CHANGES IN THE FOREST PRODUCTS INDUSTRY

Someone once said that the morethings change, the more they stay the same.This could certainly apply to the forestproducts industry. When I began as a youngforester in 1971, the Georgia-Pacific Corporationspun off several of its mills and associatedforest lands to form Louisiana-Pacific, a totally separate and independentcompany. This action was due in part tofederal regulations against monopolies.Within recent years, mergers and acquisitionshave reshaped the forest productsindustry. Most recently, Weyerhaeuser haspurchased the Willamette Corporation. Previously,International Paper Company purchasedChampion International, Federal PaperBoard and the Union Camp Corporation.Jefferson-Smurfit purchased Stone-Container Corporation. The Mead Corporationand Westvaco have merged to formMeadWestvaco. The list of forest productscompanies continues to dwindle.With all of the consolidation in the forestproducts industry, at least one company'sprocurement practices have come underscrutiny in South Carolina. Landownershave filed a law suit against InternationalPaper Company, alleging that the company's procurement system has resulted inpulpwood price fixing that has cost landownersin four states millions of dollars inlost timber sales revenue.The plaintiffs are four individuallandowners who own property in SouthCarolina. The suit claims illegal procurementpractices occurred in North and SouthCarolina, Georgia, and Virginia and allegesthat International Paper Company operatedin violation of the Sherman Anti-Trust Act.The suit cites that the company'squality supplier program is a dramatic andunlawful departure from International Paper's prior practice of setting only deliveredpulpwood prices at its mill. The lawsuit points out that Quality Supplier contractorsare independent contractors andthe system unreasonably restrains or eliminatesindependent price competition fortimber. As a result of the quality supplierprogram, it is alleged that all buyers bid onthe same stumpage on a price fixed by InternationalPaper. The complaint alsostates that since International Paper implementedthe quality supplier program, theaverage pulpwood price in South Carolinadeclined 35%.