Taking point on timber trade

Dick Bennett is talking about how cheap lumber imports from Canada are stripping profits from his family-owned sawmill in Grangeville, Idaho.

This isn’t a fist-pounding conversation. But he’s passionate enough that it could be.

For 25 years, Bennett has carried the banner for small, independent Northwest mill owners worried about Canadian competition. In that role, he’s sat at the negotiating table with U.S. senators, trade ministers and even competing mill owners in British Columbia.

Gruff, blunt and respected, the 73-year-old timberman is a colorful and persuasive figure in one of North America’s longest-running trade disputes. When Bennett speaks, he carries the credibility of someone who has run logging operations, managed mills and sold two-by-fours.

“Dick’s really emblematic of the independent producer who’s done it all and brings it all to the table,” said John Ragosta, the former lead counsel for the Coalition for Fair Lumber Imports, a U.S. industry group fighting what it deems subsidized Canadian lumber flowing over the border.

“He’s never lost sight of the real problem,” Ragosta said. “If you’re a corporate executive on the 57th floor of a corporate office, it’s a financial and sales problem. If you’re an operator on the ground, you can see how you’re paying $400 per thousand board feet for stumpage, compared to a Canadian competitor who’s paying $50 per thousand. You can see why you can’t compete.”

Canada produces about one-third of the softwood lumber sold in the United States. The commodity spruce, fir and pine are used in home construction, and the wood competes directly with lumber produced by domestic mills.

Earlier this month, the U.S. and Canadian governments declared a cease-fire in a four-year legal battle over the imports. The U.S. agreed to return up to $4 billion in tariffs collected from Canadian producers if the Canadian government would install checks on its own industry. When lumber prices fall below certain levels, the Canadian government will start collecting a border tax, designed to raise the cost of its lumber and prevent the Canadians from controlling more than 34 percent of the U.S. market.

The agreement, approved Tuesday by the Canadian Parliament, was a hard-won compromise for both sides. Bennett came out of retirement last year to help craft a deal U.S. mills would accept. For him, the seven-year agreement is the latest round in two decades of discussion about how to level the playing field.

In the early 1980s, Inland Northwest sawmills were losing money – lots of money. In a scenario reminiscent of the current U.S. economy, interest rates were rising while home construction leveled off.

In prior periods of low lumber prices, domestic mills curtailed their production. Supply dwindled until demand rose, making mills profitable again. But the tried-and-true formula failed this time around because of a new player in the marketplace. A rapidly expanding Canadian timber industry was shipping its product south.

“We really woke up to the fact that the market was not going to self-correct,” Bennett said. “The whole forest products industry was losing money, except for the Canadians. It baffled us how they could do that.”

The difference was the “tenure system.” In Canada, the provinces own most of the forestland. To encourage the timber industry to expand and support rural employment, the provinces awarded long-term cutting rights, or tenures, to mills. The tenures provided a steady – and subsidized, U.S. trade officials would later determine – source of logs for the mills.

Bennett was president of the Idaho Forestry Association at the time. He invited Northwest mill owners to the Hayden Lake Country Club for a strategy meeting. Eventually, a group of mill owners hired an attorney and filed a petition with the U.S. trade representative, alleging unfair competition.

For Bennett, the imports posed a serious threat to an industry he literally grew up in. During the Depression, his dad, the late Guy Bennett, worked at a Lewiston sawmill, earning $1 a day. For extra income, the family raised and sold peaches, raspberries and cherries.

From that venture, a small box factory was born. Guy Bennett built fruit boxes in the basement after work for the family orchard. Surplus boxes were sold to farms in Yakima and Wenatchee.

The business expanded into a two-shift, six-day-a-week operation during World War II, when wooden boxes were in high demand for shipping ammunition overseas. Eventually, however, cardboard fruit boxes replaced wooden ones, and the Bennetts put their energy into sawmills.

Guy Bennett and his sons, Dick and Frank, owned and operated several sawmills in north-central Idaho. Several years ago, the family interests split up. Dick Bennett, along with his son and grandson, operate the Grangeville sawmill and manage real estate holdings in Kootenai County. His brother, Frank, and sister, Janice Dimke, own mills in Princeton, Idaho, and Clarkston, Wash.

That first trade petition in the early 1980s, however, went nowhere. Mill owners couldn’t garner enough political support for a serious run at the issue.

A few years later, industry leaders hired Dewey Ballantine, a top New York firm in the field of international law. By then, the effort included mill owners in the South and Northeast. The Coalition for Fair Lumber Imports was born.

To win widespread political support, the coalition had to represent both large and small producers and mills from the West, the East and the South. Bennett took the lead with western mills, coaxing money and support from industry colleagues. The coalition scored its first win in 1986, when tariffs were imposed on Canadian imports.

Over the next two decades, there would be multiple trade agreements – some kept, some broken. There were also lawsuits, trade panels, negotiations and summits. The Canadian industry found powerful allies in U.S. home-builders, who advocated against trade restrictions on lumber.

“They’re like Wal-Mart,” Bennett said. “They don’t care where it comes from as long as it’s cheap.”

He made countless trips to Washington, D.C., Ottawa, Montreal and Toronto. He once hitched a ride to a meeting on a private jet with six mill owners from British Columbia. “They tried to brainwash me,” he joked.

Bennett’s been a practical voice in negotiations. He knows how details of agreements will affect operators on the ground, and his long tenure brings valuable institutional knowledge to the negotiating table, said Ragosta, the coalition’s former attorney.

Bennett’s also been a bit of a maverick, colleagues said. Behind closed doors, he can be a harsh critic of cohorts he feels aren’t doing enough for the cause. At times, the friendships he formed with Canadian mill owners raised eyebrows. Coalition attorneys, meanwhile, winced to see Bennett frequently quoted in the Canadian press.

“He has a colorful way of turning a phrase, and Canadian reporters figured out that you could always get a rise out of Dick,” Ragosta said. “Sometimes, we’d read Dick Bennett quotes in the paper and think, ‘Oh no. Did he really say that?’ Knowing Dick, he probably did.”

“He’s been more passionate than anyone I know on this issue,” said Hugh Travaille, a retired vice president of public affairs at Potlatch Corp. “Sometimes people have felt pushed by him, but at the end of the day, that pushing has been to the benefit of what we were trying to accomplish.”

U.S. Sen. Larry Craig, an Idaho Republican, has known Bennett for 30 years. “Dick never misses an opportunity, regardless of where he is, to advocate on behalf of the industry,” Craig said. “Sometimes, this is accomplished purely by talking louder.”

Over the years, Bennett found himself in disagreement frequently with Jake Kerr, a former spokesman for the BC Lumber Trade Council. “We both can be a little bombastic,” Bennett said.

Like Bennett, Kerr is second-generation in the timber business, and the former operator of a family-owned sawmill in Williams Lake, B.C. The two men are also neighbors and golf buddies in Palm Springs, Calif., where they have winter homes.

“He and I have been on the opposite side of the softwood issue forever, but we’re great friends,” Kerr said. “He’s a pretty fearless guy in going after the issue. He also has a good sense of when you need to make a deal.”

Two years ago, Kerr was named British Columbia’s Lumberman of the Year. Bennett was the only American invited to his fete at the Vancouver Club. “It was pretty comical,” Bennett said. “I got roasted more than he did.”

The recent softwood agreement comes as lumber prices are falling. In the past year, composite prices for framing lumber have dropped about $100 per thousand board feet. As a result, some North Idaho mills have cut back shifts and production.

In British Columbia, meanwhile, a liberal government began reforming the tenure system three years ago. About 15 percent of the logs are now sold competitively. Government contracts offer mill owners more flexibility, so they aren’t forced to cut set quotas of trees during poor lumber markets.

But the two countries’ log supply systems remain radically different, Bennett noted. And until Canada moves to a free-market system, trade agreements will continue to be a necessity, he said.