The trade war between the U.S. and China could chop about one-third of the Port of Astoria’s projected pier revenue in the coming fiscal year.
The Port, finalizing its budget, estimates Astoria Forest Products will send out 6.5 log ships over the coming year. Chad Niedermeyer, the yard manager for Astoria Forest Products, said the company would usually expect to send out between eight and 10.
Port staff projected $1.3 million in pier revenue, down more than 28 percent from this year and part of an estimated $11 million in estimated operational revenues. The majority of the loss in pier revenue comes from the lack of regular log ships that make up the bulk of the Port’s dockage, wharfage and other pier-related money.
“Right now, it’s just up in the air,” Niedermeyer said of how many ships will come. “It all depends on what happens with the tariffs.”
The Chinese in March 2018 imposed a 5 percent tariff on hemlock, the most common species exported from Astoria, along with 5 percent on Douglas fir and 10 percent on spruce. When the trade war ratcheted up, the Chinese increased tariffs on spruce to 20 percent, but have so far left the other two species alone, Niedermeyer said.
With the decrease in ships, Astoria Forest Products has cut its workforce by 40 percent, Niedermeyer said. Chris Connaway, the president of the local longshore union, has reported members having to go far afield to find work.
In his summary of the proposed 2019-20 budget, Jim Knight, the Port’s executive director, said the agency will cut employment by the equivalent of three positions.
“This decrease will necessitate a reorganization of our staff to account for reduced revenues,” Knight said at a recent budget hearing. “Existing staff will be wearing multiple hats to maintain quality customer service for our tenants and customers.”
Connaway called on Port staff to make a formal complaint to the federal government about the impact of the trade war.
“This is real jobs and real impact,” he said.
Astoria Forest Products recently struck a deal with Southport Lumber Co. in North Bend to ship logs on barges to the Port of Coos Bay for milling. But the business represents a fraction of the revenue from Chinese exports.
“There is good work happening behind the scenes with Astoria Forest Products in seeking new partnerships,” Knight said. “If it’s successful, that will have an impact, but it isn’t something we should count on at this point.”
It’s the company’s intent to find ways to increase log exports from Astoria, Knight said. But one of the ideas for making more money appears to be getting out of the local log business.
Niedermeyer confirmed that the company’s leadership has been looking — even before the trade war — to sell Astoria Forest Products.
“They want to invest their money elsewhere, where they think they can get a better return,” he said.
Astoria Forest Products was formed in 2014 under Murphy Overseas USA, a company owned by the family of Dennis Murphy, a former shareholder in Eugene-based timber giant Murphy Co. The company stepped in to resolve the legal problems of Westerlund Log Handlers, a smaller company that returned log exports to the Port in 2010 but became embroiled in a lawsuit with its Chinese customers.
Westerlund and Murphy later became involved in their own lawsuit over the transition before settling last year.
Astoria Forest Products received an award last year from Clatsop Economic Development Resources for its economic impact on the region.