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BC company’s closures ‘devastating’ for Minnesota’s logging industry

The leader of a Minnesota loggers association said the state’s forestry sector is reeling after the recent closure of three mills owned by a B.C. company.

“There’s no question about it,” said Scott Dane, Executive Director of the Associated Contract Loggers & Truckers of Minnesota. “Their closure has been devastating to the timber industry in Minnesota.”

In 2004, Vancouver-based Ainsworth Lumber struck a US$457.5 million deal to acquire three American oriented strand board mills from Potlatch Corp. Fuelled by a booming housing market, the Grand Rapids, Cook and Bemidji plants alone processed about 20 per cent of Minnesota’s entire wood harvest, Dane said.

But tough times were just around the corner.

Less than two years after the acquisition, plummeting U.S. housing starts coupled with a construction industry in freefall caused Ainsworth to cut production at all three plants.

And over the last few months, the Canadian company shut down Grand Rapids altogether and suspended operations at Cook and Bemidji.

According to Dane, the consequences have been dramatic.

“I’ve seen multigenerational logging businesses shut down, I’ve witnessed large logging companies going through bankruptcy,” he said.

All told, Dane estimated 20 per cent of Minnesota’s entire logging industry has gone out of business due to the closures. “The entire network that supplied wood to the Ainsworth mills has been impacted,” he said.

Asked whether the B.C. company should have done more to keep the mills open, Dane suggested the decision to close was inevitable in today’s volatile economic times.

“The losses were just too great to continue on operating,” he said. “Financially speaking did they have any choice? The answer’s probably no.”

In addition to the three Minnesota plants, Ainsworth owns facilities in B.C., Alberta and Ontario. The company recently reported third quarter losses of $43 million compared to losses of $37 million a year ago and has its corporate jet up for sale.

Geoff Dembicki is a staff reporter for the Hook.

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