CEO: Plum Creek here to stay

Plum Creek Timber Co. is "committed long-term" to its operations in Montana, even with plans to sell 320,000 acres in a sweeping conservation deal, said Rick Holley, the company's president and chief executive officer.

Holley discussed Plum Creek's rise into real estate and other diversification efforts across the country, but he stressed that Montana and the Flathead Valley in particular remain the core of manufacturing operations that generate about 25 percent of the company's overall revenue.

Sen. Max Baucus, D-Mont., announced the Montana Legacy Project early this month, a transaction that will occur over the next three years with 320,000 acres of Plum Creek lands ultimately being conveyed to state, federal or private ownership. The deal will involve "fiber supply agreements" to ensure timber for Plum Creek off those lands for up to 15 years.

Meeting with the Inter Lake editorial board Tuesday, Holley said he is confident the company will have a long-term presence in Montana beyond that period.

"We wouldn't be spending $150 million" on manufacturing improvements in Western Montana over the last 10 years if there were plans to gradually divest from Montana, he said.

Plum Creek is the nation's largest private timberland owner, with 8 million acres in 20 states. It owns 1.2 million acres in Montana, and the lands it retains will only grow in value and remain productive timber lands for the company, Holley said.

Much of the land selected for the Montana Legacy Project is distant from manufacturing operations and less productive than acres that are retained.

"Economically, Montana is very important to Plum Creek and Plum Creek is very important to Montana," Holley said, noting that 1,400 of the company's 2,000 employees reside in the state - most of them in Northwest Montana.

He said the company bases all of its nationwide information technology and accounting operations in Columbia Falls.

The guarantee of a continued timber supply was critical to the company's participation in the Montana Legacy Project.

"If there had not been a fiber supply agreement we would not have done it," Holley said.

Holley said there is a misperception that Plum Creek is selling off land for development at a rampant pace in Montana, when in reality only 3,000 acres have been developed over the last five years. He expects the same level of development over the next five years.

Far more land has gone toward conservation purchases or easements, which retain public access and traditional forest management, he said.

Hank Ricklefs, Plum Creek's vice president of northern resources and manufacturing, said the company has increasingly relied on sourcing timber from state, federal and tribal lands over the last five years, and that there will likely be an increased reliance on those sources in the future.

Ricklefs said it is important that Montana maintain a viable wood products industry - extending beyond Plum Creek - to remain competitive in a global market.

"The question is how well this region competes" with other timber-producing regions, Ricklefs said.

"Lumber is a tough business" in which Plum Creek likely couldn't survive without efforts to diversify the company and its revenue, Holley said.

Compensating for losses in lumber, Plum Creek has relied on medium density fiberboard, plywood, land sales and a variety of other revenue sources.

Last year, the company made $500,000 in lease revenue from businesses that are collecting decorative rock from company lands west of Kalispell, and it made $20 million in oil and gas leases on lands it owns elsewhere in the United States.

Holley said Plum Creek is always looking for new land investment opportunities, but that has become more difficult with stiff competition from Timber Investment Management Organizations - basically pension funds that invest in timberland.

Those types of investors could come into play in the purchase of Plum Creek lands involved in the Montana Legacy Project, Holley said, but with the conservation and access conditions attached to the project.

The Montana Legacy Project was made possible by a federal bonding provision in the Farm Bill recently passed by Congress. The provision was tailor-made for Plum Creek, developed by Baucus and his staff, the Trust for Public Lands and the Nature Conservancy.

The "Qualified Conservation Forestry Bond" provision is expected to generate about $250 million of the overall $510 million purchase price for 320,000 acres of Plum Creek land. The two conservation organizations and their partners must generate the balance in fundraising mostly from private sources.

Plum Creek recently has been scrutinized by Western Montana counties and Sen. Jon Tester, D-Mont., over negotiations with the Forest Service regarding long-standing cost-share agreements for roads that provide access to Plum Creek lands and national forest lands.

There was concern, particularly in Missoula County, that the company was attempting to modify the agreements to the detriment of taxpayers as part of its land sale program.

Holley said that is not the case; rather, the company was attempting to clarify agreements that have been in place since the 1960s, and it was asked by the Forest Service to require fire prevention and road maintenance covenants on lands it sells for development.

Holley said that issue "will largely go away" for company lands that are sold as part of the Montana Legacy Project, particularly in Missoula County, where 70 percent of the land included in the deal is located.

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com