February 10, 2011 in Idaho

Vaagen Brothers Lumber Co. deal will reopen sawmill

By The Spokesman-Review
 

Vaagen Brothers Lumber Co. plans to restart a sawmill in Midway, B.C., through a cross-border deal that should help timber workers in both the U.S. and Canada.

The Midway mill had sat vacant for three years before residents in the town of 630 decided to buy it. Boundary Sawmill, the local corporation, has signed a 10-year lease with Vaagen Brothers, which will run a small-diameter log mill similar to its operation in Colville.

Vaagen Brothers expects to employ about 35 workers at the Midway mill when it reopens in the fall.

“In a village of just over 600 people that’s a huge economic impact,” said Randy Kappes, Midway’s mayor.

The deal also benefits Vaagen’s Colville operation. Trees cut in British Columbia will be sawed and dried in Midway before being trucked about 70 miles to the Colville mill, where they’ll be planed and turned into a finished product. The planer at Midway is partially dismantled, and Colville’s planer isn’t being used to its full capacity, said Russ Vaagen, the company’s vice president.

“It’s always been a struggle for us to get enough logs into our existing mills,” Vaagen said.

Vaagen Brothers had been interested in the Midway mill for several years, but it took a collaborative effort to put the deal together.

The sawmill was formerly owned by Pope & Talbot, an Oregon company that filed for bankruptcy. Fox Forest Products of Montana purchased the Midway property but only operated the mill for a short time.

“For the last three years, the mill property has sat idle, and we all wondered what we could do to get it going again,” Kappes said.

Community leaders worked with provincial representatives to put together the local corporation. British Columbia residents who buy shares in Boundary Sawmill will get a 30 percent refundable tax credit from the province.

The village of Midway is among the investors, said Doug McMynn, Boundary Sawmill’s president. Though the purchase of the mill has closed, the corporation still wants to raise $3 million to $4 million for capitalization, he said.

The lumber that originates in Midway will probably end up in distant, overseas markets. The Colville operation already sells a high-value dimensional lumber to an Australian client, which “wants about four times as much as we’re selling to them,” Vaagen said.

The company is also investigating sales opportunities in China. Traditionally, Chinese contractors used brick and steel for construction, but demand for lumber is on the rise in the rapidly industrializing country, Vaagen said.


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