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Most forest product companies show decline in workers.

THINK THE RESIDENTIAL housing slowdown hasn't affected Arkansas? Housing starts are off 19 percent from a year ago in the worst housing recession in 16 years. And a quick look at the state's largest forest product companies reveals a great deal.

Nearly all the companies reported fewer workers than they did when Arkansas Business did its last survey in late 2005.

And that's not good news for the nation's third-largest lumber-producing state, which employs some 32,000 workers in forestry and logging, wood products and the pulp and paper industries, according to the American Forest & Paper Association. The companies in the forest product industry have an annual payroll of better than $1.5 billion in the state, the AF&PA says.

The industry is in a crisis nationwide and the forecast is for tough times for the near-term. Some are saying the housing situation is just the beginning, and plenty are wondering how many companies can hold on until a turnaround in 2010 when an expected undersupply of timber should drive prices back up.

Unsold inventories are stacked up above the eight-month mark. The slower housing market and tighter credit only add to the weak demand for lumber. While lumber prices have been down, energy costs have climbed.

Through the first half of the year, lumber production is down nationwide 13 percent, yet the market is still oversupplied as companies try to cut back and find a balance between supply and demand.

Georgia-Pacific LLC continues to rank as the largest forest product company operating in Arkansas--and by a wide margin.

No one else is even close to the 3,000 employees hired by the Atlanta-based giant.

Making the wide gap possible is the restructuring of International Paper Co. of Memphis.

IP was once a dominant player among the forest product companies in Arkansas, but the restructuring that began in 2005 has left it but a shadow of its former self in the state.

Once the largest private landowner in the state, the company no longer owns any timberland in Arkansas. And once giving jobs to several thousand workers, the company now has only a couple of containerboard plants that employ 500 workers.

Last year, IP sold its plywood and lumber complex at Gurdon to Georgia-Pacific, its lumber mill at Leola to West Fraser Timber Co., its dunnage bag plant at Fordyce (now called Kapstone Kraft Paper) to Stone Arcade Acquisition Group, and its beverage packaging operation, which included the Pine Bluff paper mill (now Evergreen Packaging Inc.), to Carter Holt Harvey Ltd.

Weyerhaeuser moves to second on the list with 1,150 employees in the state, but that's far short of the 1,800 workers it reported two years ago.

Coming in third is Evergreen Packaging of Memphis. Its Pine Bluff mill employs 1,120 workers, which is just ahead of the Domtar Industries Inc. fine paper plant at Ashdown, which reported 1,100 employees.

Potlatch Corp. of Spokane, Wash., said it has 772 workers, but in 2005 it reported 900 workers.

Two years ago Smurfit-Stone Container Corp. of Chicago had 670 workers in Arkansas.

But it closed a bag plant at Jacksonville and a box plant at Little Rock and now has only 245 workers at its remaining plants.

Anthony Timberlands Inc. of Bearden is a rarity in the business because it has actually increased the number of workers to 600 from 550 two years ago. Deltic Timber Corp. of El Dorado is unchanged at 500 workers.

By John Henry

jhenry@abpg.com
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Title Annotation:Overview
Author:Henry, John
Publication:Arkansas Business
Date:Nov 12, 2007
Words:584
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