Just five months after it completed its purchase of a Simpson Lumber Co. mill on the Tacoma Tideflats, a Canadian forest products company is putting it back on the market.
The lumber mill was one of four Simpson properties Interfor Corp. bought for $94.7 million in March. The Tacoma mill alone, the company said in its second-quarter earnings release, was responsible for $7.7 million of Interfor’s $20.6 million net loss for the quarter.
The company shut down the mill May 22 after experiencing difficulties in making the relatively modern mill profitable.
“The decision to exit the Tacoma sawmill was taken after much analysis and deliberation,” said Duncan Davies, the company’s president and chief executive officer. “We understood at the time the mill was acquired that a turnaround was required at Tacoma. While good progress has been made from an operating standpoint, the drop in product prices experienced in the second quarter of 2015 resulted in operating losses greater than expected when the mill was acquired,” he said.
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“In the face of continued uncertainty, we have concluded that we would be better served to exit the mill and to redeploy the capital associated with the facility elsewhere within our system,” said Davies.
“We understand the uncertainty this decision brings to the mill’s employees and to others associated with the operation and will do everything we can to bring matters to conclusion as soon as possible.”
Interfor said at the time of the sale that it recognized the mill had some problems. It structured its payout to Simpson to financial results from the facility over several years.
The mill employed more than 100 workers, all of whom were laid off in May.
Simpson was spending about $5 million to upgrade its facilities when it was sold.
The Tacoma facility was capable of producing up to 400 million board feet of lumber, but had operated far below that capacity, producing about 165 million board feet of lumber last year.
Lumber prices this year have been volatile with prices declining and then rebounding slightly as lumber companies cut back production.
Karen Brandt, spokeswoman for Vancouver, B.C.-based Interfor, said the company already has contacted potential buyers for the mill. Interfor’s preference is to sell the mill as a going operation.
Family-owned Simpson over the past few years has been shedding its paper and lumber mills. It sold its largest mill in Shelton earlier this year to Sierra Pacific Industries. That California-based forest products company shut down that mill, Shelton’s largest employer. About 275 workers received layoff notices. It plans to rebuild the mill with a reopening in 2017.
Simpson also sold its Tacoma Tideflats paper mill in 2014 to Georgia’s RockTenn. That company has merged with MeadWestvaco to become WestRock. It continues to operate that mill. The company has pledged to spend some $60 million modernizing that facility.
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The history of Interfor's Tacoma Tideflats mill reaches back 126 years.
The present-day mill is a descendant of one of the region's first large-scale lumber mills, opened in 1889 by the St. Paul and Tacoma Lumber Co.
That company was formed in part with the assistance of the Northern Pacific Railroad, which offered its owners timberland from its land grants at attractive prices to spur construction of a lumber mill that would produce lumber in quantities for rail shipments to Eastern and Midwestern customers.
St. Paul and Tacoma operated the mill and another mill on the Tideflats until 1957, when the St. Regis Paper Co. bought the mill. At full production, the two mills employed some 600 workers, making them among the biggest employers in Tacoma.
St. Regis merged with Champion International in 1984 and the sawmill became Champion property.
Two years later, Simpson Lumber Co. bought the mill. It substantially rebuilt the mill in 2000.
The company announced last December it was selling the Tideflats mill and three others to Interfor. Interfor finalized that deal in early March.
The Canadian forest products company shut down the mill just 11 weeks later, saying it wasn't able to turn a profit at the facility.
This week Interfor announced it was putting the mill on the block.