N.H. loggers struggle as low-grade wood loses its value

As owner of a logging company, Matt Magoon possesses huge, dangerous equipment weighing hundreds of tons that can chew up entire trees in a few minutes. But the most alarming tool at his disposal during a recent job in Northwood may have been a cheap handheld calculator.

“Twelve dollars a ton,” he shouted over the noise of 50-foot pine trees being dragged behind a skidder, after calculating how much he makes for a truckload of wood chips. “That’s it. And I still have to pay my crew, insurance, fuel; pay the landowner ... and my family.”

This quick calculation – $750 for 30 tons of chips, minus a $390 trucking fee – was alarming because of what it says about the business model that has long sustained New Hampshire’s hundreds of small, independent loggers. (A 2012 study by Plymouth State University identified 1,124 jobs in the state’s logging industry.)

They depend on making money not just from the sawmill-grade logs they cut and remove from woodlots but also from low-grade wood: the smaller, crooked or damaged trees that can be turned into chips for the paper industry and biomass power plants.

The market for this low-grade wood is collapsing, and taking some loggers down with it.

“Is this a race to the bottom? I don’t know, but it feels like it sometimes,” Magoon said. “It’s getting very hard.”

Magoon, 35, of Loudon hasn’t had to lay off anybody but he said he hasn’t replaced one worker who quit because of concerns about the future of the business. And that worker quit a job with Magoon, who won a 2017 award as the state’s outstanding logger from the New Hampshire Timberland Owners Association, recognizing 15 years of success and quality work.

The New Hampshire logging industry has been hit by the closure of paper mills and biomass power plants, including Concord Steam, that traditionally bought the parts of trees that can’t be turned into lumber.

Without a market for low-grade wood, loggers say they often don’t bid on jobs because they can’t make a profit from just high-grade wood. That cuts off a source of income to landowners.

The alternative is to stoop to “high grading” the job, an industry term that refers to cutting every single one of the high-grade, sellable trees on a property, instead of leaving some good trees behind to produce seeds for the next generation.

Magoon said high-grading is a recipe for long-term decline.

“We’re looking 30-40 years down the road, and we want to leave it better than we found it,” Magoon said, noting that “if a tree is junk, 30 years from now it’s still going to be junk.”

Ross Caron, a log buyer at White Mountain Lumber in Berlin, can testify to the pressure produced by loss of the low-grade market. Loggers, he says, are trying to sell him trees that in the past would have been chipped, placing straight, knot-free trunks or “stems” at the top of the load and slipping stems of lesser quality underneath.

“They tend to push the log quality a little bit, what’s coming to the sawmill. They’re not doing it maliciously, but before, everything that wasn’t clean went to the pulp mill and chip maker. Now they don’t quite have that option,” he said.

The tension in the logging industry has been building for years as the paper industry, long a staple for loggers, shrinks.

New Hampshire no longer has any mills that buy wood chips and sawdust to make pulp, the processed raw material of paper that, in the words of Timberland Owner Association president Jasen Stock, “looks like sheets of pressed spitballs.”

Even Maine, the heart of New England’s forest-products industry, has just four  pulp mills left, and they’re contracting. Verso Corp. of Jay, Maine, for example, has reduced the amount of low-grade wood it buys by some 800,000 green tons a year – 16 times as much wood as Concord Steam purchased at its peak. This has virtually eliminated Verso as a market for New Hampshire, since Maine loggers, facing lower trucking costs, can fill most of its needs.

Biomass plants, which burn low-grade wood to create electricity and heat, have long been seen as a potential replacement, which explains the fight over renewable energy certificates, or RECs, for the state’s six independent biomass power plants.

The low cost of natural gas produced from U.S. shale fields means electricity produced by gas-fired plants is so cheap that no other fuel source can compete. Power plants fired by coal, oil and nuclear fuel are shutting around the country because they can’t make enough money selling electricity to cover their costs.

New Hampshire’s biomass power plants would undoubtedly shut, too, if not for the extra money they make from RECs, which are assigned to encourage the use of wood rather than fossil fuels to create power.

Wholesale electricity prices are so low that the plants’ income “runs about half and half” from RECs and power sales, said Stock, of the Timberland Owners Association. That group lobbied strongly for a law, Senate Bill 129, which preserved those RECs among several other changes.

The bill has passed the House and Senate, but it’s uncertain whether Gov. Chris Sununu will sign it. The issue is controversial because the cost of RECs are rolled into the state’s electricity rates, which are among the highest in the country.

Loggers say RECs are needed to save their jobs, but critics say biomass RECs deprive other people of jobs by driving away companies that are searching for lower electricity costs.

A relatively new market for chips and pellets comes from biomass boilers for individual buildings or clusters of buildings, often using the efficiency system known as combined heat and power, or CHP. Concord Steam was a version of this system, although it generated very little electricity.

Such systems are growing in number, but they are small. Northern Woodlands magazine said in a recent review of the logging industry that CHP boilers use an average of 30 tons of wood a year, which means it would take 13,000 of them just to replace the lost chip market from Verso’s cutbacks.

“Loggers are not going to make the investment in a chipper and other equipment to supply a couple of high schools or a hospital,” Stock said.

Out on logging sites, the debate comes down to a calculation that is familiar to any industry that bids on a job: If I accept this work, will I make money or lose money?

That’s a complicated calculus, involving the number and types of trees on site as well as the status of various markets.

Standing at a Northwood work site, 120 acres owned by John Hendrick that has been managed as a woodlot for decades, Magoon gestured at various trees as he thought aloud.

Hardwood logs for lumber go for $29 a ton, he said, while trees suitable for firewood are $44 a ton as long as the dealers are still buying – “there are only so many firewood dealers; they can’t consume everything” – but New Hampshire has pretty much lost the markets for irregular-length pallet logs as well as mat logs used to stabilize equipment during industrial work in the forest, such as for power lines.

“You can’t push product into a market if it’s not there,” Magoon mused. After some mental calculation, he said, “We’ll be lucky to break even here.”

So does he think there’s a future to the logging business in New Hampshire?

“It’s getting harder but I think if you’re smart, you can do it,” he said, adding, “I’ve built a career at this.”

If he’s hopeful, he’s not the only one. Working with Magoon that day was Tyler Brewster, 21, of Tuftonboro, who hopped in and out of machines that tossed around half-ton trees like matchsticks. He’s been doing this work for three years and has gotten logging certification, and he wants to continue doing it for a long time.

“It’s something I want to be doing, being outdoors,” he said.

Brewster is aware of the industry’s problems, but takes them in stride.

“It’s up and down,” he admitted, “But I’m just happy it’s here so I can be doing this.”

(David Brooks can be reached at 369-3313 or dbrooks@cmonitor.com or on Twitter @GraniteGeek.)