The log market is in the toilet

[chevytaHOE5674]

Last Thursday Dec 31, 2009 Smurfit Stone Container officially closed the doors at the mill in Ontonagon  :(. Sad day for the area, a town with a population of around 1600 people just lost close to 200 good paying jobs.

Only hope now is the mill could get sold and somebody will put us back to work.

Many of my friends and family Have been and Will be effected by the closer.

[chucker]

   lol "in the toilet "IS JUST PART OF THE PROFITS" to a lesser story......... lol

[Ironwood]

Chevy,

Sorry to here that. All to common.

Ironwood

[SwampDonkey]

Last Thursday Dec 31, 2009 Smurfit Stone Container officially closed the doors at the mill in Ontonagon .

They shut down their mill in Bathurst a few years back. Many of the foreign mills that closed sold to non competitors, meaning the facility would never produce pulp and paper. Part of the conditions for sale. Nail in the coffin so to speak. Most of the sites were never sold yet.

[240b]

How long will the pulp and paper industry stay in north america? I mean why wouldn't they go to brazil or else where. I really hate to see markets disappear and people lose there jobs
but these huge international companies are not stupid.  Don't mean to be jerk-- just trying to look at what seems a real possiblity---   Something will fill the void left in there wake most likey.  Hopefully --- now I better go cut some wood..

[chevytaHOE5674]

They shut down their mill in Bathurst a few years back. Many of the foreign mills that closed sold to non competitors, meaning the facility would never produce pulp and paper. Part of the conditions for sale. Nail in the coffin so to speak. Most of the sites were never sold yet.

Right now smurfit said they have no plans to sell the mill, and no plans to ever reopen it. But the village is getting together and sending letters to the bankruptcy judge in hopes that they can force smurfit sell the facility. But I'm not sure that will happen. But at this point we can hope for anything, becaues if not this town will disappear.

[WDH]

How long will the pulp and paper industry stay in north america? I mean why wouldn't they go to brazil or else where.

The US South has about the lowest wood cost from a pulp standpoint in the world.  They will definitely be viable since a large portion of the cost to produce pulp and paper is the cost of the wood.  In areas where wood costs are high, North America or worldwide, those mills will be the first to go when there are demand issues.

Brazil's wood costs are also among the lower tier, so that makes it an attractive place for investment.  However, the political environment is not as favorable or stable.

[Gary_C]

Last Thursday Dec 31, 2009 Smurfit Stone Container officially closed the doors at the mill in Ontonagon  :(. Sad day for the area, a town with a population of around 1600 people just lost close to 200 good paying jobs.

Only hope now is the mill could get sold and somebody will put us back to work.

Many of my friends and family Have been and Will be effected by the closer.

Sure sorry to hear that.

I think the key to getting these mills back to work is now going to depend on the OSB markets which are tied to the housing markets. With very little demand for OSB, the paper and pulp markets have too much fibre supply and production capacity so there is cutthroat price competetion and the older less efficient mills are being pushed aside.

The question is when those OSB markets will recover.

The US South has about the lowest wood cost from a pulp standpoint in the world.  They will definitely be viable since a large portion of the cost to produce pulp and paper is the cost of the wood. 

How does the cost of pulp in the south compare with the cost in the north? What do mills in the south pay per cord for their supply?

[Ron Scott]

Yes, very sorry to here that. Really not good for Ontonagon and the western UP woodworkers.

[Fla._Deadheader]

Why have none of these closures resulted in buyouts by the workers, and turned into profit sharing . Surely, there HAS to be someone that knows how to manage these places to produce SOME profit. Either that or, people just wait for Govt. handouts ???

  Harley-Davidson went out of business, until the workers organized, and, now, there is a long waiting list ???  This is/was all worker owned, last I knew, and, it's not the first company to succeed, after shedding all the Management, that was doing little to further the companies ??

  Yes, I know markets are thin right now, but, it's hard to believe that all the experience can not create profit.

[SwampDonkey]

The last few years it was labour and electric costs that they complained about. Can't be much cheaper than it is now in the north. The loggers will soon be paying the mills to take their wood.

[chevytaHOE5674]

Why have none of these closures resulted in buyouts by the workers, and turned into profit sharing . Surely, there HAS to be someone that knows how to manage these places to produce SOME profit. Either that or, people just wait for Govt. handouts ???

This option is being talked about for the stone container mill in town here. Trouble is if Smurfit stone doesn't want to sell there's no way to buy it. Hoping the bankruptcy judge will force them to sell the facility.

[Tom]

Ontonagon ?  Do they raise foxes there?  Everytime I here someone mention going there, they are told to "wear the fox hat".  There's a place in BC like that too.  :-\

[chevytaHOE5674]

Never heard of "wear the fox hat". Nor do I know anybody raising foxes.

A local joke though is "where do yoopers where their hats? On the nagon!!!"

[motohed]

Why have none of these closures resulted in buyouts by the workers, and turned into profit sharing . Surely, there HAS to be someone that knows how to manage these places to produce SOME profit. Either that or, people just wait for Govt. handouts ???

  Harley-Davidson went out of business, until the workers organized, and, now, there is a long waiting list ???  This is/was all worker owned, last I knew, and, it's not the first company to succeed, after shedding all the Management, that was doing little to further the companies ??

  Yes, I know markets are thin right now, but, it's hard to believe that all the experience can not create profit.

  I actually think I read some where they merged or sold part of their shares to Honda .  :-\

[Gary_C]

The last thing some of these large paper companies want right now is for another player in the markets trying to take away some of their existing market share.

One of the big pulp mills here is preaching about how they need a low cost supply of pulp wood. Then they go out and bid up the larger pulp wood sales to levels where no one can make any money. They think nothing of bidding against their own suppliers. One large mill even wound up with two buyers at the same auction and got first and second place in the bidding.  :

[SwampDonkey]

Those big outfits get to be like government. No department knows what the other is really doing.  The board of directors are only looking at the money. I learned this a long time ago with Frasers. The Woodlands Office had no idea about the status of their roads, whether gated, temporarily down for repair and so on. You could be given maps to a block an hour's drive away and they never had the where-with-all to inform you it was gated and padlocked. They didn't care neither. People are being paid by peace work to do a lot of silviculture work, so no one was being paid for lost time and delays that could be prevented. One day I went right into the office and told them what a bunch of idiots they were that they couldn't radio someone to check that day whether a road was accessible. They basically told me there are roads everywhere, we have no idea at any time what their status is. I said, this place will soon be closed up. And it has been off and on. Too many leaks, the ship won't float. It's under bankruptcy protection right now, with government recently buying shares the TSX delisted a year ago.  :

Then they blat about cheap wood?

[240b]

The last thing some of these large paper companies want right now is for another player in the markets trying to take away some of their existing market share.

One of the big pulp mills here is preaching about how they need a low cost supply of pulp wood. Then they go out and bid up the larger pulp wood sales to levels where no one can make any money. They think nothing of bidding against their own suppliers. One large mill even wound up with two buyers at the same auction and got first and second place in the bidding.  :

The one I like is when the mills bid jobs and pay more for the wood on the stump than they offer for it delivered. than hire some poor guy to do the job.

[WDH]

How does the cost of pulp in the south compare with the cost in the north? What do mills in the south pay per cord for their supply?

The lower cost mills have averaged about $25/ton delivered or about $67/cord.  That may have changed in the last couple of years.  You may have better data.

[jim king]

WDH

Brazil's wood costs are also among the lower tier, so that makes it an attractive place for investment.  However, the political environment is not as favorable or stable.

I think it would be difficult for Brazil to be competitive in paper or timber products.  The cost of timber production in Brazil as with the entire Amazon is very high and that is just one of the reasons why the timber industry is so dismal and insignificant here.  The Amazon is and always will be a producer of niche market products only.    The Amazon simply does not have species condusive to pulp/paper production .   Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

I personally don`t think anyone in the world is capable of producing a 2 x 4 or news print at a lower cost than North America.   That statement does not include the rats nest of government subsidies but only true costs of production.  

Here is a link that can give you an idea of the problems in making paper in the Amazon.

http://en.wikipedia.org/wiki/Jari_project

[SwampDonkey]

Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

That is what I've always been told about Brazil to. They have to eat first and many of those plantations are going back to food crop fields.

[jim king]

SwampDonkey:

I did not make myself real clear about Brazil.  I was referring only to timber production.  In the Amazon logging is different that in temperate climates.  If you can imagine a forest where the species you are looking for grows to a density of one tree to every several acres and sometimes one every 100 acres or more you began to see the difficulty.

Now to add onto that you are in the biggest swamp in the world and it is constantly raining.  The belly of a skidder is constantly dragging and a skidder trail is rarely good for two trips.  Then the fact that the river drops 40 feet from one season to another and most of the tributaries are to low for barge and tugboat traffic it is not easy.  The level of the Amazon is mostly due to the snow melt in the Andes and not from rain.  Three to four months a year are ruled out due to low water.

As for food Brazil is actually a major producer of many commodities,  soybeans ( number one or two in the world) , rice , orange juice (number one or two in the world) and citrus , beef , coffee , black pepper etc..  It also is a major world class producer of iron ore and steel , airplanes , weapons  etc..  Brazil is also a leader in biofuels from sugar cane.

Brazil is an amazing country, in the South if you were to visit you would think that in many places you were in the States.  The people are light hair and skin wearing plaid shirts and blue jeans.  The villages and cities look European and everything works and a nice climate.
Then working your way north you pass thru many changes until you get to the Amazon where not much of anything is produced and not much works.

Brazil is always called the country of the future.  The only problem is that no one knows when their future is.  What is making them go better than ever now is the low debt they have compared to many years ago when they were borrowed into a hole.  As you can see on the CIA fact page below the in country government cash reserves are close to their total debt.

One of the most important changes in Brazil has been oil .  Twenty years ago the lack of oil was killing them.  Now they find more yearly and are developing the reserves of oil and natural gas in Bolivia and Peru which are significant.

The list goes on.  This link may be interesting.  It shows 2008 and 2009 is much , much better.

https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

Under the map click on "Expand all"

[WDH]

Maybe in the huge temperate plantation  forests of Brazil it could be possible but the country is growing so fast it will probably consume its entire production.

Jim,

My comments were directed at the SE coast temperate plantation region where the best operations have among the most productive harvesting operations in the world, and they grow eucalyptus on 7 year rotations. 

From your previous posts, I can see your point about the Amazon Region.

[Ron Wenrich]

Those eucalyptus plantations have put all the Charmin and Kimberly Clark plants on South American processed pulp.  Plants that used to use local pulp and chips have now gone that route and have shut off all local input.  That happened about 10 years ago, if memory serves me correct.

I think I read somewhere that the largest port for wood chips is located in Brazil. 

[axeman2558]

 call the h.c.haynes company ..... 1 800-432 7867  they move alot of wood dont know the prices but kim can help you .... seems the old gp mill in baileyville mst be still taking some hardwood .... or hinckley ....    redbeard