Maxxam machinations demand local solution
My Word
by Michael Twombly
February 8, 2005
The Times-Standard
The Los Angeles Times reported recently on a closed-door
meeting between Charles Hurwitz, CEO of Maxxam (parent of Pacific Lumber)
and Gov. Arnold Schwarzenegger. They conferred on the likelihood of
Pacific Lumber's impending bankruptcy. The meeting included Undersecretary
of CAL-EPA James Branham, formerly of PL and "broker of the Headwaters
deal." The Times editorialized, "Californians may get to see
up close how well or ill the revolving door of public service/private
industry serves the public's purpose."
Hurwitz, through his myriad of shell companies, took many hundreds of
millions of dollars from this once proud, sustainable and responsible
company by mortgaging PL's vast timber assets. He intentionally burdened
PL and its spin-offs with so much debt that they cannot legally cut
enough timber to pay off the approximately $100 million in annual interest
on the debt while still covering operating costs. Rather than make up
for this shortfall from the hundreds of millions he has taken from PL,
Hurwitz has found it eminently more profitable and expedient to threaten
PL's bankruptcy and the termination of hundreds of its loyal employees.
His strategy is win/win; if the North Coast Water Quality Control Board
holds to the protections of the Headwater's agreement, PL goes bankrupt
and Hurwitz walks away with his hundreds of millions (and probably sues
the state). If the Water Quality Control Board gives in and allows the
Eel and Freshwater cuts, Hurwitz takes the trees and prepares for bankruptcy
a year later.
What is clear is that CEO Hurwitz needs to keep our PL timber workers
and their families anxiously advocating for Maxxam's interests while
he engineers PL's bankruptcy and their termination.
This paper chose to poke fun at "La La Land" in a subsequent
editorial, rather than ring the Pacific Lumber bankruptcy alarm bell.
But more than 50 citizens, landowners and even former PL employees spoke
before the Board of Supervisors last Tuesday, clearly and eloquently
detailing Maxxam's bankruptcy strategy. They recounted the number of
companies which have been purchased by Maxxam, only to be looted into
bankruptcy, their pension plans emptied, their assets mortgaged, and
finally their employees terminated. They warned the board that Hurwitz,
master of junk bond piracy, had already enriched himself by borrowing
on PL's timber assets and then moving the money to Maxxam, anticipating
PL's bankruptcy.
It is heartening to see this maturing political awareness of Humboldt
citizens just as so many saw through Maxxam's failed attempt to buy
the recall of District Attorney Paul Gallegos in 2004. Charles Hurwitz
believes that he will be able to obfuscate, frighten, misdirect and
divide our community and keep his stolen profits, leaving Pacific Lumber
in financial shambles. He believes that Pacific Lumber's past reputation,
loyal workers and former positive influence in <?xml:namespace prefix
= st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Humboldt
County will cover the stink of his strategy, coupled with his assumption
that no one will be able to understand and uncover his financial manipulation
and the money trail leading directly to his pockets.
I believe we need to join together to defeat Maxxam's strategy and to
make Humboldt County's forests and timber industry permanently sustainable.
To do this, we may need to accept the difficult decision to slow PL's
rate of cutting and decrease its workforce to sustainable levels, despite
bondholders' demands. Humboldt County must look clearly at the long-term
future of Pacific Lumber and take direct control of our collective destinies.
One promising option would be to allocate Headwaters Fund money to determine
if and how we and PL's own employees could purchase PL through an Employee
Stock Ownership Plan (ESOP). Another potential worker retraining solution
under consideration is nurturing forest and watershed restoration industries
in the county.
Our community is coming to better understand what Maxxam has planned
for Pacific Lumber and its workers. We are coming to see that we are
all in this together against Maxxam, and that, if we are to survive
Hurwitz' PL bankruptcy strategy, we must take control of Pacific Lumber's
future today, because it is tied to our future.
If and when Hurwitz declares PL's bankruptcy, this community must protect
its workers by "piercing the corporate veil" of Pacific Lumber
-- by going directly after Maxxam and personally after CEO Charles Hurwitz.
The district attorney's lawsuit is one avenue which, if successful,
could result in Maxxam being legally forced to assume the liability
for the harms it has caused the county, the land, the water and PL workers.
Other legal actions may have to be taken against Maxxam and Hurwitz
if and when bondholders line up to clear-cut Humboldt County forests
in payment for Hurwitz' billion-dollar borrowing.
One thing is for sure, as evidenced by testimony before the Board of
Supervisors: The people of Humboldt County are asleep no longer. Are
we too late to save PL and our timber industry from Hurwitz? Will we
be able come together to defend PL and Humboldt County from Maxxam's
"final solution?" Our future as a community and as an economy
depends on us finding an alternative (and local) solution.
Michael Twombly is a founder of Local Solutions PAC, a political action
committee;
www.localsolutions.org
He lives and works in Bayside.
