Weyerhaeuser Company

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Weyerhaeuser Company

Tacoma, Washington 98477
U.S.A.
(206) 924-2345
Fax: (206) 924-3355

Public Company
Incorporated: 1900 as Weyerhaeuser Timber Company
Employees: 40,621
Sales $9.02 billion
Stock Exchanges: Midwest New York Pacific Tokyo

Weyerhaeuser Company is the world’s largest private owner of timber and the world’s largest pulp and paper company. This diversified forest-products company owns six million acres of timberland in the United States and license for nine million acres in Canada. In 1990, with Weyerhaeuser’s stock selling below breakup value and earnings below the industry average, the company reviewed its corporate strategy and reaffirmed its commitment to its historic strengths in paper and wood.

Weyerhaeuser Timber Company, headquartered in Tacoma, Washington, was incorporated in 1900 as a joint venture in Pacific Northwest timber by James J. Hill, railroad magnate and Frederick Weyerhaeuser, joint owner of Weyerhaeuser & Denkmann, a midwestern lumber company that relied on forests in Wisconsin and Minnesota. Weyerhaeuser remained privately owned, primarily by the Weyerhaeuser family, until 1963.

Prior to World War I, the company was dominated by Frederick Weyerhaeuser. A German-born immigrant to the Midwest prior to the Civil War, his business philosophy evolved over his lifetime, and it became the operating philosophy for the new company. Weyerhaeuser felt that “The way to make money is to let the other fellow make some too.”

Timber holdings doubled in the pre-World War I period. The company opened a sawmill to produce lumber and soon had the nation’s first all-electric lumber mill, in 1915. Company plans to market lumber on the east coast, using the new Panama Canal, were delayed until the end of World War I.

Although demand for lumber for railroad cars declined during World War I as steel was utilized, demand for lumber for military planes and other military uses increased. In the early days of the lumber mill, itinerant single men formed the core of the miU’s laborers. Represented by the International Workers of the World (the Wobblies), they pushed for the eight-hour day, and other “revolutionary” ideals. A struggle resulted, and labor unrest threatened the war effort. To assure a steady supply of lumber for war material, the federal government established a union for the industry, something never done before or since. The union, the Loyal Legion of Loggers and Lumbermen, prevailed in its demand for the eight-hour day and 40-hour week. The hours changed the work force; family men then constituted the core of workers in lumber.

The surplus of naval vessels at the end of the war allowed Weyerhaeuser to purchase ships at a reasonable cost to transport lumber to the east coast through the Panama Canal. Weyerhaeuser Sales Company had been established in 1916 to promote this postwar expansion of markets.

John P. Weyerhaeuser, eldest son of the founder, led the company during the war and through the 1920s. He relied heavily, as had his father, on George Long, general manager from 1900 to 1930. Long, an early proponent of reforestation, approached the federal government prior to the war to lobby for cooperative forest-fire prevention and for lower property taxes for timberland to make reforestation economically viable. This lobbying led to the Clark-McNary Act in 1924 that addressed these issues as well as expanded the national forest. It also encouraged changes in taxation policies at the state level to allow reforestation.

Weyerhaeuser responded by creating the Logged Off Land Company in 1925 to handle the sale of “logged off land, to study reforestation, and to lobby at the state level for lower timberland taxes. As long as taxes were the same for all land, Weyerhaeuser felt compelled to sell logged off land and not to retain it for reforestation.

By the end of the 1920s, Weyerhaeuser was the largest private owner of timber in the United States. At the beginning of that decade, the company had produced its first national advertising campaign, promoting the lumber industry. By the decade’s end, the company’s advertisements focused on the recently upgraded quality of its lumber, by trademarking and grade-marking lumber, as well as taking more care in handling the lumber during shipment to market.

The Great Depression produced hard times for the company; few businesses or homes were built. The depression in the lumber market would have been devastating if not offset by diversification into pulp in 1931. By 1933, profits from pulp offset losses from lumber. The New Deal’s Civilian Conservation Corps assisted in reforestation of logged off land in these years. State tax laws in the Pacific Northwest were amended to provide lower taxes for timberland, promoting reforestation. In 1940 the company started the first U.S. tree farm, near Gray’s Harbor in Washington.

In 1935 the kidnapping of George Weyerhaeuser, the nineyear-old son of CEO John P. Weyerhaeuser Jr., catapulted the Weyerhaeuser family to national attention. The Weyerhaeuser kidnapping ended happily, the child safe, the ransom recovered, and the kidnappers apprehended. George Weyerhaeuser grew up to become president of his family’s company.

In 1940 the company expanded its lumber business to include plywood and paneling. The Lend-Lease Program to assist the British prior to U.S. entry into World War II found Weyerhaeuser transport ships utilized to carry lend-lease materiel to the British in Egypt. During the war itself, the company served as an agent of the War Shipping Administration, directing 68 freighters and troop ships, of which two were sunk in combat. Women and minorities proved themselves competant as they became the company’s work force during the war.

Rapid technological and commercial changes in the lumber industry after the war affected Weyerhaeuser. The hand-operated whipsaw was replaced by the power chain saw. Truck hauling replaced hauling by rail. Pent-up demand in construction, from the 1930s and early 1940s, led to greatly increased sales of lumber in this postwar era.

The company’s organizational structure, highly informal and fraternal, was inadequate for rapid postwar expansion. More formal programs, reports, and the absorption of subsidiaries were instituted. A philanthropic foundation was established, and the Weyerhaeuser Real Estate Company replaced the Logged Off Land Company.

Under continued leadership of the Weyerhaeuser family, the company expanded into particle board production, ply-veneer, hardboard, and hardwood paneling in the 1950s. Timberland holdings expanded beyond the Pacific Northwest for the first time, as land was purchased in the South—in Mississippi, Alabama, and North Carolina.

Weyerhaeuser Sales Company, established in 1916, was absorbed into the parent company, and Weyerhaeuser International S.A. was created in 1958 to expand into foreign markets. The company dropped “Timber” from its official name to become Weyerhaeuser Company, and adopted its current trademark, a triangular tree over the word “Weyerhaeuser.”

In 1960, for the first time in company history, the president was not a Weyerhaeuser, although new president Norton Clapp had family connections to the Weyerhaeusers. Under Clapp, the company went public in 1963. It expanded into the Japanese market as a result of surplus lumber involuntarily “logged” by Typhoon Frieda’s 150-mile-per-hour winds in 1962. Weyerhaeuser’s first overseas office was opened in Tokyo in 1963. In 1964 and 1965 European offices were opened respectively, in France and Belgium. The company acquired a wood-products distribution firm in Australia, and it entered into a joint venture for bleached kraft pulp in Canada.

Clapp was succeeded as CEO in 1966 by George Weyerhaeuser who served until 1988. Computers were introduced into operations in 1966. Growth per year in the high-yield forestry program doubled. The company contracted its first long-term debt. By the end of the 1960s, annual sales exceeded $1 billion.

The 1970s were years of phenomenal growth. In 1973 sales surpassed the $2 billion mark. Sales doubled in five years and doubled again before the end of the decade. In 1973, after six years of planning, the company finalized a joint venture with Jujo Paper Company of Tokyo. Weyerhaeuser also entered the disposable-diaper business in 1970; decided to centralize its research in Tacoma in 1975; and conducted an internal investigation to reinforce a corporate culture based on integrity and ethics. At the decade’s end, the company concluded an agreement with China to work there on the world’s largest reforestation effort. In 1979 company sales were $4.4 billion.

If the 1970s were a boom decade, the 1980s were a bust—at first. Tight credit in housing led to a depression in lumber similar to that in the 1930s. Just as the company survived the 1930s by diversifying into pulp, so its pulp and paper products helped it survive the early 1980s.

The volcanic eruption of Mount Saint Helens in May 1980 was disastrous to the company. Weyerhaeuser lost 68,000 acres of timberland. Weyerhaeuser’s Saint Helens Tree Farm was just below the mountain’s dome. Because the eruption took place on a Sunday, fewer workers were in the path of the devastation. Timberland values in the Northwest fell 75%. The company maintained dividends by diversifying into real estate and financial services.

Weyerhaeuser became the first U.S. forest products company listed on the Tokyo Stock Exchange in 1986. It was soon the third most-traded foreign stock there.

Downsizing and economizing were company policy in the 1980s. A dramatic example was the reduction of workers’ compensation claims from $30 million to $10 million by 1990. This was done by taking proactive work-safety measures instead of reactive ones. The company introduced a plant-wide computer-integrated manufacturing system, expected to cut production costs. In 1989 the company produced the first Christmas trees grown by cloning. “Perfect” seedlings produced from super Douglas fir trees were grown on a Weyerhaeuser farm in Salem, Oregon, the product of 15 years of research.

In 1988, for only the second time in the company’s history, a non-Weyerhaeuser took over the helm of the company. John Creighton joined the company in 1970 in real estate, and became president in 1988. He had no prior wood-products experience. George Weyerhaeuser became chairman.

Environmentalism has affected Weyerhaeuser in the past and will continue to do so. The company pioneered tree farming and recycled by-products as early as 1949, but its current practices of burning debris, using herbicides, and removing whole sections of forest are opposed by environmentalists. Exports of timber from federal forests in the United States are limited by law, and environmentalists hope to also impose similar limits on lumber logged from state and private forests. Such actions seriously affect Weyerhaeuser’s international marketing of lumber.