Georgia-Pacific cites severed rail access as reason to close Oregon lumber mill

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SEATTLE — Georgia-Pacific LLC is closing a 111-employee lumber mill in the Oregon coastal town of Coos Bay, citing as one of the reasons rail service that has been cut off by a bridge closure for close to a year.

Instead of loading lumber at the mill, GP has had to truck finished product to a transload site located north of the bridge, on a portion of the line not cut off by the bridge’s closing.

“We’ve basically had to go to the railroad instead of having the railroad come to us,” said Georgia-Pacific spokesman Rick Kimble. “Any time you do that, it’s going to add additional cost to the product.”

A swing bridge, one of three on the railroad’s line, failed to open in April 2018. It was moved manually, reopening the passage to marine traffic but leaving rail customers south of the bridge, including the GP mill, cut off from the rest of the rail line, which connects to the Union Pacific near Eugene.

Repairs have been delayed while the Oregon International Port of Coos Bay, which owns the rail line, sought funding. Officials had hoped to complete repairs this month.

“It’s a little bit unfortunate that they couldn’t wait for that,” John Burns, the port’s chief executive, told the Oregonian.

In announcing the mill’s closing as of April 11, GP also said log supply has been a problem.

The mill, opened in 1994, produces dimension lumber for housing construction. Georgia-Pacific holds no timberlands of its own, so it has had to buy logs on the open market in competition with other domestic mills and from exports. That’s at a time when lumber prices are substantially lower than a year ago. The Random Lengths Framing Lumber Composite Price was $358 the week of April 5, down from $492 a year ago.

Being in a region in which raw-log costs, a mill’s biggest expense, are higher than other markets puts the mill at further competitive disadvantage.

“We tried to make it work for a long time,” Kimble said.

GP is talking to potential buyers for the mill, but Kimble added that Georgia-Pacific has no interest in restarting it.

GP isn’t the only company to announce a mill closing in Oregon in recent weeks because of log-supply issues. Random Lengths, a trade publication covering the lumber business, recently reported that Swanson Group is permanently closing its mill at Glendale, Ore. Swanson blamed “log supply constraints forced upon us by federal timber policy.”

GP’s decision puts the Oregon International Port of Coos Bay in an interesting position. While the port is affected through its ownership of the railroad by losing a large freight customer, as an export terminal, it benefits from increased log shipments.

The port said Coos Bay handles about half of Oregon’s waterborne shipments of lumber, logs, chips and pulp originated in the state. With swings in demand from domestic housing construction, the port has been advocating diversification of markets for shipments of wood products. One it’s interested in is biofuel woodchips for China.

“There are a couple terminals within the Coos Bay harbor who are already exporting biofuel to support this increasing demand,” the port said in a post on its website.

Last year, the port took over operation of what was then called Coos Bay Rail Link from ARG Transportation. Among points of disagreement between the port and the former operator were the condition of the line and who was responsible for maintaining infrastructure.

NEWSWIRETrains News Wire

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