SDS Lumber Company

In a major announcement that has been rumored for weeks, SDS Lumber Company has confirmed that it is actively exploring changes in its business, possibly including sale of its Bingen mill and its 101,000 acres of timberland.

Jason Spadaro, its current president, will be stepping down and transitioning to a consulting role, while remaining a member of the board of directors. Three new members of the board of directors are being added. They include: Sandy McDade, a 34-year Weyerhauser executive with extensive experience in Canada and international timber markets who later served as general counsel; Bill Brown, a retired former president of Green Diamond Resource Company, a timber company, who also served as chief financial officer of Plum Creek Timber Company; and Clyde Hamstreet, a Portland-based corporate turnaround specialist. Sandy McDade is the new chairman of the board.

A major player in the local timber industry, SDS Lumber and its related companies employ approximately 350 workers. McDade says the board will take a “thoughtful look at where SDS is heading and how it will continue to positively impact Bingen, the Gorge, and the entire Northwest.”

The company was founded nearly 75 years ago by two Stevenson brothers, Bruce and Wally, both freshly released by the U.S. Navy, and Frank Daubenspeck, the foreman of their father’s Broughton Company in Willard/Underwood. All three of the founders have now passed away, and none of the heirs is in a position to assume leadership of the company.

Few companies reach as broadly and yet are grounded as deeply in the land and its waters as SDS. Consider the sweep of their operations:

  • Through a related firm, the Stevenson Land Company, SDS manages nearly 120,000 acres of timberland, their own and other landowners, all located within 35 miles of their mill in Bingen on the Columbia River, and all east of the Cascades. Their forests stretch from Skamania County through Klickitat County in Washington and through Hood River and Wasco counties in Oregon.
  • The company harvests an estimated 17,000 acres annually from its forests and buys logs from other private landowners. At its height in the late 1970s, the company processed 150 truckloads of logs daily and employed 500 workers. Today, SDS is still a busy place with 350 employees.
  •  By industry standards, SDS does a very good job of reforesting. Within a year or two after harvesting, SDS replants three new seedlings per harvested tree; most years, that amounts to an estimated 81,000 seedlings planted annually.
  •  Just as hog farmers boast they use “everything but the squeal,” SDS says, “Nothing is wasted.”
    • SDS mills lumber and manufactures plywood for sale to customers in the U.S. as well as shipping its lumber products to Japanese, Korean, and Chinese markets, depending on the dimensions and quality of the wood, and current trade policies.
    • Since 1978 SDS has burned bark and other “biomass” to generate steam for its lumber drying, vats, and plywood presses; excess steam runs turbines that generate renewable “green” electricity to power SDS’s computerized high-speed electric saws. If run at full capacity, SDS can generate as much as 10 megawatts of renewable power; it sells its excess electric power on the open market.
    • SDS ships massive loads of wood chips to mills further down the Columbia River, which process them into a wide array of barbeque pellets under the name Green Mountain. SDS also sells mountains of sawdust to paper companies.
    • The shipping of SDS’s lumber, chips, and sawdust is often carried by barge, powered by one of SDS’s five tugboats, the most powerful of which, “Dauby,” was named after one of the founders, Frank Daubenspeck. SDS began tugboat services in 1984, carrying its own products and eventually providing tugboat and log rafting to third parties as well. Recently, SDS took delivery in 2018 on a new barge, able to carry 348,000 cubic feet of material in each load. The new barge is one of two such barges in the fleet.
    • The Stevenson Land Company has in the last decade expanded into commercial real estate, such as space in White Salmon occupied by Harvest Market and the public library (originally leased to the library for $1 per year; the library now pays $10,000 a month for their space). A related company owned by Stevenson heirs, the D C Stevenson Ranch LLC, currently owns interests in two Best Western Hotel properties located in Hood River and Cascade Locks, a restaurant adjacent to the hotel in Cascade Locks, the exclusive Portland hotel the Heathman, and a related property in Vancouver. The Stevenson Land Company also manages three communication towers in Washington and Oregon.
    • In addition to generating its own green energy from renewable “biomass,” SDS has been working to become a developer of wind turbine energy in Skamania County under the name Whistling Ridge Energy LLC. Begun in 2008, the project was approved in 2012 by then Washington Governor Christine Gregoire, and a Bonneville Power Interconnection was approved in 2015, for a 75-megawatt project. Still, the project remains mired in litigation.

While the company “explores its next steps,” it will face three major questions: is there another timber company that would be interested in the mill and timber holdings of SDS? Would SDS’s ancillary businesses, such as its commercial real estate and its wind turbine project, be part of any transfer or would such activities be carved off as a separate business controlled by the shareholders? Finally, would the developmental value of the original Broughton Lumber finishing mill site in Underwood, just west of the Hood River Bridge, or the 80 acres occupied by the SDS mill in Bingen, just east of the bridge, be sufficient to transition SDS in another direction entirely?

Next week, we will explore the “what’s next” issues and what these may mean for the town of Bingen, Klickitat County, and the company’s 350 employees.