Industry News – July 2000

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Industry News

International Paper signed an agreement to purchase Champion International for about $9.5 billion. UPM-Kymmene of Finland earlier had bid $6.8 billion but could not raise the money.

The agreement extends International Paper’s position as the world’s largest forest products manufacturer. It gives the company a strong presence in South America and strengthens its position in Canada.

It is far ahead of second-place Stora Enso with an estimated annual pulp, paper and paperboard capacity of 22.4 million tons.

Analysts suggest that International Paper is likely to retain all its forest industry-related assets apart from some timberland in Texas and Washington.

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• Interior Secretary Bruce Babbitt halted all prescribed burning by the National Park Service indefinitely in the West following an investigation of a burn at Los Alamos, N.M. that turned into a wildfire.

The investigation found “serious systemic problems in the way the Park Service conducts prescribed burns” he said.

The prescribed burn at Bandelier National Monument went out of control, and the resulting wildfire destroyed more than 200 homes and caused hundreds of millions of dollars in damage.

• Louisiana-Pacific signed an agreement to buy Sawyer Lumber Co., which consists mainly of a state-of-the-art narrow dimension lumber mill on the Michigan Upper Peninsula. The acquisition complements two existing L-P facilities in the region and their forest resource access, said Bruce Mallory, L-P lumber business director.

• The KPS Special Situations Fund completed the purchase of Smurfit-Stone Container Corp.’s newsprint mill in Oregon City. It will now operate as the Blue Heron Paper Company.

The KPS Fund, which specializes in brokering employee buy-outs, will own 60% of Blue Heron and mill employees will own 35%; the company’s senior executives will own the remaining 5%.

• Three U.S. loggers will travel to Norway to compete in the 24th World Championship of Loggers. It apparently is the first time the U.S. has sponsored a team in the competition, which is held annually in Europe. The competition includes five events, including precision felling, limbing, chain fitting, and two precision bucking events.

The members of the U.S. team are Dan Hartranft of Pennsylvania, Bill Lindloff of New York and Joe Glenn of Indiana. The team is sponsored by Husqvarna, and all three men are certified Game of Logging instructors.

• SkogForsk, the Forest Research Institute of Sweden, has reviewed a new harvesting system. The new system was developed by Swedish forestry-contractor Sydved AB, which calls it “integrated off-ground handling.”

A machine called a ‘harwarder’ consists of a harvesting head on a telescopic drawbar and mounted on a four-wheel Valmet 911 with a non-driven trailer; it pushes the bunk ahead through a strip road.

The SkogForsk evaluation found reduced stem and site damage as well as slight time savings over a typical cut-to-length system — mostly because of direct loading. Copies of the review are available at the Web site

• Mead Corporation’s coated board division has undergone an independent audit of its forest operations’ compliance with the Sustainable Forestry Initiative (SFI). Independent auditor PricewaterhouseCoopers found that all the division’s lands in Alabama and Georgia were in compliance with the objectives of the SFI standard.

Mead expects to have all of its 2.1 million acres in eight states audited by the end of 2001. “Our goal in having our sustainable forestry practices reviewed by a third party is to verify that we are indeed keeping our commitment to the SFI program,” said Joe Lawson, manager of forest sustainability for Mead’s corporate woodlands group.

• Forest landowners in Maine say that urban sprawl could extend into Maine’s forests if voters approve a referendum to restrict clear-cuts in November. The Small Woodland Owners Association of Maine is taking a leading role in a campaign opposing the referendum.

The ballot proposal would require landowners to get permits for all clear-cuts. The initiative also would keep owners of land with a “tree growth” tax designation from cutting trees faster than they grow.

The tree-growth program has been instrumental in conserving Maine forests and keeping out development, according to the association, but if the referendum passes, many small landowners will leave it — spurring development and sprawl.

• The U.S. Forest Service will spray some forests in eastern Washington and Oregon to fight a tree-eating insect. However, the outbreak of Douglas fir tussock moths will be allowed to run its course over much of the region.

The moth is native to the Northwest and considered beneficial in some cases, such as when years of fire suppression have left forests too crowded with immature trees.

The Forest Service identified 388,000 acres in six national forests for spraying; the area could grow to as many as 628,000 acres. The agency plans to spray 40,000 to 60,000 acres this year in areas where the outbreak is already severe.

• The U.S. Forest Service dropped plans to log old-growth trees in the Willamette National Forest. Environmentalists had threatened to halt the logging by blocking roads and camping in trees.

The Forest Service reached an agreement with a timber company in Roseburg, Ore. to cancel the Helldun timber sale and to look for another area of the forest that can be logged.

• Smurfit-Stone Container Corp. completed the acquisition of St. Laurent Paperboard Inc. St. Laurent shareholders will receive $12.50 in cash plus one-half share of Smurfit-Stone common stock for each St. Laurent share owned.

To finance the acquisition, Smurfit-Stone raised about $625 million in new debt and issued about 25 million new shares of common stock; the company also refinanced about $386 million of St. Laurent debt.

• Boise Cascade Corp. will acquire Alliance Forest Products-Joists Inc., also known as AllJoist, for $17 million (Canadian). AllJoist is a subsidiary of Alliance Forest Products and operates a wood I-joist manufacturing plant in Edmunston, New Brunswick. The mill has 80 employees and annual production capacity of 40 million linear feet.

The acquisition will allow Boise Cascade to expand its engineered wood products business and add solid-sawn lumber flange I-Joists to its product line. Boise Cascade’s building products business is a leading manufacturer and marketer of I-joists, which utilize laminated veneer lumber flanges, as well as a produce of laminated veneer lumber.

• Irving Woodlands had more than a half-million acres of Maine forestland certified in accordance with the standards of the Forest Stewardship Council.

“Irving Woodlands has demonstrated its environmental stewardship and its leadership in the forest products industry by voluntarily subjecting its operations to an independent assessment, using the true third-party standards of the FSC,” said David Ford, president of the Certified Forest Products Council.

• FEMSA Empaques concluded the sale of its subsidiary, Corrugados Tehuacan, a manufacturer of corrugated boxes, to Willamette Industries for $70.09 million. FEMSA is Mexico’s largest beverage company; FEMSA Empaques supports the beverage operations by producing cans and other packaging.

• Smurfit-Stone launched NextPak, a first-mover B2B company focused on providing brand-driven supply chain solutions to e-tailers. NextPak will increase e-tailer profitability by integrating packaging, fulfillment, and shipping activities into a seamless operation.

A survey of online consumers showed that improved packaging and other supply chain enhancements can dramatically increase consumer confidence and repurchasing intent.

• Washington Veneer closed its mill in Okanogan County, Washington. About 250 workers at the plywood mill were laid off.

“It’s an economic decision,” said Stuart Young, president of Quality Veneer & Lumber, which owns the plant. “The market is very soft right now.”

The company bought the bankrupt plywood mill in 1998 and invested $6.5 million on new equipment and a line of specialty plywood products. But prices for 1/2-inch plywood have fallen in the past 12 months.

Quality Veneer & Lumber plans to sell the plywood plant and focus instead on sawmill operations in western Washington and Oregon.

• Universal Forest Products, a leading supplier of engineered wood components, acquired the rights to produce the Open Joist 2000 web floor system from Banks Corporation.

“We believe this revolutionary, patented product has significant growth potential for the site-built construction market,” said William Currie, Universal’s chief executive officer.

Universal now has four Open Joist 2000 manufacturing facilities and plans future expansion of this product line.

•, an online marketplace for buyers and sellers of paper, said it plans to capture one-tenth of the $200 billion North American pulp and paper market within three years. It is one of several companies trying to get the paper industry and paper buyers to shift trade to an Internet-based platform.

The company’s Internet-based market was scheduled to begin in Europe in late June. Borge Bogaard was named president of the North American unit and charged with recruiting a staff of about 20. The company planned to open an office in North America.

• The Paper Industry Management Association and Forestweb announced the creation of a strategic Internet alliance co-branded Web site to be called PIMAweb. It will combine high quality content, online searchable databases, and member services to provide a unique platform for pulp and paper industry management issues.

The co-branded Web site,, will be the exclusive Internet distribution channel for PIMA’s North American & Asian Pacific Papermaker Magazines.

• The Jim C. Hamer Co. in Kenova, W. Va. recently received two awards for its contributions to improving the environment. One award from the state Department of Environmental Protection recognized the company for “ingenuity and persistence in reclaiming damaged land and water.” The other award, presented by the Big Sandy Watershed Association, honored the company’s efforts to conserve water quality.

• The board of directors of Enviro-Recovery named Bruce Nesmith as president and chief executive officer. He has 25 years of experience in the hardwood lumber business.

Enviro-Recovery is a leading supplier of old-growth northern hardwood and softwood lumber made from logs that sank in the rivers and lakes of North America during logging operations of the 1800s. The company also is a leader in recovering sunken logs in the Amazon River basin.

• Potlach Corp. is in the process of meeting with 1,700 salaried workers, letting them know whether or not they will be able to keep their jobs. It looks like hourly jobs may go on the chopping block because of down-sizing. “It’s pretty likely we’ll look at hourly,” said Potlach spokesman Mike Sullivan. If hourly jobs are eliminated, it would be in consultation with union officials, he added.

Potlach warned employees of possible layoffs earlier this year. The company is paying all employees through July 31 and has offered severance packages to everyone.