Friday, May 29, 2009

Stimlus Watch, Part I

As billions of dollars in economic stimulus monies pour out of federal coffers and into Montana, expect to see a steady stream of announcements from our two congressional representatives who voted for the recovery act, Sen. Jon Tester and Sen. Max Baucus.

Like this one, from Sen. Jon Tester, entitled “Tester pushes Forest Service chief to ‘get folks working in the woods.’”

"Tester pushed [U.S. Forest Service Chief Abigail]Kimbell to make sure that the jobs-stimulus money will be used to create local jobs while managing wildfire risk.
“I want the guy with the chainsaw in northwestern Montana to go back to work doing what’s responsible to manage our forests,” said Tester, who helped write and voted for the jobs-stimulus bill earlier this year.
Kimbell assured Tester that the Forest Service’s priority for that money is to create “jobs, jobs, jobs.”

With jobless numbers on the rise and mills closing by the month, it’s no wonder that Tester wants to do everything in his power to help his constituents keep working and turn the state’s timber industry around.

According to the press release, Tester wants to reduce fire risk around the state by putting loggers to work. Nearly $50 million of the $1.1 billion in federal stimulus dollars heading Montana’s way will go national forests. Much of that money will be spent on fire.

“We need an offense and a defense when it comes to fire,” Tester said. “If we put folks to work limiting fire danger now, we won’t burn up the entire budget fighting fires later.”

What’s absent from Tester’s press release is a proposal for what to do with all the logs once they’ve been cut. Everything I’ve read about mill closures around the state indicates that the reason the state’s timber industry is struggling is because there is little demand for wood products nationally.

Take this Pablo mill closure last month for example.

"The waning demand for our wood products is directly linked to the troubled housing market," said Rick Holley, Plum Creek president and chief executive officer. "Housing starts dropped again last month and we expect economic conditions to continue to put pressure on new construction. Unfortunately, we must, once again, take steps to attempt to match supply with the eroding demand.

Or this closure at Stoltze Lumber in Columbia Falls:

In a prepared statement, Stoltze said the "shutdown is fueled by continuing poor lumber markets across the broader United States. Lumber producers like Stoltze are finding it increasingly harder to sell their product and to realize above break-even margins in this climate."

So if there’s no demand for the wood, what are we going to do with all the logs Tester proposes we cut?

I asked his staff that question in an e-mail this week. This is the written response I received from Tester spokesman Patrick Devlin:

· The timber industry faces enormous challenges, and Senator Jon Tester is working on policies to help meet these challenges

· In these tough economic times, the short-term challenge for the timber industry is cash flow.

· Jon has worked with the Governor and the Legislature to set up a revolving loan fund to help the industry survive until the housing market recovers and the overall economy picks back up.

· The over-riding public policy challenge is responsible forest management.

· For example, beetle-killed trees have commercial value for up to three years so it makes sense for the mills to process some of them to reduce fire hazard and protect atersheds.

· In the long-term, Jon is working to encourage innovative industry practices to promote sustainable forest health.

Statement of Senator Jon Tester:

“Smart forest management will create jobs in Montana, reduce the danger of catastrophic fire and help sustain the industry long-term. It’s going to take working together to meet the challenges we face in the woods and turn them into opportunities.”

Trying to keep people working while reducing the risk of fire is an admirable goal, but Devlin doesn’t answer the long-term question of what to do with the logs once they’re cut. Will they be shipped to mills? Will they be piled as slash? With they be processed and used for biomass generation? Will they stack them in log yards until the day when the housing market turns around and demand for wood products returns?

Is Tester’s proposal a step in the direction of a long-term solution to solving the timber industry’s woes, or an unsustainable tax-payer funded band-aid? Sooner or later the stimulus dollars will run out. What will the loggers do then if the demand for wood hasn’t returned by then?

I’ll be looking for these answers in the coming weeks and months ahead.