Three news items concerning Weyerhaeuser Co. appeared in recent weeks, all playing into the longer-term saga of the company’s dramatic downsizing and restructuring, with the most prominent one being perhaps the least significant of the three in that story.
So we’ll start with that one. The company has officially opened its headquarters in Pioneer Square in Seattle, meaning that business reporters such as this one will have to train themselves to stop reflexively writing “Federal Way-based company.”
This isn’t something unique in the history of the company or in corporate America. Big companies frequently move their headquarters, sometimes to another state entirely (see: Boeing). For Weyerhaeuser this is just a second move up Interstate 5, having relocated from downtown Tacoma to Federal Way in 1971.
The rationale for the latest move was that the company didn’t need the space of its landmark building or the surrounding campus, and it wanted to be in Seattle, in the phrasing of a news release announcing the planned move, to gain “access to a larger talent pool to meet future recruiting needs, not just in this region, but from across the country.”
It will be interesting, over the long run, to see how many medium and long-tenured employees stick with the company, not relishing a long commute or the cost of relocating, and how Weyerhaeuser does competing in the high-price labor market going up against the Microsofts, Amazons and Googles of the tech world.
Also of interest will be resolution of the fate of the property (New tourism slogan: Come see our frozen-fish warehouse!) and how Federal Way copes with having a huge hole carved out of its employment base. But those are Federal Way’s headaches, not Weyerhaeuser’s, the company having sold the building and real estate.
There’s no disputing, though, the assertion that Weyerhaeuser doesn’t need the space it had in Federal Way. It’s a smaller, less sprawling and diversified company from the one that moved to Federal Way in the first place. And it’s getting smaller by the week, which brings us to the other two news items.
Weyerhaeuser announced earlier this month it is selling its North Pacific Paper Co. operation in Longview, a newsprint and printing-papers mill in Longview, to One Rock Capital Partners. Norpac had been operated as a joint venture with Nippon Paper Industries, which earlier purchased Weyerhaeuser’s liquid packaging board (used in such products as juice boxes) mill, also in Longview.
Churn in industrial assets, especially in a sector such as paper manufacturing, isn’t new. The kraft-paper mill on the Tacoma Tideflats has gone through multiple owners over the years, currently residing with WestRock (formerly Rock-Tenn, just to confuse matters). Nippon Paper, mentioned earlier, is reportedly shopping its Port Angeles mill that makes a type of paper once commonly seen in telephone directories, not exactly a growth market at the moment.
But the sell-off of much of its Longview operations has been part of a broader Weyerhaeuser strategy to exit what it called the cellulose fibers business. A collection of pulp mills supplying raw material for products such as diapers was sold to International Paper earlier this year.
And that’s not the only sizable segment that Weyerhaeuser has lopped off, having earlier jettisoned its home-building business (operating in this market as Quadrant).
Just this past week Weyerhaeuser announced an “exploration of strategic alternatives” for a business that at one time was considered a promising growth opportunity. Up for review is Weyerhaeuser’s business in Uruguay, including more than 300,000 acres of timber, a plywood and veneer mill, a cogeneration facility and a seedling nursery.
Weyerhaeuser bought into South America in 1997 with the notion of it being a long-term diversification play. But that was two CEOs ago, and the company over the intervening two decades has been shedding assets and businesses, not adding to them (the notable exception being the Plum Creek acquisition).
All of that leaves Weyerhaeuser with what, exactly, other than a need for a lot less office space? In an interview earlier this year, CEO Doyle Simons said the company will be focused on timberlands, which constitute the bulk of the company’s assets, and wood-products manufacturing (lumber and panels). The plan is to be tied to the housing market, which Simons believes has growth potential just getting back to a “normal” pre-recession pace.
That strategy too will get a long-run test, and if it doesn’t work Weyerhaeuser will try something else — shrinking more, or perhaps reversing direction by diversifying. The company has long said it operates with a long-term view because its core product — a tree — takes a long time to grow to useful size. As recent events illustrate, a tree’s lifespan can prove to be much longer than that of a corporate strategy, or a headquarters location.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at email@example.com.