Oregon thrives as it protects owls.

Our top timber state has apparently foiled forcasts of economic disaster in the wake of logging bans. But is all well in the woods?

BY NOW, THE timber communities of Oregon were supposed to be ghost towns. There was going to be an epidemic of foreclosures, a recession so crippling it would mean "We'll be up to our neck in owls, and every millworker will be out of a job," as President George Bush predicted two years ago while campaigning in the Northwest.

Politicians in both parties agreed. The villain was the northern spotted owl, an endangered bird fond of the same ancient national forests desired by loggers. When restrictions on logging were ordered in 1991 to protect the bird, Michael Burrill spoke for many of his fellow Oregon timber-mill owners when he said, "They just created Appalachia in the Northwest."

But economic calamity has never looked so good. Three years into a drastic curtailment of logging in federal forests, Oregon, the top timber-producing state, has posted its lowest unemployment rate in a generation, just over 5 percent.

What was billed as an agonizing choice of jobs venus owls has proved to be neither, thus far. Oregon is still the nation's timber basket, producing more than five billion board-feet a year (10,000 board-feet are used to build the average house). But instead of using 300-year-old trees from public land to make 2x4s, mills are relying on wood from tree farms, most of them belonging to private landowners. And the mills are getting more out of the timber, using parts that used to be discarded.

In the last five years, Oregon lost 15,000 jobs in forest products. But it gained nearly 20,000 jobs in high technology, with companies like Hewlett-Packard, which makes computer parts, expanding considerably in the state. By early next year, for the first time in history, high technology will surpass timber as the leading source of jobs in the Beaver State. And timber workers are being retrained for some of those jobs, particularly in manufacturing.

Instead of spectral monuments to the spotted owl, many parts of the state have reached what economists call full employment--a jobless level of about 5 percent that the experts say will not cause inflation and where people are usually unemployed by choice. And there are signs of impending labor shortages, according to state economists. In the last year alone, the state's growing economy has added nearly 100,000 jobs--the exact amount the timber industry said would be lost with the restrictions.

Even the most timber-dependent counties in southern Oregon report rising property values and a net increase in jobs. But some in the timber industry say the crash is yet to come. Many mills are using trees that should not have been cut because they are too small, said Chris West, a spokesman for the Northwest Forestry Association, an industry group based in Portland.

"The small-woodlot market blossomed more than anyone expected," West said. "But it's going to be short-term."

Asked about the job-loss figure of 100,000, West said, "We don't think the hammer has hit yet."

As for the loggers and millworkers who have already lost their jobs, most of them did not become minimum-wage hamburger flippers, as predicted. At Lane Community College in Springfield, the nation's largest center for retraining displaced woods-workers, nearly nine of every 10 people going through the program have found new jobs, at an average wage of $9.02 an hour, about $1 an hour less than the average timber-industry wage. They are becoming auto mechanics, accountants, cabinetmakers, and health-care workers.

"So many people say this is the best thing to ever happen to them," said Jeff Wilson, a former mill worker from the town of Mapleton, who is just finishing his retraining program and plans to become a community-service worker. "I was brain-dead at the mill, never thought I'd do anything else. Now it's like the world has opened up."

The big question on retraining--one that President Clinton brought half the Cabinet here to discuss at the Timber Summit in the spring of 1993--was what a timber worker could be retrained to do. It turned out to have a simple answer, said Patti Lake, who runs the retraining program.

"I'm so sick of the Paul Bunyan stereotype about these people," Lake said. "They come to us because they know there are better jobs than burger-flipping. They're just people who graduated from high school and went to work in the mill or the woods. Now they're becoming the accountant who does my taxes or the mechanic who fixes my car."

To be sure, there are pockets of poverty in the smaller, more remote timber towns of Oregon. The aid package promised by President Clinton, $1.2 billion over five years, has only begun to trickle in. Under the President's plan, the timber cut in national forests will be about one-fourth of what it was in the 1980s.

Places like Sweet Home and Oakridge have lost Main Street businesses as the mills have dosed. Auctions of heavy equipment used to haul and mill giant trees are common. But no county in Oregon has an unemployment rate higher than 7.8 percent, and in some rural counties, the rate is about 2 percent, compared with the national rate of 5.9 percent.

Also, few people seem to be leaving. During the last period of timber layoffs, from 1981 to 1987, Oregon lost population. Last year, the population grew by 40,000 people.

And as the number of logging jobs has fallen, the average wage in Oregon has risen. In 1988, the peak year for timber cutting, wage levels here were 88 percent of the national average. This year, they are 93 percent.

In 1991, Representative Bob Smith, a Republican from the eastern part of the state, said the logging restrictions "will take us to the bottom of a black hole." And that year, Representative Peter DeFazio, a Democrat who represents the biggest timber-producing district in the nation, in south and western Oregon, sketched a picture of widespread devastation.

But here in Lane County, in DeFazio's district. the unemployment rate is 4.8 percent. DeFazio, who still predicts some economic downturn, said he has been pleasantly surprised by some of the positive developments.

"I met a guy my age, a timber worker who was being retrained to become a nurse," he recalled. "A nurse! He said, 'Yeah, it's the fulfillment of a lifetime dream'."

Springfield, the blue-collar neighbor of Eugene, across the Willamette River, has landed a new Sony Corporation factory, where compact discs will be manufactured. It may employ 1,500 people within five years, at salaries that will start at better than $30,000 a year.

"It wasn't blind, dumb luck that helped us land Sony," said Mayor Bill Morrisette of Springfield. The company wanted a pristine place on the river, he said.

Using some money from President Clinton's forest-recovery package, the town offered Sony $8 million in tax abatements and incentives. In return, Sony promised to pay people at least 10 percent above the national average. Today, the factory is rising on farmland just miles from the woods that have been shut down to logging to protect the spotted owl.

"Owls versus jobs was just plain false," Morrisette said. "What we've got here is quality of life. And as long as we don't screw that up, we'll always be able to attract people and business."

And even though numerous timber mills have closed in Springfield because they could no longer get the big trees, newer, leaner operations like Springfield Forest Products (see "Another Mill Making Good with Young Growth," American Forests, November/December 1993) are hiring. The Springfield mill, which was shut in 1989, was retooled to use small-dimension wood from tree farms. When it was owned by Georgia Pacific, the mill relied on old-growth timber from national forests. The mill now employs 450 people.

"A lot of people were afraid of change," said Scott Slaughter, the personnel manager, a third-generation timber worker. "But I see a real future here."

Ed Whitelaw, a professor of economics at the University of Oregon in Eugene, was one of a handful of economists who predicted that job losses would be minimal and that Oregon--because of its attractive scenery and low property costs--would thrive.

"These 100,000-job-loss figures were just fallacious; they came out of a political agenda," Whitelaw said. "Yet when I would say this, I was dismissed as an Earth Firster or something."

Michael Burrill, who owns a timber mill in Medford, was asked about his statement that saving the spotted owl would create Appalachia in the Northwest.

"We've had an awful lot of new industry, and that's surprised me," he said. He said people moving to southern Oregon from California are not all retirees, as the stereotype has it.

"They are bringing jobs with them," he said. "Turns out there's a hell of a lot going on."

TIMOTHY EGAN a New York Times correspondent, works out of the paper's Seattle office. This article appeared in the October 11 edition of the Times.