Giant foreign lumber mill stokes SC dispute

State government support for foreign co. at center of SC forest dispute

sfretwell@thestate.comFebruary 17, 2013 

— Not much happens in this speck of society, except for the sporadic flow of log trucks rattling toward a little sawmill on U.S. 21 south of Orangeburg.

For years, the mill has operated in obscurity, steadily cutting trees into lumber for market.

Soon, however, a giant competitor from Europe could be on the mill’s doorstep – a prospect that is generating questions about the mega-mill’s effect on existing lumber operations and the forests that supply them.

Local mill owners say they are upset that the government is offering incentives so a large outside company can compete with smaller, family-owned mills.

Klausner Holding USA’s proposed mill would be one of the largest in the world – if not the largest – rivaling sawmills in the Pacific Northwest and Europe.

Capable of producing an eye-popping 700 million board feet of lumber annually, Klausner’s Orangeburg County mill would be nine times larger than the average sawmill in South Carolina, statistics show.

The Austrian company’s consideration of Rowesville for a mill has plenty of support from state leaders, who have dangled government incentives for Klausner to locate in South Carolina and create an expected 350 jobs. The new mill also would give landowners another place to sell timber, project boosters contend.

But Klausner’s operation could squeeze existing saw mills out of business by paying more for trees and for the labor needed to harvest them, some of the state’s 18 sawmill owners say. That could make it difficult for small mills to compete, they say.

Klausner’s entry into South Carolina would be akin to a retail superstore’s effect on small-town businesses, some say.

Mill owners and conservation groups also worry that Klausner would gobble up more woodlands than South Carolina can afford to lose. One mill operator joked darkly that Klausner’s effect on forests eventually could give Orangeburg area residents a clear view of the Atlantic Ocean, about 75 miles away.

“It really represents a threat,” said Sami Yassa, who tracks forest issues for the Natural Resources Defense Council, a national conservation group. “I don’t think Southeast forests can withstand this kind of market pressure.”

The S.C. Forestry Commission says the state has enough timber for a moderate-sized mill but one the size of Klausner’s 700-million-board-foot operation is another question.

Klausner originally told the Forestry Commission it would construct a plant half the size of the one outlined in an air pollution permit approved by the S.C. Department of Health and Environmental Control last month, according to the commission.

“The commission cannot confirm that the forest resource can sustainably support the mill at the 700-million-board-foot level,” the forest agency said in a Dec. 6 letter to state environmental regulators.

Tim Adams, director of the Forestry Commission’s resource development division, said his agency is conducting a study to determine the state’s ability to handle the plant if built to its maximum size.

“It’s just too close to call,” Adams said. “I feel like the wood is there now, but the question is, ‘Is it going to be there in the future?’”

Klausner likely would draw timber from a 75-mile radius around the plant, an area that contains an estimated 114 million tons of pine trees.

The closest existing timber mill is Dempsey Wood Products, the little mill on U.S. 21. It would be surrounded by the Klausner operation, records show. Dempsey, which cuts pines and hardwoods, declined to comment.

No cause for concern

Klausner, an Austrian company with roots dating to 1918, was unavailable to respond to questions last week about its proposal. The company is described as an aggressive business with state-of-the-art milling processes.

Gregg Robinson, the economic development director for Orangeburg County, said Klausner’s 350 jobs are needed in a county with a 12.5 percent unemployment rate. The mill jobs are expected to pay $30,000 or more. In addition to directly employing sawmill workers, Klausner also will create spinoff jobs for truck drivers needed to supply the mill, he said.

Landowners who have had trouble getting good prices for wood might see a boost in earnings if Klausner locates in Orangeburg County, project supporters say. That’s significant because South Carolina currently has plenty of mature trees available for harvest, Robinson said.

“Timber is quietly one of the largest industries in South Carolina already, and the impact of this project for timber farms and industry is very significant,” Robinson said. “This is right in the wheelhouse of skill sets in our area.”

Gov. Nikki Haley and the S.C. Ports Authority are among those trying to help land the big saw milling operation, he said.

Some of the timber cut at the Rowesville site is expected to be taken away via rail and exported through the Port of Charleston. Klausner also could provide wood waste for biomass plants that could locate in the area, creating more jobs, Robinson said.

Klausner’s interest in South Carolina is part of a three-part strategy to establish itself in the southeastern United States, a market insiders say it has long been interested in.

During the past two months, Klausner has announced two other super- sized sawmills in the Southeast: one in eastern North Carolina and the other in north Florida.

Both states offered millions in economic incentives to land Klausner, which Robinson said South Carolina would match.

Unlike Florida and North Carolina, South Carolina still is waiting for a final decision on whether Klausner will locate here. The company has options on several hundred acres at the Rowesville site, but a sale has not been completed, he said.

Robinson said the environmental permitting process took about six months longer in South Carolina than expected, which pushed the North Carolina and Florida projects ahead. He did not go into detail, but noted that South Carolina was the only state to hold a public hearing to discuss the prospect of a huge sawmill.

Still, Robinson said he’s optimistic Klausner will come to South Carolina.

“Our leadership from the state has been excellent,” he said. “The governor has been following the project closely, she has done everything you can ask for. The port has been outstanding. Rail lines, utilities – everybody is pulling in the same direction.”

Robinson said he doubts Klausner would build the entire 700-million-board foot mill anytime soon. It would likely test the market before building a mill that size, even though it has state permission to construct the large mill, he said.

Saw mills worried

The timber industry is a $17 billion business in South Carolina that for years has been a staple of the state’s economy, with an abundance of trees to go around.

While South Carolina still has plenty of trees, pressure from a giant mill easily could deplete the stock, some sawmill owners say.

To Micky Scott, state support for the Klausner project threatens his livelihood.

Scott is co-owner of Collum’s Lumber, a family-owned business that spans three generations. Started in Batesburg in 1936, Collum’s eventually relocated to Allendale, about 40 miles southwest of the Klausner mill site. His lumber operation faces higher costs if Klausner opens the massive mill at Rowesville, he said.

Klausner could pay higher prices for timber and the labor needed to cut trees – and that’s something sawmills will have a harder time competing with, Scott said. Many South Carolina sawmills struggled as the housing market fell apart and demand for lumber dropped, he said. Only now has it begun to recover, he said.

Scott said he’s upset that the state is offering financial incentives to Klausner to locate here. He said the 350 jobs gained could be offset if a South Carolina mill closes.

“I feel it personally,” Scott said. “It’s a shame when all of us have been here all this time, for the state to see fit to give a foreign company money to come in and compete with us and possibly put us out of business. I don’t know whether you call that feeling threatened or just pissed off at the very idea.”

On a recent winter afternoon, Scott walked through the milling plant and expansive lumber yard at Collum’s and explained how the operation works.

Huge cranes took freshly cut pine logs from the lumber yard and dropped them onto conveyers that eventually sent the wood through a debarking machine. After the bark was removed, the logs rolled down a conveyer belt, sustaining different cuts before the final boards were produced.

Scott said he has invested heavily in the plant, spending hundreds of thousands of dollars on sophisticated computer equipment and employing more than 200 workers. His mill would be nearly five times smaller than the Klausner plant.

He said he’ll work hard to beat back Klausner’s operation if the company builds the mill at Rowesville.

“The size of this mill is so big they’re going to put us all at risk,” said Scott, a longtime state Forestry Commissioner. “They’re going to put such a burden on the resource that we don’t think it’s sustainable.”

Although South Carolina has an abundance of wood today, one recent consulting study said the state is overcutting small trees and not planting as many trees as in the past. In the next decade, that could come back to haunt the state if Klausner locates here, Scott said.

How emissions of volatile organic compounds and other substances from the Klausner mill affect air quality concerns environmentalists. They also say a massive sawmill could create pressure to log native woodlands that were not planted specifically for timber production.

The sawmill site is near the north fork of the Edisto River, just above the ACE Basin, a nationally acclaimed nature preserve that relies heavily on conservation easements to protect land from development. Conservation easements sometimes allow property owners the right to cut timber.

The S.C. Wildlife Federation and the S.C. Coastal Conservation League are among environmental groups that have written state environmental regulators to express reservations about Klausner’s operation.

Wildlife Federation director Ben Gregg questioned the effect of more trucks carrying logs on U.S. 21 to the mill. One consultant’s report Scott said he has seen indicates the number of log trucks on U.S. 21 could reach 500 per day if the mill is built to capacity. Project supporters say the boards would be taken to market by rail. A rail line runs by the site.

In addition to those concerns, the several-hundred-acre tract Klausner is looking at contains up to 18 acres of wetlands, creeks and ponds that may need a federal permit to build anything.

“There needs to be more study on a number of these impacts,” Gregg said. “We wish somebody would address those concerns.”

Reach Fretwell at (803) 771-8537.

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