Wooden Nickels

As Weyerhaeuser mulls a transformation in its corporate structure, the future of the state’s timberlands—as forests and as investments—is at stake.

By Dan Chasan | April 2010 | FROM THE PRINT EDITION

Credit: Image: Matthew McVay/Corbis

A 1991 photo shows a logger working with fallen Western
hemlock trees at the Weyerhaeuser Snoqualmie Tree Farm. Weyerhaeuser no longer
owns the property.

Last spring, the Weyerhaeuser Co. closed its wonderful
Pacific Rim Bonsai Collection to the public. The company didn’t say how much it
would have cost to keep the bonsai exhibit open, but this move was one more
belt-tightening measure blamed on the recession.

Weyerhaeuser had opened the bonsai exhibit at its Federal
Way headquarters just 20 years before, as a gift to the people of Washington on
the state’s centennial. The company and its environment were very different
then. George Weyerhaeuser, a grandson of founder Frederick Weyerhaeuser, still
chaired the family’s namesake business, although only the year before, he had
been replaced as president by Jack Creighton. Weyerhaeuser was still the
nation’s largest private timberland owner, having nearly 10 percent of King
County, where its Snoqualmie sawmill had operated since World War I.

But Weyerhaeuser was trying to refashion itself. The company—which
Forbes magazine profiled that year in an
article entitled “Lost in the Woods”—had been less profitable than its
competitors. It started jettisoning non-core businesses it had acquired or
developed in the 1960s and 1970s, including financial services and disposable
diapers. But it refused to emulate some competitors by unloading timberland in
the Northwest.

Now, the company is refashioning itself again. In January,
its board of directors announced that the business will morph into a Real
Estate Investment Trust, or REIT. Shareholders will vote on the plan at the
firm’s April meeting. The news drew relatively little attention, but it could
have a major impact on the region. The transformation, which would require the
company to channel virtually all of its income back to shareholders, puts
pressure on Weyerhaeuser to maintain strong cash flow to pay dividends. A
business that has long been considered a good steward of the state’s forests
could find itself under pressure to sell land to maintain that flow.

Even without a change in corporate governance, Weyerhaeuser
has become a very different entity from when its bonsai exhibit opened in 1989.
It still owns 1 million acres of Washington forest, but since the start of the
millennium, Weyerhaeuser has closed its Snoqualmie and Enumclaw mills (the
Snoqualmie mill had largely shut down in 1989), and sold its timberlands in
King, Pierce and Snohomish counties. It has shifted nearly all its Washington
operations to the southwestern corner of the state.

The firm has also unloaded its paper and container board
businesses. In 2007, when Weyerhaeuser got