Return of the Mills

For decades, the flow of wood in Southern California was as predictable as it was lopsided: Finished lumber products moved south and almost no felled trees moved north.

A pest the size of a rice grain has changed the equation, offering a modest rebirth of an industry virtually absent from the Southern California landscape for 20 years.

“After 18 months of trying to get people interested and being told by experts we’d never have a mill in Southern California, we have three or four proposals to bring mills down here,” said Peter Brierty, fire marshal for San Bernardino County.

The San Bernardino mountain forests contain hundreds of thousands, perhaps as many as a million, dead and dying pine trees, all victims of infestation by a tiny insect called the bark beetle.

Although the wildfires that burned around Lake Arrowhead in early November destroyed some dead trees, the blazes were stopped before they got to the high-mortality parts of the forest.

Private landowners and county officials still face a huge job of removing dying trees -- one that has been slowed so far by the lack of a ready market for the wood.

Now that may be changing, at least in part. Last week, San Bernardino County supervisors granted a $420,000 loan to Pico Rivera Pallet Corp. of Colton to build a small mill to construct pallets from pines killed by bark beetles.

Another company, Pallet Masters of South Los Angeles, is in line for a similar loan, while companies from as far off as Oregon and China are weighing ways to capitalize on the local pine glut.

The companies are being courted aggressively by county officials, who would face multimillion-dollar costs to incinerate or bury the infested timber, which is not considered prime quality because of a blue-stain fungus associated with the beetles.

About 460 tons a day of beetle-infested timber is being cut from public and private land around Lake Arrowhead, and much of it is incinerated or buried, at a cost to the county of $12 to $30 a ton.

David Avina, owner and president of Pico Rivera Pallet, said the loan would enable his company to buy a mill and other equipment and hire up to 15 workers by year-end. Avina expects the San Bernardino wood to replace the 24,000 linear feet a day he uses from Canadian suppliers, and cost about $80 a linear foot, compared with $170 for the Canadian wood.

“Hey, the more the merrier,” he said.

A similar plan is in the works at Pallet Masters, though it doesn’t expect tremendous bottom-line savings.

“We are likely to get involved with a mill,” said Joe Smith, chief operating officer of Pallet Masters, who estimated that the pine could account for 80% of the company’s needs, and cut costs by 7% to 8% for lumber currently bought on the retail market from Canada. Pallet Masters would invest about $1 million, Smith said.

“We should be able to purchase logs, cut the lumber and take it down here and make pallets at a net lower cost, but it’s far from a windfall,” Smith said. “It’s not like, ‘Wow, this wood is free.’ The power costs are going to be high, and the transportation costs are going to be high.”

At least three companies, including Pico Rivera and Pallet Masters, have applied for loans from the county, officials said. Each loan would be for less than a half-million dollars.

Among the other possible niche uses for the wood are pellets for fuel, a project being considered by West Oregon Wood Products, which toured the area this summer, said Chris Sharron, president of the company.

“It’s still a fledgling industry in the states, but there’s a huge emerging market overseas for this,” Sharron said. “I guess I’m just trying to figure out if there’s a way for us to fit into this puzzle.”

Four Chinese firms interested in wood for paper and furniture have shipped six rail containers of wood to test its quality, said Thomas Laurin, director of the county’s Department of Economic and Community Development. Laurin declined to name the companies, saying agreements have not been signed.

Great Scott Tree Service also milled about 18,000 board feet for a test lot, according to Rex Richardson, spokesman for the county solid waste department. Great Scott officials were not available for comment.

“I can tell you we’re going to need a lot of different outlets because the quantity is just enormous,” Richardson said. “Niche markets are the way we’re going to have to go.”

More conventional uses are not entirely lacking, but the nearest large mill, operated by Sierra Forest Products, is in Terra Bella, about 220 miles north of Lake Arrowhead.

After receiving 20 truckloads a day from the San Bernardino Mountains since April, the Terra Bella yard is full and the plant stretched to capacity, said general manager Kent Duysen. “About 40% of our supply in the last six months has been coming from Southern California, which is quite unusual,” he said.

Trucks arriving in Terra Bella garner about $1,400 to $1,500 a load, but incur transportation costs of about $600, making the effort only marginally profitable, Duysen said.

“It’s tough material” to market, Duysen said of the wood. “Blue-stain makes it tough to use for doors and windows.” Most of the timber goes into items such as door and base molding or lesser uses, he said. “There’s a lot of this product being produced today,” Duysen said. “It’s a buyer’s market.”

What’s more, the Public Utilities Commission ordered Southern California Edison in April to fell any dead trees threatening its transmission infrastructure. The company estimates it will have to cut and sell 350,000 pines.

Private property owners have faced prices of as much as $1,000 a tree to have pines removed. County officials have no explicit plan to ensure that savings from commercial uses of the timber translate to lower prices to property owners, leaving it to the market to decide.

County officials and companies involved so far predict at least five years’ worth of work, with uncertain prospects thereafter.

The U.S. Forest Service has yet to embark on large-scale thinning projects, which can spark protracted legal battles with environmentalists.

Even with the Bush administration’s new Healthy Forest Initiative, and its promise to speed up forest-thinning logging on public land, the prospects for investment in a large-scale mill like those in the Sierras remain slim, industry leaders say.

“There is a real lack of confidence in the federal government, for anyone to spend $20-$30 million on a lumber mill,” Duysen said.

“Every four years, there’s an election, and we wonder if the pendulum will swing the other way.”

Industry experts also doubt whether pallet and pellet companies can solve San Bernardino’s problems.

“The question is, with the amount of volume out there, how many pallet manufacturers can you support in that market,” said Donn Zea, president of the California Forest Products Commission. “You’re going to need more than these small-scale operators to remove all of the damaged wood down there.”

The last mill to operate near the San Bernardino National Forest was opened in 1953 by Wetsel-Oviatt, said Cecil Wetsel, who closed his father’s mill in the early 1980s when the Forest Service stopped selling timber. The firm his father founded since has gone out of business.

Wetsel was skeptical of a rebirth of the industry. “It’ll be short-lived,” he said. “I think there are opportunities if the Forest Service really wanted to have a serious sale.”