Headwaters Awards $750,000 for Lumber Marketing Project

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Jessica Cejnar/The Times-Standard/times-standard.com/

Posted: 03/28/2012 02:08:41 AM PDT

The Headwaters Fund board approved a grant for a project aimed at convincing California residents to choose redwood over wood-plastic composite lumber when building decks.

Six members of the fund board awarded a three-year $750,000 grant — $250,000 a year — to the Humboldt Economic Development Division, which is working with the California Redwood Company and the Humboldt Redwood Company on the Forest Products Initiative marketing project. Board member Jackie Deuschle-Miller, a former Green Diamond Resource Company employee, recused herself.

The economic development division is sponsoring the grant and managing the project, said Jacqueline Debets, economic development coordinator and project manager. Under the grant’s conditions, the board will review the project in two years and will have the option to withdraw funds.

The board overseeing the Headwaters Fund — created by the county to utilize $22 million in state and federal funds given to offset the sale of the Headwaters Forest Reserve — also required the economic development division and the two companies to give annual budget reports.

The California Redwood Company — a subsidiary of Green Diamond Resource Company — and the Humboldt Redwood Company will match the Headwaters grant by contributing another $750,000 toward the project cost, Debets said. The total project cost is estimated to be $1.5 million.

”The goal is to increase the volume of redwood sales and thereby stop the loss of jobs in lumber manufacturing,” Debets said, adding that several manufacturers of redwood lumber have said rebuilding the value of redwood is the most important thing that could be done for the industry. “We’re all marketing redwood for one of the highest and best uses, which is for decking.”

The Forest Product Initiative will focus on redwood’s durability and strength over composite lumber for use in decks, according to Carter Welch, vice president in marketing for the Humboldt Redwood Company. The marketing will be done primarily via 30-second television commercials. Welch said his company and the California Redwood Company plan to target men — primarily ages 35 to 55 — and will air the commercials during sports programs.

Both companies and the economics development division plan to gauge consumer response by doing a quantitative study after next year’s building season, Welch said. He added that both companies conducted a study using 1,000 California residents on who would use composite lumber versus redwood lumber. After viewing the companies’ video, more residents said they would use redwood lumber versus composite.

”We’ll constantly evaluate it and tweak it,” he said, referring to the project.

California is the primary market for redwood, Debets said. Over the last 10 years, the composite lumber industry has grown and has waged an aggressive and successful marketing campaign against redwood. Up until now, redwood lumber manufacturers haven’t responded, she said.

In those 10 years, 2,100 lumber manufacturing jobs have been lost, Debets said. The economic development division anticipates 2,400 replacement jobs by 2018 as people retire, but if the redwood lumber industry doesn’t maintain or increase its market share, those jobs will be reduced through attrition, she said.

According to Carl Schoenhofer, vice president and general manager of the California Redwood Company, the redwood lumber industry was hit hard by the weak housing market as well as the composite lumber industry marketing itself as the environmentally-friendly alternative to redwood.

”We haven’t told our story,” he said. “We’re all fighting over the same piece of pie. The opportunity here is to try to grow that pie. It’s simply a matter of getting the facts out.”

During the board’s discussion, new member Gregory Seller said the lumber industry in the county has historically been plagued by boom and bust cycles. He said the project could be used to increase demand to support a buoyant, sustainable industry, or it could result in overtaxing the area’s lumber resources.

”If we increase demand beyond that point and don’t change the price, we go into a boom and bust cycle,” he said.

Welch replied that if the demand for redwood lumber was increased by 40 percent over the next 10 years and stayed within California, the industry could remain sustainable.

The money for the initiative grant is coming out of Headwaters’ revolving loan fund, said Headwaters Fund coordinator Dawn Elsbree. The balance in the revolving loan fund is $8.5 million and could be reduced to $8 million if necessary, she said. Approximately $100,000 in interest is added to the revolving loan fund each year.

Elsbree said she would bring the matter before the Board of Supervisors by April 24.

Jessica Cejnar can be reached at 441-0504 or at jcejnar@times-standard.com.

This article may also be found on the Times-Standard website, Headwaters Awards $750,000 for Lumber Marketing Project.

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