Closed for five months, 60-year-old family mill files bankruptcy papers

A family-owned lumber mill that has been a pillar of Mendocino County's business community for almost 60 years is fighting for its life.

Five months after the slumping housing economy forced what was supposed to be a one-month shutdown, Harwood Products has filed for bankruptcy protection in an effort to keep a major lender at bay.

Harwood owes the Wells Fargo bank $2.7 million, said Art Harwood, the third generation of his family to run the mill.

"They're wanting to force an auction," he said.

The Chapter 11 bankruptcy, filed Friday, halts the auction, which was scheduled for early next month, Harwood said.

The filing also is expected to allow the company to reorganize, obtain crucial new loans, pay off its current debts and reopen, he said.

Because it fell behind in its loan payments and lenders have tightened their lending practices, Harwood Products has been unable to obtain loans for operating capital, which it typically borrows each year, then pays off when its wood products are sold.

The company has not made payments on its loans since January, when it shut its doors and laid off more than 200 employees, Harwood said.

The company said it would reopen within a month, but the higher cost to purchase logs, compared with the price for selling lumber, kept the business unprofitable for longer than expected.

The market has improved but Harwood said now he can't get a loan for the estimated $1 million needed to restart.

"The ironic thing is, with the current market conditions, if we were up and running, we would be making money," Harwood said.

Mendocino County officials are rooting for the company.

"It represents a history here," said Alison Glassey, assistant chief executive officer of Mendocino County.

"It's also a business that has evolved through the times and has tried to keep up with the trends and tried to be responsible to the environment and the local community," she said.

The company has been resilient in the past, weathering past economic downturns that led the county's largest timber companies, Louisiana Pacific and Georgia--Pacific, to sell.

Forty years ago, the Harwoods were forced to sell their Willits mill and thousands of acres of timberland.

Following that setback, the family focused on its Branscomb mill, located west of Laytonville in a town of about 100 people.

When the timber company was hit in the 1990s by increased regulations and a dwindling supply of large trees, it rebounded by turning to specialty wood products.

In the late 1990s, it spent millions expanding the mill's capacity and installing high-tech equipment that allowed it to mill smaller logs.

Harwood is optimistic his company can survive the current downturn, which has resulted in mill closures across the country.

"We're hoping. We think we can," he said.

You can reach Staff Writer Glenda Anderson at 462-6473 or glenda.anderson@pressdemocrat

.com