Forbes Asia - May 2018

56 | FORBES ASIA MAY 2018

JUSTIN SULLIVAN/GETTY IMAGES

tional forests—a controversial practice known as postire sal-
vage logging—Emmerson buys in at a steep discount, oten
paying one half to one fourth the price for traditional wood.
Sierra Paciic then turns the usable lumber (about 90%) into
boards and other wood products to sell to homebuilders and
lumber retailers like Home Depot, Menards and Lowe’s.
Sierra Paciic has little competition, thanks to a 1990 law
that prohibits bidding from any lumber companies that export
logs. hat eliminates rivals like publicly traded Weyerhaeuser
and Rayonier as well as big Canadian irms.
It’s a proitable niche. While Emmerson refused to com-
ment on his company’s inances, Forbes estimates that Sierra
Paciic, which Emmerson owns entirely with his two sons and
daughter, has operating proits (before adding back deprecia-
tion and amortization) of approximately $375 million annual-
ly on sales of $1.5 billion. Salvage timber, which it sometimes
buys for pennies on a dollar, is a signiicant contributor. Based
on an analysis of records obtained in a Freedom of Informa-
tion Act request, Forbes estimates that Sierra Paciic’s operat-
ing proit margin for products made from salvage logs can be
as high as 40% and contributed as much as $100 million at its
peak in 2015.
Salvage logging is just one extreme example of how Em-
merson has built his lumber business over nearly seven de-
cades. From buying spare parts for his sawmills at bankruptcy
auctions to aggressively acquiring California land when other
timber companies were selling, Emmerson has successful-
ly carved out a fortune by being opportunistic and cheap. hat
has enabled him to become America’s richest lumberman—
worth more than $4 billion—and, in these times of increased
scrutiny and globalization, the nation’s last great lumber
baron. “It is better than I ever thought it would be,” Emmerson
says. “Because the trees will grow, and they get bigger.”
Over the decades, Emmerson has amassed more timber-
land in California than anyone else. He is the third-largest
landowner in America, behind billionaire conservationists
John Malone and Ted Tur ner, according to he Land Report.
Overall, Sierra Paciic is the fourth-largest lumber produc-
er in the U.S. he company gets around 70% of its annual rev-
enue from the sale of lumber. In California, about half comes
from logs cut down on its land and 16% from logs in nation-
al forests, much of which is salvaged wood. Sierra Paciic also
operates a millwork division, which makes door frames and
moldings, and a manufacturer of high-end, custom-built win-
dows. Together the two divisions bring in roughly $400 mil-
lion in sales.
While Emmerson’s resourcefulness has helped him climb
into the top ranks of the world’s wealthiest, critics say these
riches have come at the expense of the environment and tax-
payers. More than 250 scientists signed a letter asking Con-
gress to protect forests from postire logging, saying that it
“can set back the forest renewal process for decades.” hat’s
because it strips the land of nutrients, preventing it from re-
generating. Not only is the carbon stored in the charred tree
trunks not reabsorbed by the soil—worse, it is released into

the atmosphere as green-

house gas.

“It’s a degraded land-

scape,” says Chad Han-

son, a scientist who stud-

ies postire logging and

whose nonproit John

Muir Project has won in-

junctions against four Si-

erra Paciic postire con-

tracts. “Fire is not the

thing that’s creating areas

of devastation and waste-

lands. It’s logging, espe-

cially postire logging.”

Sierra Paciic rejects

the scientists’ analysis, ar-

guing that the process

can speed up recovery.

“It’s about extracting the

value we can from a bad

situation,” says a compa-

ny spokesperson.

Regardless, logging in

national forests is costly

for taxpayers, says Han-

son, who estimates they

are on the hook for $1

billion a year, at least

$500 million of which is

directly related to post-

ire salvage. hat’s the

amount the government

pays to build roads to re-

mote areas destroyed

by ires and for herbi-

cides the forest service

sprays prior to logging to

make clear-cutting eas-

ier, among other costs.

Meanwhile, the federal government pulls in about $150 mil-

lion annually from selling the timber in national forests, about

one fourth of which comes from postire logging. “It’s a bad

deal inancially for taxpayers, but it’s a great deal for the mills,”

says economist Ernie Niemi, who has studied the impact of

forest management since the 1970s. “It’s very hard to justify

any salvage logging. It’s like they’re bandits.”

BORN IN 1929 NEAR Oregon’s Willamette Valley, Emmer-

son grew up the only son of a heavy-drinking father nick-

named Curly. He was sent to a strict all-boys boarding school

in Spangle, Washington, in 1945. he Seventh-day Adventist

school didn’t serve meat, so Emmerson fried up hamburgers

in his dorm room and sold them to friends. He was kicked out

a month shy of high school graduation for coercing a friend

Sierra Pacific cleared many

trees in the Stanislaus

National Forest and its

own neighboring land

after the Rim Fire burned

close to 260,000 acres

in 2013. The company

could head back soon: The

Trump Administration just

approved a $28 million

reforestation plan that will

include clearing more trees

in the area.

FORBES ASIA

RED EMMERSON