Running a sawmill in Eastern Oregon in 2023

Malheur Lumber Company in John Day used to be one of many mills in Grant County. By 2012, though, it was the last one and came very close to closing its doors for good. Then, the U. S. Forest Service agreed to increase restoration logging in Malheur National Forest, and that contract kept the mill going. Now, Malheur Lumber is one of three mills in Grant County. We talk about the ups and downs of the timber industry with Rich Fulton, General Manager of Malheur Lumber Company, and Wanda Rassmussen, Chief Operating Officer for Ochoco Lumber, which owns Malheur Lumber Company.

This transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Malheur Lumber Company in John Day used to be one of many mills in Grant County. By 2012 though, it was the last one, and it came really close to closing its doors for good. Then the US Forest Service agreed to increase restoration logging in Malheur National Forest, and that contract kept the mill going. Now, Malheur Lumber is one of three mills in Grant County. We went there yesterday to talk about the challenges and the opportunities in front of them.

We met up with Rich Fulton, the General Manager of Malheur Lumber Company, and Wanda Rassmussen, Chief Operating Officer for Ochoco Lumber, which is their parent company. I started by asking Wanda how business is these days, three years after the start of the pandemic.

Wanda Rassmussen: Well, 2021 and 2022, because of the pandemic and everybody doing home remodeling and really getting a step up there, [were] very profitable years. 2023 however has taken a deep dive. Interest rates are higher, all of those types of things.

What’s the most different is our labor pool. People have moved, people retired, we’ve lost a lot of experienced employees. Everybody was just tired through the pandemic. It was very draining for them. And we’re running I would say about 30% less in our employees right at the moment. And yet we continue. The soldiers still standing continue to produce about the same amount of lumber coming out of our mill. But that’s been the biggest stress so far.

Miller: Rich, you could hire 30% more people right now, you have the capacity and the business for that, but you just don’t have the people power around here to hire?

Rich Fulton: Yeah, I believe so. I believe we can purchase enough logs. I believe we can sell enough lumber. But to pick up 30% more people, and people with skills. That’s the other thing that we’re experiencing since the pandemic is the younger generation hasn’t worked. And so we’re picking up 22 to 30 year olds, and it’s their very first job.

Miller: Let me make sure I understand it correctly, you’re not just saying it’s their first job in a mill?

Fulton: It’s their first job.

Miller: A 30 year old, potentially. That’s a lot to teach someone, I imagine. Because it’s a lot, I assume, just to teach someone how to work in a mill. But if you have to teach them how to hold down a job and to show up?

Fulton: Mhm. And you have to condition them. They’ve never done anything physical.

Miller: Literally physical conditioning, carrying heavy logs around or moving machinery.

Fulton: Flipping boards over. We have chains too, so we’re pretty old, pretty manual. But even jobs where you’re just flipping boards, you have to start them out slow, condition them. It’s been a whole new process for us to learn as well, to get people trained and conditioned and retain them.

Miller: Wanda, what about housing? Let’s say that there were no shortage of people lining up for work, and they could do the job and they knew how to actually be an employed person, are there homes for them?

Rassmussen: At the current time, no. We’ve gone out to multiple employment recruiters trying to find some skilled admin positions and those types of things, supervisor positions. And we can find those. But there’s nowhere for them to land here. Used to be you could find at least some temporary housing waiting for your permanent housing. And there’s not even the options there now. Things are getting better. There are more and more plans on the city’s radar to expand. There’s two new subdivisions that are going in. But they’re a long ways from completion. So it limits what we can do.

Miller: What does that mean in terms of planning?

Rassmussen: [chuckling]

Miller: That seemed like a sad laugh right there. But I mean, what do you do?

Rassmussen: I think that’s been one of our challenges. Rich and I have come up through the mill. I’ve been with the mill for 20 years. The game was different. The landscape was different. We were able to plan to put things in place like “this is what’s gonna happen and this is where we see this employee growing to, now we have to hire somebody back here so we can train them up.” There was planning.

We’re in reaction mode now. If we can find somebody, even with minimum skill set, we’re hiring them. But you can’t recruit, bring somebody in and do it in a really organized manner. You’re doing it kind of on the fly.

Miller: Let’s turn to the actual work that you’re doing, and that seems like you’d like to do more of, how are the logs that are coming in now in general? How are they different from what a sawmill like yours might have done 40 years ago?

Fulton: Well they’re way smaller in size, and of course that dictates the grade in the log and all that. So the end value of the product is less. We have to run two [to] three times as fast to produce a volume that we desire to get to.

Miller: How big a difference are you talking about in terms of the diameter of the average log from now compared to say 1983 when this mill started?

Fulton: You were probably looking at an average small-end diameter in those days between 20 and 25 inches. And today, our average small end diameter in pine is probably about 9.8 to 10 inches.

Miller: Wow. So less than half the diameter on average. So one thing you said is that it means you have to just work faster to produce as much finished product. What about the process itself, of milling? Did you have to retool things in order to cut the wood products you’re making now?

Fulton: Yeah, we’ve had to automate some things and put some scanning on it. We’ve had to speed things up. We’ve added a small little scrag mill to handle small logs. We went from running between 500 and 800 logs a day to now we’re 2,000-2,300 logs a day to produce the same volume. We’ve had to add a gang edger, scrags saw. We’ve had to optimize our board edger and our trimmer to keep up with the piece count. A person just can’t keep up with all the different grading and entering the sizes, so we’ve had to automate.

Miller: How many fewer jobs are there because of automation?

Fulton: I’m gonna say right now in this mill it’s none. We actually have more people now.

Miller: Despite machines or robots doing some of the work. Why is that?

Fulton The automation may change a two person job into one, but then you have to have a computer person, another electrician, and a millwright to do those. It takes more people.

Miller: And that I guess goes back to the smaller diameter logs as well. Even with automation, you don’t think that that’s led to a decrease in the need for people?

Fulton: You have to do a whole lot of it. But what you’ll see is instead of taking 20 people to operate the basic functions of the mill, now you’re down to 10. But now instead of having five millwrights you have 15 millwrights, and five electricians instead of one. Or you have computer techs as well. So it kind of redistributes them.

Miller: Wanda, the Forest Service in recent years has been coming around to the big notion that forests here need to be more actively managed, in particular for wildfires, meaning more thinning and more prescribed burns. What has that meant overall for your business?

Rassmussen: I think what’s been impactful is in the thinning or the requirements of getting timber sales. We’ve been pretty proactive in how byproducts are used there. You’ve had to be very creative to get those logs, and usually you’re doing fiber.

Other businesses have changed. Iron Triangle would be a great example. They’ve created different products, posts and poles, those types of things.

Miller: That’s for even smaller diameter?

Rassmussen: Yes. So I think everybody is just tried to be very creative of what’s happened with the forest and what needs to come off of there and what is a viable product that we could do something with, versus what is something that needs to be burned, whatever that it’s gonna be going to be, to at least get it off the forest floor. It may not have an economic impact from a consumer standpoint, but it does have an impact to the forest floor. So there’s some incentives to get it off there. We’ve worked with various things, doing juniper removals, those types of things too. That’s in conjunction with various small grants there. A lot of landowners have used it also.

Miller: What have you been able to sell in terms of wood products in addition to dimensional lumber? How else can you make money from the stuff coming out of forests?

Rassmussen: With fiber logs, usually we can whole log chip them. And so we have an area of our mill that’s just dedicated to that. Usually we try to get six and under into fiber. We whole log chip it and we can sell that to market. We can shave lumber and log and make it into a bedding product. They use it mostly for very high price horses, those types of things. So we’ve been very creative in our market. We had a pellet mill here for many years. We brought that down in 2019, and right now it’s being converted and they’re doing biochar. That is very small diameter product that can come in the form of mill chips or whole log chips, and so they can consume it and make biochar.

Miller: What about post fire logging? Rich, is your mill set up to actually take logs, for example after the Canyon Creek Complex Fire here, can you get salvage logs from a burn and do something with them?

Fulton: Yeah, we have to really look ‘em over, and there’s some processes we have to do to move our product once we get that burnt wood. But we’ve done some salvage sales that have been pretty successful.

Miller: As we’ve heard on this show, the forest plan is once again working on restarting negotiations for the Blue Mountains Forest Plan for three national forests in the eastern half of the state. Rich, what are you hoping will come from whenever the final plan is ready? What do you want to see?

Fulton: I’ve been involved in the BMFP for quite a while, the company has since it began. I think what they’re trying to achieve is a pretty good end goal. We clean up our forest, we support towns like our town here, we support some businesses personally here, we get some logs that we can saw and make a nice product out of at the end of the day. I guess my involvement is, I’m working for a company that does this for a business. But it’s a relationship, and there’s always give and take compromises along the way. I think it’s headed in the right direction. Is it exactly what I want right now, today? Probably not. But I think it’s very doable, and I think it’s doing great things.

Miller: Wanda, at the beginning when you were talking about the last couple years and where business is now, you mentioned labor, you mentioned the increase in demand in the early years of the pandemic and how those have gone down a little bit. You also mentioned interest rates right now. What are the specific challenges right now with high interest rates in terms of your operations?

Rassmussen: Well, our end users are a lot of windows and doors, things that are gonna go into home buildings. They go into the furniture market. So where our product goes into, those are the areas that people are slowing down and they’re thinking about how they’re gonna spend their next dollar or how they’re gonna finance their next dollar or what that’s gonna cost at this point in time. So I think everybody is just taking a pause. This is all new for all of us, just different times. So people are just taking a pause, where are we headed, what is that gonna cost us? Maybe if we wait a while, can we get that home a little cheaper, and going from there.

We make a product, that product is going somewhere. And right now, that product is going on the things that are kind of on pause.

Miller: Rich, what are your hopes for the future for this company?

Fulton: I hope it continues to grow, become current with the different byproducts. We utilize a lot of our stuff now. But there’s other things that we need to get better at, and I hope that continues.

Miller: So you can use more of the log that’s coming in?

Fulton: Create more value out of what’s there, and less waste.

Miller: If you were talking directly to a 24 year old who does not have a job and wants a job, what would you tell them?

Fulton: With a little hard work, you could just about own the world. There’s a lot of positions that are opened up, and there’s a lot in the next five years, there’s gonna be a huge portion of manufacturing people that are retiring. There’s gonna be a lot of opportunity if you do a little hard work to move up the ladder, probably fairly quickly.

Miller: Have you made that argument to people and it’s fallen on deaf ears?

Fulton: I’ve tried.

Miller: What have you heard?

Fulton: The biggest thing I hear is “I don’t live to work. I work to live.”

Rassmussen: It used to be you would go to work and you would be the bottom of the totem pole, but you would make connection. This person would help you learn something, and then when that person moved up you moved up, and then here comes the next new one. And it was just always layers. There’s just not any of that, and nobody has a curiosity. It’s one of the few industries I think that if you came in, you don’t need college, you don’t need even a trade school to come in. Everybody’s willing to help you get there. What’s your effort, what’s your desire to do? Rich started off as a green chain puller.

Miller: Is that one of the lower level jobs?

Rassmussen: It’s one of the hardest.

Fulton: To get in at Ochoco Lumber back in the eighties, that’s where you started.

Rassmussen: And now he’s general manager.

Fulton: Just to put it into reality, last week we hired three gentlemen. One of them, it was his very first job, I think he’s 19. The other one is 20 or 23, it’s his second job. He was hired at a local place to move boxes for a couple of days. And then we hired one that was 27. And true story, back in the old days, we would start someone on the chain, you would start in a back hole, you’d pull for a couple days, and then you start moving up. And it’s hard work, I’m not gonna kid. You’re sore, tired, you’re gonna sweat and all that.

So now we have to bring them in, and we usually put them in a back hole for a couple of weeks. It’s “hey, these grade marks here, you pull these couple of units and you watch everybody for a couple of weeks.” And so we had the 19 year old, he had been there for a week and a half, and then we hired another guy so we put a new guy in the hole, moved the next guy up to where he had to rotate. Within an hour, the guy that had been there for a week was literally laying on a catwalk, sweat rolling off, “I can’t work anymore. I can’t lift my arms up.” The guy in the back hole that we just started worked for four hours. We had to send him home. He could barely walk to the break room. He was sweating so profusely I had to give him Gatorade, and he was hardly doing any work. And then the other new guy, same thing. And this week, they’ve come in and they worked three hours yesterday and they called in sick today.

We have some really good kids that are workers, but they’re gobbled up by the big guys, the Facebooks, the Googles, the Intels, they gobble them up. So that’s what we’re facing. It doesn’t have to just even be a chain pulling job. We’ve hired guys in a boiler fresh out of high school, never had a job before, they can’t climb a ladder. They’re too overweight, they’re too unfit. Literally cannot crawl up an eight foot ladder.

Miller: Rich Fulton and Wanda Rassmussen, thanks very much.

Fulton: Thanks.

Rassmussen: Thank you.

Miller: Rich Fulton is the general manager for Malheur Lumber Company. Wanda Rassmussen is the chief operating officer of their parent company, Ochoco Lumber.

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