Old Trees, New Battles : A classic fight between environmentalists and the timber industry rages in an Alaskan Panhandle mill town.

Tucked out of sight of this no-nonsense fishing town, once the capital of Russian Alaska, the sprawling, smoky mill of the Alaska Pulp Corp. is rendering Sitka spruce into pulp as fast as its antiquated machinery will allow.

Worldwide demand for rayon, the end product of most of this pulp, has pushed the mill to record production levels. Rayon’s popularity has been spurred in part by Halston, Ralph Lauren, Donna Karan and other U.S. designers, who rediscovered this poor man’s silk several years ago.

But three decades after becoming Japan’s first postwar U.S. investment, the mill’s good fortune may be short-lived.

This mill, the roughly 1,000 workers dependent on it and the 17-million-acre Tongass National Forest that surround it are at the center of a complex, bitter battle over logging in the Alaskan Panhandle.

It is a dispute that pits environmentalists against loggers and local civic leaders and politicians from the Lower 48 against many Alaskans. And it has its roots in the historical goals of the U.S. Forest Service, formed to manage the nation’s vast timber resources rather than preserve them.

Led by environmentalists, Congress is moving to cut back logging in the verdant Tongass, while mill owners are threatening to close the mill if they do. The dispute ultimately poses the question of whether a stand of virgin forest is worth more to America as timber or as wilderness.

This is no idle question here. “Your hobby is my livelihood,” Alaskans commonly complain to environmentalists from elsewhere. And special dislike is reserved for politicians from the Lower 48, whose own forests are all but gone, who now seek to lock up the timberland of Alaska.

There’s also an international dimension to the dispute. For it was here at the Sitka pulp mill almost 30 years ago that the now-controversial trend of postwar Japanese investment in the United States began.

Long before the Japanese bought the likes of Firestone Tire & Rubber Co. and CBS Records, a group of Japanese investors and banks--with the encouragement of Gen. Douglas MacArthur and his occupation staff--built the mill. It became an anchor in creating a timber industry in Alaska as well as the beginning of the particularly close trade ties that have come to exist between Alaska and Japan.

Welcomed when it arrived, the mill has experienced nearly three decades of marginal profit and running battles with labor, environmentalists and federal regulatory agencies. The last 15 years “have been miserable,” laments George Woodbury, vice president of timber operations at the mill, “we’ve been in a war that long.”

Alaska’s most southern section has more climatological kinship with the State of Washington than with Alaska’s own northern tundra. In fact, it gets more rain than snow. And over millennia, this rain has nurtured the lush, green, overgrown Tongass, the last temperate-zone rain forest of any size in the world.

The argument here is over old-growth timber, which in the Tongass means virtually everything but the rock and ice fields. The timber industry, which rises and falls along with the demand for lumber, cellulose and rayon, has lately been booming. Almost 400 million board feet of timber were cut from the national forest last year, three times what was felled in 1985.

But for two decades, in good years and bad, environmentalists have campaigned to slow what they consider a breakneck logging rate by changing how the Forest Service sells trees to the mills. Reformers contend that current laws create an unholy federal subsidy that keeps tree prices artificially low. By federal law, they note in dismay, the Forest Service must spend at least $40 million a year to build roads for loggers who in some cases end up paying as little as $15 for enough old-growth wood to build a small family home.

Environmentalists also have long lobbied to set aside choice old-growth tracts to save the unique virgin-timber environment. Some conservationists have warned that otherwise the heart of the Tongass could be clear-cut within 15 years. Or as Chuck Johnstone of Sitka, a rare admitted member of the Sierra Club here, put it, “We didn’t come here because we wanted to live in Los Angeles.”

This week, members of Congress will be in Alaska to hear about the dispute for themselves. Senate field hearings will be held Monday and Tuesday by Sen. Frank H. Murkowski (R-Alaska) and Sen. Tim Wirth (D-Colo.), who will hear local testimony on Wirth’s proposed Tongass Timber Reform Act. Both the House and Senate considered legislation last year on the Tongass that would change the long-term contracts between the mill and the Forest Service, but only the House bill passed. Congress may vote again on the question as early as this summer.

If the House version of the reform act is adopted, 23 new wilderness areas would be created in the forest.

No matter the Valdez oil spill 600 miles to the northwest, many in Sitka resent greenies and tree huggers, as environmentalists are known.

And timber interests, the Forest Service and most civic leaders in Sitka believe there is more than enough wilderness in the Tongass already. The root issue is jobs. They say it is soon going to be hard to find enough suitable timberland to keep the mills going. One fourth of Sitka’s economy and population depends directly on the mill, according to a recent study commissioned by the pulp company.

And the mill’s 198 Japanese investors and 26 Japanese banks, who have stuck with the mill through good times and bad, deplore the idea that the U.S. government would encourage outside investment and then change the rules in midstream like some banana republic.

“God, we’re starting to act like a Third World country,” says an angry George Ishiyama, the American-born chairman of Alaska Pulp Co. Ltd., the mill’s parent company based in Tokyo. “I would never have believed this would happen in the United States.”

Ishiyama, who grew up in Los Angeles and has an economics degree from UCLA, complains that the federal government enticed investors into what he calls an especially risky, mostly money-losing deal and now, if many in Congress have their way, is about to renege on its part of the bargain. Worse yet, there’s no mention of compensation for the patient Japanese investors.

Environmentalists see all this in a different light, and they doubt that the mill will soon be shut.

“They were going to close down over the Clean Air Act. They were going to close down because they had to clean their water before dumping it in Silver Bay,” scoffs Steve Richardson, a consultant to the Wilderness Society. “They’ve cried wolf so many times, and yet they’re still here.”

Outsiders Suspect

Larry Edwards, a 12-year Sitka resident and president of a regional conservation group, says that support is growing here and in Congress for slower cutting and more wilderness areas. Across the country, preserving old-growth timber has become a priority. Even in Alaska, environmentalists find support among fishermen, tourism interests and subsistence hunters. Edwards and others predict that Congress will revise the mill contracts this year.

Meanwhile, many born and bred Alaskans make little distinction between virgin timber and the more uniform, managed, second growth. And they are convinced that outside environmentalists, ignorant of a basic fact of Tongass life, are mainly responsible for the conflict.

“It’s interesting how they care more about the forest than we do,” observes Angie Eide, arching an eyebrow. A young Alaskan raised in nearby Petersburg, she shares the popular local belief that because it naturally reseeds, and isn’t being converted to farmland, as is the Amazon, the immense carpet of forest is essentially indestructible.

“Ten acres or a hundred acres,” she patiently explains to yet another outsider, “it all grows back.”

“Our people need to live off the land,” protests Ethel Staton. “Then to hear the environmentalists: ‘You can’t do this.’ . . . Our people have been here for 10,000 years.”

Staton wears silver earrings and designer glasses, owns one of Sitka’s better restaurants and is a member of the Tsimshian tribe. She is also on the board of directors of Shee Atika, one of southeast Alaska’s native corporations. These corporations were established by Congress in the 1970s to settle land claims by native Alaskans and give them greater control over the state’s natural resources. The move also helped clear the way for construction of the trans-Alaska oil pipeline.

Shee Atika owns 23,000 timbered acres of the Tongass and has had its share of run-ins with environmentalists for its own logging practices. Few environmentalists, or loggers, consider the native corporations to be logging their land with care.

But at issue now is the federal government’s land in the Tongass, and how best to strike a balance between commerce and good biology. In fact, while the Forest Service supports the status quo, and the existing contract, it has reluctantly found itself already over-logging its ever-smaller tracts of commercial timber. The Forest Service is revising its own plans to stop this “over-management.”

Balance in the federal forests is what prompted Theodore Roosevelt and his kitchen cabinet friend Gifford Pinchot to create the Forest Service in the first place.

While the National Park Service, the country’s principal conservation agency, exists to preserve natural, recreational and historical areas, the job of the Forest Service is to manage the public forests for commercial development--essentially to create jobs.

Significantly, the Park Service reports to the U.S. Interior Department, but the Forest Service is under the Department of Agriculture.

Pinchot’s dream was to build stable communities in the American West by scientific harvesting of the timberland. The forests were to become tree plantations, a term that’s still used. And to sustain the hamlets of southeast Alaska without cutting too fast for the forest to recover, the Forest Service decided on a certain level of harvest when the mills first went in. This was based, however, on the size of the Tongass National Forest before large sections of it were were ceded to the State of Alaska, the native corporations, recreational use and, in 1980, the first tracts of wilderness.

Now, environmentalists want to protect wilderness areas that they couldn’t get set aside in 1980, as well as to break the long-term contract that the mill considered essential to the original investment. Timber contracts in other national forests are much shorter term than these 50-year contracts.

The mills say that all this would reduce the current level of promised logs and could restrict their supply in high-market years, especially when the native corporation-owned timber is all logged off. Shee Atika estimates that it will be out of timber in 12 to 15 years; other estimates have most native corporations out of logging in three to five years.

And all sides agree that without the two pulp mills, the entire Alaskan timber industry is likely to fail.

Worried About Mill

But environmentalists point out that for nearly 10 years, the timber industry hasn’t come close to using the Forest Service’s upper limit, and claim that even subtracting the new wilderness would leave the loggers with plenty.

“The Tongass can contribute a reasonable amount of timber,” says Larry Edwards, “but if the industry wants to cut all it can cut,” it will have to find other sources. The mills started up with a promise of only 300 million board feet.

Meanwhile, most Sitkans worry that the mill, its associated sawmill, logging camp and their steady paychecks will leave.

Jobs are an obsession to Alaskans, and the Forest Service has wanted to set up pulp mills here since the 1920s. Compared to fishing, hunting or mining, a timber industry offers year-round work that draws stable families, not just single men. But Alaska’s unusually high transportation costs had always scared off investors.

After World War II, the Forest Service launched what Juneau economist George Rogers calls a “rescue mission” for the Alaskan territory. The Forest Service finally agreed to 50-year contracts with investors who had considered building mills, but wanted long-term promises of logs first. Tadao Sasayama, a Japanese timber executive, assembled the Sitka mill’s investors and funding banks in Tokyo in 1953.

Helen Staton moved to Sitka and opened the town’s only restaurant two years later. Staton remembers how the whole town lived on credit until work on the mill began. Even now, “I love it when (customers) pay cash, or with a credit card,” she says. “Then you can pay your bills and pay your employees.”

Every business, labor union and civic organization in town took out newspaper ads greeting the mill when it opened. Population jumped from 1,200 to 6,000.

Share of Adversaries

The mills’ owners responded by forging a reciprocal electrical power agreement with the town, making loans to such groups as the Shee Atika native corporation, being a good neighbor. Japanese managers ran the mill, but labor was local, and by all accounts in the early years, well paid. Perks included company-paid rental cars for employees on vacation. The union itself finally banned a merry bias for choosing Cadillacs.

The mill has never been consistently prosperous, blaming the unpredictable markets in rayon and the yen. Meanwhile, production and labor costs rose steadily. By the early 1980s, during the reign of polyester, the mill was especially hard-pressed.

One morning in 1983, the office staff arrived to find the plant manager standing in the hallway, tears in his eyes. The Japanese supervisors, blamed for indulging the unions and other lax practices, had been dismissed and were returning to Tokyo. George Ishiyama had taken charge, recruited by the major shareholders and banks.

Ishiyama thinned the ranks of his managers, then went after labor costs, which he says were 25% above comparable wages worldwide. The union at first gave ground on wages and perks, but then dug in, citing the higher living costs of Alaska. Meanwhile, weak markets in housing and rayon put the entire timber industry into a slump. The mill asked for more concessions and the union began an angry strike in the summer of 1986. The mill waited only 10 days before hiring permanent replacements.

Intended or not, the long, rankling strike broke the union. The strike also did much to change the way Sitka viewed the mill. After all, the strikers had been townspeople. And some around Sitka were now plainly weary of the constant threats of closing.

In response, the mill just hired a full-time public relations director and now supports a local public TV show. More substantially, since 1986, it has spent more than $28 million on updated machinery, a new waste-water digestion plant and smoke-stack scrubbers to finally eliminate the mill haze. Overall, says Ishiyama, “We’ve spent as much on pollution control as the cost of the original mill.”

Critics believe the mill has always been a tax write-off, which Ishiyama vigorously denies. He says the mill has an accumulated debt of $150 million and that it has only stayed in business because the Japanese investors were determined to save face.

Discouraging Words

The mill also faces stiff competition from another pulp mill in Alaska and mills in South Africa and Canada. And votes last year in Congress on similar bills suggest that the Tongass Timber Reform Act may well become law.

So Sitkans are hearing a familiar, discouraging word.

“If it gets to the point we can’t get wood, we can’t run the mill efficiently,” says George Ishiyama, “we’ll have to sit down and make an agonizing decision.”

“I think that would be a very bad signal to send as a trading partner,” says Gerry Engel, in the business development division of the Alaska Department of Commerce. “I think that the Japanese would have some difficulty understanding . . . how that could happen.”

Robert Poe, director of international trade in the Alaska governor’s office, agrees. But that’s not what bothers him most about the Tongass Timber Reform Act. What irks him and other Alaskans is having their economic fate so influenced from out of state, something they haven’t observed happening during the growth of other states’ economies.

“It’s kind of the social conscience of America being exerted on Alaska,” he says, “Which happens on a pretty regular basis. . . . A lot of times we feel like New York used to be a pretty beautiful place at one time, and so did St. Louis and so did L.A., I’m sure. But all those places have been developed, and nobody got to complain.”

But Alaska is indeed developing economically. And with the trade that has come, many Alaskans are finding themselves more mindful of the environment as well as jobs, and showing new concern for the stupendously beautiful land around them. There are now more Sierra Club members per capita in Alaska than anywhere else in the country.

“I knew several people,” says Alaskan historian Robert DeArmond, “who before they died were very strong environmentalists. But in the ‘30s, they were pushing for pulp mills. They were damned hungry. There wasn’t anything up here. And the they got a little more affluent and they turned around.”

Times researcher Nona Yates contributed to this report.