By Kim Barto Meeks
A Canadian forestry firm with facilities in Virginia recently announced a $21 million investment in Henry County.
Gov. Ralph Northam and other state officials visited the Henry County Administration Building on Sept. 25 to announce the expansion of Teal-Jones Group’s pine processing operations in the county, which the company purchased in 2018. This will result in 67 new manufacturing jobs paying an average salary of $35,000, county officials said.
The move was driven in part by a major economic downturn in the timber industry across the Canadian province of British Columbia, where Teal-Jones is headquartered, a company spokesman said. Multiple forestry firms have had to cut back their operations this year in response to the shrinking supply of trees and other factors.
“There is a lot of uncertainty around both the ability to access logs as well as costs,” said Kiel Miller, of Teal-Jones.
Miller said the industry is facing reductions in harvest quotas imposed by the government due to the impact of a years-long mountain pine beetle infestation. Severe forest fire seasons in 2017 and 2018, and the creation of environmental protection areas where harvesting is off-limits have further reduced the timber supply available to loggers, according to Canadian news reports. Miller also pointed to “high log costs, which are underpinned by a very high government tax.” Loggers pay a fee known as stumpage in order to harvest trees from public lands. High export costs from tariffs in the U.S. and China also play a role, he said.
The expansion of Teal-Jones in Virginia also includes a $10.75 million investment and 59 new jobs at its sawmill in Westmoreland County. This and the facility in Henry County manufacture dimensional Southern yellow pine lumber for use in a wide range of construction and project applications, according to a news release from the governor’s office.
Both sites will undergo building upgrades and the purchase of state-of-the-art sawmills, dry kilns, and other manufacturing equipment, the news release said. In addition, the company plans to buy all of its net new timber purchases from Virginia, worth an estimated $100 million over the next four years.
Speaking at the economic development announcement, Virginia Secretary of Agriculture & Forestry Bettina Ring called it the “largest new investment in sawmill and kiln capacity in Virginia in decades. The impacts of this investment can be felt across the Commonwealth, providing economic vitality as well as all the environmental benefits that we receive from sustainably managed forests.”
Meanwhile, on Canada’s western coast, numerous articles in the Vancouver Sun newspaper describe a worsening crisis this summer in the region’s timber industry. Dozens of recent news reports of sawmill shutdowns, mass layoffs, work stoppages, and reduced shifts at forestry firms across British Columbia seem to echo the erosion of Martinsville and Henry County’s manufacturing base over the past two decades.
After the passage of the North American Free Trade Agreement (NAFTA) in the mid-1990s, the textile and furniture industries that made up the backbone of Southside Virginia’s economy began moving production overseas in order to reduce costs and remain competitive. As a result, the city of Martinsville held the highest or second-highest unemployment rate in Virginia throughout the latter half of the 2000s. Martinsville’s jobless rate hit a peak of 22.1 percent in July 2009, according to the Virginia Employment Commission.
The local economy has since rebounded, with unemployment back in the low single digits. Henry County’s rate hovers around 3.5 percent, while Martinsville’s is 4.5 percent, according to the VEC.
In a Sept. 10 Vancouver Sun article, Teal-Jones cited a weak lumber market and high business costs in its decision to shut down coastal logging operations in British Columbia. Close to 300 loggers were immediately laid off. The future of several hundred mill workers is unknown for now, but the company’s chief financial officer told the Sun to “expect additional curtailments” once the current inventory of wood has run out.
Just two weeks later, on Sept. 25, Teal-Jones Group CEO and President Dick Jones joined Gov. Northam to announce the company’s largest U.S. investment to date.
On the same day that state government and economic development officials gathered in Henry County to celebrate the announcement, Canadian news outlets reported that about 200 logging truck drivers formed a convoy in the streets of downtown Vancouver to protest the loss of forestry jobs there.
Henry County Administrator Tim Hall and Mark Heath, president and CEO of the Martinsville-Henry County Economic Development Corp. said discussions with company officials did not include references to the crisis in Canada.
“They had a couple of domestic options and they chose this one. They purchased Pine Products more than a year ago. They did not cite this to us” as a reason for expanding into Henry County, Heath said.
In his remarks, Northam praised the “team effort” of local and state partners to secure the Teal-Jones expansion for Virginia.
“Economic development is competitive,” Northam said, adding that Teal-Jones Group selected Virginia over Washington state and Oklahoma. “We’re competing with other states and other countries. It’s good that Virginia came out as number one.”
Heath called Sept. 25 “truly a great day” for the area. He said this announcement is the latest in a series of economic development successes, with seven projects bringing more than 600 new jobs over the past year. When completed, the expansion of Teal-Jones will add $296,000 to the local tax base, Heath said.
Local economic development officials, the governor’s office, and various state agencies collaborated to offer Teal-Jones an incentive package of tax benefits and more than $1 million in state and private grant funds.
David Stone, Board Chairman of The Harvest Foundation, presented Jones with a ceremonial check for $600,000 on behalf of the foundation. “We created an incentive grant to be used for attracting new business and business expansion in this area,” Stone said during the presentation. “This is right in line with what we’re all about: Jobs.”
In addition, Northam approved grants of $200,000 each from the Commonwealth’s Opportunity Fund (COF) and the Governor’s Agriculture and Forestry Industries Development (AFID) Fund to assist Henry County in securing the project. He approved grants of $125,000 each to help Westmoreland County.
“Henry County is thrilled that Teal-Jones chose to become a part of our community and now will expand operations here,” said Jim Adams, Chairman of the Henry County Board of Supervisors. “The company is a great fit for our workers, and we look forward to continuing our partnership for many years to come.”
After accepting a Virginia flag from Gov. Northam, Jones thanked everyone for being “so accommodating and so helpful. We’re going to do our best here.”
He added, “We never get support like this from British Columbia.”
According to the company’s website, Teal-Jones Group is the largest privately held forest products company operating on Canada’s West Coast. However, the family-owned business started from humble beginnings, Jones said during the announcement.
His father, Jack Jones, “built a little shingle mill in the back of a truck in the backyard” in 1946 after coming home from serving in the army in World War II. In 1960, he had the opportunity to buy a defunct sawmill for $100 down and turned it into a shingle mill, Jones said, adding “That’s where the name ‘Teal’ comes from – the shingles shed water like a duck’s back. So, there’s no Mr. Teal. It’s a duck.”