THE Pacific Northwest's timber industry is undergoing evolution, if not a quiet revolution. Under growing pressure from increased competition on a global scale, declining demand for lumber, and an uncertain supply of timber, companies in Oregon and Washington are looking with increased fervor for a niche to specialize in, and are reshuffling their own operations in an effort to prepare for the future.
``The industry has become more competitive,'' says George Haloulakos, a timber analyst for Dain Bosworth in Seattle. ``Markets are more global, and marketing is now a key.'' Adding to the pressure is a prolonged sag in the national housing industry, dropping the demand and price for lumber.
Forest-products companies are taking different approaches to survival. Most are looking at ways to cut unnecessary costs.
The James River company, for example, plans to sell more than two dozen mills in the Northwest.
But the new trend in the industry is the move to specialize in a specific paper product. For example, Louisiana-Pacific Corp., based in Portland, Ore., is actively marketing engineered home-building products.
``Instead of a `make-and-sell' approach, companies are now taking the `sell-and-make approach,''' Mr. Haloulakos says. In other words, they tailor a specific product for a market.
The industry is also vigorously pursuing improved technology at their mills, especially since last summer's federal ruling on the northern spotted owl promised to remove much public land as a timber supply source.
Like other companies, Portland-based Willamette Industries is installing modernized lathes and other machinery for its mills.
``There's a big push toward leading-edge technology,'' says John Davis, vice president for timberlands for Willamette. ``We have to get every piece of the log we can.''
Changes in the forest-products industry began, however, long before rulings on endangered animals. The recession that hit the US economy in the early 1980s forced many Northwest companies to streamline operations.
Since the early 1980s the industry ``has experienced some downsizing, reduction in people,'' says Dan Nelson, a timber industry analyst at Ragen MacKenzie, Inc., in Seattle.
Mr. Davis adds that ``1982 was a catharsis for the industry. We have fewer [employees] now than we did 10 years ago. If we were to cut more out, we'd be cutting out muscle, not fat.''
Companies did not make the future any easier to face during the 1980s when they overcut from their own private timber supplies, Haloulakos argues. The rate of logging on private lands failed to slow down, in spite of studies dating as far back as the early 1970s warning of a looming timber shortage.
Consequently, old growth and mature timber is almost nonexistent today on privately held lands in Oregon and Washington.
Today, timber companies, particularly ones reliant on federal lands for timber, have had to re-examine where they are going. Many companies have shut down or sold mills that catered to old growth logs.
Companies have scrambled to reforest lands, but it takes 50 years before a tree is ready to harvest. Today, those companies that have been replanting, such as Weyerhaeuser, Plum Creek, and Boise Cascade, are in the strongest position.
``The trend has been toward managed growth,'' Haloulakos said. Other companies are in a more uncertain situation.
Willamette Industries, for example, has closed three mills in the Northwest in the past two years, Davis said. The company has been shifting emphasis away from the Northwest and to the South. Of the company's 1.1 million acres of timberland, only 275,000 are in Oregon, Davis says.
``We just don't have the prospects of timber supply'' in the Northwest that other companies have, Davis says.
It is estimated that about one-fifth of all commercial timberland in Oregon is privately held. In Washington the figure is higher, at about 28 percent.
But environmental concerns and development pressures are threatening to pinch privately held timberlands as well.
In Washington, the state's commissioner of public lands asked the Washington Legislature in 1990 for an annual $20 million appropriation to buy a greenbelt in Western Washington. The money would be used to buy forests threatened by the eastward suburban sprawl from Seattle. The state approved a one-time $7 million grant.
Environmentalists in Washington are concerned, however, about logging's impact on the land. A group called the Sustainable Forestry Roundtable - comprised of public, Indian, and private timberland owners as well as ecologists - are trying to hammer out an agreement with the state limiting the size of clear cuts.
Haloulakos says he expects more mill closures in the Northwest during the 1990s. He also says he wouldn't be surprised to see more consolidation by companies. But on what scale, ``it's hard to predict.''