Largest sawmill in the world to SC?

[duckman88]

CUangler, a mill cannot operate like a walmart. There are antitrust laws that prevent this from happening. Do a google search on International Paper and the lawsuit that happened in South Carolina.

[SOUTHERN WOODS]

You either learn to adapt or get left behind. It's the same in any business.

The "little man" when he first started probably hurt someone else's business way back when. Competition is good.

As far as believing that this company will pay higher prices to run the little mills out of business and then drop down to one set price .... read up on the ******* Antitrust Act and see how that worked out for IP.

[slowiedawg]

You people have no concept of business, especially the timber business.

Couldn't agree more. If this mill opens it will not run Dempsey or Collums out of business, the sawtimber market has sucked since the crash. Forest product markets are driven by the people who own the product, ie landowners. The reason landowners are harvesting smaller wood is bc we have a strong paper (pulp) market. Why because we have numerous paper mills. We need these harvests to happen, keeping a forest rotation on an even keel, benefits the future of the market as well as other factors such as wildlife habitat, etc. The reason this other mills are speaking out is becasue they know that they will have to increase their prices.

[Timberman22]

Spot on........be ready for Hutchy and Mdbsquaredtothe2ndpower to let you know how stupid you're for having a little common sense.

[CUAngler]

CUangler, a mill cannot operate like a walmart. There are antitrust laws that prevent this from happening. Do a google search on International Paper and the lawsuit that happened in South Carolina.

Thanks for the response. The only thing on google that looked relevant was a 2002 lawsuit by SC landowners in when IP was guilty of being "engaged in an unlawful conspiracy to artificially depress the prices at which the company procures fibers for its mills." Is that it?

Anti-trust laws are in place to prevent collusion and anti-competitive practices.
The scenario that I proposed was the opposite of this.

[duckman88]

It might seem that it is but, let's say that the new mill offered higher prices to start. They could not then lower their prices after having the higher prices in the sole name of increased profits. Like has already been stated, this should not be looked at from the mill perspective but the landowner perspective. They would get the short end of the deal if this new mill lowered the prices. If the new mill started with a higher price and kept it then that it their decision although it would be hard for the mill to survive in the long run if they kept their prices high, simply because thats not how business works regardless of the size of the business. Therefore, under anti-trust laws they would be encouraging/engaging in anti-competitive prices. This would be especially true if they were to gain the majority in the timber market.

And yes that is the lawsuit. It was settled out of court

Also, this mill would be a great opportunity for a ton of SMALL BUSINESSES involved in the timber market.

[GMAC]

Raybird gets it. Why should this German company get a bunch of tax breaks and other subsidies that the existing local folks don't enjoy? Could that be why they can offer premium prices? Move along, folks. No free enterprise to see here.

[mdb2]

Gmac is spot on. Dempsey has been teetering for years, and you think the largest sawmill in the world next door is gonna help out? Maybe if they create a niche for them to fill for the larger mill. Or maybe if the German mill buys dempsey out. A lot of maybes there. New company gets tax breaks and other incentives. Old company doesn't. How is that fair business practice?

[b-stick]

it will hurt our mill as far as sawtimber goes..

should not effect us to much on pulpwood.

[dfasano]

Klausner is flat investing some money in the US economy. Don't hate, we need this.



Klausner to build second southern pine sawmill in Suwannee County, Florida

PORTLAND, OR, Jan. 29, 2013 (RISI) - Florida Governor Rick Scott announced that Klausner Lumber will construct a sawmill, Klausner Lumber One, in Suwannee County with an investment of $130 million, creating 350 permanent jobs.

In December of last year, the Klausner Lumber Two project in Enfield, NC - also a 350 job project with a $110 million investment, was announced by North Carolina Governor Bev Perdue.

Klausner has additionally completed all the paperwork for a third facility in Orangeburg County, South Carolina, but no announcement has been made as yet for this facility.

[duckman88]

GMAC,
Do you know what the possible breaks they would get are?

Also, like I said, if no one, especially American's are willing to invest in their own country (they would rather go to china) giving some sort of breaks are the only way to get new businesses in our country at a time when we desperately need them. I just think it is interesting because if it were an American company building this new plant and there were some incentives/tax breaks no one would be complaining about the loss of free enterprise.

[GMAC]

All I know is that the article says "millions". State and local incentives are too many and too complex to list, but they include: Free land, per-job created tax credits, fees in lieu of property taxes, accelerated depreciation schedules, infrastructure committments, and so on.

[dfasano]

Although South Carolina has an abundance of wood today, one recent consulting study said the state is overcutting small trees and not planting as many trees as in the past. In the next decade, that could come back to haunt the state if Klausner locates here, Scott said.

They are referencing a study I put together with two other coworkers for a presentation our President did.

We modeled the forest of the SE and grew it out 50 years making a few conservative assumptions.

[CUAngler]

It might seem that it is but, let's say that the new mill offered higher prices to start. They could not then lower their prices after having the higher prices in the sole name of increased profits. Like has already been stated, this should not be looked at from the mill perspective but the landowner perspective. They would get the short end of the deal if this new mill lowered the prices. If the new mill started with a higher price and kept it then that it their decision although it would be hard for the mill to survive in the long run if they kept their prices high, simply because thats not how business works regardless of the size of the business. Therefore, under anti-trust laws they would be encouraging/engaging in anti-competitive prices. This would be especially true if they were to gain the majority in the timber market.

I understand where you are coming from, but I guess I just see it differently.

I disagree that that they can't operate by offering a premium price. As a large scale operation, which they definitely will be, they are going to be operating on total volume, not on a percentage of their overhead. When you increase revenue, you can get away with a decreased profit margin. For example, Wal-mart and CVS are able to waltz into smaller areas and charge less because they sell more, even though they make less money on each transaction than mom and pop down the road. As long as they can prove that they are working within legitimate price competition, they violate no anti-trust statutes. It's pretty tough to charge a company with predatory pricing, like what I suggested, and even tougher to get a conviction, even though we know it happens. The burden of proof is on the plaintiff and it's pretty high. Most competitors are long gone before the case even goes to trial. Yes, it's not normal business procedure, but Klausner seems to have significant financial backing or reserves to make it happen.

[DJP]

Incentives are offered to any company (existing and/or new) that invest serious capital in the local economy that results in new jobs.

[duckman88]

Yea, and they could get all that but we don't know as of now. But, when you look at their entire investment I think that those breaks will proportionally extremely small to the overall investment.

This still needs to be looked at from the landowners perspective and not the mill perspective. If the mills want to survive, they will need to offer competitive prices. From the landowners perspective this would be a great thing to bring to SC. Not only for them but for the consultants, wood buyers, loggers, truckers, planters, seed orchards, seed nurseries, local feed and seed/co-ops etc..... all will benefit from this mill and those with the exception of some of the wood buyers and a couple of the consulting groups are all small businesses. The mill would not over-harvest because they would put themselves out of business. Just because a mill is capable of running x million board feet does not mean that they will.

I Just go back to the fact that if these companies were not investing in America, none would.

[duckman88]

Yea, the difference is, in those markets, we are paying them. In the timber market, they are paying us. Offer me a good price or I will go to another mill that will. The forest industry is a much different market then most of the markets out there.

[flockbuster]

Sons of bitchs will probably get here just in time to start cutting during turkey season. Damn it.

[GMAC]

Exactly, DJP. Which is another nail in the coffin for small locally ownd businesses. They're just not big enough to invest "serious" capital. So the whole system is slanted towards big out of state companies. Say what you want. The incentive game is government economic planning. Or meddling. Take your pick. Why don't they just invest that money in reducing the employment taxes across the board for everyone. Now there's a novel idea. Wonder how many jobs that would create? I know I'd probably take on somebody else.

[SOUTHERN WOODS]

I understand where you are coming from, but I guess I just see it differently.

I disagree that that they can't operate by offering a premium price. As a large scale operation, which they definitely will be, they are going to be operating on total volume, not on a percentage of their overhead. When you increase revenue, you can get away with a decreased profit margin. For example, Wal-mart and CVS are able to waltz into smaller areas and charge less because they sell more, even though they make less money on each transaction than mom and pop down the road. As long as they can prove that they are working within legitimate price competition, they violate no anti-trust statutes. It's pretty tough to charge a company with predatory pricing, like what I suggested, and even tougher to get a conviction, even though we know it happens. The burden of proof is on the plaintiff and it's pretty high. Most competitors are long gone before the case even goes to trial. Yes, it's not normal business procedure, but Klausner seems to have significant financial backing or reserves to make it happen.

Look at it like this...

Did Walmart put CVS out of business?... No (at least not in my area)

Did Walmart put Piggly Wiggly out of business?.... No

Did Walmart put some little guy in BFE out of business?... Possibly

Did the little guy who closed up shop put someone out of business when he started 50 years ago... Probably