MINNESOTA FOREST INDUSTRY

Skyrocketing Minnesota timber prices have sparked logger protests and prompted them to wonder if they'll be able to stay in business.

And the broader forest products industry is cautious, too.

In response, some forestry officials are casting their eyes far away -- to Finland, a cold country that grows lots of trees with intensive thinning and management.

As a result, Minnesotans could see more intensively managed forests in the future. Residents may even like what they'll see.

"What they have in Finland is a park-like forest, and people love it more," said Jerry Birchem, a logger from Gilbert and the president of the American Council of Loggers. "If there was a patch of woods in the middle of this city, they'd be thinning it."

Whether Finland has the answer or not, Minnesota forestry officials are looking for a way to make forests produce more with less controversy, and at a lower cost.

Stakes are high for the regional economy: Forest products are now bigger business than iron mining. A 1998 study by the University of Minnesota Duluth estimated that iron production accounted for $1.3 billion in output; pulp, paper and other forest products companies produced $1.7 billion.

The debate became public in July, when loggers protested lower payments at Sappi Ltd.'s pulp and paper mill in Cloquet.

Sappi and area loggers subsequently reached a compromise, but a question remains unanswered: Are timber prices high enough that the region's timber industry will become uncompetitive?

MORE THAN MONEY

The price for a cord of aspen on the stump has risen from about $7 early in the 1990s to at least $30 now -- often more.

A tight supply, caused by cutbacks in national forest logging and increased demand by mills, have contributed to the price increases.

They're become higher than competing regions in the United States and many other countries, experts say, although it's tough to compare timber prices.

Higher prices squeeze mills as well as loggers, and any higher cost hurts in a global market.

"What that's done is remove one of the competitive advantages that the Minnesota industry enjoyed, which was low-cost wood," said Douglas Parsonson of Jaako Poyry, a Finnish consulting company for the wood products industry. Parsonson has studied the Minnesota forest industry.

"Definitely, the cost of wood to manufacturers is the biggest factor that's changed," he said.

Globally, Parsonson explained, it's critical, because the strong dollar has made many countries' timber less expensive as costs here increased.

But costs aren't the only problem. Typically, the price of wood is about 15 to 20 percent of the cost of making paper, said Alan R. Ek, head of the Department of Forest Resources at the University of Minnesota. In sawmills, it's 50 percent, making them more sensitive to timber costs.

Getting enough timber is a bigger problem, he said.

"To be globally competitive, probably the biggest problem is uncertainty of supply from state lands and federal lands," Ek said.

Supply, coupled with logging costs, brings the debate back to Finland.

ATTRACTIVE STANDS

Part of the legacy of timber management in Great Lakes states is a difficult-to-log forest.

Ek said a lack of thinning and other management has yielded forests with lots of small trees that are difficult to harvest.

"You have to screw around with more material before you get to merchantable timber," he said.

That won't last forever if Minnesota Department of Natural Resources Commissioner Alan Garber has his way. The state has set up boundaries around a 240,000-acre demonstration forest in northern St. Louis and Aitkin counties.

Garber hopes to use thinning and similar techniques to grow more trees and a greater variety of trees. The demonstration forest, however, is focusing on thinning trees that can be sold to mills.

Where did he get the idea? During a trip to Finland, while talking to an executive for Finland-based UPM-Kymmene, which owns a paper mill in Grand Rapids.

The executive told Garber the state won't be able to provide enough timber for the industry if it kept managing its forests the way it is now.

"And that means industry would go to where the product could be provided," Garber said.

Garber has tried to make the advisory committees as broad-based as possible -- in fact, one of the co-chairmen is from the Ruffed Grouse Society.

A cultural change could also be needed. In Finland, forest land is considered an investment, said Simo Jaakkola, a Finnish logger who was in Duluth for last week's American Loggers Council annual conference.

He joined Birchem, the Gilbert logger, and others to share experiences with mills and logging issues worldwide.

Finland has laws requiring replanting and intensive management, he said. About one-third of a loggers' income comes from thinning forests -- in a hundred-year forest cycle, the forest is thinned two or three times before clear-cutting it.

Finland's forest industry isn't immune to pressures from environmentalists, he said. It was once common practice to drain swamps to create more forest land, which is virtually impossible under U.S. wetlands regulations. That's no longer possible in Finland, either.

In addition, Finland's forests are naturally much less diverse than Minnesota's. That could make it hard to transfer that model here, said Jan Green, a local environmentalist who has been involved in forestry issues.

"We have three pines, two spruces, one fir, one tamarack, one cedar, and that's just conifers," Green said. "And then we have 10 or 12 deciduous trees, depending on the area."

Garber also will need more than just a plan, Birchem said. It takes money and more than commitment from one governor who is about to leave office.

"As far as I'm concerned, the forestry department should be taken out of the DNR and moved up here," Birchem said.

Garber won't go that far, but said he tried to craft a long-term political strategy, including getting as many interest groups involved as possible. He said he hopes that strategy will make it hard for another administration to close down the project.

"There's a need for old forests," Birchem said. "But I think there's also a need for intensively managed forests."