The Year or More in Review (Belated)

By Dana Doran

Each year at our Annual Meeting, I provide an overview of the prior twelve months in terms of the organization and all that has transpired. Since our annual meeting was postponed back in late April and rescheduled for October 16th, 2020, I decided that it was still important to review what the PLC has done since the last time the full membership convened even though it has been more like 18 months instead of 12. As 2020 grinds along, this review in my mind is a good thing because not only does it help provide positive perspective, but it also documents what has been accomplished despite very trying circumstances.

As most are well aware, 2019-20 has been one for the ages and can only be described as a bit like Jekyll and Hyde. Since we last got together as a full membership in Oxford (April 2019), the last half of 2019 and the winter of 2020 showed signs of a strong recovery. While the weather was not completely cooperative, there were positive signs throughout the industry as all markets, except for biomass, were wide open for sales. However, while confidence grew and most of the membership noted that they had one of their best winters in a long time, the bottom fell out almost overnight starting in late February and it hasn’t gotten any better since. The rearview mirror is now foggy, and most are looking for an exit to take a breather or shed some weight before moving forward.

The majority of 2020 has been the most challenging and unprecedented year in the history of our state, and it is not over yet. The organization has been relatively stable, but it’s plans for growth and expansion have been curbed a bit as a result of the pandemic. That said, this pales in comparison to the struggles that PLC members have experienced in the last seven months. If the old saying, “what doesn’t kill you will only make you stronger,” is true, then that is the only way to describe 2020 and the challenges that face this industry both now and into the future.

In the past 18 months, the organization has added 23 new contractor members and has reached the pinnacle of 200 members for the first time in its history. This accounts for about 50% of all contractors in Maine but more than 80% of all timber that is harvested annually.

The growth in contractors has taken place as a result of the PLC Board’s decision to diversify its membership criteria in 2016 by providing an opportunity for a broader range of contractors to join. This diversification includes opportunities for those that are involved with chipping, grinding, trucking and other components of the process to harvest and truck wood from stump to mill to take advantage of all that the PLC has to offer.

As you may recall, in late 2017, the PLC, as a result of its collaboration with Acadia Insurance and the Cross Agency, was able to create a position for its first Safety and Training Coordinator. In the spring of 2019, Donald Burr joined the PLC full time to take on this role. Mr. Burr was a logger for 22 years, working primarily as a feller buncher operator for Madden Timberlands (Scott Madden, PLC Immediate Past President). He is also the lead instructor and coordinator for the very successful Mechanized Logging Operations Program in 2017, 2018, 2019 and again in the summer of 2020.

Safety, training and loss control are major priorities for the PLC. Mr. Burr’s portfolio includes oversight over the PLC’s training program development and coordination, including our Spring safety series, but also developing additional

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This is Part II of a series of articles, “Logging in Crisis” that began in the summer 2020 edition of The Logger’s Voice. In the series, the PLC is examining the effect of the COVID-19 pandemic and recent mill losses on Maine’s logging industry. In this article, we provide the latest updates on the overall situation, and speak with PLC members who were interviewed for the first article to see what has changed, how they are adapting, and what the future may hold for them.

In September of this year, something happened that Richard McLucas, owner of R.C. McLucas, a PLC Member and Master Logger certified company operating in Maine and eastern New Hampshire, had never seen before.

“The week before last was the first week since I started in 1988 that I could not move one stick of pulpwood,” Richard said. “I could move firewood, but as far as taking pulp to a paper company, I could not move one stick.”

At the time of the conversation it was nearly October, six months into a COVID-19 pandemic that had disrupted global economies and wood markets, and five months since the Pixelle Specialty Solutions pulp mill in Jay exploded - erasing about 20 percent of Maine’s total pulpwood market in a few seconds.

Since those two events, the Sappi Westbrook mill had announced it would be shutting down its biomass plant by the end of the year, eliminating one of the last regional consumers of biomass - already an unprofitable market for many loggers. Outbreaks of COVID-19 in the state’s few remaining paper mills were beginning to disrupt operations and further weaken wood buying for mills already slowed by lower demand for paper. Pixelle, in a move most saw as ominous, laid off an additional 51 workers including most of its wood buyers.

In northern Maine, as uncertain markets cut demand for wood and the pandemic complicated U.S.Canada trade and travel, Seven Islands Land Co. in August idled most of its contractors until Oct. 1. In late September, LandVest Inc. announced all contractors in Aroostook County not working on pre-commercial thinning (spruce/ fir), would be shut down until the end of the year.

As the crisis dragged on, there was anger at the lack of action to help the industry, even as federal assistance for fishermen and farmers - including growers of

Christmas trees and hemp - made headlines.

Most loggers agreed the federal Paycheck Protection Program, though not created specifically for loggers, did help their companies, but said since then nothing substantial had happened. In the absence of aid, debt climbed, equipment purchases slowed or stopped, and business equity was tapped just to maintain payrolls and payments.

For most loggers in the southern half of the state, the loss of Pixelle’s pulp mill continued to dominate their list of issues. Richard said not enough has been done to encourage the rebuilding of the mill, and the damage from its permanent loss is something he fears many do not fully appreciate.

“I don’t think they get it, it isn’t just the logging

Crisis Continued Page 12

Crisis Continued from Page 11 16 that’s going to get hit, it’s going to be tire companies, fuel companies, convenience stores, you could go on and on,” Richard said. “It’s getting tougher and tougher and tougher here.”

That same domino effect could be experienced by Maine’s economy as a whole if the logging industry continues to weaken, ultimately collapsing the foundation of the state’s entire $7.7 billion forest economy, loggers warn.

Despite the warnings, by early fall 2020, many logging companies across the state were reporting major struggles. Most could still move plenty of saw logs, but described other markets as weak or nonexistent, and prices as poor. In many areas, the limited markets were reducing the ability to go into a wood lot and cut what should be cut to manage the stand properly and preserve forest health while still showing a profit for both the landowner and the logger.

The crisis for Maine’s logging industry was deepening.

It is what it is

L & A Ridley Logging Inc. in Jay is a small, third-generation family logging business, fully mechanized and efficient. The PLC Member and Master Logger certified company is used to dealing with challenges and adapting to them. Ron Ridley, his son, Corey, and truck driver Jeff Rowe make up the entire staff.

These days, the challenges and demands of the business are greater than ever. Ron spoke on the phone in late September while delivering a load of wood on another long work day. The previous week he had broken a rib and Corey had broken his right hand within a few days of each other, but they were doing what they could to keep operating because they had no other choice.

“It’s been rough lately, not good timing, we can’t do everything we’re supposed to be doing that’s all,” Ron said.

Located just a few miles from the Pixelle pulp mill, the company was hit hard by its loss, but has struggled on, finding other buyers and continuing to operate. Markets are poor, and Ron does not pay himself every week.

“Hardwood’s starting to go a little bit better, softwood pulp’s nonexistent, biomass has been holding up for us, but we’re looking at cutbacks with the fall maintenance coming up,” Ron said.

The latest round of layoffs at Pixelle is, “not a good sign,” Ron said, worrying like others that it may mean rebuilding is not going to happen and the market for softwood pulp may never recover.

The Ridleys are loggers by choice. Like many in the woods business, they have skills they could take into another industry. Ron is a diesel mechanic and a truck driver. Corey has his degree for forestry and is working towards his forestry license. Both are skilled heavy equipment operators. They have options, but they want to continue logging, to keep a business and a way of life going that three generations of Ridleys have chosen.

Although he and every other logger the PLC spoke to in this series remained reluctant to ask for aid, the lack of help for loggers while other industries continue receiving federal assistance has been very disappointing, Ron said.

“It is what it is, we’ll get by with or without them, it just seems disrespectful that other people get help and loggers don’t,” Ron said.

Back in June, Ron said he would like to have a business plan that is more than just, “survive.” Three months later, and with mud season coming up before an uncertain winter, it was still not possible to do that.

“I think most of us just want to survive and we’re struggling to do that,” Ron said. “We’ll hang on until springtime and I’ll probably reassess things then, I don’t know what else we can do.”

Diversify to survive

Not long ago, CTL Land Management Services in Washington had a business model built largely on revenue from softwood pulp trucked to the Pixelle mill. As recently as early April of this year, CTL was delivering 30-40 truckloads to Jay per week, keeping five mechanized logging crews in the woods.

“I could make a living on delivering loads of pine pulp to Jay, literally it was a profit center of the business,” Gavin McLain, who founded CTL with Kyle Overlock in 1998, said. “It’s a completely different business now than what we were accustomed to.”

The PLC Member and Master Logger company might well have closed its doors by now had Gavin and Kyle not seen the handwriting on the wall several years ago and begun to diversify the business. While they had no way of knowing a pandemic was coming or that their primary consuming mill would be lost to a disaster, years of watching the trend of rising costs for loggers without higher wood prices from wood buyers to compensate for those costs had convinced them logging was on a path to unprofitability.

CTL first branched out by launching a kiln dried firewood business several years ago. That business has since grown so well that the company will at the end of this year double its firewood production capacity to meet demand, Gavin said.

While the firewood operation was a success, that Crisis continued Page 14

Crisis Continued from Page 1316 alone was not going to be enough to make the business profitable long-term, so this year CTL took a much bigger step, building a large sawmill and branching out aggressively into land purchases and sales, and log purchases and sales.

The sawmill has come on line in the wake of the Pixelle explosion, and CTL is quickly ramping up production of value-added hardwood industrial products from rough-sawn lumber to dozens of varieties of wooden brackets/ packaging components for a local manufacturing company. A tracked wood chipper has been purchased to allow CTL to expand into more commercial land clearing.

The company has kept its workforce intact, but is down to three mechanized logging crews, shifting many employees out of the woods into its other operations. The three remaining wood crews combined are now averaging only 10 loads of hardwood pulp a week for outside sale, the rest of their production goes almost entirely to CTL’s operations.

“We’re using the equipment just to create the raw materials we need to do these other things,” Gavin said. “We have moved to a complete focus on diversification.”

The shift means changes in both equipment and harvesting methods. With softwood pulp nearly impossible to move and biomass paying poorly, CTL - like many other logging companies in Maine - is being forced to focus more on saw timber - and less on cutting the variety of wood that it normally would to achieve the best forest management outcomes.

“If you’re going to continue to do this, you’re going to have to cut logs, that’s just way it is,” Gavin said. “Our hand has been forced to basically go to the woods and get whatever’s going to make a paycheck, you can’t practice forestry the way we have traditionally practiced forestry, and that is unfortunate because that’s a big reason we got into this work in the first place, but for right now, that is the reality.”

We can turn this around

White Oak Inc. is based in St. Francis on Maine’s northern border, far from the Pixelle pulp mill and the looming closure of Sappi Westbrook’s biomass facility, but like many other logging and trucking firms in the north it has had its share of challenges since the pandemic began. The economic shocks that followed the global spread of COVID-19 slowed demand for many wood-based products, eventually dropping wood purchases and prices in the north just as they did in the south. The loss of Jay, meanwhile, created an oversupply of pulp in the entire state, making it harder for northern Maine loggers to get rid of pulp as mills to the south that were still operating purchased what they needed closer to home. Contracts in the pipeline were canceled. Banks became reluctant to lend to woods companies. As spring turned to summer, major landowners began shutting down crews.

In August, White Oak was one of the companies affected when one of the major land companies it works on idled down because of the markets and - with 20 families depending on his business to put food on the table - owner Mike Nadeau struggled through all of this to find a way forward.

Speaking on a call at the end of September, Mike was upbeat after a rough summer: Finally, his crews were going back to working at full capacity the next week, thanks to Trucking GH Inc., Seven Islands Land Company, Landvest, Blanchet Logging, and Prentiss and Carlisle, but had taken this downtime to find new efficiencies, crosstrain workers to run a larger variety of equipment, and come up with a better, more adaptable business. He foresaw more rough times ahead, but felt his company had become stronger because of it.

“We gained a lot of knowledge and it made us better at the end of the day,” Mike said. “If we don’t try to adjust here and find different alternatives, we won’t be in business.”

Mike credited his workers with stepping up to the challenge after he told them White Oak could not survive with a “business as usual” approach. He thanked his lenders for working with him to gain time to retool his operation during the downtime, and landowners and others in the forest products chain in his region for pulling together to try and find ways to keep everyone going.

Mike believes 2020 has exposed weaknesses in Maine’s forest economy, and that now is the time to take a hard look at the way things are being done and seek better alternatives and ideas.

He pointed to the example of Sweden, where the business model for logging and forestry emphasizes steady, reliable harvesting that loggers, mills and landowners can count on from year to year and plan around versus the unpredictable boom and bust cycle of timber harvesting here in the U.S.

Why is that important? Because a business owner can deal with many of the elements in the woods industry, but when you have health insurance and a quality of life that you normally provide to your employees, sudden, unplanned work stoppages like what happened to many logging firms this summer will eventually kill a business. Even the best professional contractors may not survive this, Mike said.

“We’ve got to start looking at these things as a state and an industry, and start planning and finding a better way,” Mike said. “It takes money to do that, but we need to do it.”

Mike said he believes there are more rough days ahead for Maine loggers, but he has no plans to give up, and for the moment is just grateful his crews have the chance to operate at 100 percent capacity in October.

“How long will it last? We can only pray it lasts for a while, because next year I feel is going to be even worse than this year,” Mike said. “But we can turn this around, we’re at a low point, but we can come out of it, if we work together.”

At the time this article went to print, federal legislation for logger and timber hauler relief introduced by Maine Sen. Susan Collins and Maine Rep Jared Golden and supported by Maine’s entire Congressional delegation remained stalled in Congress. Similarly, efforts to gain eligibility for loggers to access already-approved pandemic relief funds in the U.S. Department of Agriculture Coronavirus Food Assistance Program were ongoing but had not succeeded. The PLC was an architect of both efforts, and is continuing strongly advocating for Maine loggers.

Meanwhile, the PLC successfully advocated for the State of Maine to include loggers in Phase II of an Economic Recovery Grant Program that will use CARES Act relief funding to support Maine-based businesses and non-profit organizations hit by the pandemic. The funding originates from the federal Coronavirus Relief Fund and will be awarded in the form of grants to alleviate the disruption of operations suffered by Maine’s small businesses and nonprofits as a result of the COVID-19 pandemic. The PLC is grateful to Maine’s Department of Economic and Community Development Commissioner, Heather Johnson, for making a point of reaching out to the PLC to ensure our members take advantage of this grant opportunity, and for cohosting a webinar on Oct. 7 to provide guidance on it and answer questions from members.

Doran Continued from Page 9 resources and series including online options, which have become more important than ever in 2020. In January, Mr. Burr finished work on the NE Safe Logger Program, a fully online entry level training program for new hires in the industry that was rolled out to the membership shortly thereafter. To date, more than 35 individuals have taken advantage of this convenient online program and we expect that number to double in the near future.

In 2020, the PLC continued its strong record of offering professional development for its membership, albeit in a different venue. As a result of the pandemic, we were forced to postpone our in-person safety training series for our members. While this was disappointing, it was the reality of the situation and we endeavored to provide online training to all of our members from the convenience of their own homes, garages or pickup trucks. While this isn’t the preferred method for the long run, it certainly did provide the opportunity to diversify what we have done in the past and we are hopeful to have our first in person safety training in early December with a full return to training in the spring of 2021.

In June 2019 and 2020, the PLC, in collaboration with the Maine Community College System, kicked off the third and fourth years of its Mechanized Logging Operations Program (MLOP) in Stratton and Greenbush Maine. The program was created thanks to a partnership between three Maine community colleges, the PLC, and industry partners including Milton CAT and Nortrax/John Deere. MLOP gives students a broad overview of the most common mechanical systems found in modern timber harvesting equipment, and an understanding of the variables of timber growth, tree species, and markets. It also includes a strong emphasis on safety. The program graduated 15 highly trained students in September 2019 and 10 students on October 9, 2020.

The PLC also had another successful run at the Maine Legislature during 2020, even though the session was cut short by about a month because of the pandemic. First, the PLC held its annual legislative breakfast in Augusta on March 5th. Over 50 legislators attended and nearly 125 members and supporting members came to hear about the issues facing the industry and the ways that the Legislature could help. Speaker of the House Sara Gideon joined us and commended the PLC on its role in the legislative process and all of the good work that the organization has done to protect and improve one of Maine’s most important industries. This also provided the perfect backdrop for the PLC to release its new economic impact study, which showed that while things have dropped off considerably since 2014, the overall economic impact of logging in Maine as of 2017 was still over $620 million to the Maine economy and 9,000 jobs.

Three out of five of the PLC’s priority bills were passed and signed into law by the Governor this past session: 1) LD 1498, An Act To Provide Equity for Commercial Vehicles on Roads and Bridges in Mainesince 2003, a Canadian bridge weight advantage (Madawaska, Van Buren, Calais) has led to $108 million in lost economic opportunity for Maine’s loggers and truckers and 25 jobs/annually because of an unlevel playing field with Canadian contractors. This bill was carried over from 2019 to allow time for an economic analysis to be done. At the end of the day, we want a level playing field with our counterparts from Canada. The Transportation Committee voted unanimously to support the removal of the Canadian trucking weight exemption for wood fiber products (logs, chips, kraft pulp) beginning on December 31, 2025. While this is not immediate, it does remove this blatant economic advantage that the Canadians were given almost twenty years ago; 2) LD 2005, An Act To Amend the Law Governing Maximum Length Limits for Truck Tractor Semitrailers. This bill takes care of a technical issue on trailer length that came up in 2019 and put many of our members out of service and out of work; 3) on a nearly unanimous vote, the Legislature voted to approve a revised Supplemental Budget which included $2.5 million for Community College workforce training and $1.5 million for CTE’s to buy new equipment. This funding will keep the MLOP program running for at least two to three more years.

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Unfortunately, one bill, LD 912 – An Act to Establish the Wood Energy Investment Program, did not get taken up and looks like it will die along with 400 other bills from the 130th Legislature. LD 912 encourages new thermal energy markets in rural Maine to provide a path forward to replace four million tons of lost wood energy production. We will introduce this bill again in 2021.

At the federal level, the PLC has also had a strong impact, but our work is not done yet.

As it was clear that COVID 19 was going to wreak havoc upon our economy, Congress went to work on an aid package to help those who they thought would be most impacted. Included in that package was $16 billion for farmers, $2 billion for fisherman and $0 for loggers.

A survey of the membership of the PLC conducted in early May 2020 on the impact of COVID-19 on Maine's loggers/truckers revealed 88 percent of respondents have been negatively impacted by the pandemic. My guess is that today, this percentage is probably closer to 100.

Those impacts include revenue losses, layoffs, loss of clients, reduced productivity, and inability to plan for the future. Many respondents reported experiencing all of these effects. The companies responding to the survey represented 44 percent of the total membership of the PLC, and the predicted harvest losses for this subgroup alone would represent a minimum 6.8 percent of Maine’s total wood harvest for the most recent year for which data is available, 2018. As time goes on and market impacts are continuing to spiral, it is our prediction that a minimum of 20% of the annual timber harvest could be impacted. A 20% reduction in timber harvesting means a nearly $86 million direct economic loss for the Maine economy and over 600 jobs eliminated. Clearly, a lot is on the line.

In July, Senator Collins and Congressman Golden introduced the Loggers Relief Act to help this industry. The bill received full support from the entire Maine delegation, including Senator King and Congresswoman Pingree when it was introduced. The leadership of the Maine delegation on this issue has been unwavering and once again, Maine has taken the lead just like our state motto.

Under this proposal, $2.5 billion would be reserved for contractors that harvested/delivered wood to various mills across the country in 2019 to apply for low interest loans/grants through the U.S. Department of Agriculture to assist them with their ability to continue business operations for the next twelve months while their markets attempt to recover, much like the assistance already given to producers of agricultural and seafood commodities. If a company that applies for and receives the funding can prove that their revenues or volume delivered are down 10% or more from 2019, the funds will be treated as a grant and forgiven. If company revenues are down less than 10% than what they declared in 2019, the funds will become a low interest loan and need to be repaid.

Unfortunately, Congress has not taken action on this bill as of October 16, 2020 and all other federal programs that have been administered to help businesses cope with the pandemic’s impact do not work well for loggers and log haulers. In the absence of Congressional action and to ensure that loggers and log haulers are afforded assistance similar to their counterparts in other natural resource-based industries such as farming and fishing, Senator Collins and Congressman Golden have sent letters to USDA Secretary Sonny Perdue to urge the Department to use its broad authority and funds already provided by Congress to immediately make financial assistance available to loggers and log haulers impacted by the pandemic. The CARES Act appropriated $9.5 billion to USDA – which was leveraged with additional Commodity Credit Corporation funds for a total of $16 billion – to “respond to coronavirus by providing support for agricultural producers impacted by coronavirus.”

According to current USDA interpretation, however, loggers and log haulers are ineligible to receive any of this relief – despite the fact that there is sufficient USDA precedent for including these individuals in the definition of “agricultural producer.” For example, USDA’s Value-Added Producer Grants define “agricultural producer” as “an individual or entity that produces as Agricultural Commodity [including timber and forestry products] through participation in the day-to-day labor, management, and field operations; or has the legal right to harvest an Agricultural Commodity.” This precedent could be applied to CFAP, similar to what the Department has done for other fiber producers, to ensure these businesses that are the backbone of the forest products industry can emerge from this crisis. The PLC and the American Loggers Council will continue to push the White House and USDA to help loggers and truckers through this unfortunate time.

And lastly, the PLC has continued its leadership role as the state sponsor of the Log-A-Load for Kids Campaign. Our Annual Meeting was postponed this past spring and the in person auction we normally hold along with it, but we are persevering for the kids. On October 16th, we held a virtual auction and raised an additional $59,439 for our partners at Children’s Miracle Network Hospitals. In August and September, we held two successful golf tournaments in Lincoln and Lovell that raised $77,290. With the generous support of our members and the forest products industry, we have raised $136,729 thus far for Log A Load in 2020. The generosity of loggers never ceases to amaze me.

The past year has been the most challenging we have ever seen in our history, but we will get through it and look forward to our continued work on your behalf.