Plum Creek invests heavily in plant upgrades

Plum Creek Timber Co. plans to invest $10 million in plant improvements this year at its Northwest Montana manufacturing facilities.

“We’re optimistic overall for another good year,” said Tom Ray, Plum Creek’s vice president of Northwest Resources and Manufacturing. “The largest single concern is the lack of raw materials, but we are hoping Congress will address that.”

Plum Creek’s optimism is based in part on a gradual increase in housing starts across the country, along with better timber prices and an uptick in the number of Montanans working in the timber industry, state economists say.

The company, one of the largest private landowners in the United States with 6.6 million acres of timberlands, also had a strong finish financially to 2014. Plum Creek reported earnings of $214 million on revenues of $1.48 billion, with harvest volumes 13 percent higher than in 2013, according to a year-end financial report.

Plum Creek’s Columbia Falls sawmill was impacted late last year by a federal court ruling that blocked several timber sales on state forest lands. In early October the company cut sawmill workers’ hours from 40 to 36 per week; that cutback is still in place.

“We had a decline there, but once we get past breakup and into early summer we’re hopeful to go back to a regular schedule,” Ray said.

The sawmill employs 100 people, down from a pre-recession work force of about 133.

The company will invest $500,000 in the sawmill this year, including $300,000 for an optimizer upgrade and $200,000 on a feed system upgrade for the logs coming into the sawmill.

“It’s been over 10 years since we’ve done anything” in the way of capital improvements, Ray said. “We’re trying to be more efficient.”

Last year the one-inch board market was very strong, and that’s expected to continue.

“We’re confident as we move out of the deep freeze across the nation, that market will improve again,” he said, referring to the severe winter in much of the eastern United States.

Plum Creek’s medium-density fiberboard plant in Columbia Falls will receive $6 million in upgrades.

“It’s a big capital year there,” Ray said.

The No. 1 production line built in 1974 is due for a $1.6 million upgrade to improve reliability and efficiency. That line produces the thicker fiberboard of up to 1 1/4 inches thick.

About $300,000 is earmarked for technology upgrades such as new servers, computers and monitoring cameras at the fiberboard plant.

A new belt to be installed on the No. 2 production line will cost another $2 million. That is the plant’s newer line — built in 2001 for $80 million — that manufactures a continuous-press thin fiberboard that’s one-tenth of an inch thick.

“The client mix has remained remarkably steady” for medium-density fiberboard, Ray said. “High-value niche products like architectural doors with fancy veneers, we have a large presence in that market.”

The furniture industry is a big customer for Plum Creek’s fiberboard, with molding markets for cabinetry particularly robust, he said.

“It’s a very diversified market across the U.S.,” Ray said. “You want that broad customer base, which is healthy for us.”

The fiberboard plant employs 180 workers, with employment gains since 2011 when 135 workers were employed there.

Plum Creek rebounded after an explosion and fire in June 2014 that caused $10 million in damage and shut down the medium-density fiberboard plant for about a month. A catastrophic bearing failure on a raw material feed line triggered a series of explosions in the ductwork of the plant, which resulted in the massive fire.

No employees were laid off in the aftermath because they helped with the repair and cleanup. The plant shutdown caused only minimal impact to most customers because Plum Creek was able to ship fiberboard from its existing inventory.

The plywood plant in Columbia Falls will get $300,000 worth of technology upgrades. The biggest project at that plant is a composer scanner upgrade.

“The market has been really steady,” Ray said. “We’re trying to get into high-value niches, different product niches such as plywood for furniture. [Plywood] is in very good demand as we start the year.”

The plywood plant employs 150 workers. That compares to a pre-recession work force of 175 and a reduction to about 140 employees during the height of the recession.

Plum Creek restarted its Evergreen sawmill in 2012 as the company emerged from the recession.

“Things are going very well since the restart,” Ray reported. “We’ve got 39 employees and we’re running one shift.”

The sawmill makes 2-by-4 and 2-by-6 boards.

“They’ve done a good job of running that plant,” he said about the plant managers and staff.

The housing market has been “a little soft” so far this year given the severe winter in much of the country, Ray said. “It will pick up with the spring construction.”

The Evergreen sawmill is scheduled for a $230,000 optimization upgrade, along with a $270,000 large compressor upgrade aimed at energy efficiency.

The finger-joint plant remains shuttered with no immediate plants to restart the facility, Ray said.

“We’re not at a point where we can run it profitably,” he added. “Most of the material for that operation doesn’t come from our own stud mill, so we have to buy on the outside.”

Plum Creek is investing $600,000 in the Evergreen plywood plant this year for two composer scanner upgrades. The plant employs 160 workers, up slightly from 150 during the recession. At its peak, the plant operated three shifts and employed more than 200 people. Currently the plant runs two shifts due to log restraints, and Plum Creek expects to remain at that level, Ray said.

The company’s current Montana work force is 750 employees, including manufacturing, resources and support staff. That compares to 700 employees in 2011 as the company began to stabilize after the national recession.

Within its Montana work force, Plum Creek has 100 employees at its Columbia Falls administrative offices. Those employees provide information technology support for the company nationwide, Ray said.

Plum Creek continues to be a major economic contributor to the Flathead economy, with a payroll of more than $60 million expected this year.

Features editor Lynnette Hintze may be reached at 758-4421 or by email at lhintze@dailyinterlake.com.