Falling Apart

 

LPAbrokemillFor a half-century, the Linnton Plywood Association mill was a model of worker ownership and democratic control of the workplace. Everyone, from the general manager to the guy who ran the Raimann patcher machine—what one former worker called “a real brain-dead job”—made the same hourly wage, and each had an equal voice at annual membership meetings.

All of that was crowned by the promise of an ample retirement from ownership shares that at one point sold for $90,000.

But things went sour after the mill closed in 2001. Lawsuits divided workers into opposing camps. A mandate to liquidate the property as soon as possible dragged on for 14 years as offers were rebuffed, reserves depleted and the property value plummeted due in part to Superfund liabilities.

Many blame General Manager Jimmy Stahly and Secretary-Treasurer Gail Holter, who kept drawing full-time paychecks until at least 2012 for overseeing an idle plant. The property at last sold in September for $5.75 million, but the $2.6 million that will trickle to former workers or their heirs is likely to disappoint—and it’s still not clear if or when that money will be disbursed.

To understand the disillusionment, one must first appreciate the American dream represented by the co-op.

In 1984, the Linnton Plywood Association made the first edition of “100 Best Companies to Work For in America,” whose authors noted that LPA members made $50,000 in a good year, not including their share of retained earnings in the company.

The co-op also prospered. In 1971, it purchased its 26-acre riverfront site from railroads.

Ownership had both economic and intrinsic meaning.

“I knew when I bought this share that I wasn’t going to be just another employee, that I in a way was working for myself,” wrote Barry and Debbie Axtell. “I ‘owned’ part of this company.”

“There were Cadillacs, campers and Corvettes in the parking lot,” former LPA Board President Jeff Ingebrigtsen recalled.

“On hot summer days, Robert Peterson said. “we’d … get a break and there’d be a single file line going up to the Decoy [restaurant].”

“Them [were] good times there,” he said. “I thought, ‘I’ll be working here the rest of my life.’”

“We were like a family,” said Rich Mares. “We didn’t really have any hard feelings against each other.”

“We had a better man-hour production than union mills,” Tom Nelson added.

Annual accountants’ reports provided by Ingebrigtsen show that between 1973 and 1989, everybody got $13.05 per hour.

By 1990, the year the Northern Spotted Owl became an endangered species—putting a crimp on the logging of old growth forests—LPA’s years in the black were over.

General Manager Jimmy Stahly kept his title -- and his paycheck -- after other millworkers were sent home on 2001

“This industry used to be 155 [plywood] plants from the Canadian border to Northern California,” recalls Charles Mintken, a former manager in the industry who once rented space from the LPA. “Today, I think there’s probably 19.”

“I worked there the last year the mill made a profit, and I didn’t see a pretty picture at the end of the road,” Peterson said, “so I moved on.”

Many of LPA’s 200 members left, accepting retraining at community colleges and jobs as longshoremen. A smaller group, including Stahly and Holter, soldiered on.

“They should have flushed it, sold the damn thing, taken the $10,000 or $15,000 home, but they didn’t,” Mintken said. “It’s hard to sell the plant in an industry that’s going in the toilet, but you gotta do it.”

In 1992, the mill closed temporarily. LPA members began to receive annual loss letters signed by Holter.

On Oct. 22, 2001, the board and membership voted to liquidate by the end of the year.

It’s doubtful they understood the full consequences of having waited too long. In 2000, the EPA designated the Portland Harbor, including Linnton Plywood’s 26 acres, as a Superfund site.

LPA battled the feds in court, in United States v. LPA, but lost. In the end, a June 2015 settlement handed much of $5.75 million in sale proceeds to the Environmental Protection Agency, attorneys and county taxes. A total of $500,000 goes to the Portland Harbor remediation account, and $2.6 million will be distributed to LPA members due to a lien from a 2014 settlement, Weiss v. LPA.

In Weiss, members who left their jobs before the mill closed sued the co-op for a 2002 bylaw change that favored the members who worked until the end. LPA’s lawyer argued the bylaw change would make distribution of sale more “equitable.”

Former workers, who were not notified of the bylaw modification vote, accepted $2.6 million to settle.

Letters submitted by former LPA members in support of the Weiss claim contain bitter recriminations.

Remnants of old pilings from an earlier mill destroyed by fire still dot the river bank in Linnton

“Even though I had retired, I did not leave the mill or quit,” wrote Max M. Smith, who died earlier this year. “They are trying to tell me that I don’t deserve an equal share in any profits that may come from the sale of Linnton Plywood.”

“No accounting of the profits from the sale of the equipment and lumber in Linnton Plywood Association has ever been sent to the shareholders,” wrote the children of founding LPA member Herbert A. Randall. “Where did this money go?”

A letter from Ronald E. Thomas accuses managers of cooking the books.

“Phony W-2s were issued overstating earnings of the association, and these W-2s were used by individuals for the filing of federal, state, TriMet and Social Security taxes.”

Deals fall through

Suspicion of bad faith grew over the years after imminent sales were rumored but never came to fruition. Former members say the LPA board and top managers Stahly and Holter did not hold membership meetings or share information.

Portland developer John Beardsley submitted a $6 million written offer for the site in 2005. With a financial interest in deferring capital gains taxes, Beardsley Building Development went so far as to purchase a billboard in Linnton to woo the co-op.

In a recent interview, Beardsley and Carrollo said the mill’s “for sale” sign was half-buried in weeds and Stahly unhelpful. “Often times, if I came [to his office], he would try to either not let me in or escape through the back door,” Beardsley recalled.

Jimmy Stahly's house, built in 1908 by a magnate of the former Clark & Wilson Lumber Co., which operated on the LPA site until 1948, overlooks the mill site. Thacher Schmid photo

In the end, Beardsley was advised that the LPA board “accepted another purchase offer from one of two other offerers,” shows an email he wrote, dated September 19, 2005.

Beardsley called Stahly’s actions “despicable.”

“It’s just a crying shame,” Beardsley said. “[The association] isn’t meant for the benefit of any single person; it’s meant for the benefit of all. That was the spirit of Linnton Plywood.”

Former Board President Ingebrigtsen told the NW Examiner that Stahly and Holter delayed the sale of the mill in order to continue receiving salaries of $10,000 and $9,000 per month, respectively. Ingebrigtsen said Stahly and Holter began receiving that amount after the closure and continued to do so until the money ran out.

“We haven’t seen any financial records since we closed,” Ingebrigtsen said.

Asked how he knows the amount of their salaries, Ingebrigtsen said, “I was told by several board members. Jimmy told me too. Gail was getting nine-something; Jimmy, 10-something. To run an empty mill.

“They pretty much absconded with the funds, and the board approved it,” he said. “Nobody expected it to go on for [14] years, but it did.”

Denies sabotage

Stahly and Holter did not respond to interview requests until they were presented with a draft of this story late last month.

“It is disappointing to read some of the comments you attribute to our former colleagues and others,” reads Stahly’s two-page response. “Those comments are almost entirely false.

“First and foremost, the allegation that Gail Holter and I intentionally delayed the sale of LPA’s property in order to continue drawing compensation from the company is false.

A group of 13 former Linnton Plywood workers-members gathers for breakfast at spots like Vancouver's Peachtree Restaurant and Pie House. They talk about the good old days and what happened to the pensions they expected to get when the mill closed in 2001. Photo by Thacher Schmid

“The delay … was due entirely to the fact that the mill is located in the middle of a federal Superfund site — a fact that made it exceedingly difficult to find a buyer for the property and, once a buyer was found, to resolve the environmental and regulatory issues that stood in the way.”

Stahly doesn’t apologize for drawing a paycheck through 2012.

“It is not unusual for a company’s former managers to be paid for this kind of work,” he wrote.

“Our payroll was approved by the board of directors at levels that were commensurate with the work involved and industry standards,” he continued. “In fact, [Ingebrigtsen’s] quoted figures are more than 50 percent higher than our actual salaries.”

Stahly claims he and Holter sometimes worked from home and were not paid by the hour.

“It would have been rare for us to work less than 30 hours per week,” Stahly wrote.

His former co-workers don’t believe a word of it.

“They weren’t even there,” Frank L’Amie said of Stahly and Holter’s work pattern after the closure.

“I think they came in once a week,” Rich Mares said.

“I could come down once a week for $120,000,” L’Amie said, smiling. “Then go have a beer at the Decoy,” Mares said.

One woman who answered the phone of a former LPA member spoke bitterly of the pair.

“I think they manufactured themselves a job,” she said. “That’s the honest truth.”

Then she began crying and begged the reporter not to use her name, saying, “I don’t want them coming against us. … We’re in our 90s, and we’re not well.”

“Something needs to be done to hold these men accountable,” Barry and Debbie Axtell wrote in a letter supporting Weiss.

“I know somebody went to [state Senator] Betsy Johnson, trying to get the attorney general to look into it,” Jim Lomnicky said.

Board silent

Ultimately, responsibility for the co-op’s costly drawn-out death lies with the board, which appears never to have had another election after the 2001 closure.

Former board members Bob Thomas, Steve Fowler, Marty Erhardt and Claude Leonard all declined to comment. Former LPA President Eugene Elsey died in 2014.

One former LPA board member claimed poor hearing.

Claude Leonard’s wife warned a reporter that her husband couldn’t hear.

“Oh, no, I can hear,” Leonard contradicted, taking the phone. But after a question or two, he deferred. “You better call somebody else because I have just had a cochlear implant put in my ear. I’m sorry to say you got the guy right now who can’t hear.”

Thomas was more interested in asking questions.

“Who told you that?” he asked. “You hear a lot of rumors.”

“We finally got rid of it,” Thomas said of the property, “and I think that’s about all there is to say about it.”

Mintken described co-op elections as “popularity contests,” and said many cooperatives’ managers and board came from the general workforce and didn’t understand the larger industry issues.

“A lot of [the board] didn’t have a lot of business sense,” Ingebrigtsen said.

Stahly, on the other hand, has a master’s degree in business. He said he accepted the task of liquidating the mill instead of taking “other opportunities that would have paid me comparable or better compensation.”

The opportunity certainly saved on commuting time. His home, built in 1908 by a magnate of the Clark & Wilson Lumber Co., which operated on the LPA site until 1948, overlooks the mill.

Sale completed

The LPA property sold in September to Linnton Water Credits LLC and RestorCap, a California environmental restoration company. RestorCap partner Andrew Gregg, in charge of the LPA project, did not return calls or emails, but court documents show RestorCap is mandated to convert the site to salmon habitat. RestorCap makes money from the sale of credits “that can be used to offset land based environmental degradation,” its website states — part of a bold new environmental economy.

A post-closure estimate document provided by the EPA shows the sale was for $5.75 million. The 2014 settlement in US v. LPA noted that LPA is responsible for $11 million in “unreimbursed past costs” and “past unreimbursed natural resource damages,” but found the sale of the LPA property and insurance proceeds to be sufficient.

Former LPA members still have no idea if, when or how much they will see. The EPA document shows a $2.6 million payment for the LPA from the Weiss lien: $2.48 million to be made to 199 listed LPA members for the 2003 settlement ($12,462 each, if divided equally), plus $130,000 for “par value” of membership stock.

There’s also a payment of $433,167 to Lane Powell, whose attorney, Bill Hutchison, has long represented the LPA. Ed Trompke, the Weiss attorney, got $25,000.

When can LPA members finally expect their checks?

“I really don’t know,” Stahly said, peering out from behind gray tinted glasses.

 

(Photo credits: Wesley Mahan / NW Examiner unless otherwise indicated.)

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