Billings company lands record timber contract

2012-05-27T00:10:00Z 2014-08-25T07:32:13Z Billings company lands record timber contractBy JAN FALSTAD jfalstad@billingsgazette.com The Billings Gazette

A semi-retired Billings developer and his company have landed the largest tree stewardship contract ever awarded by the U.S. Forest Service to restore 300,000 acres of ailing forests spanning northern Arizona.

The USFS awarded the forest restoration contract May 18 to Herman Hauck of Billings and his company, Pioneer Forest Products Corp.

“It’s $150 million to $200 million. That’s the potential value of a 10-year contract they are offering us,” Hauck said. “And the investment for real estate, buildings and equipment and so forth is another $220 million.”

During full production, which should start in about two years, Pioneer will selectively log four forests, hauling the trees and all the waste wood to a giant sawmill, furniture production factory and bio-fuel complex the company wants to build in Winslow, Ariz.

Two major and super-hot wildfires in northern Arizona,

one in 2002 and last year’s Wallow fire that burned 530,000 acres, helped forge a rare forest restoration agreement between the USFS and some 30 groups, including industry, university, environmental and other interests. Ponderosa pine trees historically burn with low intensity every 30 years in Arizona, but the USFS suppressed fires for almost a century until the forests didn’t support much wildlife and were prone to very hot, destructive fires.

“We’ve got complete monoculture now with stands of Ponderosa pine with almost no sunlight hitting the ground,” said Dick Fleishman, a USFS forester in Flagstaff, Ariz., who helped negotiate the Four Forest Restoration Plan.

Over the next 20 years, trees need to be thinned on 2.4 million acres crossing four forests stretching from the Grand Canyon east to New Mexico, Fleishman said. Pioneer’s contract is the first of three to accomplish that goal.

“It’s taken years to get us to this point,” he said. “It’s pretty gratifying to get a contract, really.”

Gilbert Massiatt, the USFS contracting officer for the southwest region, said he couldn’t disclose why Pioneer’s 60-page plan was chosen until he debriefs the other four bidders. The unsuccessful contractors have until May 31 to protest the award to the Montana company.

Calling this a family project, Hauck, who speaks with his native North Dakota Lawrence Welk lilt, said one or both of his sons who live in Billings will be involved in the Arizona contract.

Only four or five Montanans, including his family, will be employed because it is cheaper to hire locals already living in Arizona, Hauck said.

Kevin Hauck, who bids projects for Pro Build in Billings Heights, said his father has invested 13 years into this proposal.

“It couldn’t be awarded to anyone who earned it more,” he said.

Herman Hauck was raised on a grain-and-cattle farm near Dickinson, N.D.

After his parents moved to town, he finally had a chance to attend high school, graduating at age 21 and marrying his wife, Dorothy, a marriage that’s lasted 63 years. They raised five children on income that Hauck earned building cabinets and furniture at his Dickinson business, Trimline Manufacturing, which he sold in 1973 when he moved to Billings.

Hauck worked as a real estate broker and builder in Montana and North Dakota, constructing low-income homes in Billings. He developed nursing homes and other institutions from Florida to Oregon, including developing and building Westpark Village Retirement Home in Billings, of which he remains a minority owner.

“I’m a North Dakota farm boy who learned how to work. I don’t golf or hunt,” he said. “I’m a working fool.”

Sixteen years ago, he first

attempted to win a contract to restore Montana forests. Then he tried Utah, then native territories in the far northern reaches of Canada and finally New Mexico. Until his recent success in Arizona, all the previous proposals failed because negotiating an agreement among all the parties is so difficult, Hauck said.

Now that the polka-loving German has landed the Arizona contract, Hauck’s home office phone rings about 30 times a day with prospective businesses pitching their materials and services.

“They all want in on a part of the action. It’s unbelievable,” Hauck said.

A former USDA official, Marlin Johnson, who now lives in Albuquerque, N.M., helped write and sell the Pioneer proposal and will be a minority owner, Hauck said.

Mike Cooley will be in charge of the operations. James Schnorf, founder of Wall Street Strategic Capital in Orlando, Fla., is raising private equity funding for Pioneer’s Arizona projects.

At least one environmental organization isn’t happy with Pioneer’s plan.

The Center for Biological Diversity said the Forest Service’s decision is based on antiquated forestry practices and “stinks of cronyism.”

During his years at the Forest Service, Johnson liquidated much of the Southwest’s old-growth forest, the center said. The organization preferred a plan submitted by Arizona Forest Restoration Products, promising to cut down only small-diameter trees.

Writing all the contracts; obtaining the permits; and building a lumber mill, furniture-manufacturing facility and a processing plant to turn wood chips into diesel fuel will take two years, Hauck said. At full production, the Arizona operation will create 400,000 tons of waste wood, sawdust and chips per year.

Pioneer won the first large-scale USFS contract for this forest project in northern Arizona. But the restoration plan calls for two more contracts until 2.4 million acres are thinned over 20 years on the Apache-Sitgreaves, Coconino, Kaibab and Tonto forests.

Pine bark beetles that are destroying large swaths of forests are a bigger problem in the northern Rockies than in the southwestern forests, Fleishman said. Arizona has mostly ponderosa pine trees, which are more resistant to pests, but cannot rejuvenate themselves after hot fires as the northern lodgepole pine trees can.

“Our ponderosa pines don’t start over again because they don’t have serotinous cones,” he said.

Those cones depend on hot fires to open them up so they can reseed the forest.

After an unusually warm and dry winter and spring in Montana, so far fire has claimed more than 30,000 acres of forest lands.

Even if Montana dodges an extreme fire season this summer, firefighters will respond to 350 wildfires, according to Montana Gov. Brian Schweitzer.

And that’s why Hauck still dreams of trying one more time to win a reforestation contract in his home state.

“We’ve got all these trees going to waste right now in Montana,” he said. “It’s so sad.”

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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