More than 100 jobs lost as Bemidji plant closes production line

Ainsworth's 260 Bemidji employees were told not to show up for work. Instead, the workforce gathered for a meeting many had expected for a while.

The company announced it was permanently eliminating 110 jobs and scaling back production at the plant. Kurt Lawson has been with the company only a few months. Now that he's unemployed again, he's not sure what he'll do.

"It's kind of disappointing," he said. "I've been waiting for about five years to get into the mill, and got in there and was told I was doing pretty good. And was told yesterday about noon we were going to shut down."

Kevin Johnson has been with Ainsworth much longer, about 15 years. He was surprised when he got a pink slip.

"Probably three-fourths of us were very senior people," Johnson says. "It was a way to get rid of the more senior people with the higher vacation load, higher paying jobs. And it's discouraging, but what do you do."

Ainsworth Engineered bought the Bemidji plant, and two more in Cook and Grand Rapids, from Potlatch Corporation two years ago. Company officials says the production line shutdown and job cuts were driven by a deteriorating market for oriented strand board, the companies main product.

Bruce Rose is head of corporate development at the company's headquarters in Vancouver, British Columbia. Rose says the company would have preferred a more prolonged phase-out of employees. But he says the production line became too costly to operate.

"There's a combination of obviously relatively high wood costs, the age of the facility, the condition of the facility," Rose says. "And that combined with the circumstances that are in the market at this point, just made it economically unsustainable. So that's where we had to make this very difficult decision."

People who've kept their eyes on the wood products industry over the past few years aren't surprised by the cutbacks. For a while, the industry was riding a wave of prosperity. Low interest rates and a booming U.S. housing market meant wood products manufacturers were getting some of the highest prices ever for their goods.

But all good things must come to an end, says Larry Young. He's director of Bemidji's Joint Economic Development Commission.

"A lot of those wood industries right now are sort of in a down cycle because of the falling demand for wood products, with the real estate market cooling in terms of new home construction," Young says. "Some of the plants are almost in a position of they're producing, but there's no market for their product at the present time."

Young says the recent slowdown in home construction starts, combined with rising stumpage prices for raw timber, are creating tough times for the timber industry.

"You start having kind of a perfect storm situation where you have a declining market for the product," he says. "You have higher operating costs with energy, then you have plants that aren't as efficient as maybe they could be, so you start putting all those things together and so there probably inevitably had to be some shake out in the industry."

Larry Young figures there will be a ripple effect from the shutdown of Ainsworth's production line. He says it will mean a slowdown in wood purchases from private landowners and from public timber sales. Loggers and companies who supply them will also see a downturn.

Young says the most direct and immediate impact on the economy will be the loss of wages for 110 people.

"And figure that payroll probably rotates and spins about five times throughout the community, so that could well be a $25 million dollar impact on the community."

Ainsworth officials say the production line shutdown means the plant will consume about 430,000 fewer tons of wood each year. The plant's product output will likely be cut in half. They say the shutdown and employee cutbacks will have no effect on Ainsworth's plants in Cook and Grand Rapids.

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