KETCHIKAN - The veneer mill in Ketchikan is closed indefinitely as its owners assess the faltering U.S. housing market, a key economic driver for wood construction products.
Prices for veneer have dropped due to the declining market in real estate, said Renaissance Ketchikan Group President Jerry Jenkins. In addition, he is paying more for his primarily Canadian timber supply because the exchange rate has gone up.
"I'm trying to figure out what the veneer market is doing and what it is going to do," Jenkins said.
The mill closed in February when bad weather caused delays in the delivery of timber and Jenkins decided not to reopen. Seven people still work at the mill, down from the 35 employees when the mill was operating, he told the Ketchikan Daily News.
He said he was "still on track" to pay the Ketchikan Gateway Borough more than $9 million plus owed by May.
In 2006, RKG bought the borough-owned Ward Cove property for $9 million held in an 18-month certificate of deposit.
RKG was obligated to pay the CD's monthly interest to the borough, but failed to make about $200,000 in interest payments between September 2006 and February 2007.
In November - when the $9 million first was due - the Ketchikan Gateway Borough Assembly granted RKG an extension until May. RKG also owed $111,236 in property taxes plus $188,055 in interest payments. The extension added $197,458 in interest payments, plus a $540,000 default penalty.
Borough Mayor Joe Williams, who supported Jenkins in November, said Tuesday that he told Jenkins if the money wasn't there in May, "it would be difficult to continue the support."
"I pray that it works for him, but certainly more so for the community of Ketchikan," said Williams. "I certainly don't want the property back."
Assembly Member Glen Thompson said he was not surprised that the veneer mill shut down.
"I felt from the beginning that the business plan was flawed and it was undercapitalized," Thompson said.
Jenkins said he wanted to develop the rest of the property. He said he was working on layout plans for a marina, crews were tearing down older buildings, and he was exploring ways to use hydroelectric power.