Columbia Forest Products Inc.

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Columbia Forest Products Inc.

222 S.W. Columbia Street, Suite 1575
Portland, Oregon 97201
U.S.A.
Telephone: (503) 224-5300
Toll Free: (800) 547-4261
Fax: (503) 224-5294
Web site: http://www.columbiaforestproducts.com

Private Company
Incorporated: 1957
Employees: 4,000
Sales: $1 billion (2005 est.)
NAIC: 321210 Veneer, Plywood, and Engineered Wood Product Manufacturing; 321211 Hardwood Veneer and Plywood Manufacturing; 321213 Engineered Wood Member (Except Truss) Manufacturing; 321910 Millwork; 423310 Lumber, Plywood, Millwork, and Wood Panel Merchant Wholsesalers

Columbia Forest Products Inc. is among North America's largest manufacturers of hardwood plywood and hardwood veneer. Through its subsidiary, Columbia Flooring, it is also a leading marketer of hardwood and laminate flooring. The 100 percent employee-owned company makes products used in flooring, cabinets, architectural millwork, and commercial fixtures. The company has 20 plants throughout the United States and Canada and sells its products through a network of distributors, mass merchandisers, cabinet makers and furniture manufacturers, and independent dealers across the continent. Its products can be milled upon request to bear the FSC ecolabel.

ORIGINS

In 1957, A. J. Honzel and a small group of businessmen purchased a defunct mill south of Klamath Falls, Oregon. They opened Klamath Hardwoods, which produced hardwood plywood. The mill was initially a cooperative, financed in part by its 43 employees.

Honzel remained president of Klamath Hardwoods until 1962. He died in 1993. In 1963, Columbia Plywood Corporation, a holding company, was formed to purchase Klamath Hardwoods. Operations continued as usual until 1966, when the company purchased a company called Indian Head and acquired hardwood veneer operations in Presque Isle, Maine, and Newport, Vermont. Then, in 1976, employees purchased the company from Columbia Plywood Corporation and reorganized the company as an Employee Stock Ownership Plan. They changed its name to Columbia Forest Products Inc.

Columbia underwent a significant growth spurt throughout the 1980s, building and acquiring new facilities across the United States. In 1982, the company built a hardwood plywood manufacturing plant in Old Fort, North Carolina. In 1986, it acquired two hardwood plywood plants in Chatham, Virginia, and Trumann, Arkansas. Three years later, in 1989, it bought a hardwood veneer manufacturing mill in Rutherglen, Ontario, Canada, and a half-round slicing operation in New Freedom, Pennsylvania. It also established its Laminated Products Division in Thomasville, North Carolina, where it produced laminated panel products and, later, from 1996 until 2001, when the company sold it, laminated flooring.

1990: CONSOLIDATING A NORTH AMERICAN PRESENCE

The 1990s were another decade of strong growth and nationwide expansion for Columbia. In 1990, it built a poplar core veneer plant in Craigsville, West Virginia. In 1995, the International Division began exporting hardwood plywood. In 1996, the company purchased Levesque Plywood in Hearst, Ontario, giving the company a larger presence in the Canadian marketplace. The Levesque division of Columbia Forest Products consisted of four separate operations: a plywood mill, a particle board plant, a melamine overlay mill, and a hardwood plywood mill. Columbia also acquired two other hardwood plywood plants in Danville, Virginia, and DeQueen, Arkansas in 1996. That year, too, the Laminated Product Division became Columbia Flooring, a subsidiary of the company.

Harry Demorest left his position as managing partner at Arthur Anderson and Co. and became chief executive officer of Columbia in 1996, having joined the company in 1991, and serving as its president from 1994 to 1996. Under Demorest, Columbia continued its focus on expansion through acquisition; it acquired a hardwood plant in Cuthbert, Georgia, in 1997 and also purchased a veneer raised panel and door insert plant in Corpus Christi, Texas. The company's Columbia Flooring subsidiary acquired an equity position in Arkansas-based Century Flooring in 1999. However, Columbia also engaged in some plant closings: In 1998, it closed the DeQueen, Arkansas, hardwood plywood plant, and, in 1999, it closed the New Freedom, Pennsylvania, slicing plant, laying off 210 workers.

2000: A FOCUS ON GREEN CERTIFICATION

In the late 1990s, so-called green certification became a hot topic in the lumber products industry as European wood buyers, Home Depot, Nike, and a number of other large American companies declared a preference for buying certified wood. The FSC, an internationally recognized organization, promoted sustainable, environmentally sound forest management. Its oversight ensured consistent reforestation, more selective harvesting, enhanced biodiversity, better road construction, special site protection, and forester and contractor training. As of late 1999, there were about 45 million forested acres under FSC certification, including 6.4 million acres in the United States. Logs from these forests were followed under chain-of-custody procedures so that customers could be sure that the products they bought were "green." In 1999, Columbia joined the FSC, and its Klamath Falls plant began producing plywood using logs harvested from FSC certified lands. It was also named Home Depot's Environmental Leader of the Year award.

From 1999 on, Columbia introduced a certified and/or environmentally progressive product each year. In 2000, it won certification of its plywood from Smart-Wood, a program of the Rainforest Alliance accredited by the FSC and began offering a line of environmentally certified hardwood plywood and particle board. By the middle of the next decade, the company's mills in Arkansas, Maine, North Carolina, Virginia, Ontario, and Quebec produced certified products as well. With certified core material making up 92 percent of finished panel volume, most of the company's hardwood veneers met FSC labeling requirements.

Additional acquisitions in 2000 broadened Columbia's presence in the hardwood veneer market. The company purchased two hardwood veneer manufacturing mills in Mellen, Wisconsin, from Louisiana-Pacific Corp., its thirteenth and fourteenth acquisitions in 15 years. One mill dated back to the 1920s, the other had opened in 1982. It also increased capacity by expanding its plants in Trumann, Arkansas; Craigsville, West Virginia; Klamath Falls, Oregon; and Hearst, Ontario, Canada. Two years later, it purchased Weyerhauser's Multiply plywood factory on the shores of Lake Superior in Nipigon, Ontario, and began marketing Multiply, a branded, three-ply quarter-inch plywood used as underlayment for flooring. And in 2001, it sold the Thomasville, North Carolina, laminate flooring plant and the Corpus Christi, Texas, veneer raised panel and door insert plant. It also partnered with West Virginia-based International Industries in constructing a solid-strip hardwood flooring plant in Holden, West Virginia.

COMPANY PERSPECTIVES

Columbia Forest Products is committed to two basic values: to build a business on quality products and to provide personal attention to customer needs.

Several unfortunate events drew media attention to Columbia in the early years of the next decade. In 2000, the Occupational Safety and Health Administration investigated a July 1999 accident that had crushed an employee to death at the Indian Head division and issued citations to Columbia totaling $235,000. In 2004, a second employee was crushed by a particleboard press, leading company and union officials to work together to identify safer solo work conditions. Workers pushed for a buddy system as an alternative to working alone.

And in 2003, Robert Washburn, a former Columbia worker, who had been fired from his job operating heavy equipment in 2001 after he tested positive for marijuana use, sued the company for violating the state Disabilities Act, saying that he had procured and smoked the marijuana through Oregon's medical marijuana program. The Multnomah County judge ruled against Washburn, saying state law didn't require a company to make accommodations for workers with marijuana in their system, but Washburn appealed and won his case, which then went to the Oregon Supreme Court for review. As of early 2006, the court's decision was still pending.

However, the company remained strong and consolidated its position as a green manufacturer. In 2003, it struck an agreement with Dow BioProducts to become the only hardwood plywood manufacturer to use Dow's Woodstalk Fiberboard made from formaldehyde-free and renewable wheat straw fiber. It also introduced EcoColors, a line of environmentally certified decorative particleboard. In 2005, it launched Pure-Bond, a cost-neutral formaldehyde-free plywood panel and began converting all of its plywood mills to formaldehyde-free manufacturing processes.

Columbia also entered into a project partnership with Clark County Forestry and Parks Department and the Wisconsin Department of Natural Resources to plant and oversee a 12-acre naturally regenerating hardwood site. When BuildingGreen Inc. announced its selections for the 2005 Top 10 Green Building products in early 2006, it chose Columbia's hardwood plywood and agrifiber-core panels.

Throughout the early years of the new decade, the company also continued to grow in the flooring market. In 2003, it acquired Millwood Specialty Flooring in Ellijay, Georgia, manufacturer of unfinished solid strip hardwood flooring, and completed the equity buyout of Century Flooring of Melbourne, Arkansas, which made pre-finished solid hardwood flooring.

In 2004, it purchased McMinnville Manufacturing Company of McMinnville, Tennessee, which also manufactured unfinished, solid strip, hardwood flooring, and completed the equity buyout of Appalachian Precision Hardwood Flooring and Appalachian Custom Dry Kilns of Holden, West Virginia, maker of prefinished solid hardwood flooring. In 2005, Columbia Flooring acquired Malaysia Wood Industries in Sungai Petani, Malaysia, the manufacturer's first large-scale investment in offshore manufacturing facilities. There was also a partnership between Columbia Flooring and Laura Ashley Inc. to manufacture a line of hardwood and laminate flooring under the Laura Ashley brand name.

KEY DATES

1957:: Klamath Hardwoods' hardwood plywood mill begins operation.
1963:: The Columbia Plywood Corporation is formed as a holding company to purchase Klamath Hardwoods.
1966:: Columbia purchases Indian Head hardwood veneer operations in Presque Isle, Maine and Newport, Vermont.
1976:: Columbia reorganizes as an Employee Stock Ownership Plan (ESOP) and changes its name to Columbia Forest Products.
1989:: Columbia establishes its Laminated Products Division in Thomasville, North Carolina.
1996:: The Laminated Product Division becomes Columbia Flooring.
2003:: Columbia acquires Millwood Specialty Flooring in Ellijay, Georgia, and completes the equity buyout of Century Flooring in Melbourne, Arkansas.
2004:: Columbia acquires McMinnville Manufacturing Company of McMinnville, Tennessee; completes the equity buyout of Appalachian Precision Hardwood Flooring and Appalachian Custom Dry Kilns, Holden, West Virginia.
2005:: Columbia acquires Malaysia Wood Industries in Sungai Petani, Malaysia.

The 2006 closing of its particleboard plant in Ontario was, according to the company, the result of escalating energy costs, low product prices, the rising Canadian dollar, and global competition. It indicated that Columbia, despite its strengths, had to deal with the ongoing struggles in the wood products industry. However, throughout the years, Columbia had managed to insulate itself from most of the ups and downs of the wood products industry, and in fact, it had turned a profit every year since its inception.