By Tom Kelly
Editor and Publisher

If forestry adopted a theme-song for 2006, it might be "Whole Lotta Shakin' Goin' On," the Jerry Lee Lewis classic.

Trees skakin' in the winds of two major Gulf Coast hurricanes, leaving the forest industry shakin' its head on how to recover from the enormous damage, salvage as much of the uprooted and broken resource as possible, and plan how to restore the growing stock of thousands of acres of devastated timber land.

Major multi-national companies shakin' up their operations to lower costs and raise profits in a competitive global forest products market.

Forestry workers shakin' in their boots awaiting word on job security, profitability, and the long-term health of their chosen niches in the long chain of forest productivity--from preparing land, planting trees, managing timber growth and the environment, harvesting and hauling the logs, operating the factories, and selling the products that everyone uses every day with little thought of where they came from and who sweated to get them to market.

While almost no one was looking, one of the biggest "shakes" in the industry was announced on November 15--the $21 billion acquisition of Georgia-Pacific, one of the world's leading manufacturers of tissue, packaging, paper, building products and chemicals, by Koch Industries, of Wichita, Kansas.

Koch is a privately held company with manufacturing in several basic industries including forest products. It proposes to acquire all the outstanding shares of publicly-traded Georgia-Pacific, and take the company private. The acquisition price includes $13.2 billion in equity value, plus the assumption of GP debt.

Included in the transaction are all assets of Georgia-Pacific, including its North American and international consumer products, building products, packaging, and paper and bleached board segments.

Georgia-Pacific is headquartered in Atlanta, Georgia, and will be operated as a wholly owned subsidiary of Koch Industries, retaining the Georgia-Pacific name and brands as an independently managed company. GP employs 55,000 people in over 300 locations in the U.S. and Europe.

Koch Industries owns a diverse group of companies operating worldwide, in trading, petroleum, chemicals, energy, fibers, fertilizer, paper, ranching, securities, and finance.

Smurfit tightening up

In a much-awaited public statement on a long-term strategic plan, Smurfit-Stone Container Corporation announced on November 9 that it will close up to 20 percent of its corrugated container facilities and transfer the business to larger units, as part of a company-wide reorganization which aims to reduce annual costs by $600 million and deliver revenue growth of $650 million.

Smurfit-Stone has 140 corrugated container plants throughout the U.S., and plans to close 35 to 40 under the new strategy. It did not identify plants which may be closed.

At the Hodge, Louisiana plant in North Louisiana, mill manager Mike Entz said he expects no local impact from the company-wide downsizing and reorganization.

"We will continue to be challenged to be as efficient and low-cost as possible," Entz said, "but this is not a new challenge." Entz said there are no pending shutdowns in the middle region.

The mill at Hodge employs 635, with total payroll and benefits of $53 million annually, and over $80 million annual expenditure for purchase of fiber, including softwood, hardwood, and recyleable products, Entz said.

Tembec layoffs

Tembec, a Canadian company which operates a paper mill at Bogalusa in Washington Parish north of New Orleans, announced it will dismiss 160 employees effective December 24.

Washington Parish lies at the "toe of the boot" in the Florida Parishes of southeast Louisiana, adjacent to the Mississippi river, bordered on the east and north by the Mississippi state line, an area in the direct path of Hurricane Katrina at the end of August. The area suffered severe timber damage, and remains involved in salvage efforts.

Press reports from the area say the layoffs will involve maintenance and operations personnel, plus some administrative, professional, supervisory, and sales positions.

Tembec acquired the mill in 2001 from the previous owner, Crown Vantage, which declared bankruptcy.

In its third quarter financial report issued from Montreal, Quebec, Tembec announced a loss of $134.9 million on sales of $834.2 million, compared to earnings of $90.7 million in the same quarter 2004.

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