Sierra Pacific Industries History

Address:

P.O. Box 496028
Redding, California 96049
U.S.A.

Telephone: (216) 267-4870
Fax: (216) 267-7876

Private Company
Incorporated: 1951
Employees:3,200
Sales: $1 billion (1997 est.)
SICs: 2411 Logging; 2421 Sawmills & Planing Mills--General; 2436 Softwood Veneer & Plywood; 2611 Pulp Mills; 2653 Corrugated & Solid Fiber Boxes; 2431 Millwork; 2621 Paper Mills

Company Perspectives:

Sierra Pacific's confidence in the future is solidly rooted in some of the finest timberland in the world. Stretching from near the Oregon border on the Pacific Coast to the Lake Tahoe area of central California, Sierra Pacific lands grow Ponderosa Pine, Sugar Pine, White Fir, Douglas Fir and Cedar. The land includes one of the first official tree farms in California, which has produced three timber harvests since 1944. Sierra Pacific lands represent the largest private industrial forest ownership in California.

Company History:

The largest timber company in California, Sierra Pacific Industries harvests and mills timber in northern California. During the late 1990s, Sierra Pacific produced an estimated 1.3 billion board feet annually, ranking as the third-largest producer of lumber in the country behind Weyerhaeuser and Georgia-Pacific. The timber to produce the lumber was logged from 1,332,000 acres of land controlled by the company and its owners, the Emmerson family. At the head of the family was "Red" Emmerson, who began the business with his father. By virtue of the vast tracts of prime timberland owned by Sierra Pacific, Emmerson ranked as the largest private landowner in the country, a distinction he attained by eclipsing media mogul Ted Turner in 1997.

Founder's Origins

Archie Aldis "Red" Emmerson began learning the forest products business as a young child, when he watched his father build crude, temporary sawmills in the family backyard. Red Emmerson was a toddler at the time, living in Newburg, Oregon, with his mother, Emily, and his father, Raleigh Humes "Curly" Emmerson. Newburg was in forest country, part of the timber-rich Pacific Northwest, where nearly every occupation during the early decades of the 20th century had something to do with timber and its derivatives. Curly Emmerson was no exception, but his years in Newburg as a sawmill operator were not successful. His business failed, and by the time Red was five years old, he and his wife had decided to go their separate ways. Curly Emmerson eventually left Newburg and headed south to northern California. Emily Emmerson remained in Newburg, in charge of raising Red.

Emily Emmerson did not assume the sole responsibility of raising Red for long; she left that duty to others, namely Seventh Day Adventists. After his parents were divorced, Red Emmerson was sent to a small town in eastern Washington State named Spangle. There, the young Emmerson attended a Seventh Day Adventist boarding school called the Upper Columbia Academy. Emmerson proved to an industrious worker at a young age. He put himself through school by attending to the school farm and by driving a truck, for which he earned 35 cents an hour. Emmerson also spent one summer working on a cattle ranch. His penchant for extracurricular labor aside, Emmerson did not fair well at the Upper Columbia Academy, at least in the minds of those in charge of the boarding school. The Seventh Day Adventists failed to produce their desired results with Emmerson, and expelled him for hanging a condom on a classroom chalkboard. It was time for Emmerson to move on once again.

With his days at Upper Columbia Academy at an end, Emmerson moved to northeastern Washington State to finish his education at a public high school in Omak, in the heart of the state's cattle country. By the time Emmerson had finished high school, he had been exposed to three localities dominated by their natural environment: Newburg by vast tracts of timber, Spangle by endless fields of agricultural crops, and Omak by multitudinous herds of cattle. For his future, Emmerson did not select any of these communities, but he returned to his roots in a sense by reuniting with his father in northern California, where towering forests were as plentiful as in Newburg. From the end of his high school years forward, the theretofore itinerant Red Emmerson remained in northern California, becoming by the century's end the largest private landowner in the United States.

Emmerson did not raise to such lofty heights on his own. Initially, he had the help of his father, and together they built the foundation for the Sierra Pacific Industries of the 1990s. When Emmerson joined his father in northern California, his father was working in the lumber business. Red followed Curly's lead, and finished up his teenage years as a greenchain puller piling lumber as it exited the sawmill. The industriousness that had demonstrated itself at a young age continued to be displayed as Emmerson entered adulthood: By the time he was 20 years old Emmerson and his father had leased a sawmill; two years later, the father and son team had built a mill of their own, and Red Emmerson was managing the entire business.

Post-1950s Development

Together, the two Emmersons fared better in the forest products business than Curly Emmerson had done 20 years earlier with little Red Emmerson watching nearby. With Red Emmerson taking on nearly all of the managerial duties associated with running the company at an early age, much of the credit for Sierra Pacific's survival went to him. And survival was not an easy accomplishment during the era when Red Emmerson took command. The wave of prosperity created after World War II rejuvenated many industries, including the construction industry, which was the largest single market for lumber companies such as Sierra Pacific. The demand for new housing, which had remained stifled during the country's decade-long Depression and inhibited to a large extent during the war, sharply increased during the postwar years, making the harvesting and manufacture of timber a lucrative business to enter. As a result, the number of lumber mills in operation soared, but as more and more new lumber companies entered the business and satisfied the demand for construction lumber, competition within the industry became increasingly severe. Such was the case during the 1960s when Emmerson was directing the fortunes of Sierra Pacific.

Small, under-capitalized lumber companies were forced to exit the business, engendering a precipitous drop in the number of mills in operation throughout the country. From 1950 to 1970, the number of lumber mills in the United States plunged from more than 50,000 to less than 35,000, as the lumber industry underwent two decades of significant change. In the new business environment created during this span, the logging and manufacture of timber became an industry in which only those companies able to make efficient use of raw materials could effectively compete. Integrated plants that used as much of a log as possible became crucial to success in logging's new era, a period in which the manufacture of plywood, particleboard, and paper became integral contributors to a lumber company's profitability. Well-financed companies able to change with the times and incorporate new logging and manufacturing techniques into their operations were able to flourish, while others dropped by the wayside.

Not far north of Sierra Pacific's operations in northern California, market conditions were particularly harsh, and their severity did not recognize state borders. In Oregon, the number of lumber mills plummeted between 1950 and 1970, falling from 1,455 to a mere 450. As elsewhere, the necessity for efficiency and diversification had weeded out those companies unable to change with the times. Under Emmerson's stewardship, Sierra Pacific not only changed with the times but it sometimes took the lead as an innovator. For instance, well before paving mill yards became a common practice, Emmerson paved his, an innovation that reduced man-hours in the loading yard and prevented his saws from getting jammed by gravel and mud clinging to uncut timber. Less damage to the saws meant less time spent changing dull saws, saving further money for the company.

After two decades of disruptive change dramatically altered the face of the timber industry, those companies that had survived did not settle into a more peaceful period of existence. The decade between the mid-1970s and the mid-1980s was framed by two painful economic recessions, forcing timber companies such as Sierra Pacific to either adapt to the economic environment or beat a hasty retreat. Chiefly to blame were rising interest rates, which crippled the construction market, and cheap timber from Canada and the southern United States. Many timber companies failed to adapt to new economic conditions and another instance of corporate Darwinism swept through the industry, weeding out those companies that could not measure up to the times. Sierra Pacific took full advantage of the situation and managed to record enviable growth as other companies struggled to survive. Between 1976 and 1986, the company spent roughly $60 million acquiring the assets of its financially strapped competitors. Sierra Pacific's remarkable progress did not go unnoticed, as one timber leader, Louisiana Pacific Corp.'s chairman Harry Merlo, testified, "As people got out of sawmilling, what did they do? They sold their assets to Red. He was the last man standing."

Having withstood the test of times and endured--even prospered--during anemic economic conditions, Sierra Pacific exited the mid-1980s in good stead. Ahead, however, loomed disastrous trouble. The potential problem for the company stemmed from a series of amendments to the 1964 Wilderness Act that began in 1976. These amendments and other legislation were increasingly reducing the amount of land available for timber harvests on public land, causing great concern among those forest products companies that lacked their own timber acreage. Sierra Pacific was one of those anxiety-ridden forest products companies.

The crescendo of debate over the use of publicly owned timberland for logging reached its peak in 1987, when a storm of controversy was touched off over concern for the Northern Spotted Owl. For Sierra Pacific, the situation quickly became grave. All its mills were in northern California, where large factions of environmentalists were struggling mightily to curtail logging on great stretches of public forestland--and succeeding. Emmerson was forced into a choice. "It was either buy land," he concluded, "or go broke." In his mind, there was not much debate over the two choices. "This business is the only thing I knew how to do," he later related. "This was my home. Where else was I going to go?"

1987: Timber Holdings Begin to Accumulate

His mind resolved on pushing ahead and gaining a sizeable amount of private timberland to feed his mills, Emmerson made his decision at a fortuitous time. In 1987, the giant railroad company Santa Fe Southern Pacific Corp. was implementing a strategic plan to concentrate on its core business. An integral facet of this plan required that the company shed interests outside the scope of its score business, which included 522,000 acres of California timberland it owned. The land was put up for sale and Emmerson grabbed it, risking nearly everything he owned to do so.

To complete the transaction, Emmerson offered all 10 of Sierra Pacific's mills as collateral and convinced a syndicate of a dozen banks to lend him the $460 million needed to buy Santa Fe's timberland. "I hocked my heart and soul," Emmerson remembered, and received criticism for his risky move. Some industry pundits believed the $880-per-acre purchase price was too high, and further skepticism erupted when the stock market crashed in October 1987. When the sale was closed, however, all those who muttered that Red Emmerson had made the mistake of his life were quickly silenced. Shortly after the deal was completed, the U.S. Forestry Service began restricting timber harvests on public lands in response to numerous court orders. The value of privately-owned timberland quickly skyrocketed, nearly doubling overnight. "We were lucky," Emmerson noted. "I bought that land because it was available, not because it was strategic."

Once convinced of the soundness in purchasing timberland, Emmerson became an irrepressible advocate of buying as much land as possible. "You can never own too much land," he declared, "because you never know what other restrictions will be coming down the pipe." After recording phenomenal success with the Santa Fe deal, Emmerson spent the next eight years buying land, laying out more than $600 million to acquire 400,000 acres.

Emmerson's penchant for acquiring tracts of timberland continued to demonstrate itself during the late 1990s. In May 1997, Sierra Pacific paid $50 million to Louisiana-Pacific for a 38,000-acre plot of white fir and pine in northern California. Although the acreage gained in the deal was relatively small compared to the more than one million acres under Emmerson's control, the deal had a symbolic importance. With the 38,000 acres gained, Emmerson became the largest private landowner in the United States, slipping past Ted Turner. It was a feat essentially achieved in one decade's time, and as Emmerson scanned the horizon into future decades additional land acquisitions seemed more than likely. Nearing his seventies as the 1990s drew to a close, Emmerson had developed a voracious appetite for land late in life. The intensity of his desire for land was perhaps the single most important factor in Sierra Pacific's existence. With the next generation of Emmersons working beneath him at Sierra Pacific, Red Emmerson likely was imparting the importance of land ownership to his children: the inheritors of his business and the probable leaders of Sierra Pacific's future.

Principal Subsidiaries: Sierra Pacific Windows; Sierra Pacific Foundation.

Sierra Pacific Industries History

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