Roseburg Forest Products Company

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Roseburg Forest Products Company

P.O. Box 1088
Roseburg, Oregon 97470
U.S.A.
Telephone: (541) 679-3311
Toll Free: (800) 245-1115
Fax: (541) 679-9543
Web site: http://www.rfpco.com

Private company
Incorporated: 1936 as Roseburg Lumber Company
Employees: 3,700
Sales: $750 million (2002 est.)
NAIC: 113110 Timber Tract Operator; 321113 Sawmills; 321213 Engineered Wood Member (Except Truss) Manufacturing; 421310 Lumber, Plywood, Millwork, and Wood Panel Wholesalers

Roseburg Forest Products Company is one of the largest private lumber companies in the United States. The company is a major supplier of engineered wood products. Its engineered wood products include brand name joists, rimboard, and under-layment. It markets a variety of traditional lumber produced from its stands of timber in Oregon and California. The company also manufactures many specialty panels and many grades of plywood and siding. About half Roseburg’s sales come from plywood. The company owns some 800,000 acres of timberland as well as processing plants in and around Roseburg, Dillard, and Riddle, Oregon, and in northern California. Some of Roseburg’s specialized facilities are the largest of their kind in the United States. The firm was founded by Kenneth Ford and is now run by his son, Allyn Ford. The Fords are major philanthropists known for their Ford Family Foundation.

Origins in the Great Depression

Kenneth Ford was born in 1908 in Asotin, Washington, a small town just across the river from Lewiston, Idaho. He came from a working-class background and did not continue his education beyond high school. His father owned a small lumber business where the young Ford worked through most of his twenties. Ford was known for his mechanical ability. He was always interested in finding ways of making equipment work more efficiently. As it grew, his company earned a reputation for quick adaptation of new technology. Ford was famous for tinkering with equipment under arduous conditions, even after he became one of the wealthiest men in the country and could have left that kind of work to others. Along with his mechanical skill, Ford also had an eye for a bargain and was wise in predicting which way the lumber market would move. He worked for his father until 1936, when he bought a sawmill on Diamond Lake Boulevard outside of Roseburg, Oregon. This single mill, called Roseburg Lumber Co., was the germ of the present company. Ford bought and refitted salvaged equipment from other mills, supervised a crew of 25 men, worked as head salesman for the outfit, and sometimes even filled in as cook at the logging camp to make a success of his business.

This was the depth of the Great Depression and not a propitious time for most new businesses. Nevertheless, Ford used the revenue from the Roseburg mill to buy up timberlands in the area. Because the economy was so poor, many owners were unable to pay the property taxes on their land, and Douglas County had repossessed thousands of acres of prime forest land. By 1944, Ford was able to secure a bank loan sufficient to build a new sawmill in Dillard, Oregon. Over the next few years, Ford made large purchases of Douglas County timberlands, which he was able to get for as little as $2 an acre. He soon owned some 160,000 acres in Douglas County. Rather than cut on his own land, however, Ford secured rights to cut timber on nearby government-owned land.

Postwar Growth

After World War II, the housing market in the United States boomed, and the lumber industry also enjoyed a rapid revival. Roseburg Lumber did well in the 1950s. The company began producing plywood in 1952 and steadily built up this aspect of the business over the next two decades. Roseburg Lumber opened a veneer plant in 1956 and started a second plywood facility that year. It bought several plywood operations in the area as well as building its own. In 1962, it opened a panel plant, and in 1965 it started its first particleboard plant. Kenneth Ford was the only stockholder in Roseburg Lumber, and he reinvested much of the company’s income. The company bought or opened three new facilities in 1965 and did the same again in 1967. Roseburg bought land as well as processing plants and mills, while continuing to use logs from government property. Roseburg Lumber was soon the largest lumber company in the area, though still small compared to industry heavyweights like Georgia-Pacific and International Paper. All its acquisitions were focused on lumber facilities and timberlands, with the exception of its purchase of a telephone equipment maker in 1963, which became known as Ford Industries Inc.

Roseburg invested heavily both in prime equipment and in new technology that let it get more out of its timber. During the 1960s, Roseburg set its sights on exporting wood chips to Japanese paper companies. The company bought a fleet of trucks as well as tons of new wood-chipping equipment. The company’s Coos Bay, Oregon, wood-chipping plant became the largest of its kind in the nation, and Roseburg secured a steady spot as a leading chip exporter. The company continued its growth in the 1970s with a dizzying number of acquisitions as well as breaking ground for new plants. It purchased a California manufacturer, Doors, Inc., in 1971, and the next year built a new truck shop, opened a new particleboard facility, and purchased a sawmill from Dillard Lumber Co. In 1974, it opened two new chipping plants and purchased another sawmill. That year, Ford hired William Whelan, formerly a top executive at the giant paper company Champion International, to be his second-in-command. Ford’s son, Allyn, had joined the company in 1968, and he was also a vice-president of the firm. In 1976, Kenneth Ford was injured in a car accident, and his health suffered. Nevertheless, he continued to work extremely long hours. In 1978, Ford offered the presidency of the company to Whelan. Whelan refused, however, apparently because he did not believe Ford would step back enough to allow him free reign. Whelan then left the company.

Industry Prominence in the 1980s

By the end of the 1970s, Roseburg had grown to one of the largest plywood producers in the country, and the industry leader in sanded plywood. Revenue by 1979 was estimated at around $400 million. Kenneth Ford’s net worth was estimated at around $500 million, and the company remained firmly in his hands. The company was one of the largest private firms in Oregon, though Ford himself lived quietly in Roseburg and was described in Business Week (September 17, 1979) as frugal and secretive. Roseburg made waves that year when it made a major purchase of timberlands outside Oregon. The company put down $253 million, outbidding half a dozen other contenders, for 323,000 acres of northern California land owned by the Kimberly-Clark Corporation. This was one of the largest timber purchases ever made in the region. The acquisition brought Roseburg’s holdings to 500,000 acres of timberland.

This sudden expansion notwithstanding, the company’s strategy remained the same: to hold onto its own lands while contracting to cut timber from government-owned forests. In the early 1980s, the timber industry suffered a downturn as the housing market slumped. The downturn hit Roseburg particularly hard. Because it had contracted to cut government timber while prices were high, it was liable for significant losses when prices fell over the next few years. During the late 1970s, Roseburg signed contracts with the United States Forest Service worth $383 million for 1.3 billion board feet. The company’s average cost worked out to about $300 per 1,000 board feet. By 1983, however, the going price per board foot was only $120. Roseburg stood to lose a huge amount of money if it harvested the wood at this price, and his was not the only lumber company in this position. Scores of companies in the Northwest were affected, and total possible industry losses were estimated at $2 billion, according to Forbes magazine (January 30, 1984). While a legislative bailout stalled, President Reagan acted to grant relief to the industry by negotiating a five-year extension on the unprofitable contracts. At Roseburg, business picked up rapidly, and by 1984 the company had opened a new melamine plant in Dillard, Oregon.

In 1985, the company went through a series of organizational changes. A new company was formed, Roseburg Forest Products, which then bought the assets of Roseburg Lumber. The company also formed another subsidiary, Roseburg Resources, which managed the timberlands. The next year, the company formed RLC Fibre Foreign Sales Corporation to handle another aspect of the business. John W. Stephens was Roseburg’s president in the mid-1980s, but the aging Kenneth Ford did not retire. Roseburg continued to buy land and facilities throughout the late 1980s.

New Leadership in the 1990s

By 1990, Ford was 82 years old, and Roseburg’s annual sales had risen to $600 million. That year, the company seemed to be for sale, and the Business Journal-Portland reported that four groups of investors were vying to acquire Roseburg. Roseburg’s union, the Western Council of Industrial Workers, also drafted a plan for an employee buyout of the company. Allyn Ford, then 48 and the executive vice-president of Roseburg, had no comment for the Business Journal, and ultimately no deal materialized. The company did have sluggish sales that year, and by November Roseburg announced a month-long layoff of 700 people and the temporary closing of three mills.

Company Perspectives

For more than half a century Roseburg Forest Products has produced quality wood products for customers throughout North America and is recognized as a major supplier of wood products. An excellent natural resource base, state-of-the-art manufacturing facilities, talented and experienced associates, and a reputation for quality products and superior customer service have been key elements to our success.

In 1995, the company announced a preliminary agreement with Weyerhaeuser Co., one of the nation’s largest lumber companies, to buy 600,000 acres of Oregon timberland for $303 million. However, Roseburg abruptly pulled out of the Weyerhaeuser deal and instead announced that it was buying the western timberlands subsidiary of another giant lumber company, International Paper. Roseburg formed a partnership with another private Oregon timber firm, Hampton Affiliates, and the two bought an interest worth $750 million in International Paper’s area forests. The arrangement brought Roseburg 214,000 acres of second-growth timber in the mountains between Reedsport and Eugene. Though Roseburg again offered no comment on the deal, it seemed to be part of a long-term strategy to supply the company with enough timberland so it would no longer need to rely on government-owned trees.

Kenneth Ford died in 1997, and Allyn Ford became president and chief executive of the company where he had already worked for 30 years. The younger Ford seemed determined to continue running the company much as his father had. Part of this strategy was planning far ahead. The company newspaper, the Roseburg Woodsman (May 1997), spoke of the company having purchased “enough timberlands to sustain itself well into the 21st century.” Other goals the company had set included continuing the company’s dominance in engineered woods. Long a leader in plywood production, in the late 1990s Roseburg founded a new Roseburg Engineered Wood Products division, headquartered in Riddle, Oregon. The new division had its own sales staff, and in 1999 it broke ground on a $75 million manufacturing plant for engineered wood products, the largest of its kind in North America.

Sales grew over the late 1990s and early 2000s at a rate of between 5 and 10 percent a year. By 2002, Roseburg’s annual revenue was estimated at $750 million. Nevertheless, in the early 2000s the company began to suffer from increased competition in the plywood market. Cheaper imports from Canada and South America eroded Roseburg’s sales and hurt other U.S. plywood makers as well. In 2003, the company announced it would cut its plywood production by 20 percent, which meant eliminating the jobs of 450 workers. This was bad news for Douglas County, where Roseburg was the largest employer, but the company hoped to make up for the cuts in plywood production with increases in other areas, such as lumber and engineered wood for residential construction. Roseburg also spent $20 million in 2003 to buy a particleboard mill in Missoula, Montana.