Officials eye Ketchikan veneer plant

Posted: Tuesday, August 12, 2003

ANCHORAGE (AP) Serious efforts are under way to revive a closed veneer plant in Ketchikan.

Gov. Frank Murkowski held a strategy session last week in his office with Undersecretary of Agriculture Mark Rey, timber executives and officials with the Alaska Industrial Development and Export Authority and the Ketchikan Gateway Borough. Rey is a former timber industry lobbyist who now oversees the U.S. Forest Service.

The goal of the meeting was to determine what it would take to put the veneer plant back in business and employ about 45 people, participants said.

At the end, they came up with a tentative plan for AIDEA to invest $3 million to purchase equipment for the plant, which closed in February 2001, one month after opening. Timber Products Co., of Springfield, Ore., would operate the plant, and Juneau-based Sealaska Corp., a regional Native firm, would provide one-third of the timber. Veneer is a building product made from lower-grade timber not suitable as dimensional lumber.

''It's very doable,'' said Jack Phelps, the governor's outgoing special assistant for natural resources. ''We want it to happen as soon as it's feasible.''

Phelps described the concept as a private-public partnership. AIDEA, a state lending agency, would provide what amounts to venture capital, he said.

The same players considered rescuing the mill a year ago, but a deal failed to come together in time.

The veneer plant was born with a $7 million loan from the Ketchikan Gateway Borough. Two years before, Ketchikan's biggest employer, an aging pulp mill, shut down after four decades, sending hundreds of workers to unemployment lines. City officials frantically looked to veneer as a replacement for the pulp mill.

A new company run by former managers of Ketchikan Pulp Co. built the veneer plant in 2000. But Gateway Forest Products, as the company was known, soon ran into problems and filed for Chapter 11 bankruptcy reorganization. The borough spent $5.5 million paying Gateway's creditors, provided $2.5 million to the company as debtor-in-possession financing, and $2.8 million to ultimately take the mill off Gateway's hands, said Al Hall, Ketchikan's finance director.

Before the borough stepped in, an eleventh-hour deal to save the ailing plant, involving AIDEA, Timber Products and Sealaska fell through, so city officials bought the plant at auction last summer. The borough has spent at least $18 million on the veneer operation to date, Hall said.

As long as Ketchikan isn't expected to put up any more money toward restarting the plant, most residents would support the venture, Hall said.

''I don't think we need to be buying the veneer plant for the fourth time. We'll let AIDEA take the next bite,'' he told the Anchorage Daily News.

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