Seeing the Forest and the Trees

I. The Problem

The Pacific Northwest, where I live and work, is in a depression. Businesses are failing at unprecedented rates, unemployment in some communities is close to 40%, and hundreds of timber mills are idle, some never to open again.

The money supply, government policies and foreign competition are all factors in the crisis. But the most important cause is the investment policies of the largest corporations that dominate the area's major industry, timber.

Much of the capital generated from the harvest of Northwest timber has been invested in countries such as Indonesia and the Philippines (and, after 1973, Chile), where government policies have encouraged corporate investments by companies like Georgia-Pacific and Weyerhauser. Most attractive to the companies were loose environmental regulations, which allowed the companies to harvest timber without replanting, and government repression of labor, which kept wages low.

During the 1960s and 1970s, money also began flowing to the southern part of the U.S. What capital spending occurred in the Northwest went into investments in automation and technology that would displace people from their jobs. But production facilities were not upgraded at a pace commensurate with technological development because the new technology was installed in other areas - such as the south - to maximize profit.

Besides investing in Third World countries, the corporations - particularly Weyerhauser - have also exported large amounts of raw logs to markets in Japan, Korea and elsewhere in Asia. By sidestepping the production process here, log exports have cost tens of thousands of jobs over the years.

The rapid harvest of Northwest timber both for domestic use and for exports has had a serious impact on the region's timber supply. Overcutting has fueled a speculative bidding spree for available timber on public lands, driving up the costs of timber.

These problems have become even more serious under the recession caused by Reaganomics. High interest rates and cutbacks in federal spending have sent the housing industry into a nosedive - and along with it, timber. Almost all the timber companies were caught with millions of board feet of federal timber that they had committed themselves to buy at high prices. Some small companies went out of business immediately; others with some reserves or more efficient management kept going until 1981. The large corporations simply closed their mills and started lobbying for relief from the government. One bill introduced by Oregon Senator Mark Hatfield offers default provisions, contract extensions and other incentives.

The timber industry is now in its most severe competitive struggle in history. As restructuring takes place, the giant companies like Weyerhauser, Georgia Pacific, International Paper, Champion and Louisiana Pacific vie with each other to dominate the markets for wood products. But some of the large, and non-transnational-companies have started complaining about Hatfield's timber bailout legislation, which they say will hurt small and medium sized companies.

Worst of all, unemployment in the lumber mill industry stands at 15%.

II. Finding a strategy

In spite of the concentration of power among large corporations, the continuing recession also means unprecedented opportunities for the public to intervene and alter corporate and government decisions in the timber industry. There are three reasons for my optimism:

1. The giant companies are being weakened by stiff competition; common interests are becoming uncommon. Serious divisions now exist, for example, between southern producers and firms based in the Northwest over the bailout for the Northwest-based companies.

   Non-timber companies have also expressed resentment at the favored tax status of the timber companies. Harvested timber is taxed as a capital gain at one half the rate of corporate taxes.

   In addition, the timber giants are weakened politically. Evidence of this is clear from the last few legislative sessions: even the most pro-corporate congresses in U.S. history were unable to achieve any of the timber industry's special interest policies

2. Public resentment against the companies is growing in the Northwest, partly fueled by disclosures that Weyerhauser and Georgia-Pacific were among several Fortune 500 companies that paid no income tax last year.. (The companies did over $2 billion worth of business.) Corporate herbicide spraying in the forests despite continued public resistance has also contributed to an anti-corporate attitude.

3. Organized labor and the environmental movement have both become more politically involved in reaction to the destructive policies of the Reagan Administration and the corporations.

III. Building an alliance

I think the most effective strategy against the multinational corporations would be a political alliance between environmentalists, labor and the small and medium-sized timber companies.

The first two groups have a number of areas of mutual concern, including right-to-know legislation, controlled use of wilderness areas, and the creation of jobs.

But small and medium companies are also hurt by the policies of the transnationals. Competition for federal timber, insufficient capital for expansion and modernization, lack of long term credit, and little legislative clout all combine to put these businesses at a very great competitive disadvantage. It is in their interest to find new allies that will help shield them from the monopolies and protect their interests. They also form the backbone of employment in this dispersed timber region.

As a first step, I think environmentalists should begin by supporting the contract demands of the international Woodworkers of America (IWA). In June, IWA contracts for the Northwest and British Columbia expire. In return for this support, the union could actively support the Northwest environmentalists' wilderness proposals. This would mean a break with past union policies. In the past, some trade unionists have bought the corporate position that additional wilderness is a jobs issue. It is not. Most wilderness areas are high elevation, thin soil sites with short growing seasons; this makes them difficult, if not impossible, to regenerate. It makes no economic sense to cut timber in an area where the forest cannot return.

But both the labor and the environmental movements could unite on a massive federally-funded jobs bill for the Northwest based on regenerating the national and state forests. Such a jobs bill must be designed to lead to economic stability while maximizing human resources, and must be tailored to existing skills such as to training and retraining. Non-traditional jobs must be opened to women and men.

In the sector in which I am familiar - timber - hundreds of thousands of jobs could be generated if such a program was adopted. There is work in brush control, tree planting, small logging, salmon spawning enhancement and erosion control. People could be employed to clean rivers, streams, lakes and bays of contaminants; the structural repair of highways, bridges, and railroads could utilize thousands more. Insect and pest control, another area I'm familiar with, could employ people, and also help reduce the input costs of small farming.

Putting people to work in these and other areas would stimulate small and medium businesses that supply the tools, technology and services that accompany such employment.

How could such a program be funded? The first place to start are timber harvest revenues. Although 50% of revenues are returned to counties in which the timber is harvested, a large chunk goes into the federal treasury. This money could be tapped. If military production was decreased more funds would be available.

The corporate tax structure for timber could also be restructured. At present, harvested timber is treated as a capital gain, and is therefore taxed at one half the rate of regular corporate taxes. In addition, to encourage exports, businesses are allowed to set up paper corporations to handle all profits generated from exports; this money is then taxed at half the rate of domestic earnings. (This tax has enabled Weyerhauser to generate about 30% of its total earnings from overseas sales.)

Both these taxes could be changed through congressional action. It's time to get the big corporations off the welfare rolls.

To help the small and medium timber companies (those with less than 300 workers) environmentalists and labor could support the allocation to these companies of enough timber from federal lands so that they can run at least one shift throughout the year. Larger companies and those with their own timber reserves would not be allowed to bid on public timber until the allotments for the smaller companies were determined. The remaining timber would then be open for competitive bids.

More control over the timber supply would lead to less speculation in the marketplace, which would in turn hold down prices, helping both the smaller companies and the public at large.

IV. Conclusions

The future of the Northwest is up for grabs. Until there is more public participation in investment decisions in both the public and private sector, we will continue to suffer from short term thinking and long term hardship. Cooperation is the only way to regain control over the corporations.

In my view such cooperation would start from the following principles: a basic guarantee of food, housing, and economic security; more democracy in our places of work and at all levels of government; a safe and healthy environment; a limit to the right of corporations to invest where and how they please; and, a future for our children through an end to the arms race.

Fred Miller works for the Northwest Coalition for Alternatives to Pesticides (NCAP) in Eugene, Oregon. NCAP publishes a quarterly journal NCAP News, for more information, write: NCAP, P.O. Box 375, Eugene, Oregon 97440, or call (503) 344-5044.

Editor's Note: The preceding article is the first in our new "Commentary" section, which will run occasionally in future issues of Multinational Monitor. The purpose of this column is to encourage discussion and debate about confronting the power of the multinationals, and to discuss alternative strategies to the present corporate-dominated political economy. Readers and activists are encouraged to submit articles for this section. They should be typed, double-space and should be no longer than 2000 words (8 pages). Whenever possible, writers should speak from their own experience. All articles should be accompanied by the author's name, address, and telephone number and when appropriate, organizational affiliation and address. The Monitor reserves the right to edit all accepted articles.