Plum Creek embraces mixed-use forestry in its 865,000 acres of North Woods

An improving housing market should help Plum Creek Timber Co. sell more of its timber in Maine and could also jumpstart its controversial plan to create up to 975 luxury second homes and two resorts near Moosehead Lake.

As the third-largest landowner in the state, Plum Creek's fortunes are also tied to the overall health of Maine's forest products industry, an $8 billion driver of the state's economy that includes paper mills, loggers, lumber and biomass mills. One in 20 jobs in Maine is tied to the forest economy, according to the 2013 report of the Maine Forest Products Council, with a total payroll of $1.9 billion.

Plum Creek's geographic footprint totals 865,000 acres in six counties, with vast chunks of Somerset and Piscataquis counties, and, to a lesser extent, Franklin, being its primary timberland. Economically, its pulpwood and sawlogs for end-users include Sappi Fine Paper's Somerset Mill in Skowhegan and Kennebec Lumber Co. in Solon, as well as wood chips for pellet manufacturers in Strong, Athens and Corinth.

More than 50 contractors — each typically employing five or more loggers in a crew — harvest the maple, birch, ash, beech, pine, spruce, fir and hemlock trees that will be used for lumber, plywood, fiberboard, pulp and paper. More than 40 mills in Maine — sawmills, pulp and paper, and biomass, employing thousands of workers — use wood harvested on Plum Creek's land.

“From a golf tee to a Learjet,” is how Mark Doty, community affairs manager for Plum Creek's Northern Hardwood Region, describes the range of products that make use of wood harvested in the company's Maine timberland.

But Plum Creek is more than just a timber company. It's a publicly traded real estate investment trust company based in Seattle whose shares are traded on the New York Stock Exchange. That puts some pressure on the intrinsically long-term nature of timberland management to maximize returns for the company's shareholders — as illustrated by this highlighted lift quote in the 2013 annual report: “Creating the most value from each acre is part of Plum Creek's DNA.”

In 2013, the national company reported a net income of $214 million from gross revenues of $1.34 billion, both up from the previous year. In the first quarter of 2014, its Northern Resources division, which includes Maine, reported an operating profit of $16 million, a $5 million improvement over the first quarter of 2013. The FY1 earnings statement noted that “sawlog” prices for the northern sector increased $9 per ton, up by more than 11% over 2013's first quarter, driven by strong demand from both export markets and domestic lumber mills.

In Maine, Plum Creek's combined real estate-timberland focus has put the company in the spotlight from Day 1 of its 1998 purchase of 905,000 acres from Sappi Fine Paper for $180 million. That sale and others fueled public alarm about the potential of Maine's North Woods becoming subdivided and no longer a working forest. More recently, its 2006 real estate proposal for the Moosehead Lake region put the company at loggerheads with the Natural Resources Council of Maine and two other groups in a protracted legal battle that eventually was decided in Plum Creek's favor in 2012. [See related story on Page 20]

Doty, who works out of Plum Creek's office in Fairfield, says whether it's dealing with the cyclic changes in timber markets or the Moosehead real estate project, the parent company is in Maine for the long haul.

“It's such a long business model,” he says, noting that typically timberland owners must wait 25 years for a first thinning of timber and between 40 and 80 years before harvesting mature trees at their optimum value.

Markets improving?

Things are looking up for Plum Creek's operations in Maine, Doty says, for all the reasons that the national company cited in its 2013 annual report. An improving housing market is creating greater demand for spruce, fir and hemlock used for structural lumber, eastern white pine for interior finish and hardwoods for flooring. Timber exports are growing, driven largely by demand from China. And Canada's timber production, historically 45% of North America's output, is shrinking due to beetle infestations in both its eastern and western timberlands.

“We're always in favor of more markets for our timber,” Doty says, standing in a timber staging area in Concord Township with hundreds of logs of various diameters neatly stacked for transportation by logging trailers once the soggy roadway dries and hardens.

Benjamin Dow, senior resource manager for Plum Creek's New England region, describes the company's Maine timberland as a mix of hardwoods and softwoods that supply the needs of different markets — sawmills, pulp and paper mills, pellet mills and biomass plants. Having that mix, he says, diversifies risk.

It's a shifting mosaic that increasingly is guided by science and new mapping technologies.

Dow, an Aroostook county native and University of Maine at Orono graduate who's been employed by Plum Creek for seven years, says his team is in charge of planning and executing Plum Creek's activities in Maine based on market projections and assessments of which trees are ready to be harvested. An inventory that's updated periodically starts with aerial mapping done by the James W. Sewall Co. of Old Town. Analysts crunch additional info from foresters to create computerized models showing the makeup and likely growth rates of Plum Creek's timberlands.

“It gives us insight into where we need to harvest each year,” Dow says. “Having all those different tree species helps with the whole sustainability piece of the puzzle … The market diversity is very positive for Plum Creek's continuing investment in this state.”

Dow says the wood pellet, biomass and bioenergy markets in Maine are strong, sustainable and, with the increasing global demand for alternative fuels, likely to grow. “That's been a very stable market in Maine since the early '80s,” he says.

Managing for multiple uses

Sustainability is very much a guiding principle for Plum Creek, says Doty, noting that in 1999 it became the first company in the nation to be certified for managing all of its lands according to standards set by the Sustainable Forestry Initiative. Those standards are updated every five years to reflect the latest science and best practices and Plum Creek undergoes recertification on a rotating basis by region every three years for the 19 states it operates in.

An independent audit of Plum Creek's operations in Maine in relation to SFI's 20 objectives was conducted last August, resulting in recertification in late November. The audit report, conducted by Texas-based Bureau Veritas Certification North America Inc., commends Plum Creek for a “very robust forest management program … one of the best;” “an excellent wildlife management program” guided by trained wildlife biologists, “something that is becoming a rarity within the forest management industry”; proactive “habit conservation plans”; being “one of the most active companies” supporting research.”

“It's a great way to provide transparency and accountability to the public,” says Henning Stabins, wildlife biologist for Plum Creek's Northern Hardwood Region. “It takes away the mystery of what forestry is, by undergoing third-party audits.”

On the edge of a small clearcut clearing in Solon, Stabins points out a tall dead tree left standing. “It's an important structure,” he says. “It's a home for 60-plus species.”

The 10-acre clearing, Stabins says, is being managed as a habitat for the American woodcock, a stocky little bird with a long bill it uses to probe for worms. Sometimes called the “timberdoodle,” it lives in young forests near streams, rivers and wetlands. A chorus of spring peepers suggests the clearing meets those requirements.

“Maine considers them a 'species of concern,'” he says, noting that the management plan will involve creating diverse habitats within the clearing for courtship, foraging, nesting and roosting. “I wouldn't be surprised if in a year or two we'll have nine or 10 woodcocks here.”

The woodcock habitat site is an example of Plum Creek's wildlife management practices. Similar efforts with researchers are under way to protect habitats for rare or threatened plants and wildlife, including the rusty blackbird, common loon and Canada lynx.

“We train our foresters and contractors to be attentive,” Stabins says, noting that handheld GPS trackers, cell phones and tablet computers facilitate real-time identification of potential areas of concern requiring greater care in logging operations. “A lot of that is related to water quality. It's one of the most important aspects of our management of the forest.”

The company also planted 646,000 seedlings in 2013 as part of its reforestation efforts to encourage high-value tree species. Since trees take so long to reach maturity, Doty says Plum Creek, like most of the other large landowners in Maine, embraces a multiple-use model for managing its timberland. That includes allowing free public access to hunting, fishing, hiking and snowmobiling.

Alan Hutchinson, executive director of the Forest Society of Maine, gives Plum Creek high marks for “making a concerted effort to hire the right people and undertake structural changes” in its forestry practices within the 363,000-acre Moosehead Lake conservation easement that FSM has overseen since 2009. That easement, finalized in 2012, is held by FSM, which puts the land trust in the watchdog role of making sure Plum Creek practices responsible forestry and abides by the numerous conditions spelled out in the agreement.

“There's a four or five page checklist we go through with them regularly,” he says. “The result is that problems, by and large, are avoided.”

Jake Metzler, FSM's forestland stewardship manager, agrees, citing Plum Creek's evolving habitat management program for the Canada lynx as a perfect example.

“It's a story worth telling,” he says of Plum Creek's management of the Moosehead conservation area. “I think the reality is far different from the perception that lingers from the LURC battle.”

Spruce budworm threat

But managing a vast forest intrinsically is complicated and forever a moving target, and the looming threat of a new spruce budworm infestation will challenge Plum Creek and other large landowners as they try to minimize lost revenue resulting from dead or dying trees.

Doty says Plum Creek, like the rest of Maine's forestland owners, is keeping a close eye on the budworm infestation in Quebec, which has defoliated 8 million acres in that Canadian province and is moving southward toward New Brunswick and Maine. The voracious pest, whose population historically has exploded every 40 years or so, feeds on spruce and fir needles and developing buds during its caterpillar stage. During Maine's last outbreak, which lasted from 1970 to 1985, more than 20% of Maine's fir trees were killed.

Efforts to salvage millions of acres of defoliated spruce and fir timberland in Maine prompted landowners to intensively spray insecticides and, when that didn't work, to clear cut large sections of forest before the dead or dying trees lost all value. The massive clear-cutting, in turn, spurred a strong public outcry that eventually led to Maine's Forest Practices Act in 1989 to regulate harvesting.

Doty says the large landowners hope to avoid a similar backlash when the next outbreak occurs. They plan to apply lessons learned from last time, he says, with one of them being a more proactive communications strategy to inform the general public about what's happening in Maine's North Woods and why. In the meantime, Doty says, Plum Creek is working to ensure that even when the spruce budworm returns, its 865,000 acres of timberland will continue to meet the needs of its many stakeholders.

“The best thing we can do is to keep them a working forest,” he says.

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