As the twig is rent.

• Author: Bailey, David
• Position: Forest products industry in North Carolina

AS THE TWIG IS RENT

Canal Chip Cpr., just west of Wilson, goes through hardwood trees like a teen-ager eating Doritos.

A conveyor in the wood yard feeds 70 truckloads a day - 22 to 23 tons of logs per truck - into the maw of the company's chipper. There, they encounter a disk very similar to a food processor's carrot grater, except that it's 12 feet across and attached to a 2,000-horsepower motor.

It takes three seconds for the disk to chew a log into chips, each one uniformly shaped and a little bigger than a jumbo matchbook. The blond wood flakes are hauled by rail to Morehead City, where they're loaded onto ships bound for Japanese paper mills. Canal expects to export about 450,000 tons of chips this year. Pulped, they could make enough paper for 800 million magazines the size of the one you're holding.

Talk about efficiency: Eight employees run the whole show.

On the other side of the Roanoke River, about 75 miles to the northeast, is Bennett Box & Pallet Co., a 90-employee operation. In a dimly lit building on the outskirts of Ahoskie, white sawdust bespeckles the black skin of a band-saw operator. Although he's supposed to be using a narrow beam of light to guide his cut, today he's doing things the old way - eyeballing it.

The slab skitters out of the way as a mechanical grappler flips the log so he can take a second shot at it. Sawdust hangs in the air, and boards, bark, wood chunks and debris are underfoot everywhere.

Across the way, several men with wrenches gather around a disabled chamfering machine. A planer nearby is locked on one setting. Outside, the debarker is choked down. Still, the company turns 11 to 15 loads of logs a day into pallets, and Bennett Box & Pallet managers to turn a small profit, says BArbara Bennette Perry, president of the family-owned business.

Little Bennett Box & Pallet Co. and Canal Chip Corp. - an arm of the largest privately owned wood supplier in the Southeast, Canal Industries Inc. of Conway, S.C. - are poles apart. Bennett has lots of customers for its made-to-order pallets. Canal Chip has a few big clients - Japanese paper companies whose specifications are identical. Bennett is labor-intensive. Canal's operation is automated. Bennett does business locally and responds to the area's economy. Canal's market is global.

In many ways, the two companies represent the extremes in the hardwood-products industry in Eastern North Carolina: big regional corporations with deep pockets and a national, if not global, strategy vs. small, home-grown companies with scant capital and most local customers.

It's what the two companies have in common that brings them into conflict. They use the same raw material: low-grade hardwood logs. Last winter, the price for hardwood logs in Easter North Carolina reached an all-time high. In fact, saw timber got so expensive Perry shut down her mill in Aulander because she couldn't get enough logs at a price to make it profitable.

One of the reasons hardwood prices hit a high is because the world is looking to North Carolina for its logs, lumber, chips and other wood products. "Hardwood timber and hardwood lumber in the Southern United States is grossly undervalued when compared to the world demand for timber," says George Barrett, a former lumber wholesaler who pulishes the newsletter Hardwood Review in Charlotte. "And I think it will increase in value in the next 10 years as world demand forces prices even higher."

Perry realizes the state has joined the global market. It's how we joined it that bothers her: "We're selling raw materials and being trated as a less-developed nation," she says.

The Japanese sell the United States computer chips. We sell them wood chips.

"The Japanese are going to come in here and mine our forests and then go somewhere else," she says. "And all i can do is sit by an d watch the future of the hardwood industry in Eastern North Carolina being chipped up."

Nearly two-third of North Carolina 0 18.4 million acres - is...