Increases in China's economy could help Cowlitz recovery

2011-03-12T21:30:00Z 2012-09-27T08:19:42Z Increases in China's economy could help Cowlitz recoveryBy Erik Olson / The Daily News Longview Daily News
March 12, 2011 9:30 pm  • 

Jeremy Krausse loved working in the woods, going to work as a logger right out of high school. The work was good but unsteady, with no benefits and long layoffs.

"You didn't know when it was going to happen, or how long," said Krausse, 28 of Woodland.

Now Krausse, married with two young boys, works at Pacific Lumber & Shipping in Longview as a shipping coordinator. He's the beneficiary of a hiring blitz at Pacific Lumber, which has seen its log-export business boom during the recession because of demand from China.

In the past two years, Pacific Lumber has doubled log exports, expanded its workforce at the Port of Longview from 19 to 39, and added new equipment, including an $800,000 log stacker.

"It's been a continual ramp-up for the last two years," said Tom Leeds, president of the Seattle-based company.

About 60 percent of the logs are destined for China, mostly the lower quality ones used to make wood palettes and frame walls, company officials said. The 46-acre Port of Longview site, the company's largest, is crammed with logs, and cars are sometimes double-parked inside the company's tiny parking lot to accommodate the boost in employees and brisk log-truck traffic.

The bustle at PL&S is evidence that China's booming economy is helping plant seeds for economic recovery in Cowlitz County, whose ports will provide easy export of logs, grain and possibly coal and other natural resources to destinations around the Pacific Ocean.

China is now the second-largest economy in the world behind the United States, having surpassed Japan in February. Surging nearly 10 percent in 2010, China's gross domestic product was $5.88 trillion in 2010, and the world's most populated country is gobbling up whatever resources it can find to support its 1.3 billion people.

Last week, the Chinese government announced a $200 billion investment in affordable housing, designed to offset huge jumps in property values, according to media reports. By 2020, China will account for one-fifth of the world's building industry, according to the Financial Times.

"They say the national bird of China is the crane. They're referring to the construction crane," said Leeds, who returned from a business trip to China last week.

Demand for resources soaring

In addition to population growth, China has cut back on imports of Russian logs and lumber due to high tariffs, opening up markets for U.S. exporters, analysts say.

U.S. log exports to China totalled 2.4 million metric tons in 2010, a staggering 2,300 percent increase from the 100,000 metric tons in 2007, Wood Resources reported.

The story is the same at the Port of Longview and Weyerhaeuser Co. docks, where total log exports rose 60 percent in 2010. Japan remains the area's largest trading partner for logs, but China's imports from Longview docks rose 427 percent in 2010, the largest increase by far, according to Portland-based Jones Stevedoring Co.

Next door to Pacific Lumber, sales of cement bag paper at Longview Fibre Paper and Packaging are rising because of export sales to China for construction, company spokeswoman Sarah Taydas said. Longview Fibre has also boosted export of roll pulp, which Chinese manufacturers use to manufacture their own linerboard for cardboard boxes and other packaging, she said.

The Chinese appetite for energy and food also is helping fill the Lower Columbia region's economic basket.

Officials at the Port of Longview say growing Chinese demand is the biggest reason for construction of the $200 million EGT grain terminal, expected to go into operation this fall. Over the next decade, China's demand for soybeans will increase by 21.6 million metric tons - about 80 percent of the total worldwide demand for exports, according to the federal government.

The grain terminal is expected to add 50 full-time longshore jobs to the area when it opens this fall.

Chinese demand for coal has sparked the most controversial new potential business in Cowlitz County, a proposed new coal terminal at the former Reynolds smelter site west of Longview. Millennium Bulk Terminals, owned by Australia-based Ambre Energy, hopes to export between 5 million and 20 million tons of coal annually. The company hopes to employ about 70 full-time workers at the plant.

The project has been held by appeals, and opponents say the United States should be halting, not expanding, the burning of coal because it produces carbon emissions that contribute to global warming.

Big opportunities, big challenges

Area business leaders say they're planning to take more trips to China to visit current customers and attract new ones to the area. China is a fascinating, fast-evolving country with big opportunities and big challenges for U.S. businesses, they say.

"China changes every time we go," said Valerie Harris, marketing director for the Port of Longview.

Port of Longview officials typically make one trade mission to Asia per year, hoping to boost the port's image overseas and attract more cargo, said Ken O'Hollaren, the port's executive director.

O'Hollaren and Harris took their most recent Asian trip in November, spending three days in Shanghai and Beijing and the bulk of the trip in Japan and South Korea. O'Hollaren and Harris say they plan to spend more time in China during their next trip later this year.

"Forging very strong partnerships is very essential. Once you've got a friend, they're always a friend," Harris said.

Rick Winsman, president of the Kelso-Longview Chamber of Commerce, said he saw a country in desperate need to improve its factories during his most recent visit to China.

During a 2009 chamber delegation trip, Winsman said he visited a dark, cold Chinese factory room, which housed about two dozen workers. Each assembled parts at a table with a single light bulb illuminating the room. The temperature was probably in the 50s, with no evidence of a heating or air-conditioning system, Winsman said.

China needs raw materials, such as wood and grain, that are produced or shipped through places like Cowlitz County to keep its economy moving, he said.

"It's still a nation that is starving for work. They've got more people than they've got jobs," he said.

Copyright 2015 Longview Daily News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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