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OPINION | REX NELSON: The timber trade

Logging is big business in the heavily forested regions of south Arkansas by Rex Nelson | December 26, 2021 at 2:02 a.m.

I'm standing in a clearing just off Arkansas 51 west of Arkadelphia with two of the leaders in the state's timber industry, Pete Prutzman and Mark Karnes.

Prutzman, who opened the Arkadelphia office of what's now Kingwood Forestry Services in 1979, oversaw the 1990 planting of timber on what had been a soybean field. The owner was taking advantage of the federal government's Conservation Reserve Program. The 1985 Farm Bill established CRP as we know it these days.

The amount of land allowed to be enrolled in CRP rose from 5 million acres nationally in 1987 to 40 million acres in 1990. In Arkansas, tens of thousands of acres were removed from agricultural production and planted in trees.

"We planted more than 100 acres of loblolly pines here," Prutzman says. "We thinned them 15 years later. We did a second thinning at the 30-year mark."

Prutzman says the land's owner, an 84-year-old woman, was pleased with the result. Pine sawlogs went to Georgia-Pacific's mill near Gurdon. Hardwood was sold to a sawmill across the Ouachita River from Arkadelphia. Pulpwood headed to Domtar Corp.'s giant pulp and paper mill at Ashdown.

We're in the muddy area where logs were loaded onto trucks.

"Logging is an ugly business," Karnes says. "It's like an ugly baby. Only a parent can love it."

Karnes, who was inducted into the Arkansas Outdoor Hall of Fame in 2017, oversees more than 60,000 acres in timber holdings in this area of the state for the Ross Foundation.

It was founded in 1967 by Esther Clark Ross and her daughter Jane Ross. The initial endowment consisted of 18,000 acres of timberland that had been part of the estate of J.G. Clark, Jane Ross' grandfather.

Additional tracts were added through the years. In 1993, the foundation acquired a large contiguous tract from International Paper Co. in Hot Spring and Grant counties. The foundation received more acreage following Ross' death in 1999.

Karnes also manages tens of thousands of acres for Arkadelphia investor Ross Whipple. The foundation's lands and Whipple's acreage are operated much like a national forest with best practices utilized and an emphasis on

wildlife conservation.

Prutzman earned his bachelor's degree from Penn State in forest science in 1977 and worked for the U.S. Forest Service on the Gifford Pinchot National Forest in Washington state and the Allegheny National Forest in northwestern Pennsylvania. He moved to Arkansas to accept a position with Davis Forestry. Kingwood was set up in its present form in 1983 but has roots in private forestry services dating back to 1963.

In addition to the Arkadelphia office, Kingwood has offices at Monticello and Texarkana. It's recognized as one of the top forestry consulting firms in the country, managing hundreds of thousands of acres for private and institutional owners in Arkansas, Louisiana, Texas and Oklahoma. Prutzman is considered an expert in the areas of timber appraisal and marketing.

We pick up lunch from Allen's Barbecue on the way back to Arkadelphia and take it to the Kingwood office, where we're joined by Steve Anthony of Anthony Timberlands Inc. and Max Braswell, who heads the Arkansas Forestry Association.

I've asked this timber industry brain trust to give me a sense of where things stand. I grew up in the south half of the state and realize the timber industry's success is critical to the overall success of a region where the vast majority of counties are losing population.

Karnes is the AFA president. Anthony and Prutzman serve on the association's executive committee.

"Everybody just assumes that the high lumber prices we saw earlier this year helped timber prices," Karnes says. "But timber prices never really responded. Landowners certainly understand the difference between timber and lumber prices, but the average person doesn't."

Anthony's family has been involved in forestry and timber manufacturing since 1907. He grew up in Fordyce and started working in the industry as a teenager, spending summers in a family-owned sawmill. He graduated from high school at Fordyce in 1979, received a bachelor's degree in business administration from Washington & Lee University in Virginia, then earned a law degree in 1986 from the University of Arkansas at Fayetteville.

Anthony joined ATI that year as vice president of legal affairs. In 1995, Anthony became the company's vice president of pine production. In 2004, he was named ATI's president.

He was on the Arkansas Forestry Commission from 2000-09, serving as chairman in 2006-07. Gov. Asa Hutchinson put Anthony back on the commission in 2019 to complete five years of an unexpired nine-year term.

ATI owns pine sawmills at Bearden and Malvern and hardwood sawmills in Beirne and Magnolia. It manages a lumber treating plant at Hope, a hardwood laminating and timber mat manufacturing facility at Sheridan and an oak flooring mill at Magnolia. In late 2018, the highly diversified company, which also owns almost 150,000 acres of timberland, purchased a hardwood sawmill and chip mill at Mount Holly in Union County.

Anthony outlines what's now a familiar litany of problems as the pandemic enters its third year: a severe lack of truck drivers, employees who refuse to be vaccinated, a dearth of applicants for jobs in the mills.

"We operate night shifts at our two pine mills, but 90 percent of folks only want to work days," he says. "We're having a real problem staffing those facilities. The job market was already tight before the pandemic, and now there are no applicants to speak of even though we've raised our hourly rates 20 percent."

With more than four decades of work across the region, Prutzman knows south Arkansas as well as anyone. He has seen population losses ravage the area during that time.

"The pool of applicants just isn't very deep" in production facilities such as those operated by ATI, Prutzman says, adding that graduate foresters are almost impossible to hire.

"Fortunately, we need fewer foresters than we once needed due to technological advances such as mapping software," he says.

Another problem facing south Arkansas is a glut of raw material. Since I graduated from high school in 1978, the amount of forestland in the state has increased by 1.6 million acres. Most of that increase occurred in the south half of the state as landowners abandoned row-crop agriculture.

Forests cover 56 percent of the state. Arkansas also contains the largest national forest area in the South with 2.5 million acres within the Ozark-St. Francis National Forest and Ouachita National Forest. Both pine and hardwood are growing far faster than they're being removed.

According to the Arkansas Center for Forest Business at the University of Arkansas at Monticello: "Net timber growth continues to exceed harvest by more than 18 million tons annually, which will keep fiber resource costs low for the near future. Expansion and interest in the forest resources of the state remain strong.

"Mortgage rates are likely to remain at record lows, stimulating growth in softwood sawmill output and demand for pine sawtimber. Bio-energy growth will utilize the low-cost and readily available pine pulpwood supply in the state. New engineered wood facilities and construction techniques will expand the use of lumber further."

My lunch guests lament the decision last year by Chinese-owned Sun Paper to abandon its plan to build a massive paper mill just south of Arkadelphia at Gum Springs. The company cited "continued political friction and economic instability." The planned $1.8 billion mill, which would have been the most expensive construction project in state history, was announced in 2016.

"We needed that facility to relieve the pine pulpwood glut we have in south Arkansas," Anthony says. "There's a reason there hasn't been a new paper mill built in this country in 50 years. They're expensive, it's tough to obtain financing, and it's hard to get the environmental permits."

Karnes says Bowater Inc., a paper and pulp business headquartered in South Carolina at the time, looked at the same location in the 1980s. Bowater merged with Abitibi- Consolidated in 2007 and the combined company went on to become Resolute Forest Products.

"Their folks told me back then that if there's ever another paper mill built in this country, it will be at Arkadelphia," Karnes says. "It the perfect location. Our sawmill owners in Arkansas produce a lot of chips that could be used at such a mill. Sun would have lifted all boats."

The scope of the Sun project changed through the years. In its final form, the mill would have made boxes used for deliveries by companies such as Amazon. Clark County officials continue to market the 1,000-acre site and say they have prospects in the timber industry.

"I'm cautiously optimistic," Prutzman says. "Somebody is going to come here to capture the surplus of fiber we have."

While growers search for markets for pine, the market for oak timber for furniture and flooring has exploded. Lower-grade hardwood timber is used for railroad crossties. Karnes says 20 percent of the land he oversees is now managed for oak logs. Still, south Arkansas remains primarily a sea of pine trees.

"We have all the fiber you could possibly want," Braswell says. "We also have the best minds in the country when it comes to the timber sector. Everybody knows how to do what it takes to be successful."

"It helps to be a long-term thinker in this business," Anthony says. "You're talking about a 40-year crop."

Resolute Forest Products has added more than 160 jobs in south Arkansas during the past two years and invested $28 million in sawmills it purchased at El Dorado and Glenwood in 2020.

"With 19 million acres of forestland, Arkansas is in a unique position to be a leader in the timber industry," Gov. Hutchinson says. "Because of that, we want to ensure that we attract companies that will be a good corporate fit."

The governor says Resolute fits that profile because it values sustainability and works to protect natural resources.

Remi Lalonde, Resolute's president and chief executive officer, says: "The capital investments in our Arkansas operations support our business strategy to grow in woods products, particularly in light of the growth we're seeing for building materials like wood. Growth in the sector also fits with our commitment to sustainability, thanks to its socio-economic and environmental benefits such as long-term carbon capture and the beneficial impacts of building with wood."

Karnes says people in south Arkansas are already familiar with combining forest health with wildlife management and recreational opportunities.

"Now there's all this interest in carbon sequestration," he says. "We need to be part of that conversation. I can assure you that our landowners want what's best for the land. When you're managing trees properly, the wildlife, recreation and carbon capture all come along with it."

Soon after acquiring the El Dorado operation, Resolute made plans to invest more than $20 million in a facility that had been idle since August 2019. When fully operational, it will produce up to 180 million board feet of dimensional lumber and specialty products using timber harvested within a 50-mile radius. The mill now employs more than 150 people.

An $8.4 million investment in the Glenwood mill allowed the facility to expand its production capacity to 185 million board feet of lumber and decking. About 25 jobs were added to the existing workforce.

"Our economy just lights up when the mill is producing," says Glenwood Mayor B.T. Smith.

That's the case across south Arkansas. The economy lights up when the timber industry is doing well.

Those at lunch in Arkadelphia remain hopeful that the south Arkansas fiber basket--which is overflowing with raw material--will attract additional employers.

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