Market prices force Pyramid
to curtail production at mill


October 26, 2000
Seeley Swan Pathfinder
Seeley Lake, Montana


by Gary Noland

For the Pathfinder
Facing a market saturated with low priced lumber, Pyramid Mountain Lumber, Inc. began this week with a 40 percent cutback in production, resulting in the layoff of 30 to 40 employees, less than one-third of Pyramid's total employment of around 130 before the cuts.

Crews were informed of the cutbacks at meetings last Thursday and the reduction became effective Tuesday after the traditional Monday hunting holiday at the mill. The sawmill and planer operations will be cut to one shift operation.

"It's been a hard decision for us," Roger Johnson, Pyramid president, said Tuesday. "We've had to lay off some good people, and you never know if those people will be around when conditions change and you're ready to hire back."

A year and a half ago, Pyramid instituted a company-wide 10 percent cutback in payroll during a down market and was recovering from that with healthier lumber prices when those prices started to erode in the past year.

"This is a market-driven decision," Johnson said. "Prices have eroded for 12 months and we're looking for a way to ride this period out."

Johnson said there is an unusual over production in the industry in a time of high consumption. That combined with increasing imports has put too much lumber on the market. Rising interest rates over the past year have slowed new construction, and diminishing confidence in the stock market is taking a toll. When prices were good, other countries entered the American market with imports. There's always been Canadian imports of lumber, Johnson pointed out, but in the past year or more imports have picked up from Europe, South America and New Zealand. The Japanese market has not fully recovered and lumber once exported from Canada and the United States to Japan is now being absorbed in America, further depressing prices.

"We are affected by the world-wide economy," he added. With limited Forest Service timber sales for supply of raw logs, Pyramid has been forced to buy logs in Eastern Montana and rising gasoline prices have increased transportation costs.

Johnson said most mills have curtailed production in some fashion or another at some time this year.

Loren Rose, Pyramid comptroller, said prices the mill is getting for its product is 25 percent less than a year ago, and that most everyone took down time this summer.

"We didn't want to be like everyone else," Rose said, " but we find ourselves in this market scratching for the right thing to do. Roger has really anguished over this, not only for the employees, but for local merchants and the community."

In the wide swinging lumber market, Johnson has faced tough decisions more than once over that past 12 years. In 1988, in a tight market for raw logs, mill production and employment was cut back very similar to this cutback.

"It (lumber industry) has always been cyclical. The cycles are just coming more quickly and more steeply," Johnson added.

 

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