Times-Standard MY WORD Editorial - 02/08/06
Maxxam Machinations Demand Local Solutions
by Michael Twombly of Local Solutions
The Los Angeles Times reported last week on a closed-door meeting
between Charles Hurwitz, CEO of Maxxam (parent of Pacific Lumber)
and Governor 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 myriads 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. Win/Win.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, land-owners 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 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
bondholder's 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 (Political Action
Committee). He lives and works in the redwood forests of Bayside.
Back to In The News
Donate TODAY
for a progressive future in Humboldt County!
