Petersburg’s Alaska Timber and Truss has secured a $2.5 million financing package to modernize its sawmill on Falls Creek Road, connect it to the power grid and install an additional small mill built to process young-growth timber.
Co-owner Brett Martin said the goal is to have the expanded operation running by the middle of next summer.
“We’re taking a gamble,” Martin said.
“We’re obtaining a couple of loans to expand our mill, or essentially retool our mill to bring it up to modern standards, so that we can actually be the most efficient and effective as we possibly can,” he said.
“Down in the Lower 48 during the spotted owl era ... the mills that retooled were the ones that survived,” he said. “And that’s what we’re trying to be. We’re trying to be a survivor and put the timber industry into kind of a different focus and move it forward.”
Spruce Root, a Southeast-based nonprofit, and the Alaska Department of Commerce, Community and Economic Development announced the financing package in a press release on Sept. 30. It includes $900,000 from the department’s Small Business Economic Development Revolving Loan Fund, $1.5 million from Spruce Root and $100,000 from the Sitka Conservation Society.
According to the announcement, the expansion is expected to create 10 new jobs and preserve five existing positions.
Martin, who owns the mill with Mike Duman, said the loan process took about six months, starting in March.
The mill currently runs on diesel generators. Martin estimated that once the mill is connected to the grid and running at full production, it will save more than $115,000 a year in diesel costs.
“Switching the mill’s energy source from diesel to Petersburg’s hydropower opened the door to Spruce Root’s Green Bank funding — renewable energy financing a sawmill retrofit couldn’t otherwise reach,” Spruce Root Executive Director Alana Peterson said in the announcement.
Martin said the company will pay the borough for materials and installation of power poles and line from the highway out to the mill. Power probably won’t arrive until next spring, he said, unless the winter is mild.
“I’m crossing my fingers we’re going to have a warm winter and the guys will be able to install some of the stuff this year, so we’ll have power maybe earlier in the spring instead of later,” Martin said. “But if we had a winter like last year, it’ll probably take a while.”
He put the total cost of the grid connection at roughly $300,000 to $400,000. About half covers bringing power to the site, and the rest covers transformers and wiring into the mill buildings.
“At times I’m shocked by how much stuff costs now,” Martin said. “Honestly, in the last five years, many, many things electrically related have gone up 200% to 300%.”
A grant from the federal Rural Energy for America Program the company received a couple of years ago will offset part of that cost.
Martin is also looking forward to a quieter mill site. “It’s always interesting how quiet it is around the mill when the generators aren’t running.”
Alaska Timber and Truss crews are milling down their current log inventory to clear the yard for a new mill building, Martin said. It will sit directly east of the building that houses the mill’s current one-pass mill.
Martin hopes to pour the slab for the new building in about six to eight weeks.
The company has made a deposit on the new mill, which should be ready for them by mid-April. The new mill could produce 6 million to 10 million board feet a year.
How much of that output gets kiln dried and surfaced on four sides will depend on which markets the mill can reach, Martin said. The company eventually expects to run at least three kilns.
Kiln-dried lumber opens up a larger market, he said.
The company is also expanding onto land it purchased from Alaska Mental Health Land Trust this year across the road, south of the mill. Martin said the goal is to store about 1 million board feet of logs on site at any one time, which will take two to three acres.
As the company pursues the housing market, Martin said most of its production will be 8-, 12- and 16-foot lumber.
According to the announcement, the mill has already moved Southeast lumber through Juneau and Seward to Western Alaska, including a shipment bound for Scammon Bay, as communities there rebuild after last year’s devastating Typhoon Halong.
The mill’s logs currently come from state and federal timber sales. Martin said the company has also talked with the Petersburg borough about a possible small borough timber sale.
