California’s Rural Economy – Boom times long gone, a small town struggles for survival

Hayfork, Trinity County — In California’s big cities, it can be hard to see how the fiscal slide of the last few years — the dot-com collapse, a lingering recession and life lived in the shadow of terrorism and war — has changed people’s circumstances.

Glen Martin, San Francisco Chronicle Staff Writer

(Thanks to Craig Rawlings for passing this along.- Russ)

But in the state’s smaller cities and towns, the repercussions are far more visible. Some are struggling; others, with a slight shift in luck or location, are thriving. This is the first in an occasional series that looks at life in rural California. .

There is still a winter bite in the air of this high mountain valley. Almost every house has a pile of cordwood laid by, and blue smoke wafts from the stovepipes.

But the bitterness that is so palpable here isn’t a matter of weather alone.

Hayfork is one of the most economically depressed towns in California, the victim of the cumulative impact of environmental strictures and world trade agreements.

In the economic downturn afflicting the state and nation, urban areas have taken a painful hit. People who were millionaires — at least on paper — have been given pink slips; they’ve seen their stock options turn into chaff, their equity evaporate, their bank accounts drain.

But if California’s cities are suffering, many of its rural towns are devastated, with the latest recessionary dip merely exacerbating an already intolerable situation.

Hayfork — a town founded on logging — is a textbook example.

In 2000, 18 percent of Hayfork’s families lived in poverty, compared with 11 percent statewide.

Twenty-eight percent of the town’s children were poor, compared with 19 percent for the state. Median family income in 1999 was $25,791, while the state’s average was $53,025.

And the town’s civilian unemployment figures seem more apt for a Third World country: 21 percent in 2000, compared with 7 percent for California as a whole.

Fifteen years ago, Hayfork was booming, fueled by a robust national demand for lumber. The lush fir and pine forests cloaking the surrounding mountains kept scores of loggers busy. A big Sierra Pacific lumber mill accounted for a local payroll of several million dollars.

RURAL PROSPERITY

Hayfork’s business district along Highway 3 was a portrait of rural prosperity. In late afternoon, the thoroughfare was crowded with loggers finished with the day’s work and mill workers just off their shifts. There were three grocery stores, three gas stations, several bars and restaurants and a movie theater, along with the usual hardware stores and small specialty shops.

"At lunchtime, it used to be standing room only around here," said Haunalee Hair, a co-owner and cook at Irene’s Cafe. "There was a lot of money in town then. Now everybody’s broke — and you really see it big time at this place."

Irene’s is one of only two restaurants left in Hayfork now, and diners are few and far between.

Today, the theater is closed and shuttered. Only two bars and one gas station are left, one of the hardware stores burned down and never reopened, and a grocery store has gone belly up.

And it’s not simply that there are fewer businesses. Even the ones that have managed to remain open are barely scraping by.

"What Irene’s is really about these days is just keeping some of our local people employed," said Hair.

MULTIPLE DEATH BLOWS

If there was a single death blow to the town, it was the closing of Sierra Pacific’s mill in 1996. And yet, that’s not what really killed Hayfork. Larger forces have been long at work, and the mill closure was merely the final, fatal gasp.

Certainly, part of the problem was the tougher logging restrictions imposed on federal lands in the 1990s as a result of efforts to protect the spotted owl and other endangered species.

In 1989, about 325 million board feet of timber were harvested in Trinity County. In 2001, that figure fell to 75 million board feet — and most of that was from private land, tracts largely held by Sierra Pacific.

The town’s economic fortunes seem to track the fluctuations in the timber harvest almost precisely.

Aid to families with dependent children (welfare) cases peaked at around 450 just as the mill began shutting down in the mid-1990s.

In 2000, they had dropped to around 275 — but that was due more to emigration of working-age families and an influx of retirees than a resurgence of the local economy.

Townspeople initially were enraged by the closures and cuts in timber quotas, and a solid undercurrent of resentment is still detectable — if tinged with black humor. One of the most popular orders at Irene’s is the "spotted fowl sandwich" — grilled chicken on a French roll.

There are modest hopes that President Bush’s "Healthy Forests" initiative —

an ambitious thinning plan designed to reduce wildfire hazard on federal lands — will persuade the U.S. Forest Service to increase the harvest on the Shasta-Trinity National Forest.

But the initiative is bogged down in Congress, and it’s unclear what, if anything, will come of the proposal.

GLOBAL COMMODITIES

And in the end, it may not matter very much either way. After a decade of world trade pacts, timber and lumber have become global commodities.

U.S. timber — encumbered by a high dollar, relatively rigorous environmental regulations and expensive labor — can’t compete well with nations strapped for hard currency and flush with natural resources.

Softwood from Canada’s vast boreal and coastal forests and New Zealand’s gigantic pine plantations are now flooding the U.S. market. Even if the logging was increased on Trinity County’s public lands, it wouldn’t make much difference to Hayfork.

Certainly, no new mill would be built. Current economies of scale would dictate trucking the logs to mills in the Sacramento Valley, which are readily accessed by railroads and interstate highways.

"I worked about 20 years in the mills," said Claude Belongia, the owner of the Hayfork Hotel Bar, "and I’ve owned this bar since 1976. I was here right after they got electricity into the valley in the late 1940s, when they established the big mills. I’ve seen this town boom. And I’ve seen it become what it is now."

Belongia, a gray-haired man with an affable manner, surveyed the dimly lit interior of his bar. At one end, three bearded men squabbled good-naturedly, if somewhat drunkenly, over who would pay for a round of beers. At the other end, a woman and a man, both thin as herons, hunkered wordlessly over gin-and- tonics. A couple of people played pool.

"I always ran this bar so everybody felt welcome," said Belongia. "Logger or hippie — it didn’t matter. And we did well. But when the mill left, it took a payroll of $4 million with it. A town like this doesn’t just get over something like that."

There’s a lot of "overripe" timber in the national forest surrounding Hayfork, said Belongia, "and it’d be good for everybody to harvest some of it. But the logging and milling culture is dead in this town now. And I just don’t see it coming back."

BOOM GONE FOREVER

That’s a sound evaluation, according to Lisa Wilson, a postdoctoral fellow with the Watershed Research and Training Center, a nonprofit organization in Hayfork that promotes ecosystem approaches to national forest management.

"The fact that all the mills are centered on the I-5 corridor basically means we’re not going to see a return to the boom days of the 1980s," she said.

"It’s hard to track the specific effects of the individual things that have influenced Hayfork, from the Endangered Species Act to world trade agreements. But the cumulative impact is very clear."

One of the most significant trends affecting Hayfork’s fate is the global trade in softwood — the pine and fir that are used in the building trade.

"The prices are very low and likely to remain that way, given the huge imports coming from abroad, particularly Canada and New Zealand," said Wilson. "Throughout the 1970s and 1980s, we were exporting logs and importing finished timber. Now, we’re a net importer of logs — lots of the mills around here are working with imported logs. They’re cheaper and the supply is more reliable than domestic timber."

AGING POPULATION

In the past 10 years, Hayfork’s demographic profile has changed dramatically, and the direction doesn’t bode well for an economic renaissance.

From 1990 to 2000, the town’s population dropped from 2,605 to 2,315.

Just as significant is the age of the emigrants. In that decade, Hayfork lost 25 percent of its residents age 20 or younger, and 32 percent of the residents in the 20-44 year cohort.

"My biggest fear for Hayfork is that young people will continue to leave, that the population will continue to age," said Wilson. "It’s not hard to figure out why this is happening — there are really very few jobs that can support a family here."

David Schumaker, the superintendent for the Mountain Valley Unified School District — which comprises Hayfork and the neighboring hamlet of Hyampom — said the greatest problem facing the schools is the economic status of the students.

"We have a very high percentage of children in poverty, and teaching poverty kids is a particularly challenging endeavor," said Schumaker. "One of our biggest problems is simply trying to get them to come to school every day. Many don’t think there’s much future in it."

With a falling district enrollment, Schumaker said, he’s hard pressed to fulfill his educational mission.

"My own position is now on a part-time basis," he said. "We’re right at the breaking point."

If enrollment numbers can’t be maintained, said Schumaker, "I’ll have to cut teaching positions. I already have a teacher handling chemistry who has never taught it before. At our level of enrollment, I can ask anyone to teach anything, regardless of experience, and that’s becoming necessary. We’re trying not to lose morale, but it’s difficult."

Since the collapse of the timber economy, Hayfork has had a shot or two at other fat payrolls — most notably a few years ago, when efforts were made to establish a private prison in the valley.

That scheme foundered, however, when a significant portion of the town’s population resisted. The company that hoped to build the prison withdrew its plan.

‘NOBODY’S GIVING UP’

Today, many residents are striving mightily to find alternatives to the well-paid jobs that no longer exist. Among them are Dennis and Vonnie Fry, owners of the local feed store.

Dennis Fry had roots in Northern California, but he has spent most of his working life as a commercial fisherman in Alaska. He returned several years ago, after he and Vonnie decided it was time for a change. It hasn’t been easy.

"There just isn’t the business there used to be — I lie awake at night, the gears going in my head, trying to think of what to do," he said one recent afternoon, seated in front of the wood stove that dominates the feed store, a couple of dogs sprawled near his feet.

As he talked, Vonnie worked quietly at the counter, going over some accounts. There were no customers in the store.

Fry looked down at his hands. They are large and scarred, with heavily muscled fingers that look like they could tie a size 18 trout fly or tear apart a diesel engine with equal facility.

"Nobody’s giving up," Fry said. "We recently installed a sewer system in the town, including some holding ponds. That gives us some extra water to work with, so we’re thinking of trying to establish a golf course — maybe getting a small-scale destination resort going."

And four years ago, Fry and a partner planted 16 acres of Pinot Noir grapes.

"It’s been a huge investment for us," he said. "When we started out, the numbers looked pretty good. We got our first crop this year — just in time for an industry-wide collapse in grape prices."

A few — very few — economic endeavors have met with some success. A local firm, Boom Boom Productions, produces firework shows.

LOOKING FOR EXPANSION

Another, Jefferson State Forest Products, has hired almost 20 locals to make display cabinets from the small-diameter timber available from thinning projects. Jefferson makes a significant percentage of the display stands used by Whole Foods, a natural foods supermarket chain.

In production for six years, Jefferson recently moved to capacious new quarters funded through special "business incubation" government grants.

The scene on the factory floor is busy, with workers sawing, planing and gluing tables and bins.

"It bothers us a little that Whole Foods comprises so much of our business, " said Jefferson’s CEO, Jim Jungwirth. "If they went through a year of consolidation, it could really devastate us. So we’re trying to develop other customers, and expand into other products — hardwood flooring and cider presses, for example."

Jungwirth pays between $7.50 and $12.50 an hour, and offers no benefits. It’s a far cry from the fat wages mill workers and loggers once earned, but he can do no better — for now.

"Our goal is to get the wages up through training and investment in better, more productive machinery," said Jungwirth. "We’ve trained everyone here from scratch, and all our profits are plowed right back into the business."

He is under no illusions of growing rich off his enterprise. A scion of a prominent Hayfork logging family, he returned to the valley after years of living in Oregon, where he ran an alternative power company.

"My family has been here since 1956," he said. "Right now, this town is going through a metamorphosis — my hope is it’ll be like a phoenix rising from the ashes. If you choose to live in Hayfork, you have to be an optimist."

HARVESTING LOCAL WOOD

One thing that would help his business, said Jungwirth, is access to local wood. Outside the factory, he pointed to the slopes around the town, thick with small-diameter timber.

"We could improve the fire resistance of these forests, improve the woodland environment, and provide lumber that could be sold as value added products if we could just harvest some of that," he said.

Trinity County forests are growing 300 board feet of wood an acre annually, Jungwirth said, and about 100 million board feet of timber dies and rots in the county each year.

"Since the spotted owl decision in 1995, the woods essentially have been shut down," he said. "We’re getting most of our wood from small private producers in Oregon — and the transportation costs are a major financial and logistical burden."

SURVIVING — BARELY

Watershed Center staffer Lisa Wilson said she strongly favors ecosystem management over wholesale wood production as a model for national forests — but she agreed with Jungwirth that some trees around Hayfork should be cut.

"If towns like Hayfork are to survive, if the Jeffersonian principle of rural America is to endure, then there has to be some economic relationship with the forests," she said, "and that includes extractive use. We must accommodate some harvesting."

In the end, said Wilson, she believes Hayfork will hang on. Barely.

"I’m afraid Hayfork will have to accept that growth is not in its future," she said. "We’re never going to have the jobs, the number of kids and young adults — the simple energy — we used to have."

The best case scenario, said Wilson, is that Hayfork will stay like it is.

"By that I mean it will remain a good place to live, a place surrounded by great natural beauty," she said.

"But it will also be a place with limited economic options — a place dependent on government jobs and cottage industries."

Chronicle researcher Kathleen Rhodes contributed to this report. / E-mail Glen Martin at [email protected].

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/03/24/MN198336.DTL&