By Stephen Smoot
Just over a year ago, Allegheny Wood Products shone near the center of the political world, albeit briefly. Representatives Alex Mooney and Carol Miller, as well as the powerful House Ways and Means Committee, visited the site of AWP in Petersburg.
Only rarely do congressional committees venture far from the friendly confines of Capitol Hill to hold a committee hearing. On this date, the company could claim to be a part of history.
For the hearing, E. Thomas Plaugher, vice president of operations for AWP, provided a written statement to be read into the Congressional Record.
That statement contained within its professional and staid narrative a plea for help.
Before describing and explaining the company’s maxim that “it all starts with the trees,” Plaugher established that AWP served as “a family-owned company founded by John and Patricia Crites in 1973. The company that started with 13 employees and a customer base that extended 300 miles evolved into a global industry giant.”
Plaugher shared that “the past few years have been very challenging for the industry.” In an effort to punish Communist China for unfair trade practices against the United States and others, President Donald Trump hit mainland China’s exports to the United States with a $550 billion in tariffs, all designed to punish the Asian economic power.
In 2022, five years after the Trump tariffs took effect, the United States – China Economic and Security Review Commission stated that “China has subverted the global trade system and moved further from the spirit and letter of its obligations under its WTO (World Trade Organization) accession protocol. China’s subsidies, overcapacity, intellectual property (IP) theft, and protectionist nonmarket policies exacerbate distortions to the global economy.”
The report added that “These practices have harmed workers, producers, and innovators in the United States and other market-based countries.”
For this and other reasons, President Joe Biden quietly continued the Trump era tariffs restricting trade with mainland China. They remain in place today.
Part of the response from Communist China included a $90 billion tariff on goods bought from American producers, including 10 species of American hardwoods. According to an article from Syracuse.com on the western New York hardwood industry “a growing Chinese middle class developed a taste for American hardwoods, a status symbol for those who could afford American red oak floors, kitchen cabinets or furniture.”
This helped to buoy American wood products companies as the Great Recession spanning the late George W. Bush and early Barack Obama administrations took hold. Empire State based Gutchess Lumber sold 50 percent of its production to China
Fast forward to 2023, and Plaugher described the effects of the trade war. He explained that “in 2017, we were caught in a trade war between the U. S. and China. American hardwood producers suffered because of retaliatory tariffs imposed on our products.”
Like many fellow companies in the industry, AWP had to retrench. “AWP was forced to close two of our mills and lay off employees that had been with us for decades because business was so bad,” Plaugher said.
In 2019, the CEO of Northwest Hardwoods, Nathan Jeppson, told the Washington DC based political news outlet The Hill that they had to lay off 225 of approximately 1,600 employees, as they closed facilities in Washington state and Virginia.
He added that “I don’t think people understood actually the job loss potential here and where these jobs are. You think about our industry, we are where the woods are so we are in rural Pennsylvania, rural West Virginia. I can’t even get cell coverage at most of our mills.”
By 2019, United States exports of hardwood products to mainland China dropped by 43 percent.
That said, when the House Ways and Means Committee came to Petersburg, Plaugher could report that “trade agreements were worked out.”
But the industry still faced even stiffer challenges.
The next hit came from the economic tsunami created by the spread of the COVID virus and the impact of government responses and programs designed to slow the spread of the virus and its ripple effects in business and industry.
COVID brought a significant negative impact on the economy throughout the world. The Journal of Forest Business Research conducted a study in 2023 that stated, “We found an overall significant decrease in prices across all timber products” ranging between seven and 30 percent. Some of this occurred due to consumer uncertainty.
A specific problem for AWP came from its ineligibility for Paycheck Protection Program funds. Until May 31, 2021, PPP funds came from a United States Small Business Association “backed loan that helps businesses keep their workforce employed during the COVID-19 crisis,” as the federal website explains.
Plaugher shared that those creating the programs failed to grasp the specific nature of the industry. He said, “The hardwood industry is a highly fragmented industry with many small producers. There are no Fortune 500 companies in the hardwood lumber industry.”
The largest of companies in the field only has a market share of approximately five percent.
“The vast majority of our competitors were eligible for these funds, but we were not,” Plaugher commented.
Such a situation created a competitive advantage for AWP’s competition in an economy already distorted by trade wars and pandemic effects.
Next week, how AWP struggled with the impacts of Biden Administration policies, workforce woes, and an environmentalist crusade from Hardy County residents.
