Plum Creek manufacturing stabilizes
Rob Carter working at the hot-press, pulling medium density overlay paper onto a plywood panel, which will press together for several minutes with hydraulic force between steam heated platens. The finished 3/4" overlay plywood will ship to a customer and be produced into roll-up truck trailer doors.
Ed Linn's sorts face-grade veneer sheets, which were produced at the robotic plugger line. The plugger machine improves veneer by precisely cutting out oversize knots and knotholes and replaces them with solid veneer for a uniform all wood face.
Doug Hall moving specialty overlay plywood on Thursday morning at the Plum Creek warehouse in Evergreen. The custom-built plywood stacked in the foreground will be shipped to a customer in the mid-west who manufacturers fiberglass reinforced panels.
Duane Bauer operating the veneer "clipper", which optically scans the ribbon of veneer and trims out defects and irregularities on Thursday morning at Plum Creek in Evergreen. The clipper produces full size sheets for faces, backs and centers as well as narrower strips that will be composed into cross-band core.
One hundred and three inch logs are sorted by diameter then placed in the steam vats (in background) for up to 24 hours at 140 degrees. The steam softens the logs and pre-conditions them for peeling into smooth veneer at the lathe.
Plum Creek Timber Co. had a dramatic turnaround in profit from its Flathead Valley manufacturing facilities in 2010, an indicator the company is beginning to stabilize after being sucker-punched by the Great Recession and one of the worst housing markets in U.S. history.
Operating profit from Plum Creek’s Evergreen and Columbia Falls plants, plus a small facility in Meridian, Idaho, was $24 million last year.
In 2009 the company took a $23 million loss on those facilities, according to Tom Ray, Plum Creek’s vice president of Northwest Resources and Manufacturing.
Roughly $20 million of that loss came from one-time costs to close mills, but even so, Ray said the $47 million improvement is significant.
“We look at this year as being very stable,” he said. “We will continue to be profitable.”
Plum Creek expects its manufacturing segment to continue at about the same level of profitability in 2011, despite continuing grim news from the housing industry. Five years ago there were two million housing starts in the United States; this year the projection is somewhere between 635,000 to 675,000, Ray said.
Last week The Associated Press reported Americans are on track to buy fewer new homes than in any year since the government began keeping data almost 50 years ago. New homes have accounted for just 5 percent of all sales so far this year.
“If you think about the difficulty in right-sizing business when it’s fallen that far,” it’s a challenge, Ray said.
He credits Plum Creek’s manufacturing work force with taking steps to make operations more efficient in the face of the company’s economic challenges.
At Plum Creek’s Columbia Falls sawmill, which produces one-inch pine boards, 115 employees are producing the same amount of product as the mill did when it had a pre-recession work force of 133.
Cross-training employees to be more versatile has made a big difference, Ray said.
“We’ve worked with employees on efficiency,” he said. “And during these lean times it’s made all the difference.”
Demand for the one-inch boards has remained fairly strong. Some of the lower-grade boards produced at the Columbia Falls sawmill are being sold to Mexico and Pakistan for industrial crates.
Plum Creek’s medium-density fiberboard plant in Columbia Falls is operating with 135 employees, producing two products: a continuous-press thin board that’s one-tenth of an inch thick and the company’s original thick fiberboard that’s up to 1 1/4 inches thick.
There’s a much bigger demand for the thin board, so that line runs six days a week, Ray said, while the thick-board line runs three days a week. Plum Creek made an $80 million investment in 2001 to add the thin-board processing capabilities.
Plum Creek has found strong markets for its thin board in commercial and industrial applications.
“One of the largest customers is Ashley Furniture,” Ray said.
The plywood plant in Columbia Falls is operating with 140 employees, down from a pre-recession work force of 175. Again, cross-training employees has boosted efficiency there.
The company has found a market for specialty products such as medium-density fiberboard pressed onto plywood that’s now used in a lot of school furniture.
Plum Creek’s Evergreen plywood plant is operating two shifts with about 150 employees. At its peak, the plant had three shifts and more than 200 employees.
“We’ve been stable since the beginning of 2010, with a stable shift configuration,” Ray said.
He doesn’t expect the permanent work force to increase over the next couple of years, but the company will hire several dozen temporary workers this summer for vacation relief.
Even at Plum Creek’s reduced capacity — its Flathead manufacturing work force collectively dropped from 902 employees at the beginning of 2009 to 567 employees currently — the company is a major economic contributor to the local economy, with a $47 million annual payroll.
Administrative support staff and foresters bring Plum Creek’s total number of employees in Montana to 700.
Plum Creek closed its Evergreen stud sawmill and stud remanufacturing plant in June 2009, but all of the equipment remains in place, Ray said.
The company shuttered its Pablo facility in April 2009 and the Ksanka mill near Fortine around the same time.
Both mills were dismantled and the 110-acre Ksanka mill site has been sold, Ray said. Plum Creek will put the Pablo real estate on the market later this year.
Plum Creek plans to invest $4.4 million in capital improvement projects this year at its Evergreen and Columbia Falls facility, including a $250,000 upgrade of optical scan equipment for its head rig saw.
Ray said the devastating earthquake and tsunami in Japan may produce a slight uptick in demand for its manufactured wood products as the country regroups and builds small temporary shelters. Normally the rebuilding process that follows catastrophes such as Hurricane Katrina is fairly slow, Ray said.
According to Plum Creek’s year-end financial report, the company plans to harvest between 15 million and 16 million tons of timber this year, comparable to 2010 levels.
While the Flathead facilities will have an adequate supply of logs, the rising costs of operational supplies is a continuing challenge, Ray said. The cost of resin has increased dramatically, and the price of special paper used in an overlay process on plywood has jumped 10 to 20 percent in the last year.
Flathead Electric Cooperative’s rate increase coming June 1 will hit Plum Creek hard, he said.
Rick Holley, president and chief executive officer of Plum Creek, said in the company’s year-end report that he believes recovery will continue in 2011.
“The supply chain remains tight and lumber prices have been firming over the past four months,” Holley said. “However, saw-log markets throughout the nation are still below what we consider attractive levels. We are approaching 2011 conservatively.”
Plum Creek earnings for the full year of 2010 were $213 million on revenues of $1.19 billion. That compares with $236 million in earnings in 2009 on revenues of $1.29 billion.
The company has kept up a strong commitment to community giving even during tough times. Last year Plum Creek provided $664,438 in financial support to community organizations and scholarship recipients in Montana.
Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.