Alder Exemption in Best Interest of Oregonians Weyerhaeuser Tells State Land Board.

Business Editors

SALEM, Ore.--(BUSINESS WIRE)--Sept. 9, 2003

Oregon citizens and the state's rural economies, local governments and schools have benefited from Weyerhaeuser's (NYSE:WY) involvement in Oregon's alder market, company officials told the Oregon State Land Board during a hearing today to review an exemption that allows Weyerhaeuser to buy alder logs harvested on state and non-federal public lands.

"I sincerely believe that the exemption works," said Richard E. Hanson, executive vice president and chief operating officer. "I say that not only because I am an officer of Weyerhaeuser Company; I also say that as an Oregonian. Oregon is a great place to work and live, and like others in this room, I want the best for this state. I have great pride in my Oregon roots. I have great pride in working for Weyerhaeuser because of its commitment to forest stewardship and high ethical standards."

The state granted Weyerhaeuser an exemption in 1999 following a series of public hearings involving interested citizens and industry officials. Recently, the state was asked to review that exemption. A ruling is expected next month.

Hanson said the exemption provides a "balance that...(encourages) competition for state hardwood in order to maximize its value."

Robert W. Taylor, vice president Appearance Wood, followed Hanson and presented testimony on the health and competitiveness of the hardwood business in Oregon that highlighted the addition of new companies and expansion efforts by others.

"Two of the petitioners, Westwood and Diamond West, are newcomers to the business rather than long-time survivors, as they have been described," Taylor said. "Another petitioner, Cascade Hardwood, ... recently increased its capacity to become the largest hardwood mill in the Pacific Northwest."

Taylor said another indication that the current state policy works is that hardwood log prices in Oregon have steadily increased since 1993 according to a study by Dr. John Beuter, a respected forest economist and analyst.

"It is Dr. Beuter's opinion that, certainly in the short term, revocation of the exemption would likely cause prices for state logs to fall, as purchasers of state timber that now sell their hardwoods to Northwest Hardwoods would have to find new buyers," Taylor testified.

Taylor said that Dr. Beuter's original study in 1999 encouraging the state "not lose sight of the secondary and tertiary economic, social, and environmental impacts" of allowing Weyerhaeuser to purchase state hardwood logs "remains true today."

"The question now to be reviewed is whether competition will be enhanced or decreased if Weyerhaeuser is deprived of access to state logs," Taylor said. "The answer is self-evident, as exclusion of a major purchaser of state logs certainly will not increase competition for the state's hardwood resources, nor will it assist the state in its capacity as trustee."

Weyerhaeuser's hardwood business employees nearly 260 in Oregon. Between 1995 and 2000, the company invested $17 million in capital improvements to its mills in Eugene and Garibaldi.

Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2002, sales were $18.5 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com.