Emerald Wood Products in Emmett is a stimulus project that went awry

EMMETT — Gem County was hungry for jobs in recession-ravaged 2010. Dick Vinson seemed to provide an answer.

He’d pumped nearly $7 million of his own money and $4 million from taxpayers — federal stimulus dollars — into building a small sawmill in Emmett. In May 2010, he started cutting logs and building a payroll that would eventually cover 57 people in a county where more than 700 were jobless.

Twenty months later, the saws are silent. Western Capital Bank in Boise has moved to foreclose on the sawmill for falling behind on a $1.9 million loan. Vinson and his partners have filed for Chapter 11 bankruptcy to stave off creditors and to allow him to put more money into resurrecting his dream.

The taxpayer money is spent. The question now: Is it gone for good, or will it ultimately serve its intended purpose — a catalyst for jobs in a county where the unemployment rate is 10.5 percent?

Vinson, 75, insists he knows what went wrong at the mill and won’t give up trying to make it right.

“The community needs this,” he said.

ROTTING TIMBERS AND A RUSHED PROJECT

Vinson has worked in timber and sawmills since he was in high school.

He first thought of opening Emerald Forest Products in 2004. A friend from Horseshoe Bend had told him about mills closing in the region, and he saw an opportunity in the timber-rich area around Gem County. He had bought a Montana sugar beet plant and replaced it with a coal-fired power station, so he applied the money he had earned from selling that project toward creating Emerald Forest Products.

He chose 22 acres that had once been part of the site of a Boise Cascade sawmill that closed earlier in the decade. He began work on the new mill. He acquired more than a million feet of timber out of U.S. Forest Service lands surrounding Emmett as part of a project to improve forest health.

But mill preparations went slowly. The logs lay unmilled behind the plant site for nearly three years. By 2009, he’d run out of money.

Vinson, who lives in Thompson Falls, Mont., 100 miles northwest of Missoula, worried the logs would not last much longer. “They were starting to rot,” he said.

STIMULUS DOLLARS FLOW TO EMERALD

Stimulus money came to the rescue. After the economy cratered and President Obama took office in 2009, Congress passed the stimulus law to put people to work. A regional organization that sought to develop timber and wood byproduct industries in Gem and surrounding counties was told by the U.S. Forest Service in 2009 that there was stimulus money for shovel-ready projects.

Vinson said he and his partners learned from the Forest Service that Emerald might be eligible. The company applied.

The group was the Woody Biomass Utilization Partnership, made up of Gem and three surrounding counties as well as state and federal agencies. It considered Emerald Forest Products along with other candidates, said Sharon Church-Pratt, a Gem County commissioner and partnership vice chairwoman.

Church-Pratt said Vinson was known as a straight shooter. “We felt we knew him,” she said. Nothing in his application pointed to the problems Vinson eventually encountered, she said.

In August 2009, the U.S. Department of Agriculture, which includes the Forest Service, awarded Emerald $4 million.

The grant was one of 700 approved from 7,000 requests submitted by the Forest Service to the USDA. Approval was based on the company’s ability to put funds to work quickly in a way that would save or increase jobs in the area hit hard by the recession, Forest Service officials said.

Vinson and his partners resumed work and opened the mill in May 2010. They began cutting the logs into lumber as a way to work the bugs out of the new mill.

Even as he began, Vinson knew he was rushing the process.

“We shouldn’t have opened then,” Vinson said. “The mill wasn’t completed.”

EQUIPMENT DIDN’T WORK CORRECTLY

He didn’t have all the equipment he needed, and some machinery had problems. One piece, for example, that is supposed to insert stick spacers into stacks of lumber before they enter a kiln for drying, didn’t do its job. He couldn’t push through the logs at the rate required to be profitable.

Moreover, within days of announcing the plant’s opening, he said, he had to confront some unexpected personal matters that took his attention off the plant for a year.

“The greatest fertilizer you can put on a field is the owner’s footprint,” he said. “And I wasn’t here.”

When he returned to the mill last April, he said, he knew it had to be shut down and completed. Emerald Forest Products announced a four-month hiatus and sent home 45 workers.

But the mill didn’t open four months later. It was in foreclosure by October. By January, Vinson had filed for bankruptcy. He faced the $1.9 million bank loan and $600,000 owed to creditors.

The Forest Service kept track of the stimulus money, Vinson said. He was audited and had to complete reports on how the money was used. If he doesn’t succeed in restoring Emerald, the government can take over the property purchased with stimulus money, he said.

Still, Vinson’s plight points up one of the concerns about stimulus money, said Brad Little, Idaho’s GOP lieutenant governor, who represented Gem County when he was in the Legislature.

Little questions whether the federal government did its due diligence in approving the Emerald funds. Little opposed putting stimulus money into private companies, which he said can create winners and losers.

Vinson says thinking about the tax money that went into his mill makes him more determined to succeed. “There is no way to give up,” he said.

He says he has found another investor to put $1.5 million into the operation. He also sold another timber mill he owned in Trout Creek, Mont., and put those proceeds into Emerald. He declined to say how much.

Now he has a staff of 16 people bringing together used machinery from other places to supplement and replace some of the original equipment. He recently bought a used trimmer — a machine to cut the ends off boards that may split and crack when they have dried — for about half the $350,000 price it would have been if new.

“If we put that money into the plant, this thing will work, ” Vinson said.

VINSON PLANS TO HIRE AGAIN THIS SPRING

He is optimistic he’ll turn the mill around. He anticipates firing it up in April, hiring back employees and selling lumber within a couple of months.

“We can start making payments to everyone,” he said. He expects everyone to get paid completely.

Vinson said the core strengths on which he built the business remain. Emerald Products sits in a region surrounded by timber. It is the closest mill for loggers. If they don’t go to Emerald, other mills are more than 100 miles away in places such as Elgin, Ore., which is 167 miles from Emmett; or Grangeville, which is 200 miles away.

With the high price of diesel, Vinson estimates it costs truckers $100 per 1,000 board feet of timber to haul a logging load to the next nearest mill.

He says the lumber market remains strong. The Treasure Valley, with a half million residents, will be a strong market for the bark he’ll peel off cut logs and sell, he said. He said he has arranged for someone to buy Emerald’s lumber, but he declined to say whom.

THE HOPE: JOBS WILL BEGET MORE JOBS

People in Emmett are hopeful he will succeed.

Economic development leaders says at least two wood-related companies they won’t name are considering locating in Emmett, bringing with them about 50 jobs. They could possibly buy products from Emerald. But their decision could be influenced by what happens to Emerald.

Most of the county’s workforce goes to Boise and other Treasure Valley destinations for jobs. The county of 12,000 people suffered a double blow last April when the last piece of Boise Cascade’s facility still operating after the 2001 closure, a laminated beam plant, closed and took out 50 jobs just days before Emerald went down.

Emerald’s revival would also bring more logging trucks to town, where drivers might buy lunch or pick up a few things at the Walgreens or Bi-Mart, Gem County Chamber of Commerce officials say.

John Evans, president of Shadow Butte Development Corp., the economic development arm for Emmett and Gem County, thinks Vinson will make Emerald work.

“I think it is 99 percent,” he said. “I think it’s coming back, and (he’s) doing it correctly this time.”

Church-Pratt, who counts herself among Vinson’s friends, isn’t so sure.

“I’d say 50-50,” she said. “I’ve really been one of the staunch supporters. The reality is we are in a bad economy. He’s got a lot of debt. It’s an uphill road.”

Vinson, who mortgaged the 500-acre ranch he has owned in Thompson Falls to create Emerald Forest, keeps pushing forward.

“I’m all in,” he said. “I have never given up on anything that worked in my life.”

Bill Roberts: 377-6408