173 



Background 



Louisiana-Pacific Corporation (L-P) is holding the workers at its Ketchikan Pulp Company (KPC) 

 subsidiary and the people of Ketchikan hostage KPC still has eight years of timber remaining on 

 its 50-year monopoly Tongass timber contract, which expires in 2004 But L-P is demanding an 

 immediate re-write of that contract, with unheard-of new governmental concessions and taxpayer 

 subsidies, ostensibly to help the company obtain financing for a court-ordered environmental 

 cleanup and other "improvements" at the aging and polluted KPC pulp mill. Otherwise the 

 company threatens to shut the pulp mill down 



KPC has used this scare tactic many times before. (See Attachment 1 ) KPC has threatened 



closure at least seven times since 1973, most often to prevent the imposition of pollution controls. 

 The threat to close KPC is ceneratcd entirely from L-P 



Developments at L-P. In the wake of scandal, major class-action and shareholder lawsuits, and 

 market problems related to its oriented strand board siding, as well as major environmental 

 problems resulting in civil and criminal penalties at several facilities including KPC, L-P has been 

 replacing its top corporate management and re-focusing the company. At its last annual meeting, 

 the company reportedly described its new strategy as focusing on its core business, doubling the 

 size of the company by the year 2000 and reassessing the competitiveness of its mills.' 



In the last four years plus one quarter, L-P lost S64 million on its pulp division, and lost $22 

 million on pulp in the first quarter of 1996 alone . The pulp sector lost money in 1992, 1993, 

 and 1994, and the first quarter of 1996 The pulp division lost over twice as much as it made. 



Current weak pulp prices may be below KPC's production cost^ The KPC mill is the largest 

 toxic water polluter in the entire Pacific Northwest, and last year received the largest 

 environmental fine ever assessed against a facility in that region-over $6 million in civil and 

 criminal penalties, including a felony KPC faces a costly environmental cleanup And the largest 

 part of its workforce is without a labor agreement and has been so for 12 years. 



The bottom line appears to be an extraordinary sweetheart deal to induce L-P to remain in 

 business in Ketchikan So the company has asked for one It is using its threat to shut down to 

 see what it can leverage out of the federal government and the American taxpayer. 



For its part, the Alaska Delegation is doing "whatever it takes" to get the company to stay This 

 bill would allow the company to operate virtually whatever operation it wanted, and force the 

 Forest Service to sell L-P a guaranteed amount of Tongass timber, at "whatever price it takes" to 

 keep the company competitive with mills in Washington and Oregon. 



'"Stump Talk," Pacific Rim Wood Market Report . May 1996 at 16. 

 ^Alaska Department of Labor. Alaska Economic Trends , May 1996 at 19. 



