
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, July 3, 1993                   TAG: 9307030069
SECTION: BUSINESS                    PAGE: A-4   EDITION: METRO 
SOURCE: Knight-Ridder/Tribune
DATELINE: SEATTLE                                LENGTH: Medium

FOREST PLAN WOULD PROFIT LARGEST TIMBER COMPANIES

Large land-owning timber companies in the Northwest will be the long-term beneficiaries of President Clinton's forest plan. Small mill owners, builders and homeowners will be the losers, timber-industry analysts say, as supply shrinks and the price for lumber rises.

The Clinton administration's plan, unveiled Thursday, took some minor shots at the operations of private timber owners, including a proposal to eliminate tax subsidies for log exports. The plan's prescription for an annual harvest of 1.2 billion board feet from the national forests of western Washington, Oregon and Northern California - less than one-third the harvest levels of the late 1980s - also is likely to restrict the supply of chips from national forests for pulp-mill operations.

But Larry Katz, a forest-products analyst for Pacific Crest Securities in Portland, says the restrictions eventually will drive up the value of the extensive land holdings of timber-producing companies such as Weyerhaeuser, Simpson Timber Co., the Plum Creek Timber Co., ITT-Rayonier and Longview Fibre.

"It makes the value of their land go up," said Katz. "It shrinks supply, and demand is constant."

Conversely, the plan doesn't offer much short-term relief for mills dependent on the national forests for their supply. Though the administration proposed freeing up 2 billion board feet of timber in the next year to ease supply problems, Katz said the U.S. Forest Service's long lead time in preparing timber for sale means the earliest new sales are likely to occur is September 1994.

And Katz offered an even gloomier prospect for longer-term supplies from the national forests. "From the environmentalists' standpoint, they've won," said Katz, "but they're not going to be satisfied." He predicted environmentalists will mount court challenges to the plan's proposal to allow limited logging in old-growth reserves.

Timber-company executives took some heart from the plan's proposal to change "owl circles" on private land - reserves for pairs of spotted owls - to a buffer-zone system that would also protect salmon habitat. The change could free up some timber.

But spokesmen for Weyerhaeuser and Simpson say the plan would further restrict the supply of chips for making pulp and paper.

Charles Bingham, executive vice president for Weyerhaeuser, said the company gets about half of its chip supply in the Northwest from the residual products of national-forest harvests.

While Simpson gets its chips from other sources, the general increase in the cost of timber has driven the price of chips up, increasing the company's costs, said Maureen Frisch, vice president for public affairs.

"We've become a high-cost producer and have had a hard time competing in the country and the world," Frisch said.

Lumber prices hit record highs in the first quarter of this year in expectation of a rebounding economy and corresponding boom in housing starts. But prices plummeted by 40 percent in the second quarter as the hoped-for home-building recovery did not materialize.

by CNB