There is no joy in Urania, Louisiana, at the recent spike in demand and prices for plywood, as Georgia-Pacific Chairman and Chief Executive Officer Pete Correll said the company has no plans to restart its four idled plywood plants, one of which is in Urania, LaSalle parish, Louisiana. At this point, prices for this product are reported to be at record highs.

The plywood and MDF plants at Urania were idled over a year ago by then-owner Louisiana-Pacific, after lumber and forest products had been produced at Urania for over 100 years in operations founded by legendary timberman Henry Hardtner. LP and Georgia-Pacific traded a number of plants which each had idled, and LP moved on with its announced plans to divest all its US timberlands, including over 90,000 acres in Louisiana, plus several manufacturing operations.

Several reason play into the recent plywood price hike. Georgia-Pacific reported that a wet winter made harvesting logs difficult, during a time when demand increased because of a strong new-home market.

Just lately, Hurricane Isabel caused another spike in demand. Added factors include Isabel's rain storms, causing further hardships in harvesting timber.

Other sources suggest rebuilding efforts in Iraq have also heightened demand for plywood.

Among the reasons cited by Georgia-Pacific for not re-starting idled plants, Correll said, is "Because the company no longer owns forests, it must buy logs to make plywood." Inventories of logs must be rebuilt, employees would have to be called back, operations tested for safety before plants could come back online. In some cases, new machinery would have to be moved back into the plants.

"It's not like flipping a switch," Correll said.

Georgia-Pacific produced nearly 6.6 billion square feet of plywood last year or about 32% of the entire capacity in North America.

Further in its moves away from traditional operations, Georgia-Pacific said in late September it is considering the sale of its building products distribution division, which can be traced back to the company's origin in 1927.

Georgia-Pacific is moving away from building products and commodity-based businesses in favor of consumer products like paper towels and tissue paper. Consumer products accounted for about 60% of G-P's cash flow for the last 12 months.

"We are committed to the idea that there's no rational reason for Georgia-Pacific to be in both businesses - no fit between them," CEO Correll said. "We've not been able to come up with a scenario where an outright sale would add value to our shareholders."

At present, the company plans to sell portions of its business products entities to help pay down debt, which stood at $11.4 billion at the end of the second quarter. Correll said the company would like to sell its lumber and pulp businesses and its chemical division.

The distribution could fetch as much as $600 million to $1 billion, said Chip Dillon, an analyst at Smith Barney.

Portland, Oregon based Louisiana-Pacific Corp. announced that it has finalized the sale of around 55,000-acres of timberland near Honey Island, Texas.

Honey Island Properties LLC purchased the timberland for $37 million.

"Our people continue to close our land sales successfully. We will complete our divestiture program within our targeted time period and generate more than $700 million of total value," said Mark Suwyn, LP's chairman and CEO. "With these funds, we are reducing our debt and investing in the businesses we have retained."

In May 2002, LP announced an asset sale and debt reduction program designed to enhance the company's long-term competitiveness and financing flexibility.

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