Virgin on Business: Branching Out

For a time, economic development history in Grays Harbor County could best be summed up by a line from the ruefully philosophical song Gloom, Despair and Agony on Me from that underappreciated television treasure, Hee Haw:

If it werent for bad luck, Id have no luck at all …

Such was the lot in life for a county whose economic base was built on, and collapsed with, timber and what could be made from it. Whether the cause was restrictions on public-lands harvests due to the old-growth and spotted-owl controversies, periodic slumps in the home-construction market, overseas competition for raw materials or aged manufacturing plants requiring infusions of capital that their owners didnt believe made long-term financial sense, the effect was a succession of mill closings, often permanent, each one costing dozens or hundreds of jobs.

Not that it ranked with the blows to the lives and fortunes of workers and their families, but Grays Harbor officials and residents likely experienced another layer of irritation when media hordes from more prosperous locales descended upon them with every outbreak of bad news to breathlessly ask, How do you feel?

Even the seemingly good-news stories sometimes came to bad ends. A pulp and paper mill was closed by International Paper and Rayonier in 1992, but the papermaking side was resuscitated the following year as Grays Harbor Paper by a group of local investors who developed a niche for office paper made from 100-percent recycled content.

Grays Harbor Paper abruptly shut down last year, citing the cost of raw materials, lower-than-expected sales and difficulty in refinancing its debt.

Grays Harbor Countys economic woes have slipped from public attention of late, not only because the forest products industry isnt the visible and dominant driver of Washingtons economy it was decades ago, but also because other parts of the state have had a run of less than encouraging economic news as well.

But, out of the limelight, an interesting thing has been happening in The Harbor. Whether by luck, happenstance, planning or design, a new economic base is being built, and it comes from, of all places, the forest products sector.

Earlier this year came two announcements of plans to restart idled mills. One involved our old friend, Grays Harbor Paper, with an investment group headed by a former executive of the mill proposing to acquire it. The other concerned Hoquiam Plywood, purchased by California-based Pacific States Industries.

Two announcements, as welcome as they are, do not a trend make, but theres been more activity. A private equity group reopened a former Weyerhaeuser specialty pulp mill in Cosmopolis. In Elma, NewWood took over a plant making plastic-wood composite materials that another company built but never got to full production. And thats on top of a base of other mills and operations, some of which are making investments in expansions of their own.

Common threads running through these ventures include the fact they tend to involve small or midsize concerns often targeting niche markets with innovative and modern technology. Paneltech International, for example, makes a countertop material from recycled paper.

That adaptability poses some challenges, such as access to capital and having the necessary resources and clout to compete for market share and raw materials, as well as interesting opportunities.

Grays Harbor County is not, you should pardon the expression, out of the woods. As of May, its unemployment rate was still well into double digits, nearly twice King Countys. The forest products sector is still fraught with peril: Whats the future for paper? Can domestic companies compete with the Chinese for raw logs and recycled paper? Will we ever get back our housing sector?

Some of these new ventures may fall through or fail to establish themselves. But if Grays Harbor can take an industry it knows well and rework it, making itself a laboratory for nimble, technologically advanced manufacturers in the process, then the stormwatching that draws visitors to the coast can focus on whats going on out on the water, not on the havoc being wreaked on dry land.

BILL VIRGIN is the founder and editor of the subscription newsletters Washington Manufacturing Alert and Pacific Northwest Rail News.