JOHN DAY — Grant County’s last remaining lumber mill is shutting down.

Malheur Lumber Co. announced on July 23 that it would permanently close after current log inventory has been milled and the lumber shipped to customers.

The John Day lumber mill, a subsidiary of Prineville-based Ochoco Lumber, has been in operation for 41 years and employs 76 full-time and part-time workers.

In a letter provided to the Blue Mountain Eagle, company officials said that the lumber industry had been struggling for years and noted that many other wood products manufacturers had been forced to close.

“The current cost of operating a small manufacturing business in the rural part of the state seems no longer sustainable,” the letter stated.

It went on to cite a number of factors that contributed to the decision to close up shop:

• Lack of a willing and drug-free workforce.

• Lack of housing to recruit workers from outside the area.

• Unfavorable market conditions for lumber in recent years.

• High manufacturing costs due to inflation.

• Low and inconsistent production due to workforce issues.

• Continued layering of government regulations on small business in Oregon.

Malheur Lumber officials will work with employees to keep them informed of next steps, the letter said, adding that the company will be developing a strategic plan for the shutdown over the next several weeks.

Grant County had two functioning sawmills after Prairie Wood Products reopened in July 2022 following a 15-year shutdown, but that situation didn’t last long.

The Prairie City mill shut down again in March of this year, citing a dispute with the Forest Service over a $1 million grant intended to subsidize the cost of transporting logs to the mill. 

News of Malheur Lumber’s shutdown plans follows the closure of another wood products business that had been operating at the same site.

Restoration Fuels, which built a torrefaction plant on the Malheur Lumber property in 2020, closed on July 15, laying off 11 employees.

The company, a subsidiary of the U.S. Endowment for Forestry and Communities, initially produced torrefied wood — wood that has been partially burned through the torrefaction process — for use as a cleaner-burning alternative to coal for fueling electric power plants. 

That turned out not to be economically feasible, so in 2021 the company pivoted to producing biochar — a product similar to charcoal — for use as a soil amendment or in filtering toxic chemicals and metals out of polluted water.

Restoration Fuels officials told the Eagle in July 2023 that they hoped to be able to expand their markets, but now they’ve decided to pull the plug.

The company had been leasing space for its operations from Malheur Lumber, which also supplied raw material for biochar in the form of wood chips and sawdust generated by the sawmill.

Malheur Lumber nearly closed once before.

In 2012 the mill was on the verge of shutting down due to a shrinking and inconsistent timber supply, but a deal was worked out at the 11th hour to keep Malheur Lumber afloat.

Blue Mountains Forest Partners and the Harney County Restoration Collaborative, a pair of stakeholder groups that include representatives of both conservation and timber industry interests, worked with the Forest Service to hammer out a deal that ensured a steady stream of logs for Malheur Lumber.

Part of what made the arrangement work, according to many observers, was a long-term stewardship contract with the John Day logging company Iron Triangle. That contract, which was criticized by some of Iron Triangle’s competitors, expired in March 2023.