“Our plans are to still to select the right partner, whether that ends up being Hancock or somebody else and open the facility as soon as we can,” said Teevin Bros. General Manager Eric Oien. Based in Rainier, Oregon where it runs a large export facility on the Columbia River, Teevin first proposed building a log exporting yard at the Port of Newport’s International Terminal four years ago. The project has met a number of delays related to terminal construction, permitting and dredging.

Log Over Supply

An oversupply of logs contributed to the softening of the China log market. The improving U.S. economy and strengthening dollar continues to hold prices down by giving Russia and New Zealand an advantage in the marketplace.

“China can buy logs a lot cheaper from those places than they can buy them from here,” Oien said. “That’s a fundamental I don’t see changing anytime soon. It’s going to make it challenging for the China markets for the next couple of years.”

Large Investment

Since proposing the Newport log yard, Teevin has invested a large amount of its own money in the project. The company is currently negotiating with a private owner to lease land adjacent to the International Terminal facility. Central coast timberland owners currently export logs through Columbia River or Coos Bay facilities. Shipping from Newport represents a significant savings in transportation costs.

While Hancock is Teevin’s “top-tier” choice as a partner, (Hancock exports logs through Teevin’s Rainier operation) Oien said he’s confident in interesting other investors in the project. “There’s a lot of other potential candidates,” he said. “There’s someone out there, in my opinion, who is going to see the value of having Newport as a strategic facility, regardless of how tough the market is currently.”

If Teevin is able to find a partner for the project in time, construction on the log yard could begin in the summer of 2015. “Because the permitting is already done, we could almost do it last minute,” Oien said. “We could wait until May as far as getting a lease signed and still be ok because all the other hurdles have been met.”

Delay Puts Port in Financial Bind

To complete the International Terminal, the Port of Newport took out about $5 million in loans from the Oregon Business Department on top of a $15 million general obligation bond passed by voters. Without the log revenue, the port was forced to use $266,000 from its cash reserves this year to help cover the annual $355,000 loan payment.

Port Manager Kevin Greenwood said he is working with the state to delay further loan payments until the terminal is producing cash flow. “We only have a finite amount of cash reserves,” Greenwood said. “We can’t keep burning through a quarter million dollars every year. If all things remained even, we only have a few years of reserves.”

New Port Admin Building on Hold

As a result of the log revenue uncertainty, port commissioners temporarily shelved a plan to build a $900,000 administration building. The port commission planned to use money received from NOAA to fund the facility. Greenwood said using the NOAA cash asset to make interest payments on the state loans is not in the long-term financial interest of the port.

Oien, the Teevin Bros. general manager, said the company remains hopeful that its log exporting operation in Newport will be generating revenue for the port next year. “We have an interest in seeing this project through, one because we’ve got a lot of money tied up in it, and two we feel pretty bonded to the area from the community perspective.”

Contact Reporter Larry Coonrod by emailing editor@lincolncountydispatch.com