Faced with Verso closure, mild temperatures, logging industry battles challenging year
The market for spruce and balsam disappeared while the market has been flooded with aspen and pine.
At a logging site along Camp 26 Trail in the Superior National Forest, Josh Hull welcomed Monday morning’s single-digit temperatures.
But the owner of Hull Forest Products didn’t like that the forecast showed mostly 40-degree days for the rest of the week.
Within days, load restrictions are expected to be placed on roads across the Northland as the ground thaws, making it difficult for loggers to move timber and reach trees in swampy forests.
“We’re in a deep bog right now on another timber sale,” Hull said. “We’re scrambling to get done before the bottom falls out of it.”
It’s a difficult end of what should be the best time of year for loggers.
The problem facing Northeastern Minnesota loggers is two-pronged: The closure of Verso’s paper mill in Duluth has slashed demand for several species of timber, while the mild winter has shortened the prime logging season.
Verso’s closure hurting loggers
When Verso closed its paper mills in Duluth and Wisconsin Rapids last summer, demand for area spruce and balsam disappeared.
For Hull, about half his annual production went to Verso.
“It definitely hurt us,” Hull said. “I lost seven product lines in one day when (Verso) closed.”
His mantra since then has been “be creative.” He’s found some new markets and expanded others by repurposing some equipment and adding other equipment. That includes sending some spruce pulpwood to the UPM Blandin paper mill in Grand Rapids and chipping some wood to burn at biomass power plants.
For Mike Nielsen, owner of Mike Nielsen Logging in Ely, Verso made up about a third of his business.
And now, Nielsen’s crew of nine is down three workers compared to last year.
It may be too soon to tell if Verso’s closure is having an industry-wide drain on logging jobs.
Employment data shows a declining trend in logging jobs across Northeastern Minnesota over the past several years and 2020 is no exception. The region had 343 logging jobs through the third quarter of 2020, the most recent data available. That’s down from 387 in 2019.
However, 2020’s figure does not yet include the fourth quarter, which is generally one of the highest employment quarters for the industry, said Carson Gorecki, northeast regional analysis at Minnesota Department of Employment and Economic Development.
Scott Dane, executive director of the Associated Contract Loggers and Truckers of Minnesota, said he's conducting a survey on the health of logging companies. So far, he’s finding revenues have fallen 10%-45% compared to last year and many are reducing in crew sizes — some have been cut in half, Dane said.
“Guys are having to adjust and scale down to address the lack of markets,” Dane said.
Nielsen has still stayed busy this winter by focusing on aspen and pine, which are taken by the other mills.
But many other loggers have focused on those species, too, Dane said.
“That has flooded those markets with wood to the point where the mills have reduced the hours of accepting wood and then put guys on quotas, limiting how much wood they could even bring during those hours,” Dane said.
Duluth business leaders have been pushing for a new owner of the Verso mill. People involved in the negotiations had been working with an interested paper making company in November , but so far no deal has materialized.
The area needs another mill soon, Nielsen warned. He fears that if logging companies disappear, their infrastructure will go with them and make the area less attractive for a mill looking to move in.
“We need another mill up here,” Nielsen said. “We’ve got 20 to 30% too many loggers for the mills that we have right now. … We don’t have too many loggers; we have too few mills.”
Loggers seek relief
Verso’s closure left Nielsen with state permits for 20,000 cords of spruce and balsam that “I had a home for until last year when we lost (Verso),” he said.
The timber permits were secured by putting 15% down on the value of the timber on that land. But if the sale is forfeited, that down payment is gone.
“I mean, 15% of 20,000 cords — there’s a lot of value,” Nielsen said.
In 2019, spruce was about $24 per cord while balsam was about $14 per cord, according to the Minnesota Department of Natural Resources .
So, Nielsen and others are seeking relief and a refund of the down payments from the DNR.
Across the industry, there’s more than $1 million tied up in those state permits for mostly spruce and balsam timber that were destined for Verso before it closed, said Mike Birkeland, executive vice president of Minnesota Forest Industries and the Minnesota Timber Producers Association.
But, Birkeland said, modifying the permits require statutory changes so industry groups are pushing for a bill in the Minnesota Legislature that would allow the DNR to refund the down payments if logging hasn’t started on the land.
“Rather than the loggers be held liable for these sales that were conducted in good faith with markets at the time, we’re looking to provide other options and … provide some relief on those commitments related to down payments on some of these timber sales,” Birkeland said.
St. Louis County, which issues its own timber permits for logging on county land, has granted relief to loggers with county permits.
Using federal COVID-19 relief funds, the county has refunded the down payments on 18 logging permits totaling almost $131,000, said Jason Meyer, St. Louis County’s deputy land and minerals director.
Mild winter compounds challenges
Despite last month’s polar vortex, the 2020-21 winter logging season has been mild.
“Nothing was frozen at all until two weeks ago with that blast of cold … and then it warms up,” Nielsen said.
With only warm temperatures in the forecast, road weight restrictions are expected to return within a few days — well ahead the second half of March, when they are typically lifted, according to historical data.
Mud from the thawing ground, which makes it difficult to log within swampy sites, isn’t far away either.
Until that happens, Hull needs to finish his work along Camp 26 Trail and move to a list of other sites “before it all starts falling apart.”
Faced with warm temperatures and the closure of Verso, both Nielsen and Dane said this year felt similar to the Great Recession to the industry.
“This year has been challenging weather wise as any other challenging year,” Dane said. “But you couple that with the Verso mill shut down in Minnesota and Wisconsin … it makes it one of the most difficult years since the housing industry crash of 2008.”