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.