Ply, Ply Again Thanks To New Owners, Omak’S Veneer Plant Finally Has Some Stability

The sounds of plywood production echo off the walls of Washington Veneer’s six-acre plant.

Saws whine as they trim the edges of boards. Metal rings on metal as hot presses clamp sheets of veneer together. Sanders buzz as they buff splintery panels into high-grade plywood.

The noise is music to the ears of Mark Watson, Washington Veneer’s personnel manager.

“The new owners have a goal and focus that gives me the feeling I’m going to retire here. That hasn’t always been the case,” said Watson, 49, who has worked at the mill under five different owners.

Quality Veneer and Lumber Co. of Seattle, which operates Washington Veneer, bought the bankrupt mill last year. Before it closed, the mill was losing up to $1 million a month. About half the work force had been laid off.

During the past 14 months, the new owners have spent $6 million on new equipment and upgraded the mill’s product mix. Quality Veneer has also hired 400 workers, re-establishing the mill as Okanogan County’s largest private employer.

“We’re glad to have the mill back. You betcha,” said Omak Mayor Walt Smith.

The 80-year-old mill has had a tumultuous history in recent years. The employees bought the mill in 1988 from British corporate raider Sir James Goldsmith. They hoped the purchase would guarantee greater stability in a challenging industry.

But after a 10-year struggle with high debt payments and low plywood prices, the mill was sold to pay creditors.

Quality Veneer and Lumber — a partnership involving a former Cinnabon executive, Weyerhaeuser manager and Hoquiam mill operator — purchased the Omak mill and three others in Washington and Oregon for $80 million in July 1998.

“Our collective thought was that it was an industry that had bottomed out,” said Stu Young, the former Cinnabon executive who is now the president of Quality Veneer and Lumber. “We felt if we could buy at liquidation value, if we brought in experienced management, that we could turn the operation around and be profitable.”

In Omak, the new owners are gambling on higher-grade plywood.

The mill historically produced four varieties of lower-end plywood for home construction. Even when the national housing market boomed, the plywood faced stiff competition from oriented strand board, which is cheaper to produce. “You make some money when the market is good, and you give it all back again when the market is bad,” Watson said.

Now the mill produces 18 grades of plywood, including siding, a tongue-and-groove flooring product and an oiled panel that contractors use to make concrete forms.

Though plywood prices fluctuate daily, Washington Veneer’s lowest-value product recently sold for about $268 per thousand square feet. The highest sold for more than $800 per thousand square feet.

About 60 percent of the mill’s plywood is the higher-quality product - a mix Washington Veneer is working constantly to improve, said production manager Richard Grenier.

Washington Veneer isn’t alone in its approach.

Many plywood mills have moved toward the higher-value products, said Paul Ehinger, a Eugene, Ore., consultant who tracks the wood products industry. But mills are limited by the raw materials available, he noted.

Fir and larch from North Central Washington, for instance, still provide most of Washington Veneer’s timber needs. But the mill also requires larger-diameter logs to produce the fronts and backs of its higher-grade plywood.

To meet that need, a million board feet of veneer arrives by rail each week from Canada, Oregon and Washington. The mill also buys 105 truckloads of the bigger logs from Western Washington.

The changes at the mill have increased employee Tony Fleming’s sense of job security. “We’re making a lot-higher-quality product,” said Fleming, head sheet stacker and 13-year employee.

Fleming’s parents also worked at the mill until it shut down last year. They took advantage of retraining benefits, but Fleming opted to reapply for his old job.

“I had several other offers, but I like making plywood,” he said. John Gonzales considers himself lucky to work at Washington Veneer. He and his family moved to Omak from Wenatchee last year so his wife could care for her ill father. But jobs were scarce in Omak, a town of 5,000 that serves as the area’s commercial hub. The Okanogan Valley’s apple crop has been poor for the past two years, and retail trade has suffered from the weak Canadian dollar.

Gonzales was one of 2,000 who applied for the mill’s initial 250 openings. Though he likes his work on the mill’s hot press, he and his wife have hesitated to buy a home in Omak. They’re not sure about the mill’s long-term prospects.

Young, too, foresees challenging times ahead for the new company. Though he expects the mill to turn a profit this year, “we won’t be out of the woods for sometime,” he said.

Quality Veneer and Lumber shut down a sawmill it bought in Mill City, Ore., last year. The mill produced lumber primarily for export to Japan, a market the partners expect to be sluggish for some time.

Plywood prices, central to the Omak operation’s success, also plunged in recent weeks. The same 1,000 square feet of 4-ply plywood that sold for $510 in mid-July sold for $280 last week.

“It’s an enormous swing. The market went from a recent historic high to a recent historic low,” Young said.

“The acid test is when the market goes bad,” Ehinger said. “Until recently, this year has been especially good for plywood.”

Recent market swings haven’t prevented people from applying for jobs at Washington Veneer. An additional 600 applicants want to work at the mill, where production jobs pay $9 to $11 an hour.

That’s one reason company officials want to turn the mill’s former junkyard into an industrial park. Young envisions small manufacturers that use plywood on the 70-acre parcel.

The site already has utilities and rail access, not to mention a willing labor pool.

“You could run another mill with the people who want to work here,” Watson said.

Map of area

Three sidebars appeared with the story: 1. IMPROVEMENTS Environmental restoration In addition to updating equipment, Quality Veneer and Lumber spent $2 million on environmental remediation at the plywood mill in Omak. One of the largest projects was restoring Omak Creek. A previous mill owner had rerouted the creek through culverts underneath the mill. But the creek flooded last year. Omak Creek was put back in its traditional path, and trees and shrubs were planted to enhance fish habitat.

2. Through the years A look at how the plywood mill in Omak, Wash., has evolved since it opened in 1921. 1921 Wenatchee lumberman J.R. Biles buys struggling mill and apple box manufacturing company in Omak. Late 1950s The Biles-Coleman Lumber Co. employs 1,200 people in several mills, a logging operation and a factory that builds coffins and furniture. 1985 After several sales, all that remains of the company is the Omak plywood and lumber mill, now in the hands of British corporate raider Sir James Goldsmith’s forest products unit, Cavenham Forest Industries. 1988 Mill goes on the market, prompting union to call a meeting discussing a strike. Employees decide to purchase the mill themselves and rename it Omak Wood Products. 1997 After struggling with high debts and poor markets, Omak Wood Products files for Chapter 11 reorganization. 1998 Mill shuts down in June. In July, the mill and assets are sold for $19.5 million to Quality Veneer and Lumber to pay off creditors.

FAST FACTS The owners and the employees Though some of the former workers were rehired after Quality Veneer and Lumber purchased a plywood mill in Omak, many are new. The current work force - 35 percent Hispanic, 20 percent female and 5 percent Native American - better reflects the community, according to company officials. An election on union representation in July failed, with 82 percent voting against. However, a second vote will be Wednesday, due to a technical error the National Labor Relations Board made during the first election. Quality Veneer and Lumber of Seattle includes three partners. President Stuart Young is a former Cinnabon executive. Chairman Gordon Boyd is a former Weyerhaeuser executive with experience in operations and business turnarounds. Founding partner Tom Mayr is the past president of Mayr Brothers, a sawmill in Hoquiam, Wash. In addition to Washington Veneer in Omak, the company also operates sawmills in Hoquiam and Hood River, Ore.