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Louisiana-Pacific now eyeing Cook site for new siding plant

Louisiana-Pacific has purchased a shuttered board-making plant near Cook and is eyeing the site for a possible siding plant there, instead of in Hoyt Lakes.

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A home with Louisiana-Pacific SmartSide siding. Credit: Louisiana-Pacific
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Louisiana-Pacific has purchased a shuttered board-making plant near Cook and is eyeing the site for a possible siding plant there, instead of in Hoyt Lakes. LP officials Friday confirmed reports that they had purchased the former Ainsworth waferboard plant along U.S. Highway 53 near Cook. The company has been renting the site as a "laydown" site to store wood for its Two Harbors and Hayward plants. Company spokesman Mark Morrison said LP is now considering the Cook site for a new siding plant instead of the proposed Hoyt Lakes site. The News Tribune first reported in June that LP was ready to use state and Iron Range Resources and Rehabilitation Board incentives to build an all-new siding facility at a Hoyt Lakes industrial park. The new facility would produce LP's hot-selling SmartSide composite wood exterior home siding product. While Minnesota officials have known they are competing against other possible sites in the U.S. and Canada, LP confirmed that Friday by saying it had swapped board plants in Canada with another company. LP is swapping ownership of its Chambord, Quebec, mill for Norbord's Val-d'Or, Quebec, mill, which now is in the running for the new siding plant.
As part of the deal, Norbord, which held a covenant over the deed of the Cook plant, has agreed to drop a noncompete clause that previously prevented any buyer of the property from opening any kind of wood products plant there. "Once that covenant was dropped, it opened the door for Cook, which they had been looking at before Hoyt Lakes," said Mark Phillips, IRRRB commissioner. Phillips said LP now is focusing on Cook for the new siding plant and its potential 250 jobs. Phillips said he expects the LP board of directors to decide on a final location for the SmartSide project at its February meeting. "It's still good news, it's just good news for Cook now instead of Hoyt Lakes," Phillips added. "But getting them here is good news for the whole region." The new plant would consume about 800,000 cords of wood each year, or about 200 logging trucks daily. LP made it clear Friday that no final decision had been made on where to build the new plant. "In northern Minnesota our focus is on the Cook site, not Hoyt Lakes. As our release says, the Val-d'Or mill site in Canada is also part of this equation," Morrison told the News Tribune. "We are evaluating both sites." The new acquisitions in Quebec and Cook are "part of LP's strategy to increase siding capacity, an area of the business that has delivered consistent sales growth over the past decade. The Canadian mill exchange, coupled with the recent Minnesota acquisition, provides us flexibility and increases our ability to optimize our capacity for sustained business growth," said Curt Stevens, LP's CEO. "We have seen tremendous growth in our siding business and anticipate this growth to continue as we look to meet increasing demand." The goal, Stevens said, is to have the new facility producing siding "by the end of 2018." Detailed evaluation Company officials said their first priority will be to conduct a detailed evaluation of both the Cook and Val-d'Or sites. The assessment will determine the operational feasibility, including access to timely and adequate wood supply and the work required to convert the sites into fully operational siding mills, as well as conversion costs and annual operating expenses. Phillips said the Cook site offers rail access but that bringing in natural gas may be expensive. In addition to jobs inside the plant, the $440 million project is expected to boost work for loggers and the truckers who move felled trees - rural, north-woods jobs that have been hit hard in recent years by board plant closures and paper mill downsizing. The IRRRB is being asked to kick in $16 million from the agency's economic development trust fund with another $20 million from the state's 21st Century Minerals Fund administered by the Department of Employment and Economic Development. State taxpayers also would kick in up to $3 million in cash incentives each year for 10 years to the company based on production at the new plant. State lawmakers approved that incentive during the 2016 session, saying it was akin to state production incentives for ethanol plants. That puts the total public financing package at more than $66 million - or about $264,000 for each job created in the proposed plant. Phillips told the News Tribune on Friday that most if not all those incentives still are available for the Cook site because they were not site-specific. A provision in the 2016 tax bill at the state Legislature would have given Louisiana-Pacific a $6 million rebate on state sales taxes on construction materials and plant equipment. But the tax bill was vetoed by Gov. Mark Dayton. Instead, the IRRRB approved spending another $6 million out of the agency's economic trust fund as a "backfill" for the state rebate. The expectation, Phillips told the News Tribune, is that the state would reimburse the IRRRB for the sales tax rebate if and when a tax bill passes. State lawmakers have said the plant will pay an average of $27 per hour in wages. Nashville, Tenn.-based Louisiana Pacific - commonly referred to as LP - already operates siding plants in Two Harbors and Hayward. It operates 14 mills in the United States, seven in Canada, two in Chile and one in Brazil and employs about 4,800 people, said Bush Bernard, a company spokesman. The Fortune 500 company had $1.9 billion in global sales in 2015, about the same as 2014, although the company reported operating losses in both years. The company has had a tough go of it recently with declining prices for oriented strand board, often called waferboard. But LP saw 22 percent growth in sales of its SmartSide siding material in the first quarter of 2016, a new quarterly record, Stevens said earlier this year. The siding has the look of hardwood lumber but is marketed as a long-lasting, often less-expensive alternative that is resistant to insects and weather.Louisiana-Pacific has purchased a shuttered board-making plant near Cook and is eyeing the site for a possible siding plant there, instead of in Hoyt Lakes.LP officials Friday confirmed reports that they had purchased the former Ainsworth waferboard plant along U.S. Highway 53 near Cook. The company has been renting the site as a "laydown" site to store wood for its Two Harbors and Hayward plants.Company spokesman Mark Morrison said LP is now considering the Cook site for a new siding plant instead of the proposed Hoyt Lakes site.The News Tribune first reported in June that LP was ready to use state and Iron Range Resources and Rehabilitation Board incentives to build an all-new siding facility at a Hoyt Lakes industrial park. The new facility would produce LP's hot-selling SmartSide composite wood exterior home siding product.While Minnesota officials have known they are competing against other possible sites in the U.S. and Canada, LP confirmed that Friday by saying it had swapped board plants in Canada with another company. LP is swapping ownership of its Chambord, Quebec, mill for Norbord's Val-d'Or, Quebec, mill, which now is in the running for the new siding plant.
As part of the deal, Norbord, which held a covenant over the deed of the Cook plant, has agreed to drop a noncompete clause that previously prevented any buyer of the property from opening any kind of wood products plant there."Once that covenant was dropped, it opened the door for Cook, which they had been looking at before Hoyt Lakes," said Mark Phillips, IRRRB commissioner.Phillips said LP now is focusing on Cook for the new siding plant and its potential 250 jobs.Phillips said he expects the LP board of directors to decide on a final location for the SmartSide project at its February meeting."It's still good news, it's just good news for Cook now instead of Hoyt Lakes," Phillips added. "But getting them here is good news for the whole region."The new plant would consume about 800,000 cords of wood each year, or about 200 logging trucks daily.LP made it clear Friday that no final decision had been made on where to build the new plant."In northern Minnesota our focus is on the Cook site, not Hoyt Lakes. As our release says, the Val-d'Or mill site in Canada is also part of this equation," Morrison told the News Tribune. "We are evaluating both sites."The new acquisitions in Quebec and Cook are "part of LP's strategy to increase siding capacity, an area of the business that has delivered consistent sales growth over the past decade. The Canadian mill exchange, coupled with the recent Minnesota acquisition, provides us flexibility and increases our ability to optimize our capacity for sustained business growth," said Curt Stevens, LP's CEO. "We have seen tremendous growth in our siding business and anticipate this growth to continue as we look to meet increasing demand."The goal, Stevens said, is to have the new facility producing siding "by the end of 2018."Detailed evaluationCompany officials said their first priority will be to conduct a detailed evaluation of both the Cook and Val-d'Or sites. The assessment will determine the operational feasibility, including access to timely and adequate wood supply and the work required to convert the sites into fully operational siding mills, as well as conversion costs and annual operating expenses.Phillips said the Cook site offers rail access but that bringing in natural gas may be expensive.In addition to jobs inside the plant, the $440 million project is expected to boost work for loggers and the truckers who move felled trees - rural, north-woods jobs that have been hit hard in recent years by board plant closures and paper mill downsizing.The IRRRB is being asked to kick in $16 million from the agency's economic development trust fund with another $20 million from the state's 21st Century Minerals Fund administered by the Department of Employment and Economic Development.State taxpayers also would kick in up to $3 million in cash incentives each year for 10 years to the company based on production at the new plant. State lawmakers approved that incentive during the 2016 session, saying it was akin to state production incentives for ethanol plants.That puts the total public financing package at more than $66 million - or about $264,000 for each job created in the proposed plant.Phillips told the News Tribune on Friday that most if not all those incentives still are available for the Cook site because they were not site-specific.A provision in the 2016 tax bill at the state Legislature would have given Louisiana-Pacific a $6 million rebate on state sales taxes on construction materials and plant equipment. But the tax bill was vetoed by Gov. Mark Dayton.Instead, the IRRRB approved spending another $6 million out of the agency's economic trust fund as a "backfill" for the state rebate. The expectation, Phillips told the News Tribune, is that the state would reimburse the IRRRB for the sales tax rebate if and when a tax bill passes.State lawmakers have said the plant will pay an average of $27 per hour in wages.Nashville, Tenn.-based Louisiana Pacific - commonly referred to as LP - already operates siding plants in Two Harbors and Hayward. It operates 14 mills in the United States, seven in Canada, two in Chile and one in Brazil and employs about 4,800 people, said Bush Bernard, a company spokesman.The Fortune 500 company had $1.9 billion in global sales in 2015, about the same as 2014, although the company reported operating losses in both years.The company has had a tough go of it recently with declining prices for oriented strand board, often called waferboard. But LP saw 22 percent growth in sales of its SmartSide siding material in the first quarter of 2016, a new quarterly record, Stevens said earlier this year.The siding has the look of hardwood lumber but is marketed as a long-lasting, often less-expensive alternative that is resistant to insects and weather.

Related Topics: IRON RANGEHOYT LAKESCOOK
John Myers reports on the outdoors, natural resources and the environment for the Duluth News Tribune. You can reach him at jmyers@duluthnews.com.
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