Amid the gloom, there's still a potential timber industry.

• Author: Swagel, Will
• Position: Industry Overview

Alaska's timber giants have fallen, but the vast forests of Southeast may sprout a second growth of wood-based business.

The southeastern Alaska timber industry is a boiling kettle and recently a big bubble burst. Officials announced last fall that the Ketchikan Pulp Co. mill would cease new production on March 24.

Pro-development forces point their fingers squarely at Bill Clinton and his supporters for strangling the timber supply. Environmentalists blame the mill's demise on antiquated technology and an economy changing toward tourism and vacation homes.

They're both right.

The Problem

The Clinton administration clearly opposes wholesale cutting in the Tongass National Forest and considers the old levels of logging there - about 450 million board feet (mmbf) annually - to be too much.

Then, too, it is true that the mill owners did not significantly upgrade the mill. And the economy of southeastern Alaska is changing away from resource development as the national ecotourism boom begins to have a significant presence in Ketchikan and Sitka both, where the most expensive houses in town are being built by people who live in them for two months a year.

The good news is that there are small- to medium-sized timber industry entrepreneurs who are willing to invest in wood processing that is clean, high value and more compatible with tourism. They are champing at the bit to get going. So what's holding them up?

It's the Supply, Stupid

Paraphrasing President Clinton is fun, but the situation in Southeast isn't. The harvest from the Tongass, which fell from 471 mmbf to 220 mmbf between 1990 and 1995, plummeted another 100 mmbf in 1996 to a modern record-low harvest of about 120 mmbf. Harvests from private lands have experienced a similar decline, going from 506 mmbf in 1990 to 254 mmbf in 1995.

In Thorne Bay, a small, timber-dependent town on Prince of Wales Island, fallout from the announcement of the closure of KPC has smothered the economy months before the mill is actually slated to close.

Thorne Bay is home to the KPC log sortyard, and with less timber being cut, less is graded and baled. Small sawmills that manufacture cedar shakes and shingles have shut down, since they can no longer glean their working stock from the flow of wood to KPC. Black Bear Cedar did not operate for the majority of 1996. Star Cedar, which used to employ a 24-person double shift, ultimately shut down. Nine of Southeast Alaska's 17 sawmills used to operate in Thorne Bay.

City Administrator Ginny Tierney says Thorne Bay's population has dropped from 650 to 580. School enrollment has decreased from 152 to 87. Local businesses report only half the activity of a year ago.

"We've seen half our loss already," Tierney says. "Before the mill is even closed."

Two-thirds of Thorne Bay's workers are connected to KPC, says Tierney, and many live in company housing. For a town that has been growing steadily since it was created by an act of the Legislature and incorporated in 1982, this is as devastating as it gets.

"We are a timber-based community," Tierney says of Thorne Bay. "That is the most abundant natural resource in our area."

Hard-hit Thorne Bay received only $150,000 in Tongass Timber Relief Funds ("Two jobs," as Tierney explains) versus $34 million for Wrangell, $25 million for Ketchikan and $14 million for Sitka. The funds are a federal grant to the area to make up for the loss of timber to the economy.

"Prince of Wales Island has a tendency to be looked at as part of Ketchikan," says...