By Leah Thibault
By 2008, the textile and apparel mills that once employed more than 10 percent of the Snelling, South Carolina, population were shutting their doors and moving overseas. At the same time, a three-hour’s drive north in Cherokee County, a lumber distributor watched sawmill after sawmill close in the wake of the housing downturn, placing its supply chain at increasing risk. Meanwhile, the forest products industry in Alabama lost between 10,000 and 22,000 jobs between 2005 and 2009.
Each of these rural southern communities were hit hard by the economic downtown. The remaining business and community leaders sought to fill the yawning gap left in the wake of staggering job losses. But in seeking to rebuild, instead of returning to traditional manufacturing, they found growth in companies that take a greener approach to product and job creation.
Associated Hardwoods re-tools its business plan
If you were to drive by the Associated Hardwoods facility in Cherokee County, it may seem at first glance like a traditional sawmill, one of scores around the rural South. But on closer examination, the structure of this particular business — coupled with new, state-of-the-art technology — is giving way to a vibrant new economic engine in the rural community.
The mill has gone green, using new technology to effectively utilize nearly 100 percent of its most sustainable feedstock certified by the Forest Stewardship Council (FSC) and Sustainable Forestry Initiative (SFI). Associated Hardwoods can maximize the lumber recovery out of a log, while reducing energy costs by as much as 80 percent.
That benefit doesn’t even account for additional efficiencies in trucking and shipping generated by their new business structure, vertically integrating with its distributing parent. The company is bringing new quality jobs to a community where a third of the population lived below the poverty line just a couple of years ago and unemployment was nearly double the national average.
The improvements at the Associated Hardwoods sawmill is having a ripple effect within the logging community. The sawmill has provided a prime location for local loggers to bring their logs, reducing transportation costs to mills that are further from the area where the trees are cut. In a nine-month period in 2014, Associated Hardwoods spend over $1.3 million to purchase materials from local loggers.
Recycling brings renewal
In June 2009, Snelling, South Carolina, had a poverty rate of 20.7 percent and was a state-designated Economic Impact Zone. State and local economic development agencies worked around the clock and around the country to attract new businesses to the area. They found success with Pittsburgh-based Horsehead Zinc, another company updating a traditional industry for a new economy, greatly reducing its environmental impact.
Horsehead Zinc recycles a by-product of the steel processing industry known as electric arc furnace (EAF) dust into a safe and useful materials. EAF dust is classified by the EPA as a hazardous waste due to its concentration of heavy metals, but through its recycling process, Horsehead Zinc is able to transform that waste into products that can be used in brass manufacturing, battery production and corrosion-resistant coatings.
The company sought the right site for its heavy metal recycling operations and found the right elements in Snelling. It turned out to be a win-win. For a 12-month period ending in September 2014, Horsehead Zinc diverted 130,224 tons of EAF dust from landfills. The operation supports 61 full-time positions with an average annual wage that well exceeds the county per-capita level by 62 percent.
Diversifying through renewable energy
In Aliceville, Alabama, a privately-held timber management and natural resources organization sought to further diversify its business by utilizing renewable materials — primarily the byproducts of forestry and sawmill operations — to manufacture wood pellets for use in energy generation. In 2014, Westervelt Pellets utilized 75,551 tons of bark and fuel wood purchased from local loggers and supported 62 direct employees. The new manufacturing facility and related jobs were especially important to the community that had recently suffered extensive tornado damage.
It is an understatement to say it is a challenge for struggling, economically-distressed communities to reinvent themselves. There are hundreds of community leaders throughout the rural South who are trying to do exactly that, finding the right formula to attract and finance innovative business like Horsehead Zinc, Westervelt Pellets and Associated Hardwoods. In each of these cases the businesses and community leaders put together packages of state and local incentives. They also were able to utilize the federal New Markets Tax Credit program, a community development program with a primary goal to attract private capital and new businesses to economically underserved areas.
While these business are diverse in industry and output, they all share the common bond of ushering in new and greener opportunities for sustaining traditional industries, such as farming and logging. This innovation seeds the renewal of rural regions where they are creating much-needed employment opportunities.
Leah Thibault is Director of Executive Administration and Special Projects at CEI Capital Management, LLC.