By Tom Wodetzki – Anderson Valley Advertiser, May 1, 1985
The Louisiana-Pacific Corporation is known even on Wall Street as the most controversial company in the forest products industry, a reputation that is largely a reflection of President Harry Merlo’s aggressive style.
The son of Italian immigrants who settled in a small California lumber town, Merlo moved up rapidly in the industry. He began as a shipping foreman for a small mill, became a partner, and then when Georgia-Pacific bought out the firm, Merlo moved up quickly through that company’s ranks.
In 1973, when the Federal Trade Commission threatened to break up the monopolistic Georgia-Pacific Corporation, G-P split off 20 percent of its assets to start Louisiana-Pacific. Under Merlo’s management, L-P grew rapidly into the nation’s second largest lumber company, with 110 plants nationwide, some 13,000 employees, and sales of more than $1 billion a year.
Named the timber industry’s executive of the year by the Wall Street Transcript for two of the past four years, Merlo’s “yes we can” philosophy, emblazoning L-P’s stationery and annual reports, has nonetheless taken the company into some shady practices that have resulted in blatant environmental violations, a conviction for restraint of trade in its Alaska operations, a $5 million settlement against it for alleged stock fraud, and a $4 million fine by the Federal Trade Commission for failing to divest a subsidiary—the FTC’s largest fine ever.
However, few moves Merlo has made with his company have proven so controversial as his decision two years ago to break ranks with the other major timber companies in their contract negotiations with the labor unions; to singlehandedly demand wage and benefit reductions and thereby precipitate a strike (now 22 months old—the longest and most bitter in West coast timber industry history); and then to attempt to crush the unions in L-P’s mills…
It’s no coincidence that Harry Merlo, in the grand tradition of the robber barons of a century ago, is making millions and breaking unions at this time—the peak of this conservative Reagan era. Just when he was causing 1,700 West Coast mill workers to lose their jobs (in 1983), Merlo was also bringing in for himself $2.4 million in salary, bonuses and fringes, placing him among the top 20 highest paid executives in the country.
Louisiana-Pacific is perhaps a prime example of the amoral corporation in its lust for profits at all costs. It personifies the kind of corporate mentality that has been implanted into every aspect of the Reagan administration. For example, despite all the frauds and fines lacing L-P’s recent history, that company was rewarded by Reagan when he chose its top lawyer, John Crowell, to head the US Forest Service. No surprise then when a few months ago Crowell arranged a $600 million bailout that allowed L-P and other timber companies to break overpriced contracts they had made with the government.
Also, as Jack Anderson noted in a September 1984 column, it is no surprise to learn that L-P now “buys more government-owned timber than anyone else, and has a long history of preferential treatment by the Forest Service which just happens to be headed by Louisiana-Pacific’s former general counsel, John Crowell.”
Anderson went on to describe an all too typical deal, this one in Montrose, Colorado. When the Forest Service there announced plans to cut 2 million” board feet of aspen trees for fire prevention, L-P announced its plans to open a waferboard plant in Montrose, and the Forest Service jumped its allowable cut figure from 2 million to 50 million board feet. This aspen-cutting “project was approved by the Forest Service’s regional director, Ron Desilett, who took over one year ago from Robert Rosette, who moved on to, you guessed it, L-P.
Rosette now represents the company in negotiations with the Forest Service over Colorado aspen. Although he didn’t actually leave the Forest Service until August, he began work as a consultant for L-P in June. If there was any lingering doubt about the effectiveness of having friends in high places in the Reagan administration, it is dispelled with the knowledge that L-P started its waferboard factory even before the contract from the Forest Service was completed.
Back to John Crowell, who was not only L-P’s general counsel but also assistant secretary of the L-P-owned Ketchikan Pulp Co. in Alaska from 1973 until Reagan appointed him Forest Service chief in 1981. Ketchikan and a Japanese lumber firm were found guilty of conspiring to drive other Alaskan lumber companies out of business. According to US District Court Judge Barbara Rothstein, “from 1959 to 1975 the two companies virtually divided up southeast Alaska and rigged bidding on US Forest Service lands to keep new companies from entering the market.”
As if to reward these gross violations, in 1982 the Forest Service slashed stumpage rates in Alaska’s Tongass National Forest where L-P’s Ketchikan Pulp Co. still holds a 50-year contract. In a recent flier entitled WHY ARE WE PAYING BILLIONS TO DESTROY OUR NATIONAL FORESTS, the Wilderness Society writes:
“The US Forest Service consistently sells timber at a price below the direct costs of building logging roads, managing the sales, and reforesting the cut land. Over the past ten years this policy has produced a net loss to the Treasury of $2.1 billion. For example, in Fiscal Year 1983 the Forest Service spent $83 million for roading and other expenses in Alaska. They received in return $½ million. That’s less than a penny in revenue for every dollar spent!”
The horror stories associated with Harry Merlo’s Louisiana-Pacific Corporation could go on and on. And of course they occur not only in Alaska and Colorado, but also in California and other West Coast communities where 1,700 mill workers have lost their jobs to Merlo’s union busting tactics, and in Mendocino County forests and backyards where L-P insists on spraying toxic herbicides despite the overwhelming opposition of the county’s citizenry.
Right now Harry Merlo and similar robber barrons have a supporter in the White House and friends throughout the Reagan Administration. To end this we need to fight them on the grass roots level with protest demonstrations against herbicide spraying, boycotts of L-P wood products, and organizing to thoroughly replace the Reagan regime in three years.