BEMIDJI -- The Bemidji Ainsworth Lumber Co. plant will follow the Cook, Minn., plant in closing Monday for an indefinite period because of reduced customer demand and log shortages.
Bruce Rose, Ainsworth vice president for corporate development, said in a telephone interview from the company's Vancouver, British Columbia, Canada, headquarters that the drop in housing starts has effectively closed the market for oriented strand board, Ainsworth Bemidji's product. The local plant employs about 140 people.
"The markets have just frozen up," Rose said.
"Business demand continues to reflect the severe decline in U.S. housing starts and the credit market issues," said CEO Robert Allen in a press release. "Our outlook is that these very difficult conditions will continue for at least the near term."
He said the company would reassess the situation toward the end of October.
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"I don't have a really good feeling about it," said Gary Kallstrom of the probability of the plant reopening. "If they start buying wood after deer season, that would be a good sign."
Kallstrom, a dryer who has worked at Ainsworth for 27 years, said the plant would stop buying wood as of Friday.
He agreed with Rose and Allen that the credit crunch has made it impossible for the OSB customers to borrow the money they need to buy the product.
Rose said Ainsworth Bemidji produces 350 million square feet of 3/8ths-inch OSB annually using 550,000 tons of logs. He said the Bemidji plant had been shipping 20-40 railroads cars full of OSB daily.
"We have days (that) at almost any price we can't sell it," Rose said.
Normally, there are about 1.8 million annual housing starts in North America. However, Rose said that number has dropped to about 500,000 in the last 30 months.
He said the closing of the Bemidji plant is no reflection on the management or hourly workers, who have cut costs and put out record productions during the last three years.
The Cook plant closed last month with a company announcement that it will likely not open again in 2009. The company permanently closed the Grand Rapids plant in August. The company also reorganized to forestall bankruptcy in July.
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Rose said he expects the Bemidji plant to reopen, but couldn't predict when that would happen.
"It's a horrible front row seat on the worst housing crunch in a generation," he said. "We don't expect an immediate change in the market."
If housing starts move back toward the normal range, perhaps 1.2 million starts, Rose said the Bemidji plant would reopen.
"At some point, we're going to get a turnaround," he said.
Ainsworth also closed the High Level, Alberta, Canada, plant, but other plants in Ontario, Alberta and British Columbia continue production.
The Bemidji Pioneer and the Herald are Forum Communications Co. newspapers.
