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Veneer plant set to begin production

Posted: Monday, November 06, 2000

KETCHIKAN (AP) -- The opening of a veneer plant at the site of a closed pulp mill later this month is a boost to the struggling timber industry of southeast Alaska.

Gateway Forest Products Inc. plans to fire up the veneer plant by mid-November, said company spokesman Cliff Skillings.

Up to 20 people will be employed initially, and the company hopes to add a second shift by mid-December, bringing another 15 or so people onto the payroll, many of them former employees of the Ketchikan Pulp Co., Skillings said.

Old-growth trees from the Tongass National Forest will be toppled, peeled and sliced into green veneer, a building product never before made in Alaska. Barges will carry veneer to the Seattle area, where it will be dried and manufactured into finished products, including plywood and laminated veneer lumber.

''It'll be an economic boost to the town,'' Ketchikan Mayor Bob Weinstein told The Anchorage Daily News.

The pulp mill was Southeast's largest private employer before it closed three years ago, Weinstein said. The mill closure signaled the loss of a $20 million annual payroll, according to a report by the McDowell Group, a Juneau research firm.

''It's an opportunity to put some of our people back into the manufacturing sector,'' said Jack Phelps, executive director of the Alaska Forest Association, a timber industry trade group.

Not everyone, however, is celebrating.

Environmentalists and others prize the Tongass' 17 million acres. They predict the veneer plant's appetite for timber will threaten pristine areas important for wildlife, recreation and tourism.

''The veneer plant is more like value-subtracted, not value-added. It'll provide too few jobs per tree cut. It's going to require over 100 million board feet of timber a year and will place great pressure to clear-cut areas important to Southeast Alaskans,'' said Katya Kirsch, executive director of the Southeast Alaska Conservation Council.

Construction on the plant began last March, four months after Gateway bought the assets of Louisiana-Pacific Corp., which owned the former pulp mill and a sawmill in Ward Cove.

The veneer factory was built adjacent to the sawmill. Gateway received a $7 million loan from the Ketchikan Gateway Borough to build the facility.

The company also received a fixed asset loan and financial support from Louisiana-Pacific to build the plant, said Richard Leary, Gateway executive vice president.

Louisiana Pacific received $2 million in federal economic disaster aid to study the feasibility of making veneer from low-grade Southeast hemlock that used to be ground into pulp. The study concluded the mill could make money because Tongass hemlock would make good veneer and the market for engineered wood products is growing.

Environmentalists are skeptical.

''If history is any guide, Gateway will be likely be looking for more money from Congress. The large-scale timber industry on the Tongass has always been dependent on government subsidies,'' Kirsch said.

Alaska's timber industry has struggled over the past decade. Depressed timber prices, federal restrictions on logging, increased competition from low-cost producers, and costly environmental lawsuits have reduced the industry to a shadow of its former self.

In the 1970s, some 4,000 people worked in the Tongass timber industry, according to the McDowell Group. By last year, the state Labor Department found the number had fallen to 1,200.

Tourism employs some 4,400 in Southeast, the McDowell Group said.

Supporters of the Ketchikan veneer plant see this month's planned opening as a good omen. The veneer plant has 115 million board feet of Forest Service timber under contract. It also has to option to buy up to 25 million board feet from Ketchikan Pulp Co., trees that were originally slated to go to the pulp mill, Skillings said.

''It's a pretty incredible project. They've made the maximum out of an industrial site that a couple of years ago had no purpose,'' said John Pearson, board member of the Southeast Conference, a Juneau-based association that promotes regional business interests.



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