Trump’s trade war tests Alaska’s struggling timber industry
By Marc Heller, originally published Friday, August 16, 2019 at E&E News
KETCHIKAN, Alaska — The Trump administration’s trade war with China is hitting Alaska’s timber industry where it may hurt most: in the younger trees that everyone seems to agree are the future of the business.
China’s 20% tariff on U.S. timber is retaliation for similar levies the administration placed on Chinese goods. And while Chinese officials spoke earlier this week of trying to reach a middle ground in the broader trade battle, people close to the timber industry in southeast Alaska say they’re not sure the region’s mills that ship there can quickly recover when the battle settles.
That could throw off plans to transition out of old-growth timber harvesting in the Tongass National Forest, a practice that’s unpopular with conservation and environmental groups, as well as Alaska Native tribes, but maintains support from the state’s political leaders.
China imports wood from Alaska for use in products like the backing used for concrete that’s poured during construction. The country has been a major market for companies in Alaska and the Pacific Northwest due to growing demand and close proximity. China is a mainstay for Alcan Forest Products in Ketchikan, which does business in western hemlock and spruce.
Tariffs have taken a chunk out of Alcan’s business as China looks elsewhere for timber, said Eric Nichols, a partner.
While industry sources say younger-growth timber isn’t terribly profitable compared with the much bigger trees taken from forests that have never been logged, it’s the primary source of exports to China. And China is the main destination for the log exports that now dominate the state’s timber industry.
With China looking to Europe to replace U.S. supplies, Nichols said he worries the market there could dry up even after the trade dispute is resolved, and even knocking prices down for a while might not fully regain the business.
“It’s really hard to get back in. You have to discount it,” Nichols told E&E News in an interview in his downtown Ketchikan office. “What’s going to happen to the young growth up here? I don’t know.”
Transitioning to younger-growth trees isn’t viable under these conditions, even though an eventual change is inevitable, Nichols said. “We’d be done. You just can’t replace that much, that fast.”
That’s a disappointment to groups that are pushing for a quicker move to younger growth, including handing the Forest Service and timber industry new forest inventories that indicate enough supply is available to make the switch now, rather than waiting the 16 years the Forest Service has said is necessary.
Wood product companies are already doing business in younger growth to a greater extent than policymakers may realize, said Catherine Mater, a forest products engineer in Corvallis, Ore., and consultant to the Forest Service who helped assemble the latest inventory.
But the timber industry in southeast Alaska hasn’t fully embraced the idea, and the state’s political leadership is still faithful to old-growth timber, said Mater, who has worked for years in southeast Alaska and has been pushing for a quicker transition.
Mills would need to be upgraded and a consistent supply ensured, Mater said. But the latest information suggests the goal is more reachable than even she thought a few years ago, she said.
The timber industry in southeast Alaska is a shadow of its former self, having shrunk so sharply since the 1980s that only one substantial sawmill — the Viking Lumber Co. facility on Prince of Wales Island — remains. It employs around 30 people and is the last vestige of the region’s industrial-scale old-growth timber used in high-end products such as pianos and guitars.
The China dispute surfaced in the middle of Mater’s and others’ efforts.
At the federal level, Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) believes the dispute has dragged on so long and hurt the timber industry badly enough that federal subsidies are called for to support businesses in the interim, her office said.
“Some operators in southeast Alaska have made the difficult transition to young growth timber harvesting but are now in danger of losing their only market, China, due to retaliatory tariffs,” Murkowski said in a statement.
“These operators are in a no-win situation,” she added. “I recognize that the administration is trying to make trade with China more fair for our country and I appreciate their efforts to promote sustainable timber harvests in the Tongass. But this dispute has also been hard on our timber industry, and I believe it is appropriate to provide temporary assistance to help them.”
Some operators in southeast Alaska have made the difficult transition to young growth timber harvesting but are now in danger of losing their only market, China, due to retaliatory tariffs. Sen. Lisa Murkowski (R-Alaska)
Still, Murkowski has pushed to keep old-growth sales going from the national forest for a bit longer, including supporting more lenient restrictions on forest road construction that could open previously unharvested areas. A proposal to do that is moving through the Department of Agriculture, of which the Forest Service is part.
How long the tariff war will persist remains to be seen and may hinge on next year’s presidential election, which makes China nervous, Nichols said. If President Trump is reelected or appears likely to serve a second term, Nichols said, Chinese officials may believe they need to keep up the search for alternative timber markets, meaning the pain for Alaska’s industry could persist.
“They’re at a real loggerheads,” Nichols said.
Like many timber industry representatives, Nichols has been skeptical about abandoning old-growth stands in the Tongass and elsewhere. He said he believes the Forest Service has overestimated how much young growth is available but agrees with old-growth critics that the biggest trees taken from previously uncut forests have a lot more defects than younger growth, for instance.
For now, Nichols said, he’s angling for more old-growth timber to satisfy markets in Japan, for instance.
And while he supports more business in younger trees, he said, environmental groups fighting against logging in the Tongass risk putting an industry out of business, old growth or new.
“The environmental community has to decide whether it wants a timber industry here,” Nichols said.