They are the latest in a long string of northwest Montana layoffs, which since summer have affected the mining, manufacturing, high-tech, construction and retail industries.
“What we have,” said company spokeswoman Kathy Budinick, “are some really unprecedented conditions in the housing sector. Housing starts have just collapsed.”
As lenders struggled beneath bad subprime mortgage debt and credit ripples spread through the broader economy, the resulting global recession has claimed not just new home starts, Budinick said, but also the home repair and remodel sectors.
Markets vary for each of Plum Creek's products, she said, but overall orders are off by 30 percent to 50 percent.
With no one buying boards, she said, Plum Creek's mills have been forced to adjust.
Previously, the company had enacted shift reductions and small plant closures in Montana, affecting 110 manufacturing jobs. On Thursday, Plum Creek announced additional cutbacks that will result in 145 more workers laid off, with affected workers receiving a severance package of one month's pay and health benefits.
All four of its lumber sawmills will be hit, as will the fiberboard plant in Columbia Falls.
The Ksanka sawmill, in Fortine, will permanently close in March and all 74 workers will be let go.
In Kalispell, Plum Creek intends to temporarily curtail operations at the Evergreen sawmill through February and perhaps into March as well. Effective immediately, 88 employees are temporarily out of work there.
Both mills produce dimensional lumber for new home construction. When markets improve, Budinick said, the Evergreen mill will absorb some of the volume previously produced at Ksanka.
The company's two pine board mills - in Columbia Falls and Pablo - also will see changes, as production is slashed to meet falling demand. The Pablo mill will drop from 1 1/2 shifts to just one shift, resulting in 36 jobs lost. The Columbia Falls mill will close for January, February and perhaps March, affecting 133 workers.
Products from those mills generally are used in home repair and remodeling, Budinick said.
And at the fiberboard plant, production lines are scaling down to two shifts as of Jan. 19, which will reduce the work force by 35.
“That's it for now,” Budinick said, “but certainly we will have to continue to monitor the situation.”
Budinick said the company is making no predictions as to how quickly housing markets might rebound, but many analysts have projected a gloomy future well into 2010.
Prior to the season's layoffs, Plum Creek employed about 1,160 people in Montana. After these recent job losses, the company will employ 845.
It is the largest private landowner in the nation, with more than 7 million acres, including 1 million in Montana.
Company stock traded at about $33 on Thursday, after hovering near $50 since spring and hitting a $60 high in early autumn.
Rick Holley, Plum Creek president and CEO, acknowledged two weeks ago that his outfit was operating in “unsettled and challenging markets.”
He anticipated fourth-quarter manufacturing losses of about $20 million, up from earlier predictions.
Holley's comments came as part of a land-sale announcement, in which Plum Creek received $150 million for 130,000 Montana acres. That sale, he said, helped bolster company cash reserves, and he expected fourth-quarter earnings of about 50 cents per share. Of that, land sales contributed about 40 cents.
The company's real estate business, however, has not entirely escaped the economic downturn. Quarterly sales will total about $65 million, he said, down from an anticipated $80 million as deals are delayed and, in some cases, canceled.
Final quarterly reports are expected Feb. 2.
“The forest products industry in general and the lumber business in particular have been severely impacted by the battered housing market,” Holley said Thursday. “The closure of the Ksanka stud mill and reductions in production levels at our other facilities are painful steps to take, due to the job losses and impacts to a number of our valued employees.
“Unfortunately, these steps are necessary to match supply with the eroding demand for our wood products, “ he said.
Reporter Michael Jamison can be reached at 1-800-366-7186 or at mjamison@missoulian.com
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Matthew Koehler wrote on Jan 9, 2009 9:18 AM:
" WESTERN WOOD PRODUCTS ASSOCIATION
FOR IMMEDIATE RELEASE
Prepared January 6, 2009
LUMBER FORECAST REVISED DOWNWARD DUE TO WEAK HOUSING MARKET, ECONOMY
"Western mills are experiencing the largest downturn in lumber demand ever recorded."
PORTLAND, Ore. - With the weakness in the U.S. economy much deeper than was seen earlier this fall, Western Wood Products Association has scaled back its earlier forecast for lumber supply and demand for 2009.
The Association reports Western mills are experiencing the largest downturn in lumber demand ever recorded. The downward trend is forecast to continue through 2009 before beginning recovery in 2010.
U.S. lumber demand is expected to finish 2008 at 40.9 billion board feet, the third consecutive annual decline in demand and 36 percent below the 2005 peak. For 2009, lumber demand is forecast to fall to 35 billion board feet, the lowest annual consumption since 1982.
The unprecedented decline in home building has been the chief cause of the demand freefall. Traditionally, home building consumes as much as 45 percent of the lumber used each year. In 2005 alone, some 27.6 billion board feet of lumber was used in new home construction. Since then, the number of housing starts has been reduced by more than half.
For 2009, housing starts are forecast to reach just 803,000 units, a post World War II low. Lumber used in residential construction will total 9.5 billion board feet, one-third of its 2005 peak.
Entire press release at:
http://www2.wwpa.org/ABOUTWWPA/Newsroom/tabid/817/Default.aspx "
FOR IMMEDIATE RELEASE
Prepared January 6, 2009
LUMBER FORECAST REVISED DOWNWARD DUE TO WEAK HOUSING MARKET, ECONOMY
"Western mills are experiencing the largest downturn in lumber demand ever recorded."
PORTLAND, Ore. - With the weakness in the U.S. economy much deeper than was seen earlier this fall, Western Wood Products Association has scaled back its earlier forecast for lumber supply and demand for 2009.
The Association reports Western mills are experiencing the largest downturn in lumber demand ever recorded. The downward trend is forecast to continue through 2009 before beginning recovery in 2010.
U.S. lumber demand is expected to finish 2008 at 40.9 billion board feet, the third consecutive annual decline in demand and 36 percent below the 2005 peak. For 2009, lumber demand is forecast to fall to 35 billion board feet, the lowest annual consumption since 1982.
The unprecedented decline in home building has been the chief cause of the demand freefall. Traditionally, home building consumes as much as 45 percent of the lumber used each year. In 2005 alone, some 27.6 billion board feet of lumber was used in new home construction. Since then, the number of housing starts has been reduced by more than half.
For 2009, housing starts are forecast to reach just 803,000 units, a post World War II low. Lumber used in residential construction will total 9.5 billion board feet, one-third of its 2005 peak.
Entire press release at:
http://www2.wwpa.org/ABOUTWWPA/Newsroom/tabid/817/Default.aspx "
Brandon Horton wrote on Jan 9, 2009 10:55 AM:
" Clean and green? Who cares about that when its -20 and still snowing outside. Montana officials have to look past manufacturing of goods as a tax base. Its gone to China and South America. The train has to be stopped and turned towards job development, which I know Montanans hate, means education, job corp, tech schools, something, so you won't freeze to death. "
Matthew Koehler wrote on Jan 9, 2009 7:58 AM:
"Eroding demand for our products" isn't exactly the language any corporate executive wants to use about their industry; however, finally the timber industry is being straight and honest with the public, which is a good thing.
Remember, as recently as a few months ago (and certainly over the past five years as many of us warned of the dire economic consequences of over-consumption and over-development) the timber industry and their supporters (including the past publisher and environmental reporter for the Missolian) were still telling us that the timber industry just needed more trees from national forests to solve their problems.
That was never the case during this emerging economic crisis, which is rooted in over-consumption/development. And it certainly isn't the case when you consider Plum Creek specifically, the largest private land owner in Montana (and the nation) that has unlimited access to their own timber lands.
Hopefully, elected officials and the public will now better understand the true and honest scope of the situation facing the timber industry so that we can better move forward with solutions. I've said all along that solutions not based on economic reality really don't get us anywhere and certainly don't help workers or communities get on the right track for a clean, green and sustainable future. "