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Weyerhaeuser Company

Weyerhaeuser Company

33663 Weyerhaeuser Way South
Federal Way, Washington 98003-9620
U.S.A.
Telephone: (253) 924-2345
Toll Free: (800) 525-5440
Fax: (253) 924-2685
Web site: http://www.weyerhaeuser.com

Public Company
Incorporated:
1900 as Weyerhaeuser Timber Company
Employees: 49,887
Sales: $22.63 billion (2005)
Stock Exchanges: New York Chicago
Ticker Symbol: WY
NAIC: 113110 Timber Tract Operations; 233210 Single Family Housing Construction; 321113 Sawmills; 321211 Hardwood Veneer and Plywood Manufacturing; 321212 Softwood Veneer and Plywood Manufacturing; 321219 Reconstituted Wood Product Manufacturing; 322110 Pulp Mills; 322121 Paper (Except Newsprint) Mills; 322130 Paperboard Mills; 322211 Corrugated and Solid Fiber Box Manufacturing; 233110 Land Subdivision and Land Development; 423930 Recyclable Material Merchant Wholesalers

Weyerhaeuser Company is one of the world's largest private owners of softwood timber and one of the world's largest producers of softwood lumber, hardwood lumber, engineered lumber, softwood market pulp, and containerboard and paper-based packaging products. This diversified forest products company owns and leases 6.4 million acres of timberland in the United States, has licenses for 27.6 million acres in Canada, and also owns 518,000 acres elsewhere, mainly in Uruguay and New Zealand. Weyerhaeuser is also one of the world's leading recyclers of paper and pulp products. One of the largest homebuilders in the United States, Weyerhaeuser is involved in real estate development and construction, specifically single-family housing, residential lots, and master-planned communities. The company is primarily focused on the North American market, as 84 percent of revenues are generated in the United States, with another 5 percent originating in Canada. The production of wood products is the firm's single largest business segment, accounting for more than 40 percent of overall sales.

EARLY HISTORY

Weyerhaeuser Timber Company, headquartered in Tacoma, Washington, was incorporated in 1900 as a joint venture in Pacific Northwest timber (900,000 acres of forestland in western Washington) 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 run by Frederick Weyerhaeuser. A German-born immigrant to the Midwest before the Civil War, his business philosophy evolved over his lifetime and 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 period preceding World War I. In 1902 the company purchased its first sawmill, located in Everett, Washington, to produce lumber. Then in 1915 the firm built a mill for the first time, the nation's first all-electric lumber mill, also located in Everett. 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 mill's laborers. Represented by the International Workers of the World (the Wobblies), they pushed for better working conditions, including an eight-hour work day. A struggle resulted, and labor unrest threatened the war effort. To ensure 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 workforce; 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.

PIONEERING IN REFORESTATION

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 before 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, which addressed these issues and expanded the national forest. The act also encouraged changes in taxation policies at the state level to promote 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.

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 upgraded quality of its lumber, by trademarking and grademarking lumber, as well as by taking more care in handling the lumber during shipment to market.

The Great Depression produced hard times for the company, as few businesses or homes were being built. The depression in the lumber market would have been devastating if not offset by the company's 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 during this period. State tax laws in the Pacific Northwest were amended to provide lower taxes for timberland, promoting reforestation. In 1941 the company started the first tree farm in the United States, near Gray's Harbor in Washington.

In 1935 the kidnapping of George Weyerhaeuser, the nine-year-old son of CEO John P. Weyerhaeuser, Jr., catapulted the Weyerhaeuser family to national attention. The Weyerhaeuser kidnapping ended happily, with 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 material 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.

COMPANY PERSPECTIVES

Our Mission: Produce superior returns for our shareholders by focusing on our customers and safely growing and harvesting trees, manufacturing and selling forest products, and building and selling homes.

Rapid technological and commercial changes in the lumber industry after the war affected Weyerhaeuser. The hand-operated whipsaw was replaced by the power chainsaw, and 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 altered to accommodate rapid postwar expansion: more formal programs and reports were instituted, and subsidiaries were absorbed. A philanthropic foundation was established, and the Weyerhaeuser Real Estate Company replaced the Logged Off Land Company.

DIVERSIFICATION IN THE
POSTWAR ERA

Under the 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 Mississippi and Alabama in 1956 and in North Carolina the following year. Also in 1957, Weyerhaeuser entered the packaging business, producing corrugated shipping containers, paperboard, folding cartons, and milk cartons for such well-known firms as the Quaker Oats Company.

In 1958 Weyerhaeuser Sales Company, established in 1916, was absorbed into the parent company and Weyerhaeuser International, S.A. was created to expand into foreign markets. With its increased diversification, the company in 1959 dropped "Timber" from its official name to become Weyerhaeuser Company and adopted its current trademark, a tree in a triangle over the word "Weyerhaeuser."

In 1960, for the first time in company history, the presidency of Weyerhaeuser passed out of the family to Norton Clapp. Although Weyerhaeuser shares had for some time been periodically available for purchase by the public in the "over the counter" market, the company under Clapp officially went public in December 1963, with listings on the New York and Pacific Stock Exchanges. It entered the fine paper business in 1961 via the acquisition of Hamilton Paper Company and also 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 in France and Belgium, respectively. The company acquired a wood products distribution firm in Australia, and it entered into a joint venture for bleached kraft pulp in Canada.

KEY DATES

1900:
Weyerhaeuser Timber Company, based in Tacoma, Washington, is incorporated as a joint venture by James J. Hill and Frederick Weyerhaeuser.
1915:
Company builds the nation's first all-electric lumber mill.
1929:
Weyerhaeuser ranks as the largest private owner of timber in the United States.
1931:
Company diversifies into pulp.
1940:
Plywood and paneling are added to the product lineup.
1957:
Weyerhaeuser enters the packaging business.
1958:
Weyerhaeuser International, S.A. is formed to expand into foreign markets.
1959:
Company drops "Timber" from its name, becoming Weyerhaeuser Company, and adopts its "tree in a triangle" logo.
1960:
Presidency of the firm passes out of the Weyerhaeuser family for the first time.
1963:
Company goes public and opens its first overseas office, in Tokyo.
1969:
Weyerhaeuser enters the homebuilding business.
1971:
Headquarters are shifted to Federal Way, Washington.
1989:
Major restructuring is launched to refocus firm on core businesses.
1992:
Two pulp mills, several sawmills, and 175,000 acres of timberland in Georgia are acquired from the Procter & Gamble Company.
1997:
Steven R. Rogel is brought onboard as the first outsider to run Weyerhaeuser.
1999:
Vancouver, British Columbia-based Mac-Millan Bloedel Limited is acquired.
2002:
Weyerhaeuser acquires Willamette Industries, Inc. in an $8.1 billion deal.
2006:
Weyerhaeuser announces plan to spin off its fine paper operations and merge them with Domtar Inc.

Clapp was succeeded as CEO in 1966 by George Weyerhaeuser, who served until 1988. Growth per year in the high-yield forestry program doubled, while the company contracted its first long-term debt. By the end of the 1960s annual sales exceeded $1 billion. In 1969 Weyerhaeuser entered the homebuilding business through the acquisitions of Quadrant Corporation of Washington and Pardee Construction Company of California, leading to the formation of Weyerhaeuser Real Estate Company that same year. The real estate operations grew through the purchases of Dallas-based Centennial Homes, Inc. and Florida residential builder Babcock Company in 1970 and 1972, respectively. In the meantime, Weyerhaeuser in the fall of 1969 completed its largest ever single purchase of land when it purchased from Dierks Forests 1.8 million acres of forestland in Arkansas and Oklahoma along with several sawmills and paper mills.

The 1970s were years of phenomenal growth, with sales surpassing the $2 billion mark in 1973. Sales doubled in five years and doubled again before the end of the decade. Weyerhaeuser entered the disposable diaper business in 1970; moved its corporate headquarters to Federal Way, Washington, in 1971; and centralized research in Tacoma in 1975. 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 early 1980s were a bust, with tight credit in housing leading to a depression in lumber similar to that of the 1930s. The volcanic eruption of Mount Saint Helens in May 1980 was also a blow to the company. Weyerhaeuser's Saint Helens Tree Farm was just below the mountain's dome, and the company lost 68,000 acres of timberland. Fortunately, the eruption took place on a Sunday, and fewer workers were in the path of the devastation. As a result of the eruption timberland values in the Northwest fell 75 percent. The company maintained dividends through its diversification into real estate and financial services. In 1986 Weyerhaeuser became the first U.S. forest products company listed on the Tokyo Stock Exchange and soon became the third most traded foreign stock there.

In response to difficult economic conditions, down-sizing and economizing became company emphases in the 1980s. In one dramatic example, Weyerhaeuser instituted safety measures that reduced workers' compensation claims from $30 million to $10 million by 1990. To cut production costs still further, the company introduced a plantwide computer integrated manufacturing system.

CREIGHTON-LED REORGANIZATION AND RESTRUCTURING

In 1988 John Creighton became president of Weyerhaeuser, and George Weyerhaeuser became chairman. Creighton reevaluated the company's diversification into areas outside of forest products. By the 1980s the company had become involved in insurance, homebuilding, mortgage banking, garden products, pet supplies, and disposable diapers. While these businesses contributed greatly to the company's sales volume, they added very little to profits. As the head of Weyerhaeuser's nursery operations noted in the Wall Street Journal several years later, after the divestiture of his unit, "Weyerhaeuser was darn good at growing trees, but they sure didn't know anything about garden supplies."

Creighton reorganized Weyerhaeuser to focus the company's priorities and develop a coherent long-term strategy, selling less profitable businesses and returning to a focus on forest products. As part of the restructuring program, Creighton altered the company's incentive system to reward each mill for profitability rather than the amount of product it manufactured. He also whittled Weyerhaeuser's product lines to concentrate on high-quality, higher-margin products such as white papers and high-grade lumber. By 1990 the company had sold or closed operations that had previously accounted for nearly $1 billion in sales. The loss of this revenue, however, affected virtually none of its profits.

As the restructuring program was gaining momentum in 1989, an economic recession loomed. After posting a record high of more than $10 billion in sales in 1989, Weyerhaeuser's sales dipped to $9 billion in 1990 and profits fell by 35 percent. The decline was attributed to decreased housing and other construction projects as banks grew more reluctant to lend money and, in addition, to an oversupply of pulp and paper in the market that lowered the price of paper. In 1991 the financial situation did not improve. Sales fell to $8.7 billion, and the company recorded a loss of $162 million compared to a profit of $565 million three years earlier.

Although significant, the losses suffered by Weyerhaeuser were not as large as those incurred by the rest of the forest industry. Beyond the damaging effects of the recession, other companies also sustained losses because of the protection of federal timberlands that reduced their supply of wood. With 5.5 million acres of federal timberland cordoned off in the Pacific Northwest, lumber prices soared, and Weyerhaeuser was able to reap the benefits, harvesting timber on land it owned. This enviable position resulted in greater earnings for the company, and it was able to rebound from 1991's disastrous year. Profits in the first quarter of 1991 jumped 81 percent and, for the year, the company recorded earnings of $372 million. Also in 1991 Creighton added CEO responsibilities to his duties as president.

By 1992 the company had closed 50 plants, representing roughly 20 percent of its operating facilities, as part of its restructuring program, and it continued the divestiture of businesses that did not support the company's core business strategy. In 1993 Weyerhaeuser's diaper business was sold for $215 million; GNA Corporation, Weyerhaeuser's consumer finance unit, was sold for $525 million, which represented the largest divestiture ever made by the company. In addition to shedding businesses that no longer fit the company, Weyerhaeuser strengthened its core businesses through the purchase of two pulp mills, several sawmills, and approximately 175,000 acres of timberland in Georgia from the Procter & Gamble Company in 1992 for $600 million. The company also undertook a $1 billion modernization program to overhaul three of its largest paper millsin Plymouth, North Carolina; Longview, Washington; and Kamloops, British Columbia.

Despite its large landholdings, Weyerhaeuser was not exempt from federal environmental regulations, and the company had to strike a deal with federal wildlife regulators to log in areas of Oregon inhabited by the endangered northern spotted owl. The company agreed in 1995 to leave corridors of larger, older trees, which the owls could use to move from Weyerhaeuser land to that of national forests. It was in large part through Creighton's leadership that the company began to shed its reputation as an inveterate clear-cutter, through such compromises. Creighton believed that it was in the company's long-term interest to take a more cooperative approach to environmental issues; he told Business Week in 1995: "Although we own huge amounts of [private] timberland, to some degree we operate at the sufferance of the public." Another environmental concern that Creighton faced was that of salmon runs in the Pacific Northwest, which critics claimed were silted up by heavy logging. Weyerhaeuser studied the effects of logging on 12 Northwest river basins, then formulated plans for minimizing the impact of future logging. In addition, in response to demands that chlorines be eliminated from the paper production process, Weyerhaeuser, as part of its paper mill modernization program, brought in new technology that enabled it to eliminate most chlorines from these mills.

MORE ADDITIONS AND
SUBTRACTIONS

As the 1990s continued, Weyerhaeuser made additional moves that altered the company's operational makeup. The company bought 240,700 acres of timberland in the U.S. South in December 1995, then bought 661,200 acres in Mississippi and Louisiana and two sawmills early the following year. Later in 1996 Weyerhaeuser sold its facilities in Klamath Falls, Oregon, and 600,000 acres of forest to U.S. Timberlands for $309 million. This divestiture was part of a company strategy to return to its core Douglas fir processing activities, as the Klamath Falls acreage consisted mainly of ponderosa and lodgepole pine trees. In a further narrowing of the company's focus, Weyerhaeuser sold its mortgage company subsidiary and its Canadian chemical business in 1997. Also that year, the company made its first investment in the Southern Hemisphere, purchasing for $185 million a 51 percent interest in a joint venture in New Zealand that held 193,000 acres of fast-growing softwood timberlands.

In late 1997 Creighton retired and was succeeded as CEO and president by Steven R. Rogel, who became chairman as well in April 1999, taking over for the retiring George Weyerhaeuser. The appointment of Rogel, who had previously served as CEO and president of rival Willamette Industries, Inc. of Portland, Oregon, was a departure for Weyerhaeuser, which had never before chosen an outsider to run the company. Rogel had earned kudos for his tough-minded restructuring efforts at Willamette and was expected to focus on improving Weyerhaeuser's profitability, which had been on the decline since a peak in 1995 of $799 million. Rogel's focus on margins was likely to result in a further narrowing of Weyerhaeuser's interests; along these lines the company in early 1999 announced that it would table a proposed expansion of its pulp capacity and in April 1999 announced an agreement to sell its composite products business and a ply-veneer plant to SierraPine Limited. At the same time Weyerhaeuser was expected to increase its global presence, and in 1999 it opened plants in Mexico and in Wuhan, China, and acquired timberlands and sawmills in Australia through a limited partnership.

BLOCKBUSTER DEALS FOR
MACMILLAN BLOEDEL (1999)
AND WILLAMETTE (2002)

The biggest immediate impact of Rogel's hiring, however, stemmed from two blockbuster purchases as the new leader counted on acquisitions and consolidation to drive future growth rather than the building of new capacity. In November 1999 Weyerhaeuser acquired MacMillan Bloedel Limited in a stock swap valued at approximately $2.2 billion. Based in Vancouver, British Columbia, MacBlo (as it was known in its home country) had at one time been the largest forest-products company in Canada. With a history dating back to 1901, MacBlo at the time of its purchase by Weyerhaeuser operated three containerboard mills, 19 packaging plants, three oriented strand board (OSB) mills, nine lumber or plywood mills, and 31 building materials distribution centers. (An alternative to plywood, OSB was a multilayered board made from wood strands "oriented" in various directions; the strands were held together by a mixture of wax and resin and compressed under intense heat.) The firm also held ownership or harvesting rights to 6.9 million acres of forestland in both Canada and the United States.

Through the MacMillan Bloedel deal, Weyerhaeuser also acquired a 49 percent stake in a joint venture called Trus Joint MacMillan, a Boise, Idaho, producer of homebuilding products made out of wood strands and sheets of veneer. In January 2000 Weyerhaeuser acquired TJ International Inc., thereby gaining full control of Trus Joint. The total purchase price of $874 million included $142 million in assumed debt. In its continuing effort to further focus on core areas, Weyerhaeuser sold its Marshfield, Wisconsin-based door manufacturing business in 2000, and it also shut down four corrugated packaging plants as part of its efforts to consolidate the MacBlo acquisition, the efforts aiming to ultimately secure $150 million in annual savings through merger synergies. Also during the year, a charge of $82 million was recorded in relation to the settlement of a class-action lawsuit concerning defective hardboard siding the company had sold from the early 1980s through 1996.

The second blockbuster deal of the Rogel era entailed a protracted hostile takeover battle that commenced in November 2000. That month Weyerhaeuser offered to acquire Willamette Industries, where Rogel had worked from 1972 to 1997, for $5.3 billion in cash, or $48 per share. Willamette firmly rejected this offer and several more that followed. In 2001, however, Weyerhaeuser gained three seats on the Willamette board through a proxy battle, but this only prompted Willamette to enter discussions in late 2001 with Georgia-Pacific Corporation on some sort of business combination with that firm's building-products units. However, in January 2002 Willamette backed away from a deal with Georgia-Pacific because of concerns over the company's asbestos liabilities and instead agreed to be acquired by Weyerhaeuser for $55.50 a share. The deal closed in June 2000 at a final price of $8.1 billion, which included $1.8 billion in assumed debt.

The purchase of Willamette added operations that had generated $4.65 billion in sales in 2000. Willamette had owned 1.73 million acres of timberland and produced building materials, composite wood panels, fine paper, office-paper products, corrugated packaging, and grocery bags. Rogel set a goal of $300 million in savings achieved through consolidation by early 2005. Toward this goal and to pay down the company's swelling load of debt, which stood at around $13 billion following the Willamette deal, Weyerhaeuser closed a number of facilities and divested various assets over the next few years. Among the closures were four wood products facilities and six containerboard, packaging, and recycling facilities in 2002; eight wood products plants, one containerboard mill, and one packaging facility in 2003; and one wood products plant and two packaging facilities in 2004. Thousands of jobs were cut from the workforce. Between 2002 and 2004 Weyerhaeuser sold 817,000 acres of timberland in Washington, the Carolinas, Tennessee, and Georgia.

During this same period, the company weathered the biggest downturn in the forest products industry in half a century. Struggling through this difficult economic period saddled with a heavy debt burden, Weyerhaeuser eked out small profit totals of $241 million and $277 million in 2002 and 2003. By the end of 2004, however, debt had been cut to around $10.6 billion, and as the economy began turning around that year, Weyerhaeuser achieved record profits of $1.28 billion on revenues of $22.67 billion, a 14 percent increase over the previous year.

Weyerhaeuser continued closing operations and selling assets in 2005. The firm either closed or placed for sale 40 facilities, operations, and machines. The largest divestment that year centered on the British Columbian coast. Weyerhaeuser sold to Brascan Corporation 635,000 acres of private timberlands, the annual harvesting rights to 3.6 million cubic meters of timber on land owned by the provincial government, and five lumber mills, for a total of $970 million. The company also sold its French composites business in 2005. Connected primarily with the divestments and closures were $560 million in after-tax charges, resulting in reduced net income of $733 million for the year. Yet Weyerhaeuser was also able to cut its debt by an additional $2 billion, to $8.26 billion.

In April 2006 Weyerhaeuser combined its five wood products unitsengineered wood, structural panels, plywood, lumber, and distributioninto a new division called iLevel. Another noncore operation was jettisoned in July 2006 when the company exited from the composite panels business by selling its six U.S. composite mills to Markham, Ontario-based Flakeboard Company Limited. That same month, Weyerhaeuser's homebuilding unit began scaling back its construction plans in several sections of the country as a national housing slowdown continued to unfold. Then the following month Weyerhaeuser announced a plan for its largest divestiture since taking over Willamette. The company planned to spin off its fine paper operations, a unit that had generated $2.4 billion in revenues during 2005, to its shareholders as a new company, which would then be merged into the Canadian firm Domtar Inc. Prior to the merger, the Weyerhaeuser spinoff would pay the company $1.35 billion in cash. Divesting the fine paper unit was expected to enable Weyerhaeuser to concentrate on areas with greater growth potential, including wood products, containerboard and packaging, pulp, timberlands, and real estate.

Ellen NicKenzie Lawson

Updated, Jeffrey L. Covell;

David E. Salamie

PRINCIPAL SUBSIDIARIES

Columbia & Cowlitz Railway Company; DeQueen & Eastern Railroad Company; Fisher Lumber Company; Golden Triangle Railroad; Jasmine Forests, LLC; Jewell Forests, LLC; Mississippi & Skuna Valley Railroad Company; Norpac Resources LLC; Texas, Oklahoma & Eastern Railroad Company; Westwood Shipping Lines, Inc.; Weyerhaeuser de Mexico, S.A. de C.V.; Weyerhaeuser Forestlands International, Inc.; Weyerhaeuser International, Inc.; Weyerhaeuser Products Limited (U.K.); Weyerhaeuser (Asia) Limited (Hong Kong); Weyerhaeuser Brasil Participações Ltda. (Brazil); Weyerhaeuser China, Ltd.; Weyerhaeuser Europe Holdings (Ireland); Weyerhaeuser Holdings Limited (Canada); Weyerhaeuser Company Limited (Canada); MacMillan Bloedel Pembroke Limited Partnership (Canada); Weyerhaeuser Australia Pty Ltd.; Weyerhaeuser New Zealand Inc.; Weyerhaeuser (Hong Kong) Limited; Weyerhaeuser Japan Ltd.; Weyerhaeuser Korea Ltd.; Weyerhaeuser Taiwan Ltd.; Weyerhaeuser Uruguay S.A.; Weyerhaeuser (Mexico) Inc.; Weyerhaeuser Raw Materials, Inc.; Weyerhaeuser Real Estate Company; Weyerhaeuser Real Estate Development Company; Weyerhaeuser Sales Company.

PRINCIPAL OPERATING UNITS

Timberlands; iLevel; Cellulose Fiber and White Papers; Containerboard Packaging and Recycling; Real Estate.

PRINCIPAL COMPETITORS

International Paper Company; Georgia-Pacific Corporation; MeadWestvaco Corporation; Smurfit-Stone Container Corporation.

FURTHER READING

Allison, Melissa, "Weyerhaeuser Posts Loss After Quarter of Revisions," Seattle (Wash.) Times, February 4, 2006, p. E1.

Beauchamp, Marc, "Lost in the Woods," Forbes, October 16, 1989, pp. 221 +.

Carlton, Jim, "Weyerhaeuser Bulks Up to Avoid Consolidation Buzz Saw," Wall Street Journal, January 24, 2002, p. B4.

, "Weyerhaeuser Outbids Georgia-Pacific to Acquire P&G Assets for $600 Million," Wall Street Journal, August 21, 1992, p. A3.

, "Weyerhaeuser Plans to Split Off Fine-Paper Unit," Wall Street Journal, August 24, 2006, p. A2.

Carlton, Jim, and Christopher J. Chipello, "Weyerhaeuser, MacMillan Bloedel Agree to Combine in a Stock Swap," Wall Street Journal, June 22, 1999, p. A4.

Carlton, Jim, and Robin Sidel, "Willamette Agrees to Be Bought by Weyerhaeuser," Wall Street Journal, January 22, 2002, p. A3.

Deogun, Nikhil, and Jim Carlton, "Weyerhaeuser Seeks Its Rival Willamette in an Unsolicited Offer of $5.3 Billion," Wall Street Journal, November 14, 2000, p. A3.

Deutsch, Claudia H., "His Past, As Acquisition Target," New York Times, June 24, 2001, p. BU2.

Edwards, Marcelene, "Weyerhaeuser Sours on Paper," Tacoma (Wash.) News Tribune, April 27, 2006, p. D1.

, "Weyerhaeuser Still in Timber," Tacoma (Wash.) News Tribune, April 21, 2006, p. D1.

Erb, George, "Kudos for New CEO at Weyco," Puget Sound Business Journal (Seattle), November 21, 1997, pp. 1 +.

, "Not Lumbering: Weyerhaeuser's Steven Rogel Moves Quickly, Decisively," Puget Sound Business Journal (Seattle), April 26, 2002.

, "Still Spry at 100: Weyerhaeuser Sharpens Its Strategies," Puget Sound Business Journal (Seattle), February 18, 2000, p. 1.

Ferguson, Kelly H., "Weyerhaeuser Focuses on Future with 'Minimum-Impact' Strategy," Pulp and Paper, September 1994, pp. 52, 5556.

, "Weyerhaeuser Paper Co.: Refocusing Redefines Major Industry Player," Pulp and Paper, January 1994, pp. 2829.

Ferguson, Tim W., "'Timmm Burrr!' Could Remain the Northwest's (Muffled) Cry," Wall Street Journal, July 9, 1991, p. A17.

Hidy, Ralph W., Frank Ernest Hill, and Allan Nevins, Timber and Men: The Weyerhaeuser Story, New York: Macmillan, 1963, 704 p.

Holmes, Stanley, "Pulp Friction at Weyerhaeuser," Business Week, March 11, 2002, pp. 66, 68.

Kimelman, John, "Weyerhaeuser: Not Too Late for the Timber Turnaround," Financial World, March 30, 1993, p. 22.

King, Harriet, and B. J. Spalding, "Weyerhaeuser Revamps Paper," Chemical Week, August 21, 1985, pp. 11 +.

Lipin, Steven, "GE Capital to Buy GNA Corp. Unit of Weyerhaeuser," Wall Street Journal, January 7, 1993, p. A5.

Lubove, Seth, "Out of the Woods?," Forbes, March 22, 1999, p. 54.

Patrick, Ken L., "Weyerhaeuser Brings High-Tech Pulp Mill Online at Mississippi Complex," Pulp and Paper, December 1990, p. 79.

Richards, Bill, "Silver Lining: Owls, of All Things, Help Weyerhaeuser Cash in on Timber," Wall Street Journal, January 24, 1992, pp. A1, A6.

Sensel, Joni, Traditions Through the Trees: Weyerhaeuser's First 100 Years, Seattle, Wash.: Documentary Book Publishers, 1999, 228 p.

Swisher, Kara, "Weyerhaeuser Picks Rogel As New CEO, Recruiting Him from Rival Willamette," Wall Street Journal, November 18, 1997, p. B11.

Taylor, John H., "Rip Van Weyerhaeuser," Forbes, October 28, 1991, pp. 3840.

Twining, Charles E., F. K. Weyerhaeuser: A Biography, St. Paul, Minn.: Minnesota Historical Society Press, 1997, 332 p.

, George S. Long: Timber Salesman, Seattle: University of Washington Press, 1994, 414 p.

, Phil Weyerhaeuser, Lumberman, Seattle: University of Washington Press, 1985, 401 p.

"Weyerhaeuser: An Early Lead in Exports Is About to Pay Off," Business Week, June 29, 1981, pp. 116 +.

Weyerhaeuser, George H., "Forests for the Future": The Weyerhaeuser Story, New York: Newcomen Society in North America, 1981, 24 p.

"Weyerhaeuser Gets Set for the 21st Century," Fortune, April 1977.

"Weyerhaeuser Timber: Out of the Woods," Fortune, September 1959.

Where the Future Grows, Tacoma, Wash.: Weyerhaeuser Corporation, 1989.

Yang, Dori Jones, "The New Growth at Weyerhaeuser," Business Week, June 19, 1995, pp. 6364.

, "Weyerhaeuser's Exports: An Endangered Species?," Business Week, July 16, 1990, pp. 50 +.

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Weyerhaeuser Company

Weyerhaeuser Company

33663 Weyerhaeuser Way South
Federal Way, Washington 98003
U.S.A.
(253) 924-2345
Fax: (253) 924-3543
Web site: http://www.weyerhaeuser.com

Public Company
Incorporated
:1900 as Weyerhaeuser Timber Company
Employees :35,800
Sales :$10.77 billion (1998)
Stock Exchanges :New York Midwest Pacific
Ticker Symbol : WY
NAIC :11311 Timber Tract Operations; 23321 Single Family Housing Construction; 321113 Sawmills; 321211 Hardwood Veneer & Plywood Manufacturing; 321212 Softwood Veneer & Plywood Manufacturing; 321219 Reconstituted Wood Product Manufacturing; 32211 Pulp Mills; 322121 Paper (Except Newsprint) Mills; 32213 Paperboard Mills; 322211 Corrugated & Solid Fiber Box Manufacturing; 23311 Land Subdivision & Land Development

Weyerhaeuser Company is the worlds largest private owner of softwood timber and the worlds largest producer of softwood lumber and market pulp. This diversified forest products company owns 5.1 million acres of timberland in the United States and license for 27 million acres in Canada. Weyerhaeuser also produces fine paper, containerboard, bleached paperboard, and a variety of wood products, and it is one of North Americas leading recyclers of office wastepaper, newspaper, and corrugated boxes. The company is also involved in real estate development and construction, specifically single-family housing, residential lots, and master-planned communities.

Early History

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 run by Frederick Weyerhaeuser. A German-born immigrant to the Midwest before the Civil War, his business philosophy evolved over his lifetime and 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 period preceding World War I. The company opened a sawmill to produce lumber and soon had the nations 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 mills laborers. Represented by the International Workers of the World (the Wobblies), they pushed for better working conditions, including an eight-hour work day. A struggle resulted, and labor unrest threatened the war effort. To ensure 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 workforce; 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.

Pioneered in Reforestation Beginning in the 1920s

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 before 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, which addressed these issues and expanded the national forest. The act also encouraged changes in taxation policies at the state level to promote 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.

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 decades end the companys advertisements focused on the recently upgraded quality of its lumber, by trademarking and grademarking lumber, as well as by taking more care in handling the lumber during shipment to market.

The Great Depression produced hard times for the company, as few businesses or homes were being built. The depression in the lumber market would have been devastating if not offset by the companys diversification into pulp in 1931. By 1933 profits from pulp offset losses from lumber. The New Deals Civilian Conservation Corps assisted in reforestation of logged off land during this period. State tax laws in the Pacific Northwest were amended to provide lower taxes for timberland, promoting reforestation. In 1940 the company started the first tree farm in the United States, near Grays Harbor in Washington.

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

Rapid technological and commercial changes in the lumber industry after the war affected Weyerhaeuser. The hand-operated whipsaw was replaced by the power chainsaw, and 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 companys organizational structure, highly informal and fraternal, was altered to accommodate rapid postwar expansion: more formal programs and reports were instituted, and subsidiaries were absorbed. A philanthropic foundation was established, and the Weyerhaeuser Real Estate Company replaced the Logged Off Land Company.

Diversified in the Postwar Era

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

In 1958 Weyerhaeuser Sales Company, established in 1916, was absorbed into the parent company and Weyerhaeuser International S.A. was created to expand into foreign markets. With its increased diversification, the company in 1959 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 presidency of Weyerhaeuser passed out of the family to Norton Clapp. Under Clapp, the company went public in 1963. It expanded into the Japanese market as a result of surplus lumber involuntarily logged by Typhoon Friedas 150-mile-per-hour winds in 1962. Weyerhaeusers first overseas office was opened in Tokyo in 1963. In 1964 and 1965 European offices were opened in France and Belgium, respectively. 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. Growth per year in the high-yield forestry program doubled, while 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, with sales surpassing the $2 billion mark in 1973. Sales doubled in five years and doubled again before the end of the decade. Weyerhaeuser entered the disposable diaper business in 1970; moved its corporate headquarters to Federal Way, Washington, in 1971; and centralized research in Tacoma in 1975. At the decades end the company concluded an agreement with China to work there on the worlds largest reforestation effort. In 1979 company sales were $4.4 billion.

Company Perspectives

To achieve its vision of becoming the best forest products company in the world, Weyerhaeuser must lead the industry in forest management and manufacturing excellence. This vision also includes a commitment to employees, customers and shareholders to support the communities where the company does business, to hold itself to the highest standards of ethical conduct and environmental responsibility, and to listen to and communicate openly with Weyerhaeuser people and the public.

If the 1970s were a boom decade, the early 1980s were a bust, with tight credit in housing leading to a depression in lumber similar to that of the 1930s. The volcanic eruption of Mount Saint Helens in May 1980 was also a blow to the company. Weyerhaeusers Saint Helens Tree Farm was just below the mountains dome, and the company lost 68,000 acres of timberland. Fortunately, the eruption took place on a Sunday, and fewer workers were in the path of the devastation. As a result of the eruption timberland values in the Northwest fell 75 percent. The company maintained dividends by diversifying into real estate and financial services. In 1986 Weyerhaeuser became the first U.S. forest products company listed on the Tokyo Stock Exchange and soon became the third most traded foreign stock there.

In response to difficult economic conditions, downsizing and economizing became company emphases in the 1980s. In one dramatic example, Weyerhaeuser instituted safety measures that reduced workers compensation claims from $30 million to $10 million by 1990. To cut production costs still further, the company introduced a plantwide computer integrated manufacturing system.

Creighton Launched Reorganization and Restructuring in the Late 1980s

In 1988 John Creighton became president of Weyerhaeuser, and George Weyerhaeuser became chairman. Creighton reevaluated the companys diversification into areas outside of forest products. During the 1980s the company had become involved in insurance, home building, mortgage banking, garden products, pet supplies, and disposable diapers. While these businesses contributed greatly to the companys sales volume, they added very little to profits. As the head of Weyerhaeusers nursery operations noted in the Wall Street Journal several years later, after the divestiture of his unit, Weyerhaeuser was darn good at growing trees, but they sure didnt know anything about garden supplies.

Creighton reorganized Weyerhaeuser to focus the companys priorities and develop a coherent long-term strategy, selling off less profitable businesses and returning to a focus on forest products. As part of the restructuring program, Creighton altered the companys incentive system to reward each mill for profitability rather than the amount of product it manufactured. He also whittled Weyerhaeusers product lines to concentrate on high-quality, higher-margin products such as white papers and high-grade lumber. By 1990 the company had sold or closed operations that had previously accounted for nearly $1 billion in sales. The loss of this revenue, however, affected virtually none of its profits.

As the restructuring program was gaining momentum in 1989, an economic recession loomed. After posting a record high of more than $10 billion in sales in 1989, Weyerhaeusers sales dipped to $9 billion in 1990 and profits fell by 35 percent. The decline was attributed to decreased housing and other construction projects as banks grew more reluctant to lend money and, in addition, to an oversupply of pulp and paper in the market that lowered the price of paper. In 1991 the financial situation did not improve. Sales fell to $8.7 billion, and the company recorded a loss of $162 million compared to a profit of $565 million three years earlier.

Although significant, the losses suffered by Weyerhaeuser were not as large as those incurred by the rest of the forest industry. Beyond the damaging effects of the recession, other companies also sustained losses due to the protection of federal timberlands that reduced their supply of wood. With 5.5 million acres of federal timberland cordoned off in the Pacific Northwest, lumber prices soared, and Weyerhaeuser was able to reap the benefits, harvesting timber on land it owned. This enviable position resulted in greater earnings for the company, and it was able to rebound from 1991s disastrous year. Profits in the first quarter of 1991 jumped 81 percent and, for the year, the company recorded earnings of $372 million. Also in 1991 Creighton added CEO responsibilities to his duties as president.

By 1992 the company had closed 50 plantsrepresenting roughly 20 percent of its operating facilitiesas part of its restructuring program, and it continued the divestiture of businesses that did not support the companys core business strategy. In 1993 Weyerhaeusers diaper business was sold for $215 million; GNA Corp., Weyerhaeusers consumer finance unit, was sold for $525 million, which represented the largest divestiture ever made by the company. In addition to shedding businesses that no longer fit the company, Weyerhaeuser strengthened its core businesses through the purchase of two pulp mills, several sawmills, and approximately 175,000 acres of timberland in Georgia from the Proctor & Gamble Company in 1992 for $600 million. The company also undertook a $1 billion modernization program to overhaul three of its largest paper millsin Plymouth, North Carolina; Longview, Washington; and Kamloops, British Columbia.

Despite its large landholdings, Weyerhaeuser was not exempt from federal environmental regulations, and the company had to strike a deal with federal wildlife regulators to log in areas of Oregon inhabited by the endangered northern spotted owl. The company agreed in 1995 to leave corridors of larger, older trees, which the owls could use to move from Weyerhaeuser land to that of national forests. It was in large part through Creightons leadership that the company began to shed its reputation as an inveterate clear-cutter, through such compromises. Creighton believed that it was in the companys long-term interest to take a more cooperative approach to environmental issues; he told Business Week in 1995: Although we own huge amounts of [private] timberland, to some degree we operate at the sufferance of the public. Another environmental concern that Creighton faced was that of salmon runs in the Pacific Northwest, which critics claimed were stilted up by heavy logging. Weyerhaeuser studied the effects of logging on 12 Northwest river basins, then formulated plans for minimizing the impact of future logging. In addition, in response to demands that chlorines be eliminated from the paper production process, Weyerhaeuser, as part of its paper mill modernization program, brought in new technology that enabled it to eliminate most chlorines from these mills.

Additions and Subtractions Continued in the Later 1990s

As the 1990s continued, Weyerhaeuser made additional moves that altered the companys operational makeup. The company bought 240,700 acres of timberland in the U.S. South in December 1995, then bought 661,200 acres in Mississippi and Louisiana and two sawmills early the following year. Later in 1996 Weyerhaeuser sold its facilities in Klamath Falls, Oregon, and 600,000 acres of forest to U.S. Timberlands for $309 million. This divestiture was part of a company strategy to return to its core Douglas fir processing activities, as the Klamath Falls acreage consisted mainly of ponderosa and lodgepole pine trees. In a further narrowing of the companys focus, Weyerhaeuser sold its mortgage company subsidiary and its Canadian chemical business in 1997. Also that year, the company made its first investment in the Southern Hemisphere, purchasing for $185 million a 51 percent interest in a joint venture in New Zealand that held 193,000 acres of fast-growing softwood timberlands.

In late 1997 Creighton retired and was succeeded as CEO and president by Steven R. Rogel, who became chairman as well in April 1999, taking over for the retiring George Weyerhaeuser. The appointment of Rogel, who had previously served as CEO and president of rival Willamette Industries Inc. of Portland, was a departure for Weyerhaeuser, which had never before chosen an outsider to run the company. Rogel had earned kudos for his tough-minded restructuring efforts at Willamette and was expected to focus on improving Weyerhaeusers profitability, which had been on the decline since a peak in 1995 of $799 million. Rogels focus on margins was likely to result in a further narrowing of Weyerhaeusers interests; along these lines the company in early 1999 announced that it would table a proposed expansion of its pulp capacity and in April 1999 announced an agreement to sell its composite products business and a ply-veneer plant to SierraPine Limited. At the same time Weyerhaeuser was expected to increase its global presence, and in 1999 it opened plants in Mexico and in Wuhan, China, and acquired timberlands and sawmills in Australia through a limited partnership.

Principal Subsidiaries

Westwood Shipping Lines, Inc.; Weyerhaeuser Asia Ltd.; Weyerhaeuser Canada, Ltd.; Weyerhaeuser Financial Services, Ine; Weyerhaeuser Forestlands International, Inc.; Weyerhaeuser International Inc.; Weyerhaeuser Real Estate Company.

Principal Operating Units

Timberlands; Wood Products & Distribution; Pulp, Paper and Packaging; Real Estate.

Further Reading

Carlton, Jim, Weyerhaeuser Outbids Georgia-Pacific to Acquire P&G Assets for $600 Million, Wall Street Journal, August 21, 1992, p. A3.

Erb, George, Kudos for New CEO at Weyco, Puget Sound Business Journal, November 21, 1997, pp. 1 +.

Ferguson, Kelly H., Weyerhaeuser Focuses on Future with Minimum-Impact Strategy, Pulp and Paper, September 1994, pp. 52, 55-56.

_____, Weyerhaeuser Paper Co.: Refocusing Redefines Major Industry Player, Pulp and Paper, January 1994, pp. 28-29.

Ferguson, Tim W., Timmm Burrr! Could Remain the Northwests (Muffled) Cry, Wall Street Journal, July 9, 1991, p. A17.

Kimelman, John, Weyerhaeuser: Not Too Late for the Timber Turnaround, Financial World, March 30, 1993, p. 22.

Lipin, Steven, GE Capital to Buy GNA Corp. Unit of Weyerhaeuser, Wall Street Journal, January 7, 1993, p. A5.

Lubove, Seth, Out of the Woods?, Forbes, March 22, 1999, p. 54.

Patrick, Ken L., Weyerhaeuser Brings High-Tech Pulp Mill Online at Mississippi Complex, Pulp & Paper, December 1990, p. 79.

Richards, Bill, Silver Lining: Owls, of All Things, Help Weyerhaeuser Cash in on Timber, Wall Street Journal, January 24, 1992, pp. Al, A6.

Swisher, Kara, Weyerhaeuser Picks Rogel As New CEO, Recruiting Him from Rival Willamette, Wall Street Journal, November 18, 1997, p. B11.

Taylor, John H., Rip Van Weyerhaeuser, Forbes, October 28, 1991, pp. 38-40.

Twining, Charles E., F.K. Weyerhaeuser: A Biography, St. Paul, Minn.: Minnesota Historical Society Press, 1997.

_____, Phil Weyerhaeuser, Lumberman, Seattle: University of Washington Press, 1985.

Weyerhaeuser, George H., Forests for the Future: The Weyerhaeuser Story, New York: Newcomen Society in North America, 1981.

Where the Future Grows, Tacoma, Wash.: Weyerhaeuser Corporation, 1989.

Yang, Dori Jones, The New Growth at Weyerhaeuser, Business Week, June 19, 1995, pp. 63-64.

Ellen NicKenzie Lawson and Jeffrey L. Covell

updated by David E. Salamie

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Weyerhaeuser Company

Weyerhaeuser Company

33663 Weyerhaeuser Way
Federal Way, Washington 98003
U.S.A.
(206) 924-2345
Fax: (206) 924-3543

Public Company
Incorporated: 1900 as Weyerhaeuser Timber Company
Employees: 39,022
Sales $9.22 billion
Stock Exchanges: Midwest New York Pacific Tokyo
SICs: 2611 Pulp Mills; 2631 Paperboard Mills; 2421 Sawmills & Planing MillsGeneral; 6552 Subdividers & Developers Nee

Weyerhaeuser Company is the worlds largest private owner of timber and the worlds largest pulp and paper company. This diversified forest products company owns 5.6 million acres of timberland in the United States and license for 18.8 million acres in Canada. In 1990, with Weyerhaeusers 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 run by Frederick Weyerhaeuser. A German-born immigrant to the Midwest before the Civil War, his business philosophy evolved over his lifetime and 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 period preceding World War I. The company opened a sawmill to produce lumber and soon had the nations 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 mills laborers. Represented by the International Workers of the World (the Wobblies), they pushed for better working conditions, including an eight-hour work day. A struggle resulted, and labor unrest threatened the war effort. To ensure 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 before the war to lobby for cooperative forest fire prevention and for lower property taxes for timber-land to make reforestation economically viable. This lobbying led to the Clark-McNary Act in 1924, which addressed these issues and expanded the national forest. The act also encouraged changes in taxation policies at the state level to promote 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.

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 decades end, the companys advertisements focused on the recently upgraded quality of its lumber, by trademarking and grademarking lumber, as well as by taking more care in handling the lumber during shipment to market.

The Great Depression produced hard times for the company, as few businesses or homes were being built. The depression in the lumber market would have been devastating if not offset by the companys diversification into pulp in 1931. By 1933 profits from pulp offset losses from lumber. The New Deals Civilian Conservation Corps assisted in reforestation of logged off land during this period. State tax laws in the Pacific Northwest were amended to provide lower taxes for timberland, promoting reforestation. In 1940 the company started the first tree farm in the United States, near Grays Harbor in Washington.

In 1935 the kidnapping of George Weyerhaeuser, the nine-year-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 familys 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 material 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.

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, and 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.

However, the companys organizational structure, highly informal and fraternal, was altered to accommodate rapid postwar expansion: more formal programs and reports were instituted, and subsidiaries were absorbed. 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 Mississippi, Alabama, and North Carolina.

In 1958 Weyerhaeuser Sales Company, established in 1916, was absorbed into the parent company, and Weyerhaeuser International S.A. was created 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 presidency of Weyerhaeuser passed out of the family to Norton Clapp. Under Clapp, the company went public in 1963. It expanded into the Japanese market as a result of surplus lumber involuntarily logged by Typhoon Friedas 150-mile-per-hour winds in 1962. Weyerhaeusers first overseas office was opened in Tokyo in 1963. In 1964 and 1965 European offices were opened in France and Belgium, respectively. 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. Growth per year in the high-yield forestry program doubled, while 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, with sales surpassing the $2 billion mark in 1973. Sales doubled in five years and doubled again before the end of the decade. Weyerhaeuser entered the disposable diaper business in 1970 and centralized research in Tacoma in 1975. At the decades end, the company concluded an agreement with China to work there on the worlds largest reforestation effort. In 1979 company sales were $4.4 billion.

If the 1970s were a boom decade, the early 1980s were a bust, with tight credit in housing leading to a depression in lumber similar to that of the 1930s. The volcanic eruption of Mount Saint Helens in May 1980 was also a blow to the company. Weyerhaeusers Saint Helens Tree Farm was just below the mountains dome, and the company lost 68,000 acres of timber-land. Fortunately, the eruption took place on a Sunday, and fewer workers were in the path of the devastation. As a result of the eruption timberland values in the Northwest fell 75 percent. The company maintained dividends by diversifying into real estate and financial services. In 1986 Weyerhaeuser became the first U.S. forest products company listed on the Tokyo Stock Exchange, and soon became the third most traded foreign stock there.

In response to difficult economic conditions, downsizing and economizing became company emphases in the 1980s. In one dramatic example, Weyerhaeuser institued saftey measures that reduced workers compensation claims from $30 million to $10 million by 1990. In order to cut production costs still further, the company introduced a plant-wide computer integrated manufacturing system.

In 1988 John Creighton became president of Weyerhaeuser, and George Weyerhaeuser became chairman. Creighton re-evaluated the companys diversification into areas outside of forest products. During the 1980s, the company had become involved in insurance, home building, mortgage banking, garden products, pet supplies, and disposable diapers. While these businesses contributed greatly to the companys sales volume, they added very little to profits. As the head of Weyerhaeusers nursery operations noted in the Wall Street Journal several years later, after the divestiture of his unit, Weyerhaeuser was darn good at growing trees, but they sure didnt know anything about garden supplies.

Creighton reorganized Weyerhaeuser to focus the companys priorities and develop a coherent long-term strategy, selling off less profitable businesses and returning to a focus on forest products. As part of the restructuring program, Creighton altered the companys incentive system to reward each mill for profitability rather than the amount of product it manufactured. He also whittled Weyerhaeusers product lines to concentrate on high-quality, higher-margin products such as white papers and high-grade lumber. By 1990 the company had sold or closed operations that had previously accounted for nearly $1 billion in sales. The loss of this revenue, however, affected virtually none of its profits.

As the restructuring program was gaining momentum in 1989, an economic recession loomed. After posting a record high of over $10 billion in sales in 1989, Weyerhaeusers sales dipped to $9 billion in 1990 and profits fell by 35 percent. The decline was attributed to decreased housing and other construction projects as banks grew more reluctant to lend money, and also to an oversupply of pulp and paper in the market that lowered the price of paper. In 1991 the financial situation did not improve. Sales fell to $8.7 billion, and the company recorded a loss of $162 million compared to a profit of $565 million three years earlier.

Although significant, the losses suffered by Weyerhaeuser were not as large as those incurred by the rest of the forest industry. Beyond the damaging effects of the recession, other companies also sustained losses due to the protection of federal timber-lands that reduced their supply of wood. With 5.5 million acres of federal timberland cordoned off in the Pacific Northwest, lumber prices soared, and Weyerhaeuser was able to reap the benefits, harvesting timber on land it owned. This enviable position resulted in greater earnings for the company, and it was able to rebound from 1991s disastrous year. Profits in the first quarter of 1991 jumped 81 percent and, for the year, the company recorded earnings of $372 million.

By 1992 the company had closed 50 plantsrepresenting roughly 20 percent of its operating facilitiesas part of its restructuring program, and continued the divestiture of businesses that did not support the companys core business strategy. In 1993 Weyerhaeusers diaper business was sold for $215 million; GNA Corp., Weyerhaeusers consumer finance unit, was sold for $525 million, which represented the largest divestiture ever made by the company. In addition to shedding businesses that no longer fit the company, Weyerhaeuser strengthened its core businesses through the purchase of two pulp mills, several sawmills, and approximately 175,000 acres of timber-land in Georgia from Proctor & Gamble Co. in 1992 for $600 million.

In 1993 the company continued to face challenges, as public opinion built in favor of protecting Sockeye salmon runs in the Pacific Northwest, which critics claimed were stilted up by heavy logging, and as a movement grew to ban timber exports, which accounted for 26 percent of the companys profits. However, as Weyerhaeuser completed its restructuring program to solidify its position as one of the premier forest products companies in the world, company management remained optimistic about its future.

Principal Subsidiaries

Weyerhaeuser Real Estate Company; Weyerhaeuser Financial Services, Inc; Weyerhaeuser International Inc.; Weyerhaeuser Venture Co, Inc.; Weyerhaeuser Canada, Ltd.

Further Reading

Carlton, Jim, Weyerhaeuser Outbids Georgia-Pacific To Acquire P&G Assets for $600 Million, Wall Street Journal, August 21, 1992, p. A3.

Ferguson, Tim W., Timmm BurrrF Could Remain the Northwests (Muffled) Cry, Wall Street Journal, July 9, 1991, p. A17.

Lipin, Steven, GE Capital to Buy GNA Corp. Unit Of Weyerhaeuser, Wall Street Journal, January 7, 1993, p. A5.

Patrick, Ken L., Weyerhaeuser Brings High-Tech Pulp Mill Online at Mississippi Complex, Pulp & Paper, December 1990, p. 79.

Richards, Bill, Silver Lining: Owls, of All Things, Help Weyerhaeuser Cash in on Timber, Wall Street Journal, January 24, 1992, pp. Al, A6.

Taylor, John H., Rip Van Weyerhaeuser, Forbes, October 28, 1991, pp. 3840.

Where the Future Grows, Tacoma, Washington: Weyerhaeuser Corporation, 1989.

Ellen NicKenzie Lawson

updated by Jeffrey L. Covell

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Weyerhaeuser Company

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 worlds largest private owner of timber and the worlds 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 Weyerhaeusers 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 nations 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 miUs 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 decades end, the companys 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 Deals 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 Grays 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 familys 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 companys 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 companys 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 Southin 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 Friedas 150-mile-per-hour winds in 1962. Weyerhaeusers 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 decades end, the company concluded an agreement with China to work there on the worlds largest reforestation effort. In 1979 company sales were $4.4 billion.

If the 1970s were a boom decade, the 1980s were a bustat 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. Weyerhaeusers Saint Helens Tree Farm was just below the mountains 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 companys 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 Weyerhaeusers international marketing of lumber.

Principal Subsidiaries

Weyerhaeuser Real Estate Company; Weyerhaeuser Financial Services, Inc.

Further Reading

Where the Future Grows, Tacoma, Washington, Weyerhaeuser Corporation, [1989].

Ellen NicKenzie Lawson

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Weyerhaeuser Company

WEYERHAEUSER COMPANY


Weyerhaeuser Company, based in Washington state, was incorporated as Weyerhaeuser Timber Company in 1900. The company was a joint venture between railroad magnate James J. Hill of Pacific Northwest Timber, and Frederick Weyerhaeuser, joint owner of Weyerhaeuser and Denkmanna Midwestern lumber company that relied on Wisconsin and Minnesota forests. Prior to World War I (19141918), the company was run by Frederick Weyerhaeuser, A German-born immigrant to the Midwest. His business philosophy evolved over his lifetime and 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 period preceding World War I. The company opened a sawmill to produce lumber and soon had the nation's first all-electric lumber mill in 1915. Although demand for lumber for railroad cars declined during World War I as steel was more heavily utilized, demand for lumber for military planes and other military uses increased.

John P. Weyerhaeuser, eldest son of the founder, led the company during the war and through the 1920s. He relied heavily, as his father had, on George Long, general manager from 1900 to 1930. Long, an early proponent of reforestation, approached the federal government before World War I 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, which addressed these issues and expanded the national forest. The act also encouraged changes in taxation policies at the state level to promote reforestation. Weyerhaeuser responded by creating the Logged Off Land Company in 1925 to handle the sale of "logged off" land, study reforestation, and lobby at the state level for lower timberland taxes. By the end of the 1920s Weyerhaeuser was the largest private owner of timber in the United States.

The Great Depression (19291939) produced hard times for the company, as few businesses or homes were being built. The depression in the lumber market would have been devastating if not offset by the company's 1931 diversification into pulp (a wood-derived raw material in the manufacture of paper, paperboard, and other products). By 1933 profits from pulp offset losses from lumber. In 1940 the company expanded its lumber business to include plywood and paneling. In 1941 the company started the first tree farm in the United States, near Gray's Harbor in Washington.

Rapid technological and commercial changes in the lumber industry following World War II (19391945) affected Weyerhaeuser. The hand-operated whipsaw was replaced by the power chain saw, and 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. Under the 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 Mississippi, Alabama, and North Carolina. In 1959, with its increased diversification, 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, and for the first time in company history, the presidency of Weyerhaeuser passed out of the family to Norton Clapp. Under Clapp the company went public in 1963 and expanded overseas, into Japan. George Weyerhaeuser succeeded Clapp as CEO in 1966, and served until 1988. The volcanic eruption of Mount Saint Helens in May 1980, was a setback for the company. Weyerhaeuser's Saint Helens Tree Farm was just below the mountain's dome and the company lost 68,000 acres of timberland. By 1983 the company had completed a timber salvage program and replanted 18 million seedlings in the volcanic area.

As part of a diversification program, Weyerhaeuser entered the insurance, home building, mortgage banking, garden products, pet supplies, and disposable diaper markets in the 1970s and 1980s. These new ventures added little to the company's profitability. Under John Creighton, who became president in 1988, Weyerhaeuser returned to a focus on forest products. Weyerhaeuser strengthened its core businesses through the purchase of two pulp mills, several sawmills, and approximately 175,000 acres of timberland in Georgia from the Proctor and Gamble Company in 1992 for $600 million. By the end of the twentieth century, Weyerhaeuser was the world's largest private owner of softwood timber and the world's largest producer of softwood lumber and market pulp. Weyerhaeuser had annual sales of nearly $11 billion and owned 5.3 million acres of timberland in the United States.

See also: Lumber Industry, Environmentalism


FURTHER READING

Taylor, John H. "Rip Van Weyerhaeuser." Forbes, October 28, 1991.

Twining, Charles E. F. K. Weyerhaeuser: A Biography. St. Paul, MN: Minnesota Historical Society Press, 1997.

. Phil Weyerhaeuser: Lumberman. Seattle: University of Washington Press, 1985.

Weyerhaeuser Corporation. Where the Future Grows. Tacoma, WA: Weyerhaeuser Corporation, 1989.

Weyerhaeuser, George H. Forests for the Future: The Weyerhaeuser Story. New York: Newcomen Society in North America, 1981.

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"Weyerhaeuser Company." Gale Encyclopedia of U.S. Economic History. . Retrieved October 17, 2018 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/weyerhaeuser-company

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Weyerhaeuser Company

Weyerhaeuser Company

founded: 1900



Contact Information:

headquarters: 33663 weyerhaeuser way s.
federal way, wa 98003 phone: (206)924-2345 url: http://www.weyerhaeuser.com

OVERVIEW

The Weyerhaeuser Company, a leader in the international forest products business, is the largest international owner of merchantable softwood timber and the largest producer of softwood and hardwood lumber and engineered lumber products. Incorporated in 1900, the company primarily grows and harvests trees and produces and sells forest products. It also builds homes, develops land, and recycles paper products. Many of its products are used in the manufacturing and construction industries. In North America, it is the second-largest producer of structural panels and second-largest distributor of wood products. In the United States, it is the top forest products exporter and it ranks among the top exporters overall.

Headquartered in Federal Way, Washington, the Weyerhaeuser Company has offices or operations in 18 countries and customers across the world. Its principal business segments are timberlands and wood products; pulp, paper, and packaging; and real estate and related assets.

As may be expected, Weyerhaeuser's land holdings are great. In North America, it manages 5.9 million acres of company-owned and a half-million acres of leased commercial forestland in North America. The company also has renewable, long-term licenses on 32.6 million acres of forestland in five Canadian provinces managed by its Canadian operations.



COMPANY FINANCES

In the first quarter of 2002, the company's revenues rose 13 percent to $4.01 billion. Net income before extraordinary item fell 50 percent to $53 million. Results reflect an improved performance at the real estate division, offset by non-recurring charges related to facility closure. In 2001 the company's sales totaled $14.5 billion. Accounting for 19 percent of this total were sales outside of the United States, including exports. Its timberlands business segment accounted for 7 percent of sales, while the wood products segment accounted for 44 percent. The pulp, paper, and packaging segment accounted for 39 percent. In 2000 wood products accounted for 42 percent of revenues; pulp, paper, and packaging, 41 percent; real estate and related assets, 9 percent; and timberlands, 7 percent.




ANALYSTS' OPINIONS

Heading into 2002, analysts felt that Weyerhaeuser Company may be in a somewhat difficult financial position. However, it was also acknowledged that the company demonstrated aggressive growth in the past several years, and that that kind of approach can involve significant financial risks. Many wouldn't be surprised if the company's fortunes assumed an upward trajectory, especially following the major acquisition of Williamette Industries in 2002. In the first quarter of 2002, Weyerhaeuser earned $.27 per share. The earnings were above Wall Street forecasts. According to the research firm of Thomson Financial/First Call, nine analysts had expected the company to earn an average of $.15 per share.



HISTORY

Though not incorporated until 1900, the Weyerhaeuser Company's beginnings go back to the mid-eighteenth century, when a man named Frederick Weyerhaeuser, who was born in 1834 and died in 1914, emigrated to America in 1852 at the age of 18. Weyerhaeuser worked at a succession of menial jobs, but he saved his money and eventually bought a sawmill in 1857 in Rock Island, Illinois. Weyerhaeuser was a hard worker and a smart businessman, and the mill became a great success. This allowed him to purchase more sawmills on the Mississippi and to buy forests in Wisconsin, Minnesota, Idaho, Washington, and Oregon. By the turn of the century, Weyerhaeuser owned more timberland than anyone in the country. Also, he had taken on several partners. This group turned its eyes from the American Midwest to the Northwest, one of the greatest areas of timber on the face of the Earth, and the company was well on its way to becoming a global leader in the industry.

Officially, the Weyerhaeuser Company was founded in 1900, when it was incorporated. It didn't take long for the enterprise to extent itself into the international realm. Company sales to Japan started in 1923, when the island needed Weyerhaeuser lumber to rebuild Tokyo and Yokohama following an earthquake. But it wouldn't be until 1963 that the company opened its first Asia-based office, located in Tokyo. The company would spread itself out through the region during the rest of the decade and into the 1970s.

The company's Asian connection was strengthened when former U.S. President Richard Nixon initiated partial relations with China in 1971. Weyerhaeuser became the first U.S. forest products company to develop business in the Communist country. That same year, the company opened its first-ever corporate headquarters, in Federal Way, Washington.

As the company headed into the new millennium, it began demonstrating an aggressive approach to growth, as it made some significant acquisitions and business moves. In 2001 in acquired a 50 percent interest in Southern Cone Timber Investors Limited, a joint venture with institutional investors focusing on plantation forests in the Southern Hemisphere. Principal assets include 68,000 acres of eucalyptus and pine tree plantings. In July, the Weyerhaeuser Company bought the remaining 50 percent interest in Cedar River Paper Company, a manufacturer of liner and medium containerboard from recycled fiber, for $261 million. In January 2002 Weyerhaeuser entered into a merger agreement with Willamette Industries, a premium and low-cost forest products company focused on producing white paper, brown paper, and building materials.




STRATEGY

The Weyerhaeuser Company's overall stated strategies are to achieve total quality, maintain managerial excellence, pursue full customer satisfaction, empower its employees, and produce large returns for shareholders. These strategies are designed to help the company achieve its ultimate vision of becoming "the best forest products company in the world." To achieve its aims, the company is implementing business metrics and improved work processes.

Specifically, as the company headed into 2002, management placed strong focus on what it considered to be two key business metrics: safety and return on net assets (RONA). Safety, the Weyerhaeuser leaders believe, is not only about protecting employees. It also results in increased productivity and product quality.

To improve its RONA, the company has developed a "road map" that includes three elements: PACE, PIE, and process reliability. PACE (Process to Achieve Capital Excellence), the company explains, is a business metric designed to help reduce capital spending and maximize effectiveness. Weyerhaeuser puts each of its projects through a PACE analysis, which helps determine if the project provides the correct solution in the first place and then it helps keep the project on track. PIE, or Purchasing Improvement Effort, is designed to help decrease spending on goods, services, and capital equipment; to reduce inventories; and to simplify purchasing transactions. The third element, process reliability, is designed to insure that the company's products are produced in the safest and most efficient manner possible. The company is also focusing on improving work systems throughout the organization and the internal delivery of services, and on streamlining its core services. The company estimates that these efforts will result in more than $150 million in annual savings.

The Weyerhaeuser Company is also focusing on the issue of increased globalization. To deal with this, the company says it is important that its internal companies develop proper scale and scope through consolidation. In this way, they can better serve the changing customer base resulting from globalization, which will improve returns for shareholders. As far as the future of international trade, the company says the global demand for forest products will outweigh supply for most of the next decade. To deal with this situation, it is developing strategic partnerships with international companies. These include entering a joint marketing agreement with Svenska Cellulosa Aktiebolaget of Sweden, creating a partnership with the World Timberfund, and opening its first packaging plant in Mexico.

INFLUENCES

One of the ongoing strategies that has helped put the Weyerhaeuser Company where it is today is its proactive approach to its business. Obviously, a company that primarily makes its money by manufacturing and marketing wood products must ensure that raw materials remain plentiful. To this end, Weyerhaeuser strongly focuses on activities designed to increase the yield from its fee timberland acreage. These activities include extensive planting, suppression of non-merchantable species, pre-commercial and commercial thinning, fertilization, and operational pruning. Success in this area requires effective forest management, and Weyerhaeuser has dedicated itself to learning more about a forest's natural cycles. Specifically, the company applies principles of science and sustainable forestry to protect natural resources and increase forest productivity.

With the increasing globalization that began in the 1990s, Weyerhaeuser has applied these same strategies and standards to its international land holdings. In areas where it is only involved in the importation of wood products, it only conducts business with companies who operate responsibly managed forests.



CURRENT TRENDS

The merger agreement with Willamette Industries, completed in January 2002 and described as a "hostile takeover," was the most significant development in the company's recent history. Analysts estimated the total value of the transaction to be somewhere between $6 and $8 billion. Many repercussions resulted from the acquisition. As Weyerhaeuser began aligning its operations with Williamette, it closed three facilities (in Oregon, Louisiana, and Colorado) which eliminated 206 jobs, a move that was part of the consolidations and cuts intended to help Weyerhaeuser save $300 million a year over the next three years. It also closed two Williamette facilities and a Weyerhaeuser packaging facility in Denver, Colorado. Other job cuts and downsizing measures were expected.

Weyerhauser's first quarter profits for 2002 fell, in part because of the charges for its acquisition of Williamette and the resulting plant closures. For the first quarter, Weyerhaeuser reported net earnings of $30 million. At the same time in 2001, it reported net earnings of $107 million.

FAST FACTS: About Weyerhaeuser Company


Ownership: The Weyerhaeuser Company is a publicly owned company operating in the forestry, wood products, and paper sectors of the materials industry. It is traded on the New York and Toronto Stock Exchanges.

Ticker Symbol: WY

Officers: Steven Rogel, 59, Chmn., Pres., and CEO, 2001 salary $2,100,000; William Stivers 63, CFO, EVP, 2001 Salary $761,00; William Corbin, 60, EVP Wood Products, 2001 Salary $885,000; Richard Hanson, 58, EVP Timberlands, 2001 Salary $655,000; Steven Hill, 54, SVP of Human Resources

Employees: 60,000

Principal Subsidiary Companies: The Weyerhaeuser Company has three wholly owned subsidiaries: Weyerhaeuser New Zealand Inc., Weyerhaeuser Australia Pty. Ltd., and Weyerhaeuser Forestlands International. Through Weyerhaeuser New Zealand Inc., the Company runs the management and marketing activities of a New Zealand joint venture, Nelson Forests Joint Venture, which consists of 151,000 acres of Crown Forest License cutting rights, 42,000 acres of freehold land and the Kaituna sawmill. Through Weyerhaeuser Australia Pty. Ltd., the company owns a 70 percent interest in Pine Solutions, an Australian softwood timber distributor. It also owns two sawmills and 16,800 acres of cutting rights. Through Weyerhaeuser Forestlands International, the company is a 50 percent owner and managing general partner in RII Weyerhaeuser World Timberfund, L.P. (WTF), a limited partnership that makes investments outside the United States. WTF owns 58,500 acres of radiata pine plantations, two softwood lumber mills, a pine molding remanufac-turing plant, a chip export business, and a 30 percent interest in Pine Solutions. This partnership also owns a Uruguayan venture, Colonvade, S.A. The company is also involved in real estate development, construction, and other real estate-related activities through its real estate subsidiary, Weyerhaeuser Real Estate Company, and its financial services subsidiary, Weyerhaeuser Financial Services, Inc.

Chief Competitors: The Weyerhaeuser Company's major competitors include International Paper and Georgia Pacific.

Still, Weyerhaeuser felt confident following the prolonged, 14-month process to acquire Williamette. The company said it expected the market for wood products to improve in the second quarter. Also, at the time, the industry had been in a year-long downturn and was beginning to show signs of a recovery. Weyerhaeuser CEO Steven Rogel said the company was still on its way to meeting the goal of saving $300 million at the end of three years.

PRODUCTS

The Weyerhaeuser Company is divided into business segments that include timberland and wood products; pulp, paper, and packaging; and real estate and related assets. The company's wood products segment produces and sells engineered, hardwood, and softwood lumber; plywood and veneer; composite panels; oriented strand board; doors; treated products; logs; and chips and timber.

Its pulp, paper, and packaging division is further divided into businesses that include pulp, which manufactures chemical wood pulp; newsprint, which manufactures newsprint at the company's North Pacific Paper Corporation mill; paper, which manufactures and markets a range of coated and uncoated fine papers; containerboard packaging, which manufactures liner-board and corrugating medium and manufactures and markets industrial and agricultural packaging; paper-board, which manufactures and markets bleached paperboard, used for production of liquid containers; recycling, which operates a wastepaper collection system and markets it to company mills and worldwide customers; and chemicals, which produces chlorine, caustic, and tall oil.

Weyerhaeuser's real estate and related assets businesses are involved in real estate development and construction through its real estate subsidiary, Weyerhaeuser Real Estate Company, and in other real estate-related activities through its financial services subsidiary, Weyerhaeuser Financial Services, Inc.




CORPORATE CITIZENSHIP

Frederick Weyerhaeuer reputedly was a very phil-anthropic individual. In keeping with the spirit of its founder, the Weyerhaeuser Company established the Weyerhaeuser Company Foundation in 1948, which has donated more than $100 million to humanitarian causes, public outreach, and education programs.

The company itself assumes the highest degree of environmental responsibility. In 1971 it established an environmental policy that outlined its commitments and codes of behavior toward the environment, as well as to the surrounding communities and its employees. In 1999 the company began aligning all of its timberlands and manufacturing operations to the ISO 14001 Environmental Management System standard. It expects to complete this process by 2005. By adhering to these standards, the company expects that it will improve upon its already solid environmental performance and meet regulatory and stakeholder requirements. It also believes the standards will improve its efforts toward practicing sustainable forestry, reducing pollution, and conserving natural resources.

GLOBAL PRESENCE

The Weyerhaeuser Company has operations throughout North America, as well as in the British Virgin Islands, New Zealand, Germany, Hong Kong, Japan, and Korea. Its Canadian operations are located in Alberta, the Atlantic Region, British Columbia, Ontario, and Saskatchewan. The company has sales offices in Japan, China, Korea, Hong Kong, Singapore, Taiwan, Switzerland, and Belgium.

The company's Weyerhaeuser Australia Pty Limited operates facilities in the Tumut region of New South Wales and in the Caboolture area, located north of Brisbane, Queensland. The Tumut operations include a sawmill that handles more than 500,000 cubic meters of logs a year, as well as the Gilmore Operations, which include finger-jointing, kiln drying, molding, and treatment plant facilities. The Caboolture operations include a sawmill, plantation, and chip export business.

CHRONOLOGY: Weyerhaeuser Company


1852:

Frederick Weyerhaeuser comes to America

1857:

Weyerhaeuser buys his first saw mill, in Rock Island, Illinois

1900:

Weyerhaeuser and partners incorporate as the Weyerhaeuser Company

1914:

Frederick Weyerhaeuser dies

1923:

The company makes its first sale in Japan

1948:

The philanthropic Weyerhaeuser Company Foundation is established

1963:

The company's first Asian-based office is opened

1971

Weyerhaeuser becomes the first U.S. forest products company to do business in China

2001:

Weyerhaeuser acquires a 50 percent interest in Southern Cone Timber Investors Limited

2002:

Weyerhaeuser acquires Willamette Industries




EMPLOYMENT

The Weyerhaeuser Company offers its employees a wide range of benefits including health and dental benefits, life insurance, short- and long-term disability, 401(k) plans, and performance share and pension plans. The benefits package is designed to create a mutually beneficial arrangement for the company and employees. The reason that the company offers such an attractive benefits package is that it feels it is the best way to recruit and retain top-quality employees and to manage costs in a competitive environment. On the other side, the employees are protected against financial loss and are ensured a secure financial future.

The company also actively seeks vigorous employee involvement as well as good labor relations. Moreover, employee safety is the company's top priority. Many of its facilities have been recognized for their outstanding health and safety programs. The company also takes employee concern to a higher level, as its prevention focus is designed to help reduce preventable diseases, such as hypertension, heart disease, substance abuse and diabetes. To this end, the company offers an employee and family assistance program that provides free and confidential assistance in the areas of personal, financial, family or work-related problems, and a wellness program that provides comprehensive health and wellness resources and health screenings.

THE ENRON AFTERMATH

Following the Enron Scandal of 2002, things became tough for the Texas corporation's public accounting firm Arthur Andersen. After it was indicted on criminal charges in connection with Enron's collapse, the Chicago-based Arthur Anderson immediately lost more than 200 clients—including the Weyerhaeuser Company.

After dropping the Andersen account, Weyerhaeuser named KPMG LLP as its independent public accountant. Weyerhaeuser claimed that its decision to change auditors didn't result from any disagreement on accounting issues. In fact, Weyerhaeuser praised Arthur Andersen for its quality service and professionalism. The decision came after a review process by the Audit Committee of the Weyerhaeuser board of directors and Weyerhaeuser management.

Andersen's involvement with Weyerhaeuser became particularly problematic during Weyerhauser's takeover of Williamette—in the eyes of many, a hostile takeover that generated questions of merger accounting and conflicts of interest, issues of great concern in the Enron debacle.

In fact, the company is quite innovative and forward thinking in regards to its company culture, which even includes a work/life balance element. Believing that there is more to life than just work, the company provides resources for employees to help them focus on themselves, their families, and their community. These resources include adoption and adult/elder care assistance, employee support groups, employee and family assistance program, exercise facilities, family events, financial planning workshops, flexible spending accounts, flexible working arrangements, recreation services, and scholarships.




SOURCES OF INFORMATION

Bibliography

davitt publications. "weyhaeuser, frederick (1834-1914)." german-american corner, 2002. available at http://www.german-heritage.com.

dcipher reports. "corporate snapshots-weyerhaeuser company." business week online, 13 june 2002. available at http://host.businessweek.com

parrish, bill. "enron lessons for weyerhaeuser, willamette industries, the sec and arthur andersen." parrish and company, 24 january 2002. available at http://www.billparish.com/20020124willamette.html.

verespej, michael a. "who owns trees?," industryweek.com, 20 march 2000. available at http://www.industryweek.com

yahoo! finance. "profile-weyerhaeuser company." yahoo! market guide, 2002. available at http://biz.yahoo.com/p/w/wy.html


For an annual report:

on the internet at: http://investor.weyerhaeuser.com


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. weyerhaeuser company's primary sics are:

0811 timber tracts

2421 sawmills & planing mills, general

2611 pulp mills

2621 paper mills

2631 paperboard mills

2679 converted paper & paperboard prod, nec

also investigate companies by their north american industry classification system codes, also known as naics codes. weyerhaeuser company's primary naics codes are:

233110 land subdivision and land development

321113 sawmills

322110 pulp mills

322130 paperboard mills

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