Christmas Tree Sellers Know Time Is Money

Jim Heater’s mood is far from sublime, despite his location in a postcard-perfect patch of countryside near this preciously named town.

He winces when a truck driver fails to maneuver into position in time, but his shouts get lost in the whomping of the $450-an-hour Hughes 500D helicopter that has been dropping bundles into deep yellow truck beds and now sets down to wait.

“We try to keep the copter in the air, but it’s hard because we’re short a truck,” Heater says, urging the next driver on with an impatient whirl of his hand.

Heater is a Christmas tree farmer. The bundles are noble firs, each representing a decade of care and investment. It’s early December, and time is money. Holiday spirit often gets trampled in the rush to market.

As cherished and romantic an icon as the Christmas tree is, this is still a cutthroat $720-million business fraught with opportunities for losing one’s shirt, which is invariably plaid and flannel.

Over the last several years, many growers did just that--shaking out like dry needles off a tree in January--as the industry stumbled through a glut. Things are looking up as production stabilizes and wholesale prices rise, but that in turn spells higher prices and possibly modest shortages for shoppers.

Behind the tinsel-bedecked firs and pines that end up in the nation’s living rooms stands an industry that serves as a microcosm for U.S. commerce, where the forces of nature and finance conspire to stage a daily drama of distribution debacles, price skirmishes and supply snafus.

Christmas trees are commodities, just like semiconductors or vacuum cleaners or cardigans. But the seasonal nature of the occupation demands a heightened clarity about capitalism.

The competition for the tree shopper’s dollar, after all, is jammed into a few short weeks, when growers and retailers must grab for a year’s worth of profits. Fragile margins can be shaved by such unruly forces as foul weather, foul moods and even electric utility deregulation.

Christmas cheer? Bah, humbug! Chances are, most farmers and corner lot operators would chop the ear tips off Santa’s elves for an extra dollar a tree--to make up for all the angst.

“It’s a risky business,” said Dennis Tompkins, an evergreen arborist--a.k.a. Christmas tree consultant--in Sumner, Wash. Yes, even the Tannenbaum trade has consultants.

Everybody wants a piece of the action. From field to truck to the candy cane-striped corner tent in Long Beach, the price tag of this beloved symbol keeps ratcheting up like ka-chings on an old-fashioned cash register--to $35 or $70 or, for the splurgers, a lofty $200 or more for an 8- or 9-footer--making the tree one of the priciest indulgences of the season.

With most American families too busy or too citified to trudge through the woods to fell their own evergreens, most seasonal celebrants prefer to let tree-plantation professionals wield the ax--or, rather, chain saw.

Every second counts, it seems, as Pacific Northwest growers hustle to cut and ship tens of thousands of trees a day--3 million within a matter of weeks--to California.

When Jim Heater puts his Douglas and noble fir seedlings in the ground, prognostications are pointless. It’s way too soon to gauge the economy or customers’ whims of nearly a decade hence. With no return on those trees in sight, he must nurse them along through disease, drought and pest infestation.

Luckily, come cutting time, Heater at least can count on Oregon’s soggy, chilly autumn weather to keep the trees from drying out.

Except this year.

A weather phenomenon named for the Christ child--El Nino--is confounding the Christmas tree trade from start to finish, with uncharacteristic sunshine baking trees at the farm and downpours delaying Los Angeles-bound drivers at the Grapevine and keeping customers at bay in the Southland.

The warmer and drier conditions in Oregon help to account for Heater’s snap-it-up attitude in his tree yard, where dozens of workers were busily running the last of the year’s perishable harvest of 250,000 trees through a mechanical baler that twirled twine around them.

A fifth-generation Oregon farmer, Heater, 57, switched to growing Christmas trees 30 years ago after clean-air rules limited the burning of grass, which he raised for seed. His 2,700 acres of trees--60% planted in noble fir and the rest in Douglas--now account for 65% of his farm receipts.

An hour and a half south of Portland, Heater’s Silver Mountain Christmas Trees is a good-sized operation, one that he expects his grandchildren to take over when they come of age. But its output is a fraction of that of giant Holiday Tree Farms, farther south in Corvallis. That company supplies to Home Depot and other major chains, harvesting about 1 million trees a year on 6,000 acres.

Nearly a quarter of the nation’s 34 million trees this year will come from Oregon, the top-producing state. Together, Oregon and Washington account for about one-third of the inventory. Other key tree-exporting states are North Carolina, Michigan, Wisconsin and Ohio. (California’s industry consists of about 300 choose-and-cut farms that sell 600,000 trees a year, primarily Monterey pine.)

During the tree glut, prices paid to farmers plummeted, though retail prices remained stubbornly high. The oversupply resulted from a vast expansion through the late 1980s as novices with visions of dollar signs dancing in their heads entered what was then a fast-growing business.

There were times when Heater’s company sold trees below the cost of production to keep cash flowing.

“If the glut had lasted two more years, we would have considered getting out,” he said.

Heater gets a wholesale price of $10.75 for a 6- to 7-foot Douglas fir and $18.50 for the same size noble fir. (Nobles stay in the ground years longer and require more careful hand cultivation.)

According to Mike Bondi, an agricultural advisor at Oregon State University, growers spend about $7.50 to raise a Douglas and $10.50 to grow a noble. Harvest costs add $2.50 to $3 per tree.

By Bondi’s estimation, Heater makes very little for each Douglas but perhaps $5 each for nobles. Some of that is immediately reinvested to clear out old stumps and plant new seedlings.

Taking advantage of the higher margins, Heater and other growers are raising more noble firs, although Douglas firs still dominate in the Northwest. They are also building markets in Mexico and Asia; yuppies in Tokyo, Heater said, are paying as much as $250 for his 6-foot nobles.

Normally, Northwest growers send many California-bound trees by rail, but service disruptions at Union Pacific Railroad this year prompted a fierce scramble for tractor-trailer trucks. That drove up the hauling price to Southern California to as much as $3 a tree, or about $2,000 a load (paid by the retailer).

By far the biggest price leap happens at the retail level, where the price ascends to “whatever the market will bear,” Bondi said. Some higher-end nurseries and lot operators double their costs or more because they must quickly recoup their outlay and squeeze out a profit. Prices vary widely by neighborhood; Beverly Hills lot operators are given to marking trees up excessively to make them seem more chichi.

Many chain stores, on the other hand, willingly take a far smaller profit or none at all on trees, using them as a “loss leader” to lure customers in to buy toilet paper or wrenches.

At a Target store in Long Beach on a recent Saturday, Gayle Sincock and her family were looking for two trees--a 6- to 7-foot noble and a less formal variety for the family room. Target sets a firm price depending on the type and size: All 5-foot nobles, regardless of quality, cost $29.99; 6- to 7-foot nobles are $34.99, and a 9-footer is $54.99.

Sincock thought about buying an artificial tree (the market is basically split between them and live evergreens), but the scent of the real thing won her over.

Kenny Blackman was disappointed by the fullness of the nobles from Heater’s Silver Mountain farm at Target (many growers have bred them away from the spikier look of the past). A mile and a half away, at the Snowy Pines corner lot, Blackman liked the trees but found the prices too steep. “I guess I’ll keep looking,” he said.

Snowy Pines--where the sign reads Best Darn Trees in These Here Woods--exemplifies the sort of cheerful, service-oriented operation that is under pressure from urban development and chain-store competition.

Owner Dave Thacker has run the lot for 28 years, starting each October with a pumpkin patch and converting to trees by the day after Thanksgiving.

Thacker, who also grows trees in Oregon, spends thousands of dollars each year for labor costs, permit fees, electricity, security, advertising, liability insurance, flocking machines and any extras, such as pony rides for the kids.

On a busy evening or weekend, 40 workers are on hand to help customers such as Karen Boyd, who described herself as finicky and said she favors the lot because it’s family run, has better quality trees and will deliver (for a fee).

All that comes at a premium. Each tree is priced separately depending on quality, with 6 1/2-foot nobles priced from $53 to $68.

Thacker makes what he calls “a decent living,” netting perhaps $10 to $15 for each of the 2,500 or so trees he sells. But he and other independents are feeling the heat from the discount and warehouse stores.

That and other pressures are squeezing out California’s choose-and-cut industry.

Urban encroachment and general economic conditions have slashed the number of tree farms, to 300 from 700 a decade ago. Many of those remaining lease land under Southern California Edison power lines. Intent on making more money from this marginal land, Edison--a former monopoly that now faces competition under deregulation--recently began evicting tree growers in favor of building more lucrative storage facilities.

Charles Peltzer, the veteran operator of eight Peltzer Pines farms in Orange County, three of which face closure, said Edison’s action has been “a bum deal.” So far this season, Peltzer’s sales are off 50% at the three Edison farms and 20%, because of rain, at his other farms. For the first time in 33 years, he might have to ask the bank for a loan.

To Heater, the Oregon farmer, all this goes with the territory. He gets riled by people who ask, “What do you do the other 11 months of the year?”

“This is a year-round business,” he said, “just to provide the nation with three to four weeks of enjoyment.”

Times researcher Jennifer Oldham contributed to this story.