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Market prices force Pyramid to cut
payroll 10 percent across-the-board

by Gary Noland
For the Pathfinder
December 31, 1998


In a painful decision, reflecting the realities of a depressed lumber market, Pyramid Mountain Lumber, Inc.'s management held crew meetings Monday and announced a temporary, across-the-board payroll cut of 10 percent, a measure the company was last forced to use some 16 years ago.

Spokesman Lorin Rose, Pyramid's controller, said Tuesday that many positive things have emerged in the past year with cost-cutting efforts and improved production efficiency at the sawmill, but that there was "no help in the market place."

The market place has averaged 15 percent less all year, with the mill prices running $72 per thousand-board-feet less than last year, Rose said.

The United States has become a "dumping ground for lumber" in the wake of last year's collapse of several Asian countries, Rose said, adding that any improvement in the market place will probably occur only gradually, though he hopes the market is at a bottom.

With exports of lumber to Asian markets drying up, Canada and other countries have glutted the U.S. market.

With a work force of 130 affected by Monday's decision, Rose said reaction was mixed, but better than expected, for the most part.

"No one is putting 10% at the bottom of their socks, so it was a shock. There were some quiet, reflective people who needed more time to digest it," Rose said.

There might have been many with some relief, however, as some thought the entire night shift might be eliminated, he added.

Owners, hourly employees and salaried employees are all affected by the pay cut.

Pyramid is not the only commodity operation to be hit by market events beyond their control this year. Bonner's Stimson mill has closed for two weeks and a Darby mill, similar in size to Pyramid, closed indefinitely this year. In the past decade many of Montana's smaller sawmill operations have closed.

Rose said Monday's decision was "most difficult" for the management and stockholders. "They have pride and genuine concern for their employees and this community, and they know people are counting on them," Rose said.

In addition to talks with crews Monday, a newsletter announcing the reasons for the pay cut went out in the mail for the families to read.

The pay cuts are not permanent, and the company won't wait until it can restore the full amount. "When we can give some of it back, we'll give it back," Rose continued, adding that it may be as little as two percent at a time, or a bonus.

The company was forced to implement a 10 percent pay cut in 1982 and it was 13 months before normal pay was restored, all at once. "We might have traded 13 months for 16 years then," Rose said.

Rose could not say how long this cut may remain in effect, and "...there's no guarantee this will work," if this country would go into a recession, he said. That could force other, more extreme options, because lumber prices would plummet even more, he said.

He hopes, however, that the market has bottomed and that the next movement is upward.

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