Hampton Affiliates, Inc.

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Hampton Affiliates, Inc.

9600 SW Barnes Road, #200
Portland, Oregon 97225
U.S.A.
Telephone: (503) 297-7691
Toll Free: (888) 310-1464
Fax: (503) 203-6607
Web site: http://www.hamptonaffiliates.com

Private Company
Incorporated: 1942 as Willamina Lumber Co.
Employees: 1,500
Sales: $1 billion (2004 est.)
NAIC: 113110 Timber Tract Operations; 113310 Logging; 321113 Sawmills; 321212 Softwood Veneer and Plywood Manufacturing; 321911 Wood Window and Door Manufacturing; 321912 Cut Stock, Resawing Lumber, and Planing; 423310 Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers

Hampton Affiliates, Inc. is a vertically integrated lumber company and one of Oregon's top timber firms. It owns more than 155,000 acres of timberland, produces about 1.4 billion board feet of lumber annually, and has tree farms and mills in Oregon and Washington. Through its Hampton Distribution Companies division, Hampton distributes doors and windows. Hampton supplies homebuilding centers through its stud lumber and distribution operations.

1942–79: A LOCAL LUMBERYARD DIVERSIFYING AND EXPANDING

In 1935, L. M. "Bud" Hampton began operating a lumberyard in Tacoma, Washington. After World War II created a tight lumber market and made raw materials hard to find, he purchased a sawmill and 11,000 acres of timberland near Willamina, Oregon. The Willamina Lumber Co., founded in 1942, assured a supply of product for Hampton's retail yard.

Hampton "had an innate intelligence" for business, according to his son, John, in a 2005 Oregon Business article, but his early missteps almost cost him his initial investment. "He was learning as he went. He had no experience with planning. [The company has] been close to broke three times and it was always because my father had some kind of expansion plan."

However, Willamina Lumber recovered from Bud Hampton's mistakes and grew, and in 1950, with lumber prices rising, Bud encouraged John to form a sales company, Hampton Lumber Sales, to buy and sell lumber from outside mills. John Hampton had joined the family company, doing night shift at the mill, after completing a degree in economics at the University of Washington and serving briefly in the U.S. Navy. In 1955, Bud's other son, Charles, took charge of the company's newly founded Canadian subsidiary, Hampton Lumber Mills, Ltd. in Boston Barr, British Columbia.

John Hampton assumed responsibility for plant development and timber acquisition at Willamina Lumber in 1960. That same year, Willamina Lumber sold its modern plywood mill, completed in 1959, in Redcrest, California, to Pacific Lumber Co. as part of a move to get out of the plywood business and focus on lumber mill operations. The proceeds from the sale went toward improving the company's two, 100,000-feet per eight-hour shift, mills. Between 1960 and 1966, the company progressed from a simple green dimension mill with annual shipments of 18 million feet to a versatile plant with dry kilns, high speed planing mill, automated packaging and wrapping station, and byproduct program. The company sold its waste wood as pulp chips and shavings, and marketed its sawdust. In 1966, John Hampton became president of Willamina Lumber, while brother Charles became vice-president of the company.

In 1970, under the direction of CEO John Hampton, Willamina Lumber diversified further with the formation of Hampton Tree Farms in western Oregon. The company also began a program of intensive forest management. After a fire burned Hampton Lumber Mills, Ltd.'s processing plant early in the year, Willamina began construction of a high-recovery sawmill to process 50 million board feet per year.

By the end of the 1970s, the company started to use an assumed business name as an umbrella for all its ventures. The newly formed Hampton Affiliates had five subsidiaries: Hampton Lumber Sales, Hampton Industrial Forest Products, Hampton Hardwoods, Inc., Hampton Power Products, and All-Coast Forest Products. In 1979, the company built a new facility, a $9 million wood products expansion at Willamina, which employed 145 workers. The expansion housed a new small log mill, a veneer mill, and a steam boiler to provide electricity.

1980S: A DECADE OF ACQUISITIONS AMID REGULATION AND RECESSION

John Hampton led Hampton Affiliates through the tumultuous late 1980s when the environmental movement, the Endangered Species Act, and the Clinton Forest Plan cut Oregon's timber harvest in half. In this new, regulated environment, Hampton, chairman of the Northwest Forest Resource Council, earned the reputation of being a formidable adversary of environmentalists. Although Hampton championed sustainable forest management and self-regulation of the timber industry, he favored giving timberland owners the opportunity to take matters into their own hands through stream restoration and forest management.

Hampton Affiliates also tangled with its employees' union during the early 1980s and lost. When the workers at Willamina Lumber struck during a contract fight in 1983, the company hired non-union replacements. However, despite the fact that more than 30 percent of the workforce petitioned for a decertification election and many strikers crossed the picket line, the International Woodworkers of America (IWA) won the right in 1984 to remain the bargaining representative for the workers at Willamina. The IWA reluctantly signed a three-year pact with Hampton Affiliates in 1984 that included major reductions in vacations, a loss of paid holidays, and reduced health and pension benefits. The pact also established the company as an open shop.

According to John Hampton in a 1984 Oregonian article, "The company has accomplished every single major objective that it set out to achieve at the beginning of negotiations" with the IWA. In fact, following these disputes, the company concentrated on intense education and training for supervisors and managers to teach them how to "'handle their departments in a more effective and communicative manner,'" as Hampton announced in a talk quoted in a 1987 Oregonian article. "Our overall people are being encouraged to participate in the decision-making process."

Under John Hampton's leadership, Hampton Affiliates began investing aggressively in timberland acquisitions during the 1980s as well. During this decade, the company purchased: Champion Plywood in 1983; a majority interest in the Smurfit Newsprint Corp. sawmill and Tillamook operations in 1986 (it sold the sawmill in 1987); and the Fort Hill Lumber Company in 1988. The severe industry recession of the first several years of the 1980s caused many mills in the Oregon wood industry to reduce working hours, but Hampton Affiliates grew. By 1985, its overall lumber production was 308 million board feet.

COMPANY PERSPECTIVES

Our timberlands, mills, marketing department and distribution operations give us unparalleled flexibility within the industry to meet our customers' needs.

The close of the 1980s and the start of the next decade proved another hard time for the lumber business as a whole. The cost of labor and logs increased while panel prices remained flat, leading many lumber, veneer, and plywood mills throughout the Northwest to close temporarily or permanently. Hampton Affiliates closed two of its mills in the Willamina area temporarily, trimming its number of employees by 150 in 1989. In 1990, it slashed production at its Fort Hill Lumber Company, blaming high log prices and laying off an additional 20 of the remaining 60 Fort Hill workers.

1990S–2005: EMBRACING NEW TECHNOLOGY, CULTIVATING FOREST LAND IN THE FACE OF FINANCIAL CRISES

In the face of tough times for the wood industry, confrontation between environmentalists and timber interests flared. Those in business favored lifting injunctions that strictly limited federal timber sales in the Northwest, while environmentalists argued to support old growth stands as a means of preserving northern spotted owl habitats. In the midst of this period and at the height of the 1991 industry slowdown, Hampton forged an agreement with Portland-based environmentalists, agreeing to sell close to 29 acres of old-growth trees in Northwest Portland to a nonprofit called Friends of Forest Park for $600,000.

Hampton also made significant purchases of timberland in the early 1990s in response to debate over federal forest management practices: 34,000 acres in northwest Oregon, the Big Creek acquisition, in 1991; 11,000 acres of timberland, the Knappton Naselle acquisition, in southwest Washington in 1993; and 94,000 acres of timberland in southwest Washington, the Ryderwood acquisition, in 1996. "We have to depend on private sources of timber now," said Hampton in a 1994 Business Journal article. "Our ability to cut public lands has dried up." These purchases increased the company's holdings from 37,000 to 182,000 acres of forest land in Oregon and Washington, which, all told, provided about a third of the company's timber supply. The rest of Hampton's raw materials came from state, federal, and private sources. In 1997, under the direction of Ron Parker, who took the reins as CEO of the company in 1995, Hampton also purchased California Builders Supply, adding to its distribution capabilities.

By the mid-1990s, Hampton Affiliates was averaging $700 million a year in revenues, of which 15 percent came from sales to Japan. By the late 1990s, the company was one of the Northwest's largest privately owned lumber manufacturers. The company owned three sawmills in Oregon: the Willamina Lumber Co., which mainly processed Douglas fir for dimensional lumber; the Tillamook Lumber Co., specializing in kiln-dried hemlock; and the Fort Hill Lumber Co., which produced domestic and specialty items from Douglas fir. Until 1999, Hampton Affiliates also owned Precision Lumber Co. in Pollok, Texas, which manufactured southern yellow pine dimensional lumber.

KEY DATES

1942:: L. M. "Bud" Hampton founds Willamina Lumber Co.
1950:: The company creates Hampton Lumber Sales.
1955:: The company creates Hampton Lumber Mills, Ltd.
1960:: The company sells Hampton Plywood Co. to Pacific Lumber Co.
1966:: John Hampton succeeds L. M. Hampton as president of Willamina Lumber Co.
1970:: John Hampton becomes CEO of the company; the company forms Hampton Tree Farms.
1983:: The company, now known as Hampton Affiliates, purchases Champion Plywood.
1986:: Hampton Affiliates purchases the Tillamook Lumber Co. from Smurfit Newsprint Co.
1988:: The company acquires the Fort Hill Lumber Company.
1991:: The company acquires 34,000 acres in northwest Oregon.
1993:: The company acquires 11,000 acres of timberland in southwest Washington.
1995:: Ron Parker becomes president and CEO of the company.
1996:: The Ryderwood acquisition adds 94,000 acres of timberland in Southwest Washington.
1997:: The company purchases California Builders Supply.
1999:: The company acquires Cowlitz Studs.
2000:: The company acquires Lane Stanton Vance.
2002:: The company acquires a sawmill in Darrington, Washington.
2003:: Steven Zika becomes president and CEO of the company.
2004:: The company purchases Wilson River Tree Farm; closes Fort Hill sawmill.
2005:: The company sells Lane Stanton Vance hardwoods distribution business to BlueLin.

The year 1999 was another one of growth for Hampton, which then employed about 750 workers and produced 575 million board feet of dimensional lumber each year. The company bought three mills and a reloading facility in the state of Washington from Pacific Lumber & Shipping Co. It also acquired Cowlitz Studs, branching out into stud lumber production and thereby increasing its presence in the home-center and builders markets. Hampton Affiliates now ranked as the third largest lumber manufacturing company in the Northwest behind Simpson Timber Co. and Sierra-Pacific Industries. It remodeled two of its three new mills and expanded its Willamina facility to increase its annual capacity of eight foot-long studs to about 250 million board feet.

The remodeled mills embraced new industry technology: a planning system to cut wood to traditional Japanese construction sizes; new drying kilns; a fingerjoint facility for joining scrap wood into domestic two by fours and two by sixes; a small log mill for processing logs less than ten inches in diameter; a curve sawing gang which cut with the grain of the wood; and a 3D computer program that could calculate how to carve the most pieces of lumber from raw wood. The new tools allowed for greater efficiencies that became critical to profits during Oregon's financial crisis of the late 1990s during which manufacturers in the wood industry faced growing pressure from Asia's toppling economies. Despite a thriving domestic economy and record housing sales in 1998, the Asian crisis caused lumber prices to plunge; exports of logs and finished lumber to Japan dropped off while Canadian lumber poured into the United States, pushing lumber prices down further. Sawmills and paper mills shut for weeks or months at a time. About 1,000 jobs were cut throughout the top forest products companies. The sector as a whole at the time employed about 60,000 people.

Just as suddenly, during the first six months of 1999, the recovering Japanese market, record home construction, and less imported wood from Canada led to all-time highs in lumber prices and record sales. Mills ran overtime throughout the summer to take advantage of the 35 percent price increase in Douglas fir prices, and retail lumber costs rose accordingly. Some companies found it hard to reenter the Japanese market, but Hampton Affiliates had continued to devote about 10 percent of its business to Japan, and now, once again, saw its overseas sales increase. By 2000, the company ranked as the sixth largest lumber company in the nation and acquired Lane Stanton Vance, a hardwoods distribution business.

Overproduction throughout the industry and a slowing economy, however, led to a precipitous decline in lumber prices during the second half of 1999, and 2000 was, once again, a very poor year for the lumber market overall with the lowest lumber prices in nine years. U.S. exports to Japan had decreased from 1.15 billion board feet in 1990 to 303 million in 1999 and remained depressed because of competition from countries such as Canada, which exported nearly 95 percent of its lumber. Hampton Affiliates shut down its mill at Willamina.

Japan continued to figure prominently in lumber industry fortunes through 2002. A weaker dollar led to redoubled efforts to sell wood to Japan. Although sales to Japan now accounted for less than 5 percent of Hampton's revenues, its Fort Hill sawmill tailored its lumber for the Japanese market, beams up to 120 mm thick and 360 mm wide.

Moving forward on other fronts as well, the company purchased a Darrington, Washington mill from Summit Timber, which it renovated for a spring 2003 reopening. It exchanged 93,500 acres in Longview, Washington, and Cowlitz counties in southwest Washington for 68,000 acres of forestland in Whatcom, Skagit, and Snohomish counties with Lincoln Timber. Between July 2001 and March 2002, the company successfully bid nearly $10 million on enough standing timber to build 4,000 houses. It owned more than 180,000 acres of softwood timberland and marketed 1.4 billion board feet that year.

In 2003, Hampton ranked ninth in terms of timberland owned, behind North Pacific Group at sixth, Columbia Forest Products at fifth, and Roseburg Forest Products at third. Under the direction of Steven Zika, who became its fourth CEO in 2003, the company purchased Wilson River Tree Farm and closed its Fort Hill sawmill in 2004. In 2005, it sold Lane Stanton Vance hardwoods distribution business to BlueLin. Hampton Affiliates ranked third in the Oregon Business Private 150 in 2005. As the fourth largest lumber producer in the United States and the second largest in the Northwest, the company continued on its path of growth.

PRINCIPAL SUBSIDIARIES

Willamina Lumber Co.; Tillamook Lumber Co.; Mid-Valley Resources, Inc.

PRINCIPAL COMPETITORS

Georgia-Pacific Corporation; International Paper Company; Louisiana-Pacific Corporation; Roseburg Forest Products Co.; Sierra Pacific Industries; Simpson Investment Company; TreeSource Industries, Inc.; West Fraser Timber Co. Ltd.; Western Forest Products Inc.; Weyerhaeuser Company.