The Port of Newport on the Oregon coast has finished a major, award-winning renovation of the site, and is negotiating with several timber companies that want to use the terminal to export logs to Asia just as Hampton Affiliates have been investing in the expertise to cultivate a customer base in China and produce lumber those customers want to buy.
Steve Zika, CEO of Hampton Affiliates, said to KUOW Thursday that sawmills could still be in trouble if log exports continue to grow. A new log export proposal for the Port of Newport is dangerously close to his company’s Tillamook mill and could compete for logs from some of the same timberland the mill relies on.
The Oregon Coast Alliance says the terminal would route at least 50 log trucks a day.
Port President JoAnn Barton says the Port needs to bring in large industrial customers to make enough money to support maintenance on the docks it manages for local fishing and recreation fleets. She says log exports could begin moving out of the rehabbed terminal later this year.
Log exports from the Northwest grew by another 20 per cent last year, said the US Forest Service PNW Research Station, and they’ve doubled since 2009.
“I think everybody would agree that it would be better if Oregon logs were processed into higher-value products in Oregon,” said Oregon Department of Forestry economist Gary Lettman. Research shows sending logs to local mills creates three jobs for every million board feet of timber while exporting the same volume of logs adds less than one job to the local economy.
“There are considerably more jobs from domestically processing logs than there is from exporting them,” Lettman said.
China’s building boom has also spurred Chinese companies to import lumber — just not nearly as much lumber as raw logs.
Zika’s strategy to preserve his company’s sawmills — in Tillamook and elsewhere in the Pacific Northwest — is not to shut down all log exports but to get more Chinese builders to buy lumber instead.
“We’ve somehow got to convince them to buy lumber versus logs,” Zika said.
Half of the lumber made at Hampton’s Tillamook mill is exported.
Changing operations to sell lumber into Asian markets wasn’t something that could happen overnight. There are language barriers and logistical hurdles. Unlike logs, lumber has to be packed in containers before it can be shipped. That means you can’t ship lumber out of any port. Hampton had to get its lumber onto ships at the Port of Portland. It had to hire new people, change its sales office hours to cater to its new customers across the Pacific, and adjust its sawmills to cut lumber in new dimensions.
Kit LaBelle, Hampton’s global logistics director, told KUOW that shipping lumber to new overseas markets has been a game-changer for the company. In five years, Hampton has gone from shipping about 5 percent of its sales to Asia — China, Japan, Korea and Taiwan — to 25 percent. And it’s not just exporting lumber from its own mills but from other mills as well.
“There’s a lot of cargo we didn’t used to do, but now we know how. I think there’s a lot of hope that sending lumber overseas will open another door for the business as a whole,” said LaBelle.
LaBelle said the same principles that drove up log prices — lots of demand competing for a limited supply — could also drive up lumber prices.
Hampton’s mills are still running at two-thirds of capacity, but Zika’s hoping that could change if lumber prices go up.
“If lumber prices continue to go up, then we can out-compete the Chinese for logs,” Zika said. “If the sawmills can pay more for logs, maybe the Chinese won’t match those prices. And maybe they’ll find another market to get logs from.”