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iJ "l' ~~ the timbershed, they have purchased no timber over the last five years on the Rio Grande National Forest. Hence, the followiDg c1iseussion on them will be brief. Blue Mesa bas produced about 70 percent dimension lumber and about 30 percent one-by products. The mill relies more heavily on labor and less on technology then does Stone's mill in South Fork. 8eQuse of their reliance on labor, they have shown an ability to adjust to volume fluctuations, more so than for a capital intensive stud mill like Stone's. Blue Mesa's timber consumption bas variccl from 18 MMBF per year to just II MMBF per year. However, J judge their ovcrall average cIenwId level to be about IS MMBF per year based primarily 011 information ptbered from my interview with their represcatative in Montrose. Most of this wlume bas trIcIitionally come from the GMUG forest, that their main coocem is with the GMUG, DOl the Rio GBnde. Blue Mesa also qua1i6es for SBA' sales which could be an importaDl 6actor to consider as Stone CODtinues to reach beyood the Rio Grande forest for wlumes. Bee-..... the Rio Grande timbersbed 0Dly includes the Taylor River District and the CeboUa district from the GMUG, Blue Mesa's demand for timber from this timbershccl is much less than their mill demand. The data gatben:d for this project show an average sale level to Blue Mesa from the timbershccl of about 4.S MMBF per year over the last five)GIS. This 4.S MMBF purchase from the timbersbccl represents the best estimate available for their timbersbed demand level. W oU Cl'tek Industries The next largest purchaser in.the timbershccl bas been Wolf Creek Industries at Pagosa Springs. Wolf Creek has purchased very little from the Rio Grande forest, just 269 MBF of sawtimber from FY '91 to FY '87 and does nOlshow as a top purchaser on the forest. Overall, they have purclwed an average offour MMBF per year in the timbersbcd - predominantly on the San JII3II Natirml Forest for use as house logs. In 1989 Wolf Creek was purchased by new owners who have significantly transformccl the mill from a: house log operation to primarily climensiOll and industrial products. Conversion of the mill bas meant installing new equipment and increasing the mill capacity. While the mill was fonnerly designccl to process about four MMBF per year, it was recently redesignccl to process six to eight MMBF annually from the timbershed. With this increase in capacity comes an increasccl interest in Rio Grande forest stumpage. Whereas Wolf Creek had ODly minor interest in Rio Grande forest stumpage, we now expect them to annually purchase one to two million feet per year from the Rio Grande fgw1- primarily in SBA sales. Jackson Lumber Jackson is a top purchaser in both the timbershccl and on the Rio Grande forest, averaging about three MMBF per year. JadcsoD Lumber originated about 42 )GIS ago and was purclwed in 1976 by the CUrfent owner Bill Rucinski. The mill now focuses on specialty items including bou~ logs, e*lril'lg, sieling. and tongue and groove products. This is one of a few mills that makes house logs from JreeD Englemann IpNce. His facility is designed to process three million feet per year, and that is his average for the last five years. Practically all ofbis wlume bas come from the Rio Grande forest and be is dependent on SBA sales on the Rio Grande forest. Our impressionis that the owner is innovative, is consistently upgrading the facility, focusccl 011 quality products, and adaptable to changing markets and supply CClllcIitions. , When triggered, the SBA program requires sale volume to be 'set aside' for small business purchasers. Qualified small business purchasers do DOl have to compete with w,e business (e.,. Stone) on lhcse sales. This can rauJt in an imponant advanla,e to many thai qualify for the SBA program. . ('22548 IS