BEMIDJI, Minn. - Dick Walsh has run a family logging operation in northern Minnesota for decades. Walsh says it's a tough business. He's stayed competitive by investing millions in equipment.
"It's very expensive to get started in this business," said Walsh. "The equipment is terribly expensive. And there's not many people staying in this business. There's people going out of it every day."
Walsh buys the wood he cuts from government or private landowners. He says the price of timber has skyrocketed. During the 1970s and '80s, Minnesota trees were among the cheapest in the country. As a result, huge investments in wood and paper manufacturing plants were made in Minnesota.
But with the industry buildup came a rapid demand for more trees to feed the mills. The high demand and tighter timber supplies drove the costs up, and lessened Minnesota's ability to compete as a manufacturing location.
On a jack pine stand near Bemidji, Larry Young watched the harvest recently. Young is director of Bemidji's Joint Economic Development Commission. He's brought with him about a dozen other members of a newly formed Forestry Affairs Council, a local group concerned about the direction the forest industry is headed.
"This industry is an extremely important part of our regional economy here," said Young. "We saw some dark clouds on the horizon that didn't look good. Potlatch Corporation, at its manufacturing facility in Bemidji, had lost $4 million last year, $4 million the year before. And that tells you, you know, can that go on forever? Probably not."
Potlatch Corp. operates three production mills and a sawmill in northern Minnesota. The company employs about 700 people.
"One of the reasons we're uncompetitive is the price of our wood here in Minnesota, that it's simple supply and demand. We are not supplying the industry what it demands," said Pete Aube, who manages the Bemidji mill. "Wood availability is the number one factor. We're importing a half a million cords here in Minnesota that could be cut here in Minnesota."
Aube said Minnesota is not doing a good job of managing its forests. He said the state is too slow to put mature tree stands up for sale. More and more trees are dying before they can be harvested, which Aube called a waste.
Once a tree dies and begins to decay, it loses about two-thirds of its value. Aube said the harvest site near Bemidji is a good example; the state should have sold that timber years ago.
"That jack pine stand, a third of those trees are broken off 10 feet high," Aube said. "That's what happens to a jack pine stand over rotation age, over 50 years. We've lost a third. That is our history in Minnesota. We have an abundance of overmature forests."
Aube said the problem is worse in the Chippewa and Superior National Forests. He said new inventory numbers show not only is more wood dying than is being harvested, but more wood is dying than is being grown.
Some people say that's Mother Nature at work. Environmental groups want a more natural approach to forest management. They're working to slow down the rush for more logging. Minnesota Sierra Club organizer Joshua Davis said trees are not just a cash crop - they provide wildlife habitat and forest recreation.
"If a tree falls down in a forest, that's a good thing, because that's the way these forests evolved," said Davis. "All of the wildlife in Minnesota evolved with mature forests that had forest fires, that had blowdowns. And they didn't evolve with clear cuts. ... The industry wants a boom in logging. And you know what happens after a boom."
Davis said the industry's problems go beyond Minnesota. He said free trade agreements have saturated the market with products from countries with weaker protections for labor and the environment.
And he's quick to point out that most paper mills in Minnesota are owned by multinational corporations able to move assets away from these protections.
The timber industry lobby will push for changes in forest management policy when the Legislature meets in February. They're bolstered by a report released this summer by an industry task force created by Gov. Tim Pawlenty. The governor asked the panel to look into ways to help the timber industry compete. The task force recommends increased timber harvesting on state lands, and streamlining the environmental review and permitting process.
Some lawmakers agree. Sen. Carrie Ruud, R-Breezy Point, sits on the Legislative Commission for Minnesota Resources. Ruud said Minnesota needs to spend more money on forest management. She favors planting more trees and creating a dedicated fund for reforestation efforts.
"We have not had a good management plan," said Ruud. "We need to harvest our timber. The trees are dying now faster than we're regenerating. And I think that's a big issue out there. And people need to understand that cutting down a tree is not a bad thing. It's a good thing."
It's likely more trees will be cut down on federal lands, including the Chippewa and Superior National Forests in Minnesota. The timber industry fought hard for a bill signed in December by President Bush. The Healthy Forest Restoration Act, is the first major national forest legislation in 25 years, is designed to prevent catastrophic forest fires.
In the past year, nearly four million acres of forests burned across the country. The measure streamlines the approval process for logging thick, overgrown forests. It also creates a major change in the way federal courts consider legal challenges of tree cutting projects.
Davis said the new federal law curtails public comment into how forests are managed. He says it's bound to lead to unnecessary logging in roadless areas and sensitive wildlife habitat. Davis said at both the state and federal levels, the battle lines are being drawn.
"The timber industry has a lot of momentum right now," said Davis. "They've got the Bush administration in power, they have the Healthy Forest Initiative that was just passed by Congress, and so everything has been going in their favor as far as increasing logging on national forests and on state forests. And so we are going to be opposing that strongly."
