L-P Dashes Workers’ Hopes Employees Told Chilco Plant Unlikely To Reopen As Expected

Louisiana-Pacific Corp. said Tuesday it may permanently close its Chilco, Idaho, sheeting plant, putting 100 people out of work.

Employees, many of whom had been furloughed since Jan. 6 under a temporary layoff, learned last week that the plant may never reopen unless the company converts the factory back to a siding plant.

The news stung some workers who delayed seeking other jobs because they believed they would return to the mill. Chilco is 15 miles north of Coeur d’Alene on U.S. Highway 95.

By the time L-P makes its final decision on the plant’s future in early July, many workers will have exhausted their 26 weeks of unemployment insurance benefits.

Workers earned an average of $27,000 a year, a company official said.

“They told us it (the layoff) was a seasonal thing,” said one worker, who asked to remain anonymous. “All these fellows were thinking they would be going back. I don’t know how they (L-P) can get away with that.”

As required by federal law, L-P of Portland last week gave employees 60-day notices that it may permanently close the nonunion plant. The notice does not bar L-P from reopening the facility but sends a strong signal that the sheeting factory likely is dead.

“We were hopeful that this plant would come back on line, but from the information we are receiving, it’s looking doubtful,” said Larry Hertling, dislocated worker coordinator for the Idaho Department of Employment. “We’re encouraging them to look for new jobs and careers. To wait now would definitely be taking a risk.”

Hertling said L-P employees who lost their jobs are eligible for career training and placement assistance.

The adjoining Chilco lumber mill and its 40 workers will continue without disruption, said Jim Beldin, human resources manager for L-P’s North Region. Company mills in Sandpoint and Moyie Springs, Idaho, also are not affected.

However, a plant closure warning has been issued at L-P’s sheeting plant in Montrose, Colo., where the company also is considering conversion to a siding operation.

“We’re primed, hopeful and ready to produce siding in Chilco,” Beldin said. “But we wanted to let our people know that this (shut down) was going to go on beyond what we expected. We realized some of them would need to get on with their lives.”

Siding would replace production of L-P’s sheeting, known in the industry as oriented strand board. The popular composite sheet is used by builders on roofs, floors and walls as an alternative to plywood.

But the product has been greatly overproduced in recent years, said Joe Heitz, associate editor for Random Lengths, a Eugene, Ore.-based industry trade group and publisher.

“A lot of other producers are contemplating the same thing as Chilco,” Heitz said. “It’s a pretty tough market right now.”

OSB prices in April averaged $122 per thousand square feet, down from $201 one year ago, Heitz said. Falling prices reflect a move by North American producers to increase production from 11.6 billion square feet in 1995 to a projected 16.8 billion this year.

Chilco’s OSB capacity is 150 million square feet per year, making it one of the smallest in L-P’s stable of 22 North America sheeting factories, Beldin said.

Although Chilco has not produced siding for two years, Beldin said it would be easy to convert the plant. That could result in rehiring all of the 100 terminated employees, but market conditions would have to improve significantly.

Chilco siding also would have to live down its old reputation for turning soggy in wet weather. L-P’s Inner-seal siding, which was produced at Chilco and other sites, was the focus last year of a $275 million settlement with 800,000 homeowners seeking to replace the imitation cedar material.

L-P maintained that most problems could be traced to improper installation and maintenance. But in February, the company reached a separate $65 million class-action settlement with shareholders who claimed the company misrepresented its potential liability for producing Inner-Seal.

L-P ended 1996 with a $200.7 million loss on revenue of $2.486 billion, compared with a loss of $51.7 million on revenue of $2.843 billion the previous year. It has 12,000 employees.

, DataTimes ILLUSTRATION: Color photo

MEMO: Cut in the Spokane edition