Minnesota's timber industry experienced a second blow Friday when Ainsworth Lumber Co. said it's suspending operations at two oriented-strand-board (OSB) factories in Cook and Grand Rapids effective immediately. About 300 workers will be laid off.
The news comes one month after the Vancouver, British Columbia-based lumber company closed one of two OSB production lines in Bemidji, displacing 110 workers.
The company said the operations shutdown is for an "indefinite period." It is symptomatic of the slowing housing market, which has dramatically hurt OSB factories and logging firms throughout the state.
Sheets of OSB have become a popular home-building product during the past 30 years. It is a plywood-like product that is made from chipped wood.
As the housing market has stalled, so too has demand for OSB products. Prices have fallen 25 to 50 percent in the past year, prompting mill owners and loggers to complain that their industry is in a crisis. The news at Ainsworth had many loggers calling other mill owners to learn whether they planned similar moves.
In a statement, CEO and Chairman Brian Ainsworth said: "The continued losses due to very high Minnesota wood costs, increased costs for freight and resins and prevailing market prices have regrettably forced us to take this action."
Ainsworth added that he did "not foresee any near-term improvement" in either costs or market conditions. However, he pledged to review the situation again in mid-October.
Combined, the Cook, Grand Rapids and halted Bemidji production lines produced 1.1 billion square feet of OSB a year. For now in Minnesota, Ainsworth will operate its one remaining OSB line in Bemidji. That line produces about 300 million square feet a year and employs 150 workers.
Ainsworth officials said that current and future orders for the once-popular OSB will be supplied by the company's five other OSB plants in North America.
"The effect that this has to the infrastructure of the [Minnesota] logging community is what is devastating," said Ed Gudowicz, the resource manager for Louisiana Pacific, which operates a siding plant in Two Harbors, Minn., and an OSB and siding plant in Hayward, Wis. "We are getting calls from loggers trying to figure out what they are going to do."
According to the Minnesota Timber Association, there are about 300 small logging firms in the state that supply wood to 11 mills and plants that make mostly OSB, lumber, crates, paper, pulp and firewood.
Wayne Brandt, executive vice president of the association, recently lamented, "This is probably the worst market that we have seen for loggers [and mills] for 25 to 35 years."Star Tribune
