs because of increased imports.

The Pablo sawmill had been operating one shift and will continue to run for the next 60 days or until the log inventory is depleted, whichever comes first.

"Right now we have inventory to run through June 16 or 17," Ray said. "We still have a small amount of logs coming in. After they come in we'll have to finish drying the lumber and do the manufacturing and shipping. I would imagine the actual last day will vary between 60 and 90 days' from Monday's notification.

Workers will get all retirement and pension benefits they have accrued and will be provided with severance packages, Ray said. He didn't immediately know the average length of service for Pablo workers, but called them 'very good long-term employees."

Pine boards from the Pablo mill are shipped across the nation.

Decisions about the Columbia Falls and Evergreen mills still are up in the air.

"We will wait 60 days and then, depending on what the market has done, will make the evaluation depending on the … market forecast," Ray said. "If we have an opportunity to operate on a break-even basis, we'll do that. We want to continue to employ our good long-term employees and contractors."

Both Budinick and Ray emphasized that Plum Creek is committed to maintaining a manufacturing presence in Montana.

"We're serious about manufacturing," Budinick said. "We invested $10 million in Montana in the past few years. And we will invest $4 million in Montana manufacturing this year alone."

That investment in 2009, which Ray pegged at "closer to $5 million," will go for retubing the Columbia Falls boiler, improving raw material storage dust control at the fiberboard plant, and automating painting units and handling long-length panels at Evergreen plywood, plus several smaller items such as forklift replacements and computer control system upgrades.

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com