Oregon

Log Exports Take Root At Port

Daily Astorian | Feb. 16, 2013 2:56 p.m. | Updated: Feb. 16, 2013 10:56 p.m.

Contributed By:

EDWARD STRATTON

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Three nine-man stevedore gangs hustled around Pier 1 Feb. 1, helping take the stacked timber from front loaders, wrap it in a cable noose and load it by crane into the hatches of the Malaysian-flagged Eco Discovery, until an 8-meter wall of timber formed on its deck. It was the first log ship at the Port of Astoria in 2013.

The bulk carrier docked at Pier 1 in the Port of Astoria Jan. 29 to Feb. 5 while it took on more than 5 million board feet of timber before steaming its way to the central China coastline, leaving $86,000 in the Port’s coffers.

Westerlund Log Handlers, which operates a log export facility on Pier 1, came to Astoria in 2010 amid much controversy over its potential effects on Astoria’s tourism and marine industries, but the company has labored along under the radar for nearly three years, quietly earning the Port nearly $1.9 million from 26 ships – the next one is due Feb. 22.

“It took a lot of work – a lot of meetings,” said Roger Nance, a Washington state banker who turned in his suit to help form Westerlund Log Handlers with partner Dave Westerlund in 2009. “It was essentially a grassroots effort where we needed to meet with those parties who were opposed to log exports for philosophical reasons, for reasons that they had made their own investments down here at the Port.

“It’s hard to come into a small community like this and tell somebody how you’re going to conduct business and have them believe you if they’ve been burned in the past. It’s taken some time, but over the last three years, I think we’ve demonstrated that we’ve done everything we said we were going to do.”

After a Chinese crackdown on inflation and construction sent timber exports plummeting and left the Port without a log ship arrival for periods of up to nearly 3½ months, the company is seeing a glimmer of hope with a stabilizing log market and a steady one log ship per month for the Port.

“Westerlund represents about 48 to 50 percent of our pier revenues,” said CEO Hank Bynaker, who thoroughly supports the operation. “They’re an anchor tenant, for sure.”

Westerlund operates a 4-acre log yard at Pier 1 from which it exports logs to China. In addition, it runs a 22-acre log-sorting yard and debarking facility on Lewis and Clark Road.

“It’s pretty solid and pretty tight,” said Nance about the electronic bar coding system Westerlund uses to track each log as it comes into the yard, is sorted by species and length, and is trucked to Pier 1 and eventually lowered onto a ship. “We might be anywhere from one to three, to one to five logs off on a ship that will carry 33,000, so the threshold for error – the margin of error – is very, very small.”

Westerlund, which started in Bremerton, Wash., and added facilities in Tacoma, Wash., has since consolidated all its operations in Astoria. Nance said the entire operation employs between 70 and 80 people when a ship is being loaded, and 40 to 50 when one isn’t.

Dave Westerlund, a stout, bearded fourth-generation logger of more than 40 years whose great-grandparents emigrated from Finland and homesteaded on Bainbridge Island, Wash., said log export competition intensified in the Puget Sound region, and when Weyerhaeuser Co. sold its approximately 140,000 acres of timber holdings in Clatsop County to Portland-based timber investment company, The Campbell Group, a big customer opened for business.

“When it changed hands … it became exportable,” said Westerlund, mentioning federal and state laws that only allow timber exports from private land, which picked up drastically following the housing market downturn in the U.S.

Nance said Clatsop County was losing out on a big opportunity with its logs from private land going through downtown Astoria to Longview, Wash., for export. He estimates that Westerlund has taken at least 60 log truck trips per day out of the downtown corridor.

But trucks, tankers and a lot of noise and biomass still come with timber exports, so Westerlund faced more difficulties before starting up.

A rough start

Mayor Willis Van Dusen was afraid that Westerlund’s log export project would hurt cruise ships, Englund Marine and Bornstein Seafoods, all staples of Astoria he helped to bring about. For those reasons and others, he, Jon Englund of Englund Marine, Jay Bornstein of Bornstein Seafoods and a host of other movers and shakers came out against the deal.

On April 27, 2010, the Port Commission voted unanimously to approve a five-year lease of 3.1 acres on Pier 1 to Westerlund Log Handlers for $11,208 per month – around $134,500 a year, in addition to the fees the Port earns from berthed log ships. In December of the same year, the Port modified the lease to include Pier 3, for which Westerlund pays $12,500 a month.

The revised lease approved by the commissioners gives Westerlund the first right of refusal if the Port wants to lease out space to another tenant or operation, although Pier 3 houses a boat haul-out area run by the Port.

“I have now freely admitted I was wrong,” said Van Dusen about Westerlund. “It did not affect the cruise ships. In fact, the cruise guests like the log handling.”

Van Dusen wouldn’t go so far as to say log handling aids tourism, but he said Astoria’s economy needs to remain diversified, and the Port needs to stay busy. Don West, the general manager for the Cannery Pier Hotel, added that while he’d rather see Bornstein’s proposed fish factory tours, similar to those in Tillamook, come online, he’s had no issues with the Westerlund operation.

Kurt Englund of Englund Marine & Industrial Supply worried about “the log yard from hell” causing the boatyard to shut down, hurting his and other marine businesses.

“All the concerns we had … we haven’t had any problems at all,” he said.

The original proposal, which called for log storage and debarking on Pier 3, never came to pass. Nance said Westerlund had been quoted about $4 million to get Pier 3 online, but then that doubled to $8 million, and Westerlund didn’t bite. It instead started the yard in the Lewis and Clark area and moved in to Pier 1.

A stable China

In 2011, it was “the wild west,” said Nance about China’s huge appetite for timber in its burgeoning real estate market. “China, as it was trying to get control over its housing and inflation and banking and financial system, they needed to take a look at what was going on in the market.”

The Chinese cabinet took such measures to control inflation and the housing market as raising down payments on houses, restricting purchases, raising interest rates, enacting a real estate sales tax and eliminating mortgage discounts. Nance said the deflation of this housing bubble mostly occurred between August 2011 and January 2012.

“I think that with all those things, the market right now is stable,” he said. “It’s not going to drop through the bottom, and it’s not going to go gangbusters.”

He previously told the Port to budget for one log ship a month while projecting up to 14 this year. “We’d like to get 20 ships out this year.”

Nance bucks the notion that log exports will slow down once the U.S. housing market gathers steam, as state and federal governments own most timberland and don’t allow exports.

The Port has been working on permitting and soil samples to help bring Pier 3 back online as an export dock. Van Dusen said that for his part, he’d like to see the operation continue as it has. Kurt Englund said the Port needs to remain cognizant of how any Pier 3 operation would affect the boatyard, which is vital to his business.

Nance has also floated a cost-sharing possibility in which Westerlund would store part of a ship worth of logs on Pier 3 to speed up the loading process. He said that if the Port could share the cost of timber transport between the piers using Westerlund’s trucks and its own labor force, and if more ships came in, the Port would significantly boost its revenue.

“We’ve only just brushed on the topic of staging some logs on Pier 3,” said Bynaker, adding that no further negotiations have taken place since the idea was first brought up.

Bynaker, Nance, Westerlund and a representative from the stevedores will travel to China from March 15 to 23 to visit with Chinese government, port and business representatives, trying to find a willing partner to develop Pier 3.

This story originally appeared in Daily Astorian.

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