July 31st 2008

By Nathan Rushton
The Eureka Reporter
July 31, 2008

Mendocino Redwood Co. took legal possession of the Pacific Lumber Co.'s timberlands and mill Wednesday as the new Humboldt Redwood Co. begins its hiring process.

MRC Chairman Sandy Dean confirmed Wednesday that the reorganization had been implemented and the title for the town and timberlands were recorded.

Wednesday was the last day for all PALCO and Scotia Pacific employees, some of whom have worked there for decades -- as did some of their family members before them.

Employees handed over keys, turned in company vehicles and collected their final checks as PALCO and SCOPAC employees as MRC begins the process of making job offers and initiating the hiring process for the new company.

Dean said all of the offers to the former employees they plan to hire on are expected to be completed by the end of the week.

Dean said when the process is completed there will be employees who won't have jobs.

MRC officials stated previously that they expect to re-hire between 225 and 250 of the approximately 350 of the former companies' employees. Reorganization plan partner Marathon Structured Finance Fund indicated it might employ approximately 50 employees who run PALCO's cogeneration power plant and its other town facilities.

Marathon officials couldn't be reached.

Dean said there will be more uncertainty for some employees for a few more days, which he acknowledged would be tough as the offers are finalized and confirmed.

"As soon as we can get that done, we can get the mill running and get people back in the woods," Dean said.

According to one former employee in Scotia, the transition hasn't been smooth for some and there was still uncertainty on Wednesday as to whether employees should continue reporting to work.

A PALCO memo to employees issued Wednesday advised that they should only report to work after Wednesday if they have been advised to do so by their supervisor, Mendocino Redwood Co. or the Town of Scotia company.

A Web site for the new company has been launched at www.hrcllc.com to provide resources and updates to employees.

Dean said MRC has made every effort to make the transition as smooth as possible, and for reasons outside of its control, MRC was unable to have meetings with employees prior to the resolution of the bankruptcy case.

"We have been racing to turn that around to offer jobs," Dean said.

MRC Chief Forester Mike Jani spent Wednesday bouncing back and forth between offices in Scotia to help with the transition.

In addition to closing Scotia's sawmill during the transition to conduct an inventory of lumber and logs, Jani said MRC is also stopping log deliveries from the woods to log decks during the transition so his staff can check out SCOPAC's active timber harvest sites.

To implement its business model for SCOPAC's former 210,000 acres of timberlands, Jani said areas covered under existing timber harvest plans that are slated for clear cuts will be changed to select harvest methods or other practices consistent with MRC's forestry philosophy.

Each harvest site will be looked at individually to determine how it will be logged by the new company.

"We are not going to just cookie-cutter it," Jani said.

Simultaneously, an old-growth policy will also be put in place to retain those specified trees when logging resumes.

Overall, MRC officials say they are moving quickly while trying to minimize disruptions.

"Whatever we do, it's all pointed at being an up-and-running and functioning company in a couple of days," Jani said.

MRC foresters worked in advance and researched forest practice rules, which Jani said included discussions with state forestry agencies.

Permits with California Department of Fish and Game and CAL FIRE will be finalized during the next few days to clear the way for logging in what has been described by a SCOPAC official as the peak of the harvest season.