SEELEY LAKE (AP)
The family-owned Pyramid Mountain Lumber Co. Has cut wages by 10 percent across the board and plans to lay off 10 workers, company officials said. The company blames the depressed lumber market, which has caused massive layoffs and shutdowns at mills across the country. “The way prices have been for the last six to eight months, I don’t think anybody is doing well,” said Loren Rose, the company’s controller. High stumpage prices and record-low lumber prices are forcing many mills to operate at a loss. Average lumber prices have fallen to record lows and are proving slow to recover. In fact, according to the University of Montana’s Bureau of Business and Economic Research, average lumber prices fell by more than 20 percent in 2006, and higher energy and operating costs took a toll on the nation’s mills. Cold weather in recent months is delaying the seasonal upswing in new housing starts, Rose said. According to the National Association of Realtors, new housing starts dropped 12 percent in 2006 and are expected to decrease by an additional 15 percent in 2007, to about 1.54 million units. Lumber companies across the country had ramped up production in 2004 and 2005 to meet historically high demand for housing, with levels topping 2 million housing starts. They have since been curtailing production on a grand scale, which many analysts are predicting will result in a marketcorrecting price rebound. However, that future is closely tied to imports of softwood lumber from Canada, which has been flooding the market with discounted lumber to rid itself of millions of acres of beetle-killed forests. Stimson Lumber Co. Was among the producers citing poor market conditions for layoffs earlier in the year. It cut 43 jobs from its Bonner mill and another 17 from a mill in Libby. The hostile lumber market has strained all of Montana’s woodproducts facilities, said Ellen Engstedt, executive director of the Montana Wood Products Association in Helena. “We can only hope that at some point the stars will line up and we’ll see improvement in the forest products industry,” she said. Pyramid Lumber was able to hang on longer than other mills because it is a flexible operation that specializes in niche woods and products, Rose said. Part of the company’s longrange plan is to continue diversifying the variety of wood it works with and the lumber products it turns out. For the past few years, Pyramid has been stepping up its technology to increase efficiency and remain competitive in niche markets. Two months ago, it bought a new machine expected to increase efficiency and help cut costs. “The bad news is, it didn’t go online until late December,” Rose said. Employees are still familiarizing themselves with the machine and debugging its computers. That and below-zero weather have caused a slowdown in production, he said. “January and February aren’t good times in Seeley Lake to be debugging a machine outside,” Rose said. Also, Pyramid owns no timberlands and must rely on what it can buy on the open market, a disadvantage in Montana’s tight timber market. Instead, the company buys and transports most of its raw material from private lands scattered around the area. The good news is that the company has a full timber yard enough to keep it running well into May and possibly June, Rose said. Pyramid Mountain enacted similar wage cuts in December 1998, he noted. The 10 percent reduction in wages affected everyone from the company’s president to its maintenance crew and lasted 3 1/2 months. Pyramid ultimately managed to pull out of it with hard work and a sharp eye on the market, Rose said. The company is optimistic about the market and expects the industry to begin picking up soon, he added. “Once spring kicks in, there’ll be some increased consumption,” Rose said.