Lumbering to uncertainty
Company town on brink as timber firm struggles

For the past 140 years, tiny Scotia's fate has been inextricably linked to the fortunes of Pacific Lumber, long the North Coast's largest employer, landowner and community benefactor. But the futures of both are up in the air as Pacific Lumber goes through bankruptcy protection proceedings in Texas courts.

SCOTIA -- The workday begins in this old logging town the same way it has since the 1880s.
A shrieking whistle pierces the early morning quiet, calling lumberjacks, millwrights and engineers to another day sawing redwoods and Douglas fir.

The whistle is indiscriminate, a sort of townwide alarm clock, sounding through every home and building. It's a reassuring sound to residents of this company town.

But some worry about it going silent.

Over the past 140 years, no company has been more important to the economic fortunes of this region than Pacific Lumber. It has long been the North Coast's largest employer, landowner and community benefactor.

But all that history is up in the air with Pacific Lumber in bankruptcy protection.

To satisfy its creditors, the company is proposing a vast sale of its Northern California timberlands. It has reduced its once-formidable work force by more than half and shuttered mills in Carlotta and Fortuna.

The bankruptcy protection proceedings are playing out 2,100 miles away in courtrooms in Texas, home of Pacific Lumber's parent company, MAXXAM Inc.

But up here, in communities tucked among majestic redwoods, residents are wrestling with controversy sparked by the grip Pacific Lumber maintains on local politics -- influence that defies the company's decline. And small communities are left wondering how life will change if the company they depend on becomes a shadow of its former self.

"There is life after Pacific Lumber," said Erin Dunn, executive director of the Chamber of Commerce in nearby Fortuna. "But we're going to have to adapt."

A way of life is threatened

No town's fate is linked more closely to the company's than Scotia.

Scotia became Pacific Lumber's logging camp in 1883. Today, it is home to the corporate headquarters and about 275 workers and their families.

To save money, Pacific Lumber wants to sell Scotia and shed responsibility for providing the town everything from security to home repair services.

That would end a relationship that has survived fires, floods, the Great Depression and tree-sitting environmentalists. One leading proposal is to have Scotia annexed by Rio Dell, the gritty logging town across the Eel River. Another is for the town to become its own municipality. Either way, townspeople would have to buy their homes or pay higher monthly rents.
The demise of Scotia would mark the end of one of the last company towns in the United States and close a way of life for those like the Rogers family.

Joe and Deb Rogers, lifelong Pacific Lumber employees, raised two sons here: Matt is going to college on a Pacific Lumber scholarship. Grant lives just a couple of blocks away with his wife and son -- the third Rogers generation to live in Scotia -- and works for the local post office and swimming pool.

"We're unsettled," Joe Rogers said. He recently switched from carpentry to a more secure job in the power plant after watching too many longtime co-workers leave the company.

When Joe Rogers started, "you felt like if you got a job and did your part, you could retire here," he said. "We don't have that feeling anymore."

Company town in every way

Scotia today looks very much like it did in pictures from a hundred years ago. The mill looms over everything. Towering redwoods, growing atop coastal mountains, frame the shot. The town's perpendicular streets are lined with bungalows, each painted in a pale green, brown, yellow or blue, the preferred palate of a discerning former company president's wife.

Scotia seems to have everything a little town needs -- a bar, a restaurant, a theater, a supermarket. It has two churches. The town does not, however, have a mayor, a town council or any other form of local government.

Water, electricity and sewer are provided by Pacific Lumber free of charge. Residents call on the company to solve just about any problem.

If the faucet breaks, they call the company. If the garbage man is late, they call the company. If they're unhappy with their kid's homework lesson, they can take matters up with the town's elementary school principal -- whose check is signed by the company.

Grant Rogers says he wouldn't want to have grown up anywhere else. He fondly recalls sneaking down by the mill as a kid, watching the lumberjacks roll logs and high-pressure hoses peel bark off giant redwoods like an orange. He remembers how the company would christen the town's Christmas tree -- a redwood high atop a nearby mountain, draped in lights, beaming down like an angel over Scotia.

Now 24, Rogers is among a handful of young people who decided to stay in Scotia. The running joke is that bright young people like him are the region's leading export -- after marijuana. For Rogers, the choice to stay was easy. Thanks to a company subsidy, he pays around $600 a month for his three-bedroom home, far less than what he'd pay in nearby Fortuna.

Fortuna is also vulnerable

Pacific Lumber's struggles are rippling through Fortuna, as well. With a population of 11,000, Fortuna is the economic center of Pacific Lumber country. The company had a major presence in the city until last year, when it laid off 100 workers and abandoned a mill that had been running 30 years.

During the mill's heyday, sawdust would waft from the mill and collect on the roof of Clif Clendenen's cider works shop across the street.

"It was a major avuncular presence in town," Clendenen said, noting that the company routinely supported community groups and charities. "None of us wanted to see it go away."

Now Fortuna must decide what to do with the abandoned mill, on 75 acres in the city's business district.

Pacific Lumber reached an agreement in 2003 to sell the site to Roseville shopping center developer Fred Katz for $10 million. As part of the deal, the parties anticipated the city of Fortuna would kick in $7 million in redevelopment funds.

But the arrangement, details of which surfaced in Pacific Lumber's bankruptcy protection case, has been controversial: Fortuna's mayor, John Campbell, received money from Pacific Lumber while the city discussed the site's future as part of its general plan update.

Campbell, a top Pacific Lumber executive for 30 years before taking public office in 2004, has collected $519,000 in deferred compensation since 2004 and is owed $400,000 from the company, money he did not disclose on his statements of economic interest. Campbell's deal with Pacific Lumber also required he do nothing "adverse to the company's interest."

The Humboldt Watershed Council, a longtime foe of Pacific Lumber, calls the arrangement a conflict of interest and has asked the state Fair Political Practices Commission to investigate. FPPC officials won't say if they've taken up the case.

"The idea that I'm getting paid to make decisions on a proposal is just ridiculous," Campbell said. "If I feel uncomfortable or other council members feel uncomfortable, I might then recuse myself."

Hopes still pinned on company

In Scotia, there's hope Pacific Lumber can survive bankruptcy protection and remain a viable employer.

Critics blame the company's financial troubles on Charles Hurwitz, the Texas tycoon whose MAXXAM Inc. bought Pacific Lumber in 1986.

That deal altered the reputation of a company once known for its community patronage and its protection of the region's famous forests.

Hurwitz's aggressive logging in the 1990s inspired action by environmentalists and led the state and federal governments to take the rare step of purchasing an ancient stand of redwoods from the company.

Although Pacific Lumber's public relations department declined interview requests, Hurwitz has said environmental constraints pushed Pacific Lumber into bankruptcy protection.

Whatever courts and the corporate titans decide, Grant Rogers said he and his neighbors will make do.

Scotia has endured change before. He recalled, for instance, how town residents rallied to rebuild the shopping center after a fire in the early '90s. He said it is the town's ability to stick together through change that provides its sense of identity.
That, and its whistle.

Comments from the site:
MidwayMac at 5:38 AM PST Saturday, October 13, 2007 wrote: Lumbering to uncertainty
My introduction to this marvelous sight was in1952, when I travelled up 101 to visit a relative in Oregon. As I viewed the marvelous scenery, there was Rio Dell and Scotia, the latter, a tiny spot that was on it's own. Then the invasion of a profiteer and the tree-huggers; has pretty much shut every thing down. What's laughable is that private forest owners are logging their forests and selling their products at steep costs. The waste products, such as slash, that's what's left when trees are fallen, run thru a saw mill, the bark and a few inches of good wood remain. Even this by-product is put to good use, by shredding it and pressing it into materials which can be used for building siding and roof underlayment.

borealfox at 8:35 AM PST Saturday, October 13, 2007 wrote: How Sad
Once more the demise of something that has worked for so long so well, that's the sad part of it.
We used to stop at there in the early 1950's when it took forever to go up Highway 101 through all the little towns on the way to Blue Lake. Half of my family worked for the timber companies, and they paid well while everyone lived well too. And now this too is going to pass. Damn.

tallone934 at 8:35 AM PST Saturday, October 13, 2007 wrote: The end result
Since we have a huge industry of eco maniacal organizations dedicated to stopping all human endeavors regarding the use of the environment this is the natural conclusion. Non profits ripping off the taxpayers to fund fulltime naysaying employees are hard to beat. The productive people and the taxpayers get to fund both ends of these results. Tax money to maintain all these properties and tax money for the unemployed workers of the timber companies. You do-gooders better not complain when you are paying twenty bucks for a four foot board for that deck of yours.

ad50nt at 10:01 AM PST Saturday, October 13, 2007 wrote: don't blame environmentalists for scotia's demise
Although the old PL did cut old growth, it was widely regarded by all as one of the best managed timber companies anywhere until Bush-buddy Hurowitz took over the company by means that were barely legal (if legal at all - we'll never know after he scrambled the financial books). Many observers predicted the sorry outcome we see today: screwed forests, screwed workers, screwed investors and screwed taxpayers. Only the principal in this crime, Charles Hurowitz, continues to laugh all the way to the bank back in Houston or Geneva or wherever he hides his money. This was a textbook corporate raid designed to a set plan: liquidate an asset purchased with someone else's money via junk bonds, and then go bankrupt leaving the bondholders with nothing but hot air. Environmentalists didn't do this, Texas money men did.

billbillbillbillbillbill at 10:08 AM PST Saturday, October 13, 2007 wrote: ahem, tallone934:
Critics blame the company's financial troubles on Charles Hurwitz, the Texas tycoon whose MAXXAM Inc. bought Pacific Lumber in 1986.
That deal altered the reputation of a company once known for its community patronage and its protection of the region's famous forests.
Hurwitz's aggressive logging in the 1990s inspired action by environmentalists and led the state and federal governments to take the rare step of purchasing an ancient stand of redwoods from the company.

stevenchr at 11:46 AM PST Saturday, October 13, 2007 wrote: triple the cut and the end is near
there's no mention what so ever that when hurwitz hostilely took over the family run business & tripled the cut rate in 1985, that he'd put this company out of business. he bought the company for the price he got from the headwaters scam & still owes more money for the acquisition of the com. what happend to the half billion he got for the postage stamp headwaters forest? had hurwitz let the company run along as it did before he acquired it, this scenario wouldn't even exist. but the greedy bastard sent all the monies made to houston & never paid down the debt from the original acquisition. this writing was on the wall in the late eighties after hurwitz took it over. you can log in perpetuity if you manage the forest for that, but this clown from houston let his pocket book drive the logging rate. it has absolutely nothing to do with the enviros, this is purely a business decision to run this company into the ground. yes, the environment/fisheries suffered when he tripled the cut rate

Mtrent2 at 1:07 PM PST Saturday, October 13, 2007 wrote: Glad
There are plenty of differrent types of materials people can use to build with these days. Now the forest will be able to grow back. It's called progress. Move forward.

dwh at 2:20 PM PST Saturday, October 13, 2007 wrote: It's both
Blame both greed and environmentalism(which in some ways is one and the same).

ridinger at 3:39 PM PST Saturday, October 13, 2007 wrote: A Scotia Native
I now live in Elk Grove, but I grew up in Scotia. My folks still live there. It breaks my heart to see what has happenned. Yes, the greedy Texan and the idiotic envornmentalists are mostly to blame. I just can't help wonder why the Murphy family that founded Scotia didn't maintain majority interest in the stock to prevent this from happenning. We had state of the art gymnasiums, swimming pools, weight rooms, baseball fields, etc... We'd fish in the Eel River and ride bikes on the local trails. We'd build forts and swim all day long. The company used to bring in semi-trucks full of Christmas presents for all the children. On Halloween you would knock on every door. You always felt safe--we had the run of the town. I wish every kid had the experience I had. From the time I was 9, my folks would give me a grocery list send me on my way down the street to Hoby's Market. We had responsibilities & freedoms today's kids will never know. How do we take it back & turn it around?

sirrebral at 4:09 PM PST Saturday, October 13, 2007 wrote: Sadly, this story was not a surprise...
I'm one of the area's "exports". I grew up in a town between the Fortuna and Carlotta mills, attended Fortuna High, and left to go to Sac State. Even as a 17-year old high school student, I could see that the MAXXAM acquisition spelled trouble for PL's future.
Just a few years after the MAXXAM took over PL, Hurwitz was cutting more than trees; he was slashing spending. In the past, PL gave a scholarship to *every* college-bound child of a company employee, but shortly after I left in 1989, the company announced an end to that program.
Increasing production while reducing expenses can make a company more profitable. However, In MAAXAM-controlled PL's case, this was done to the extreme, resulting in short-term financial gains at the expense of the demise of the company. Like an out-of-state landlord, Hurwitz was a disinterested party who was more concerned with profits than the impact to the citizens of the area.

Walter_E_Wallis at 5:11 PM PST Saturday, October 13, 2007 wrote:
Tax laws make family ownership of any business impossible.Tax laws also encourage debt. Blame MAXXAM for Scotia, but who do you blame for the rest of the Pacific Northwest logging towns thet closed down after the tree huggers went nuts?

billbillbillbillbillbill at 12:45 AM PST Sunday, October 14, 2007 wrote:
I don't know why I bother replying to you stupid hillbillies. You're clearly functionally illiterate.
It doesn't matter if "tree-huggers" prevent these quick-buck companies from clear-cutting the last one percent of our forests. Either logging ends now, with just a few trees left, or it ends a few years from now, with no trees left. Either way, corporate rapine destroys these communities.
Thankfully, there are still a few sensible people left in the world who see that saving at least one tiny part of our natural heritage is more important than some Texas billionaire buying another yacht.

pondo at 9:17 PM PST Sunday, October 14, 2007 wrote: A sorry story!
As a former residence of the area it hurts to read what is happening in Scotia!! As some before me have stated, it is not the tree huggers who caused this, it was the con man from Texas!! If it had been managed as in the past it would have been able to continued to have existed for years!! But no, triple cut and run with the money.
Good Luck to the people of Scotia, hope something happens to change things around for them!!
"Fortuna's mayor, John Campbell, received money from Pacific Lumber while the city discussed the site's future as part of its general plan update." Sounds like the Mayor has some explaining to do. Maybe a "Recall Election?"

info1 at 1:45 PM PST Monday, October 15, 2007 wrote: Leveraged Buy out and Republican Corporate Swindlers Caused This
The Leveraged Buyouts that the Reagan administration encouraged are what caused this. It had nothing to do with the environmentalists, which Bush/Reagan have unceasingly smeared and blamed for THEIR policies that reward the rich and screw everyone else. PL had been in business for 50 years becaused they engaged in SUSTAINABLE harvesting. Then Maxxam purchased it with basically NO MONEY and had to pay off everyone by tripling the harvest. Trees don't grow any faster just because the "owner" is a rich Republican, and a good friend to the Bush Dynasty. This is just like the S&L mess, also courtesy of the Republicans, who bankrupted retirees, and forced us taxpayers to pay the bill. One of Bush Sr's brothers bankrupted a S&L in Colorado, but of course you never hear about that. They just keep pretending to be christians and counting on the fact that the right-wing voters don't read (or think).

By Todd Milbourn - Bee Staff Writer
Published 12:00 am PDT Saturday, October 13, 2007
Story appeared in MAIN NEWS section, Page A20
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