58 | FORBES ASIA MAY 2018
Even with its massive landholdings, Sierra Paciic relies on
national forests to supplement the timber from its own land, at
a time when the federal government sells less than one fourth
of what it did four decades ago. Over the past seven years,
around 16% of Sierra Paciic’s California timber has come
from U.S. Forest Service land. hat’s one reason why Emmer-
son turned to salvage logging ater ires or insect infestation.
In 2015, at the peak of California’s drought, the company ac-
quired 58% of its federally sourced logs through postire sal-
vage logging. In 2017, it was 19%.
Sierra Paciic has also stacked the deck in its favor by
building a dominant network of sawmills in northern Califor-
nia. It now has ten mills there, at eight locations, and they are
all close to federal forests. No one else owns more than three.
Even if smaller rivals win postire contracts, they oten end up
reselling to Sierra Paciic, which gets around 31% of its Cali-
fornia timber indirectly. “We have somewhere to take it,” Em-
merson says.
TO EMMERSON, POSTFIRE logging is just
another form of his legendary bargain
hunting. Even as his business grew, he
lew coach, stayed at the cheapest motels
and ate lunch packed by his wife, Ida,
while on the road. “Limos” kept at air-
ports for employees became a running
joke: One car had a mushroom growing
in the backseat; another had a gaping
hole in the loorboard. he limos routine-
ly lacked power steering, modern brakes
and air-conditioning.
he company is just as scrappy today.
Sierra Paciic oten buys whole pallets of
used steel and spare parts, like motors,
car batteries and farm tools, at bankrupt-
cy auctions or on eBay for its own fab-
rication shop to reuse. he IT guys buy
old computer parts online. Because it
picks up so much in bulk at auctions or
through bankruptcies, Sierra Paciic has
set up an eBay store to sell the parts it
doesn’t use. “We bought an airplane that
was sitting in Russia for two years. We
bought it for the parts,” says Mark, who
joined the company in 1985. Adds his
older brother, George, who is president:
“A lot of our competitors don’t do that
kind of stuf.”
BEING THRIFTY AND aggressive has
helped build the business, but it has also
created plenty of challenges, includ-
ing dozens of lawsuits. he biggest one
it’s ever faced resulted in a record $122.5
million settlement. he Department of
Justice alleged in 2009 that Sierra Paciic’s negligence helped
lead to the Moonlight Fire, which burned 46,000 acres in Las-
sen and Plumas National Forests two years earlier. In the sum-
mer of 2007, Sierra Paciic hired Howell’s Forest Harvesting,
a small irm owned by one person, to log in that area. A bull-
dozer brought in and operated by Howell’s allegedly struck
a rock and caused a spark. he loggers let without checking
the site for lames or smoke, even though it was a “red lag”
day, meaning high ire potential, according to the govern-
ment report. A bigger red lag, the DOJ argued, was that How-
ell’s equipment had already started three other ires that sum-
mer, at least one of which Sierra Paciic allegedly knew about,
raising questions about why Sierra Paciic was working with
the irm. he DOJ’s lawsuit against Sierra Paciic, Howell’s and
other, much smaller parties sought close to $800 million in
damages for negligence. In 2012, Sierra Paciic and the others
entered into a voluntary settlement, agreeing to pay $55 mil-Logs brought to Sierra Pacific’s Anderson, California, sawmill are cut into
flat boards, which are then scanned using a proprietary algorithm to find the
most profitable way to cut them up. A 4x4 has higher margins than a 2x4, for
example. After drying out in the kiln, the boards are sorted into several grades,
packed into bundles with bar codes and shipped out across the country to
retailers like Home Depot.FORBES ASIA
RED EMMERSON
TIM PANNELL FOR FORBES