A legal fight is brewing in Eastern Oregon where a coalition of timber interests is trying to block the sale of the only sawmill still operating in Grant County to Iron Triangle, a logging company in John Day.
The Malheur Forest Fairness Coalition filed a federal lawsuit last year against Iron Triangle and the sawmill, Malheur Lumber, alleging that the two companies were conspiring to stifle competition. Although the suit was dismissed in September, it is currently being appealed, with the coalition threatening further legal action if the sale is pursued.
As first reported in The Blue Mountain Eagle, Malheur Lumber, announced in July it was shutting down after more than 40 years. It cited a range of factors that led to the decision, including difficulty hiring reliable workers and a lack of housing to recruit them. The company’s financial woes are emblematic of the state of the timber industry in Oregon where seven mills announced their closures this year.
Bennett Hall is the editor of the Blue Mountain Eagle. He joins us to share his reporting on this issue and how federal assistance could once again offer a lifeline to timber operations in Grant County and the region.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. We start today with a bitter fight that could have a huge impact on Grant County’s future. In July, Malheur Lumber, the only sawmill that’s currently operating in the county, announced it would be shutting down after more than 40 years. Local leaders say its closure would have disastrous effects on the region. In response, the local logging company, Iron Triangle, announced that it wanted to buy the mill to keep it running. But a coalition of timber interests doesn’t want that to happen. They argued in an earlier unsuccessful lawsuit that Iron Triangle and Malheur Lumber conspired to stifle competition. Now, they are threatening new legal action to prevent the sale.
Bennett Hall has been reporting on all of this as the editor of The Blue Mountain Eagle. He joins us now to explain what is happening. Bennett, welcome to the show.
Bennett Hall: Thanks for having me, Dave.
Miller: Can you give us a sense, first, for what Malheur Lumber means to the community?
Hall: As you mentioned, it’s the only sawmill in the county that’s currently operating. There’s another one in Prairie City that’s currently shut down but has promised to restart. After the owners of Malheur Lumber announced plans to shut the mill down at the end of this year or early next year, there was a state economic analysis. It showed that that would cost the county about $58 million in economic activity. In terms of direct and indirect job losses, about 207 jobs. The school district has also done its own study and they estimate that it would take about 60 students out of the local school district. That would cost the district about $700,000 a year in state support.
Miller: You wrote about the ripples that people were expecting. Can you just describe what they were assuming would happen if this closure were to go through, the step-by-step devastation?
Hall: Well, there’s the immediate loss of 76 jobs – people working at the mill. That’s how many were working there when they announced plans to close. They’ve started tapering that off already. They’ve worked their way through their existing log decks and are in the final stages of processing that material. There are also indirect effects, in terms of the spending power that those employees had in the community. Money that would be spent at local restaurants, and grocery stores, and gas stations that these folks no longer will have. Then there are companies that work with Malheur Lumber in the timber industry, other support businesses and other industries that also sell goods and services to Malheur Lumber. All of those would be impacted.
Miller: And then the school district numbers … My understanding is, that’s the possibility of people looking for other jobs in the region, in John Day or in Grant County, and then some of them realizing they can’t find them and moving away.
Hall: Yeah, that’s exactly right, and that has already started to happen. We’ve heard, anecdotally, about people who have quit good jobs at Malheur Lumber before the mill wound down because they’re thinking about their future. They need to remain employed and take care of their families.
Miller: The first reason, the leaders of Malheur Lumber mentioned in their closure announcement, was the issue just of getting workers. It’s something that Rich Fulton, the general manager, mentioned to us when we spent a week in John Day in 2023. He talked about people not being able to pass drug tests, but also just not being up to the job physically. I want to play part of what he told us.
Rich Fulton [recording]: Within an hour, the guy that had been there for a week, he was literally laying on the catwalk, sweat rolling off: “I can’t work anymore. I can’t lift my arms up.” The guy in the backhole 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 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 8 foot ladder.
Miller: That is Rich Fulton, the general manager of Malheur Lumber, talking to us last year about the challenges in finding people to hire. I should say he’s one of the people who signed on to the closure announcement letter. What other reasons did those leaders mention in that announcement?
Hall: That was the big one on their list, just really persistent and difficult workforce issues. But they also talked about a lack of housing in the community. They’ve made efforts to recruit people to come to John Day and work at the mill from other areas. There’s a real shortage of affordable and available housing. A lot of employers around here struggle with that. They also mentioned unfavorable market conditions for timber products, rising manufacturing costs and a plethora of government regulations getting in the way of doing business.
Miller: I mentioned in my intro that now there are all kinds of legal questions going on. To understand the current legal tangle, I feel like we need a little bit of recent history. Malheur Lumber nearly closed in 2012. What happened then and what rescued them?
Hall: At that time, Malheur Lumber was the only lumber mill in Grant County. So it was a real shock to people to think that it could go under. The biggest issue, at the time, was an unreliable timber supply. And what happened then was that some political leaders, including Senator Ron Wyden, brokered a deal. There were two forestry collaboratives – Blue Mountains Forest Partners, here in Grant County, and Harney County Restoration Collaborative – that put their heads together.
What ultimately came out of that was a long-term stewardship contract. The idea was that it would provide some consistency and some certainty in the local timber industry. It would guarantee a certain amount of logs coming off the Malheur National Forest. It would provide jobs in the woods and keep some of these timber companies afloat. And it would provide a steady stream of logs to Malheur Lumber.
The company that won that contract was Iron Triangle, a John Day-based company. And that contract went into effect in 2013 and expired in early 2023. It seemed to have done what it was supposed to do, in terms of providing a consistent lumber supply to the mill, and keeping the mill going, and that sort of thing. But it’s also generated a lot of resentment in the community from people who feel like Iron Triangle had prospered at the expense of some of its competitors.
Miller: And that led to a lawsuit from some of Iron Triangle’s logging competitors. What exactly did they allege?
Hall: The claim was that because of that stewardship contract and because of Iron Triangle’s close relationship with Malheur Lumber, everybody else was essentially being squeezed out. The claim was that the two of them had created a virtual monopoly over softwood sawlogs coming off the Malheur National Forest and that they had actually colluded to stifle competition in the industry locally.
Miller: My understanding is that the judge did not find for Iron Triangle’s competitors and, in fact, Iron Triangle won that case. Am I right about that?
Hall: Yeah, that’s right.
Miller: And now, Iron Triangle has stepped forward with some kind of plan to resuscitate the mill, to buy it and to keep it running. How much do we know about what they’re suggesting, what the plan is?
Hall: They haven’t released any details and neither has Ochoco Lumber, the parent company of Malheur Lumber. What they have said is that they are exploring the possibility of buying the mill and keeping it running. They have also said that they don’t think that the deal would pencil out, economically, without some amount of government assistance. And they have not released any specific numbers about how much money Iron Triangle would put up, how much government assistance they’re asking for or what the asking price for the mill is.
Miller: Speaking of federal assistance, a week ago, Oregon’s two Democratic U.S. senators – Ron Wyden and Jeff Merkley – put out a press release saying that there’s going to be $3.5 million in federal funding from the Inflation Reduction Act coming to Eastern Oregon, for the timber industry. How might that money play into what we’re talking about?
Hall: It’s kind of hard to say with any specificity. But I did talk to Bruce Daucsavage, a spokesman for Ochoco Lumber, and they’re in line for, let’s see, I think it’s $310,000 to help cover the cost of transporting logs to the mill. And the sense I got talking to him is that this might buy Malheur Lumber a little bit of time to keep exploring a potential sale of the mill. And if that falls through, it might cover the cost of transporting those logs to another mill somewhere in the region.
Miller: What can you tell us about the coalition that has risen up to block the sale of the mill to Iron Triangle?
Hall: They call themselves the Malheur Forest Fairness Coalition. One of the main partners in that group is Prairie Wood Products. This is the Prairie City sawmill I mentioned earlier. It had been shut down for 15 years and reopened in 2022. It gave a real boost, economically, to the Prairie City area, providing some good jobs that had been missing from that economy for a long time.
On March 1 of this year, they shut down, laid off most of their staff and just kept a skeleton crew on board, a maintenance crew. They’ve been trying to make some repairs to their equipment and restart, but they haven’t been able to do that. The other members of the coalition include a couple of logging companies and a couple of ranchers who own timberland. And the logging companies claim that they have been squeezed out by this axis of Malheur Lumber and Iron Triangle. The loggers claim that they have been unable to sell timber from their property to Malheur Lumber.
Miller: Is the coalition that doesn’t want Iron Triangle to take over this mill putting forward another scenario where the mill could continue to operate?
Hall: There hasn’t been anything publicly said about that. The implication is that there are other potential buyers, other than Iron Triangle for Malheur Lumber. And what they stated, in an announcement that they released, was that Iron Triangle should not be allowed to buy Malheur Lumber because it would create a monopolistic situation. If they had both a logging company and the mill, they would wield too much power in the local economy and would use it to squeeze out their competitors.
Miller: Bennett, thanks very much.
Hall: Thanks for having me.
Miller: That’s Bennett Hall, editor of the Blue Mountain Eagle.
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