Political Blast Furnace.

 

Sands Bethworks Bethlehem, PA. Condo construction to the left and abandoned blast furnaces to the right. Right now I’m working on a letter to the Editor of the Vermont based Caledonian Record newspaper. And I’ll cut right to the chase: I’ll be arguing against local jobs and the local economy.

How can I possibly do this!!!

I read the article about St. Johnsbury based Caledonia Kiln Inc. and the rail carrier that serves it the Washington County Railroad (see below) and could not help but to start thinking: “This isn’t about jobs it’s about politics, it’s about taxpayer financed bailout money and it’s about the use of capital that belongs to the taxpayers and not the agenda that wants access to it.” At least this is my thinking.

I’m also thinking that this type of situation would not happen in New Hampshire I’m grateful for this. It’s still hard to make against an argument against local jobs and economic development it’s a political blast furnace. Either support the politics and the process or there will be no jobs.

Not really the best choices here. Political or not.

Source: Caledonian Record Newspaper.

Caledonia Kiln Corp. Put Up For Sale
+ click to enlarge
James Jardine
Staff Writer

A 34-year-old St. Johnsbury company, Caledonia Kiln Corporation, has been put up for sale by its owners and the potential loss of the kiln lumber drying operation could have a major impact on one of the company's best customers, Piette and Sons lumber in Irasburg.

Caledonia Kiln was founded by Henri Jacquet in August 1977. Jacquet, born and raised in France, started a sawmill in Nigeria in 1957 and ran it until 1971. It was there that he met his future wife Joan, where she was serving as a Peace Corps volunteer.

They married and moved to Vermont where Henri started CKC. The Jacquets' son, Jeremy, joined his father and together they ran CKC for years. Henri is retired now and Jeremy is running the business.

The company at one time had 18 full-time employees. The company operates kilns that dry lumber for customers, primarily lumber yards. Loads of lumber are shipped to CKC either by railroad or by tractor trailer. The lumber is unloaded and dried to eliminate the moisture content from the green lumber. CKC has thousands of feet of indoor, dry storage where customers' lumber can be stored. In addition, CKC can also do precision cutting of lumber.

CKC also does "reloading" or "transfers" meaning some rail cars can be left in the yard and the lumber can be offloaded at the CKC facility then reloaded on a tractor trailer.

Energy costs and the global recession have combined to devastate the lumber industry internationally and a perfect storm of economic forces have battered CKC and the rest of the lumber industry in Vermont, throughout the United States and in Canada as well.



 

The foremost issue for kiln companies such as CKC is the soaring price of Number 6 oil. The oil fuels the lumber drying kilns and the price has climbed to $2.77 a gallon, according to Jeremy. It was 38 cents a gallon in 2001.

The largest lumber companies that used to ship out their lumber to be kiln dried by companies such as CKC have built their own dry kilns and now dry their lumber themselves. In the case of the lumber companies, it makes sense to start from scratch with wood waste boilers. The lumber companies generate their own scrap wood that can be used for fuel in the new waste boilers and they can now dry lumber for less than the cost of shipping the lumber to CKC and back.

When CKC started in the 1970s, there were plenty of sawmills large and small in surrounding communities. The lumber did not have to be trucked great distances to CKC and trucking costs were not as high as today. A strong economy over the years drove a robust housing industry and new housing starts meant a steady demand for building materials dried in the kilns.

As fuel costs for trucks increased, the Jacquets embraced rail and hoped the Washington County Railroad would help grow their business by cutting transportation costs and providing a steady, reliable bulk carrier. Unfortunately, according to Jeremy, when diesel fuel began creeping up, the railroads added on fuel surcharges which drove up the costs of rail.

The Jacquets have always supported the local railroad and Jeremy is still a supporter of Washington County Railroad. He says he had to do business with five railroads to ship lumber along the East Coast and dealing with so many railroads meant carloads of lumber had to be switched in rail yards repeatedly. According to Jeremy, it now costs CKC more to ship lumber by rail than by tractor trailer.

As the economy soured, lumber companies folded in northern New England. The larger ones still operating are located in New York state or southern New England. They have either set up their own scrap lumber boilers and are operating their own kilns or the companies are so far away from St. Johnsbury, transportation costs are prohibitive.

Jeremy says he investigated building a new boiler system that could burn biomass or scrap lumber, but unlike a lumber yard, he does not generate his own wood waste and would have to purchase the wood fuel. The new boilers would require clean air permitting from the state, and when Jeremy added up all the costs of building new boilers, it came to a little more than $1 million.

While the payback on the investment was doable, the Jacquets realized the new boilers would not solve all of the other problems facing the industry. Realizing they could not justify the million-dollar investment in an uncertain economy, CKC was put on the market.

The 28-acre site is listed with Redstone Commercial Real Estate with a price tag of $1.1 million without the inventory, kilns or machinery. The property includes five buildings, including an office building and four warehouse buildings. There are rail sidings and two kilns that can store up to 450,000-board feet of lumber. A key selling point, Jeremy said, is that the lot has all of its permits in place, including a storm water permit and it has a public water source. To Jeremy, the site could be an excellent site for manufacturing and warehousing.

The company is now down to seven employees and is mostly doing reloading from rail to truck or truck to rail and is also doing dry storage for customers.

Dennis and Louis Piette run the Piette Lumber Co. in Irasburg where they specialize in pine lumber. Dennis said Tuesday afternoon that if CKC closes, "that's going to affect us dramatically. It may affect our ability to keep going." The Piettes are facing economic challenges of their own and are working hard to keep their company going and 12 jobs intact.

Started in 1986, the company does 60 percent of its business with Canadian companies. They've used CKC to dry kiln their wood for years, then sold the finished dry lumber. Faced with high fuel costs to run their own kiln, the Piettes shut their small kiln down some time ago and relied on companies such as CKC.

In the meantime, Dennis said they've been working with the U.S. Dept of Agriculture and Northern Communities Investment Corp. to study the feasibility of installing a new biomass boiler system to dry green lumber onsite.

However, according to Dennis, the company would need to borrow about $550,000 to build a new drying system and federal regulations would insist on the Piettes buying all new equipment, hiring a clerk of the works and conforming with numerous other requirements in order to become eligible for a federally guaranteed loan through a private bank.

Like the Jacquets, Dennis is concerned that to add a major new expense during a time of uncertainty in the industry is too risky. They've decided, for now, not to pursue a new boiler.

If CKC is no longer able to partner with Piette Lumber, the Piettes must give some serious thought to what they will do. Dennis said his 12 employees are excellent workers but they are scared of the future and are uneasy about what employment opportunities there may be in the Kingdom.

Dennis said Canada's lumber business is just as bad as Vermont's and his Canadian customers have said they cannot continue to buy logs from the Piettes. The Piettes, in turn, have loggers desperate to sell the Piettes logs every day, but for now, the Piettes have no markets for the wood.

Dennis said the lumber industry will not begin to turn around until the housing industry rebounds. He believes if the economy could restore the housing market, the lumber industry, and in turn the logging industry, could turn around very quickly.

Northeastern Vermont Development Association Executive Director Steve Patterson said Tuesday he was aware of CKC's dilemma and was aware of the challenges facing the wood industry in the Kingdom. NVDA has been working with some economists who have been hired to study the future of the Kingdom economy. Some of the questions will be what the future of the wood industry is in the Kingdom and what areas other than the wood industry may provide a solid employment base in future years.