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Rebuild or not rebuild Photo by Jim Craven Bob Smith of Boise Cascade walks along the burned-out "layup line," where veneer was glued to become plywood. With fire insurance cash in hand, officials at Boise Cascade are weighing their options By DAVE PRESZLER The haze surrounding the future of Boise Cascade's Medford plywood plant remains thick more than two months after the mill was destroyed by fire. With at least 450 jobs hanging in the balance, Boise officials are still weighing their options before answering the Rogue Valley's most pressing economic question: To rebuild or not to rebuild? It's a question Bob Smith is asked almost everywhere he goes. "When they recognize me, or know who I am, people will ask," says Smith, Boise's employee relations manager and spokesman. The answer isn't expected for another month, when Boise finishes its analysis of what is a complicated business decision. Several options have emerged, three most prominently: rebuild the mill fully, rebuild part of it or don't rebuild at all. Relocating the plant is also an option, although Smith says it appears unlikely. But which way the company will go is still up in the air. "I don't think there's leaning in any direction at this point," Smith says, speaking in tones that underscore the gravity of the choice. "Ultimately, our main office in Boise has to make a decision about whether it wants to make that kind of reinvestment." Fully rebuilding the plant would cost Boise about $75 million, Smith says. Factory Mutual, the company's insurance carrier, has already settled Boise's claim following the Sept. 7 fire; the exact figure isn't being released but Smith says it's in the ballpark of the full estimate -- making rebuilding financially possible. The settlement carries no requirement that Boise rebuild the plant, Smith says. And that has some Southern Oregon economic development officials and politicians fearing that it could be an extremely close call. "This thing is very much at risk of not returning," says Bruce Laird, a regional officer for the Oregon Economic Development Department. Laird has joined with Jackson County Commissioner Sue Kupillas, Medford City Councilman Bill Moore and others to form the Boise Cascade Recruitment Task Force, which meets every Monday to search for ways to encourage Boise to rebuild. They are attacking the problem in the same way they attempt to lure new businesses -- by removing as many bureaucratic roadblocks as possible. "We are taking this extremely seriously," Laird says. "This is a rough-and-tumble, bare-knuckle recruitment." As the company has said all along, the central issues are the strength of the plywood market and the availability of raw materials -- both now and the in future. For now, Smith says the market looks solid for the mill's staple product: sanded plywood. "It's still pretty good and this plant had a good reputation for producing quality products," he says. "But we have to try to predict what the markets are going to be like in the 21st century." The Medford mill was Boise's only producer of sanded plywood in the Northwest and no other mill has been equipped to produce it -- a factor that could favor rebuilding if that market remains strong. Boise also has to consider how the Medford mill's future is tied to its other eight mills in Oregon -- especially the White City laminated veneer lumber plant. "The decision to rebuild is not a single mill decision," Smith says. "We have to think about what is the best use of all our raw material supply, how we can integrate products from all those plants." In addition to producing sanded plywood for outside markets, the Medford mill provided high-grade plywood for the White City plant. The company has been able to meet demand for that plywood thus far, Smith says, but could be scrambling next spring when building picks up. One option would be to build a Medford mill just big enough to supply the White City plant with high-grade plywood. The desire to have a nearby plant to supply the White City mill is a factor working in favor of rebuilding, Smith says. The proximity to the strong California market is another plus. A potential cloud over the raw material supply outlook faded earlier this month when voters soundly rejected Measure 64, which would have restricted clearcutting and dramatically changed forest management practices. The raw material issue goes beyond the number of trees or the level of board feet available for harvest. The species and age of the trees are the key factors. "If the forest practices and goals change, it can have a big effect on which products the mills can produce," Smith says. A factor in favor of rebuilding is the availability of a large skilled work force, Smith says, although rebuilding would take 12 to 18 months -- longer than some workers might be willing to wait. If Boise decides to rebuild fully, about the same number of people would be needed at the new plant as at the old one. Smith says most equipment that could be automated already had been, so technology upgrades won't eliminate jobs. Efforts made by government agencies could swing the decision toward rebuilding, but Laird admits that may not be enough. "All of these decisions are very mathematical," he says. "We understand that our support level is not going to be the key driving force, but it could be if we get to the cusp." The state Economic Development Department has extended the Medford Urban Enterprise Zone to include the Boise site. That move brings a five-year freeze on property taxes that Smith says could save Boise about $1 million. Smith says the Department of Environmental Quality has indicated that if Boise rebuilds a plant of the same size or smaller it would not have to re-apply for is Title 5 emissions permit -- a process that could delay rebuilding for months. "They've done a tremendous job in a compressed amount of time," Smith says of the governmental assistance. "It's not a case of Boise coming out and saying what can you do for us. It's them saying we want you to stay." Laird says the idea is to make Medford the most attractive place to rebuild and to make rebuilding as easy as possible. "We will do anything that is reasonable," he says. "We want to make it a solid green light." Time will tell whether Boise will step on the gas. Cause of fire still unclear Boise Cascade officials still don't have a definite answer to what caused the Labor Day fire that destroyed the company's Medford plywood mill. The company has a preliminary report from Factory Mutual, the insurance company investigating the blaze. But the cause remains unclear and may never be known, Boise spokesman Bob Smith said Thursday. The fire is believed to have started near the veneer dryers. Two fires were reported in that area the night of Sept. 6, the first about 8:30 p.m. and the second about 10:50 p.m. Smith says Factory Mutual investigators haven't been able to establish a clear link between the fires. The investigators spent two to three weeks collecting evidence and interviewing mill workers, firefighters and witnesses. Smith wasn't sure when the final report would be delivered. Though much of Boise's Medford plant was destroyed, Smith says firefighters' successful efforts to save a crucial structure, the powerplant, probably kept alive hopes of rebuilding the mill. "Without that, we aren't having this discussion," he said Thursday while explaining Boise's rebuilding options. "That's very expensive to replace." Today's Business Index Mail Tribune Copyright � The Mail Tribune 1998, Medford, Oregon USA