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Episode 158: Exploring the Timber Industry in Arkansas with Peggy Clark

January 19, 2022  |  By Matt Waller

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This week begins our special mini series where Matt sits down with the four Arkansas Business Hall of Fame inductees, starting with Peggy Clark. Peggy is the owner and managing partner of Clark Timberlands and an Arkansas Business Hall of Fame Inductee for 2022.

Listen in as Peggy discusses the current state and future of the timber industry in Arkansas, the Forestry Commission and their work in the Natural State, and how to adapt to last minute changes especially when working with natural resources.

If you are interested in nominating someone for the next class of inductees, find more information on the Arkansas Business Hall of Fame website.

Episode Transcript

Peggy Clark  0:00  
Then in northern Arkansas, we have hardwood forests and hardwood forests. You don't know what you got when you got that there's just a myriad of species in our hardwood forests.

Matt Waller  0:12  
Excellence, professionalism, innovation and collegiality. These are the values. The Sam M. Walton College of Business explores an education, business and the lives of people we meet every day. I'm Matt Waller, Dean of the Walton College and welcome to the be epic podcast.

I have with me today, Peggy Clark, who is owner and manager of Clark Timberlands. And she took over the business in 1987 from her father, and Peggy is being inducted into the Arkansas business Hall of Fame in February in Little Rock, and so Peggy, congratulations on being inducted into the Arkansas business Hall of Fame.

Peggy Clark  1:00  
Well, I thank you very much. I'm just astounded with with this award. I can't think of anything, anything bigger or anything I would be more pleased to, to receive as unworthy as I feel I'm very excited about it.

Matt Waller  1:17  
Well, you're very humble. I know that when you took over running Clark Timberlands in 1987. You then grew the business to encompass timberland in eight South Central Arkansas counties. You also have had livestock or have a livestock auction and the working farm and cattle ranch. Would you mind just spending a few minutes talking about

Peggy Clark  1:50  
My father  died just unexpectedly September 27, in 1987, and at that time, we had timber holdings that we had had for well, my my nephew, my nephew is now running the day to day operation with that he's down to the fifth generation, we were in the eight counties. Perhaps what I may have done is improve the the growth rate on that that timberland that we have and and gotten the yield up maybe a little bit higher than it had been before and maybe moved us a little bit more into a little bit different philosophy of timber management. But no, I can't take credit for growing it. It was it's pretty much the same same asset that we had, my grandfather built a cattle auction there. He enjoyed the cattle business and he had as many as 400 head at one time and built a cattle auction across the highway. In fact, he figured out a way to walk the cows down and under a bridge and up and around the other side so they could walk to the to the sale rather than being transported in a they didn't lose a lot of weight by being upset. And everybody said that was a fairly smart thing to do with cattle auction and across the highway from your from your holdings that that business had begun to shrink. And yes, we did still own the cattle auction but I was not running it. We were leasing it to people and I don't know anything about the cattle business. And so that hurt where it stood. When my father died. I knew a little bit about the timber business, but that's never been a big part of mine. But yes, that was part of the family holdings. And I did do it for a while, but, but we sort of consolidated into the timber business

Matt Waller  3:37  
Well tell us you know, most of the listeners won't know anything about the timber business. Could you tell us a little bit about that?

Peggy Clark  3:45  
Well sure. W ell I'll tell you a little bit that I know that is a very forgiving business those forests are pretty fabulous things there are lots of different ways that you can manage a forest and and make a good living from it there. There are different ways to harvest there's a single tree selection a fella goes in with a paint gun and picks out the poor material that there that's there the crooked trees, bent trees, the ones that may get hit by lightning and he has an eye to pleasing the people who own the land and get the poor genetic material out but he's got to please that person he's selling that land to each tree he squirts with with the paint gun is the one they'll take out that he's got to please that logger and put enough good straight tall mini logged trees in there to make it worth his while to come get it so it's a bit of a balance for the guy marking the timber and you'll probably go in maybe every seven or eight years and mark of nuff trees maybe 1500 feet 2000 feet to the acre and and they'll come in and get it out. Or you can do shelter wood cuts which leave a lot of material on the the top canopy, oh, you take everything out except maybe I'll wait 10 trees that are still there and they reseed the track for you. So you don't have to replant but you take everything out under neath it. And then you try to go in and get the canopy off. There are clear cuts. And that way you go in when a forest is mature, you can take all the trees out and replant, put improvement genetic material in there and harvest that way. So there are lots of different ways that you can can can do it, we do a little bit of all of it.

Matt Waller  5:29  
So what do for the labor to take care of it? Do you outsource it? Or do you hire people full time? How does that work?

Peggy Clark  5:41  
Now it used to be that the timber companies the saw mills would have their their crews and they often would come to you and the the man that own the sawmill and negotiate with you for a track of timber and then he'd send his folks in there to, to harvest it. And you just sort of watched how they did it to make sure they didn't tear up your your land and rut it up or log in when it was too wet. And you were in there trying to take care of the land and they're trying to get out as fast as they can to get on to the next track. And now the the loggers are the ones primarily out buying the Timberland. When 2008 came along, we lost almost 70% of the logger, loggers in this country, they just couldn't survive without being highly mechanized. And what you have now are loggers who come in who are very sophisticated and they are they can move the timber they've got these machines that crawl in there on their little bulldozer feet and they grab that tree and hold it and slice it off at the bottom and lift it over the top of the head of the machine and go over lay it down just beautifully on a pile of logs and they can really move the timber now. But we negotiate primarily with with loggers now,

Matt Waller  7:00  
How do you negotiate with the loggers?

Peggy Clark  7:04  
It used to be it there's three pieces to the price of the timber there's there's the what they call stumpage. And that's how much the landowner is going to get for the wood. And that's one price that's in it, then the logger always wanted, they had a certain amount of money that they wanted per ton. For for their labor. Those two prices would would be what the mill paid you and that was, if someone just brought up a load to the mill, they would that would be called Gatewood. And that the combined price. So you you negotiate with the logger on how far he's got to go to take it to the mill. To get a price. It used to be about 70 miles was as far as anybody would go. And the good days before 2008, the great recession. They were beginning to haul logs from Oklahoma to some of our mills. So that has kind of changed. And then you negotiate well this mill, how much will they pay you? How much was this meal pay for you. But by and you go where the best price was. But the trick to it, Matt, is to do what they call merchandising on the site. And that's where if you got a good logger, he'll put the hardwood logs over here in this pile and taken to the hardwood mill, they'll give you the best price. And he'll put the big pine logs in a pile and take them to the mill, they'll give you the biggest price for a Big Pine Log. And then he'll take those medium size logs over to another mil that specializes in products that are made for medium sized logs. And then the little bitty stuff they take to the people that make paper out of it. And they figure all this out and we negotiate a price there. So it's a little more sophisticated. And when we were hauling it out with mules

Matt Waller  8:50  
Are there when you when you're dealing with loggers, are there multiple loggers coming to you wanting to work? Or is it just one that you work with every year?

Peggy Clark  9:02  
Well, you know, there used to be a lot of loggers that would come to us. And now there really are not. There are a few big companies around our area, big people that had the big equipment. And for the last four or five years, we have dealt with one logger. And we sit down with him two or three times through the year and review where we are and see if we need to adjust the price up or down. But we are very aware of what the mills are paying and you just need to kind of check on things. You don't you don't need to do this from afar.

Matt Waller  9:34  
How do you ensure that the logger that you negotiate with complies with you know government regulations and so forth?

Peggy Clark  9:46  
I don't know that there are too many really severe government regulations. What we have in Arkansas are called BMPs and they're called Best Management Practices. And they're things that the industry and environmentalists have gotten together. agreed upon, are good for logging in our, our area. And it has to do with stream size management, you don't want to cut all the trees right up to the edge of a stream. And we have 1000s of streams in Arkansas. And some of them don't run all year long, but you don't want to cut all the trees right up to that. So we back off X number of feet dependent kind of on the size of the stream and the steepness of the bank, and you leave that material there to prevent erosion. And there are certain days you don't burn on to because of air quality. And you we have some some sustainability. With that's a whole big issue. It's a different thing, that sort of a blockchain on sustainability issues. And all these are regulated through the Forestry Commission, and they'll come out and audit your logging jobs to make sure you're not breaking any of the rules. And I'm happy to say we have always passed with flying colors. 

Matt Waller  10:55  
Well, that's  great. Now, I would imagine do you come up with a plan way beforehand? Or is that part of the negotiation for the harvest plan?

Peggy Clark  11:07  
Well, my daddy always said, Peggy, you can you can make a plan for this forest yourself. I was always asking, let's get a plan. Let's get down what we're going to do this year, let's plan this all out and get organized here. And he'd say, yeah, we can, we can do that if you want to, but I've never had one that's worked out yet. Because a disease will get in a pine beetle get in and you got to hop when that happens, because those will spread through your tracks and, and completely eat them up the southern pine beetles, one of the worst ones we have, or you have a big storm and it blows down timber and you were just going fine on another track that needed to be harvested. But now all this timber down on the ground, and you can get it up, if it's not a twisting wind, if it just it's a flat wind that comes through just blaze it down. The loggers they don't it's a it's a hard logging job, but I can get in there and get that up while it's still good material. And but you got to get on it. And so you pull off of everything you're doing and scramble around trying to get to the you know, blown down timber, and that messes your plan up but yes, we have had plan ever since I've been running this, this and we've actually completed one or two of them. And we're constantly shuffling and adjusting and and we try to accommodate the loggers to if it gets wet where they are, we try to find another place so they can keep on working. A lot of times if you lose them, you can't get them back and you start running out and we got to deal with hunters the hunting season is not a good time to be in the woods and and you can wear all the orange you want but you need to pull out when that that happens and let the hunters have those woods for a few weeks. And then you can can resume it have a plan but it just we have to be we have to be a little bit nimble.

Matt Waller  12:42  
Do you make leases with hunters?

Peggy Clark  12:45  
We do, we do and that was it. Gosh I've been in this so long I've seen that completely turn around. The hunters in this state were just anathema. They did not want leases they did not want anybody putting up gates and they want the free Walk Run in the woods and they would hunt where they wanted to hunt and and they would run off other groups and they get into fusses out there and eventually one group would get the land and and the landowner didn't have much say so about who was out there. But industry started leasing maybe maybe 25 years ago. And it really the hunters love it now and everyone accepts it. It's created some order out there. Everybody knows who has what and it's they understand we've got to get in there and make a living and we're going to take a track down every now and then and I believe I never did that piece of it. My nephew is very interested in hunting and he and our forester take care of that leasing. I don't understand hunters I don't understand how that can be fun. But it is and a lot of folks and I think there are over 100,000 hunters in our woods during deer season and it's it's a pretty noisy place.

Matt Waller  13:55  
Wow. Over 100,000

Peggy Clark  13:57  
Oh easily. Yes sir.

Matt Waller  13:59  
How about fishing on the property? 

Peggy Clark  14:01  
You know. We don't lease fishing rights. There's another group I'm with is the Ross foundation and they have 64,000 acres of timberland and then I'm a trustee of that on some old family lands too and and we will lease fishing rights to go with hunting on on there but no people are welcome to just come and fish when they choose. We're happy to have them and there isn't this territorial stuff that occurs with the with the deer hunters.

Matt Waller  14:31  
How about fire management?

Peggy Clark  14:34  
Fire Management has changed in Arkansas. Fire Management is under the control of the Arkansas Forestry Commission. And they have the right to go through a fence or onto someone's property to fight a fire which no one else has. But for a long, long time the larger timber companies in Arkansas International Paper Georgia Pacific Potlatch Willamette Deltek They maintained firefighting equipment sort of in the general area of where their property was. But when there was a fire anywhere close to them, they took their equipment over and they would fight fire on other people's land, too. And the Forestry Commission, they had equipment, but but they their equipment became very, very out of date. And they serve primarily as the fire boss, we have excellent, excellent training in firefighters in Arkansas, they are the first ones that get called out to all these California fires. And they're the fire bosses out there. And they run the show, they run the shows pretty much wherever they go. And we really have a group of firefighters in Arkansas to be proud of, but we haven't had the equipment. And about 20 years ago, I was on a, I was on the commission at that time, and four or five of us just said we've got to start buying equipment, even if it means we're going to have to cut the number of positions that we've gotten. And I think I chaired that committee, I know that there were four other commissioners with me and and we spent months going through and interviewing the departments to make a huge cut, I think we cut maybe 50 positions at the Forestry Commission in order to free up some funds to start buying the equipment. And we also have a state forest at poison springs, which does a timber cut every year and the timber price went up right when we were trying to do this maybe like double what we've been getting, and that the timber price and the the savings with reorganizing the whole staff allowed us to start really buying buying equipment. When us when I got on the Forestry Commission, the youngest, the youngest piece of equipment we had was 20 years old, the time I left, I think we were down to the oldest piece of equipment we had was about 12 years, that kind of thing was 10. But we did a complete turnaround of the equipment and the Commission now has equipment that can actually be effective. But the greatest thing that they do is detection. And we have gone from the tower system to airplanes that has changed things. I was gonna say it's changed the size of the the forest fires, they're a little bit bigger, but they're fewer of them. And I'm not sure that's true. I haven't seen that data in probably 10 years.

Matt Waller  17:19  
Did you expect to be and the timber business for your for your career ? 

Peggy Clark  17:28  
No, no, let me tell you, this timber business chose me. I did not choose it. What I would sort of like a lot of the dogs we have, you know, they choose us. No, I've really never dreamt I would, I would. I was going to be a history teacher. I have a history degree from Fayetteville. And then I'd say well, maybe I didn't want to do that. And I went to Houston and was with some some of my friends from college and worked at the Texas Heart Institute down there for a while and then I tried to sell real estate. But I don't have very good sense of direction. And you just need that if you're gonna, I couldn't find the houses. I decided since there wasn't anything that caught my eye that I really want to do. I just go back home for a while and see, see about this family business we had we had and I really, I really liked it and felt like it might be something that I might be able to do. And I didn't think I would be doing it nearly as soon as I did. My father was only 65 when he died. But like I said it chose me. And it has been great this, this track has really taken care of us for very well for four or five generations. And I really like these forests. The more I get to know about our our forests, the more I realize how important they really are. They really helped so much with air quality and water quality. And they support wildlife in all manner vegetations and they're a pretty big piece of of in solving this environmental problem that we've got.

Matt Waller  19:12  
That's interesting. So how would you say timber, the timber business is going to change over the next few decades in the United States.

Peggy Clark  19:25  
I think the timber industry is looking at the past few years they're going to get more and more efficient at getting this wood out of these forests. And they're getting more and more efficient at growing timber the genetic material is is really improving faster than I thought it ever would. We used to talk about you know 45 to 55 years to grow saw log. Some industry I just found this hard to believe but they think they can get a saw log grown up in 25 years which is just, you know, cutting in half what I, what I started hearing about when I began this business

Matt Waller  20:07  
Amazing

Peggy Clark  20:07  
but what I think is important is if people understand this carbon, I guess carbon cycle is maybe the word you use

Matt Waller  20:16  
yeah

Peggy Clark  20:17  
about how these young forest when you plant all these little seedlings out there, they really really suck in the carbon dioxide for a number of years and and these young forests that are vigorous and healthy and growing, they just cannot pull in more carbon dioxide. And that tree grows up into a log. And if you want to cut that log down and make something out of it, some type of wood product, all that carbon in that tree is captured. And they came up with this term just sounds awful carbon sequestration, that carbon gets sequestered into that wood product. And it will stay in that wood product as long as that wood products there like a chair or a table or something in those you know last forever. Now if you let that tree just grow, it starts reaching the cycle and it no longer is pulling in the carbon dioxide, it begins putting it back out again as the tree begins to deteriorate. So the forest industry is growing all these trees up cutting them down catching that, that carbon and baking them into wood products. Well, that's out of that's out of the atmosphere forever. Where if you let the tree fall over and die and deteriorate, you come back to a zero carbon sequestration, it all comes back out again. The foreign forests, the forest in South America and everything where they're just cutting and moving on is is where we're losing ground.

Matt Waller  21:44  
I didn't know that about the the cycle. That's very interesting. What type of woods do you have?

Peggy Clark  21:50  
We have in Arkansas, we have what they call an oak hickory climax for us. And that means that if nothing is put in there, if man doesn't go in there, if fire doesn't get in there, if nothing goes in there, the oaks and hickories will eventually choke out every other tree that's that's around. And so all these pine forests, they're sort of kept in there by the fact that we get in and we burn tracks, and we take the equipment in and open them up and get sunlight in there and you allow it to flourish. But we have, we have pine forests, and we have hardwood forests. And the pine is primarily loblolly. Pine, up, say as far as hot springs, then you get into another species that's called shortly pine, it's a little harder, it's a little more slow growing. And it doesn't need quite as much as we do in town it down in what we call the coastal plain of Arkansas. Then in northern Arkansas, we have hardwood forests, and hardwood forests, you don't know what you've got when you've got that there's just a myriad of species in our hardwood forests. And the and they're much more slow, slow growing. But we have a variety in Arkansas, depending on your geography.

Matt Waller  23:08  
And what about pests eating your trees?

Peggy Clark  23:14  
Oh, they're getting worse and worse, we're getting more exotics coming in. And that's because we're in a global economy now. And they're just you cannot keep the foreign bugs out. And in fact, we had the emerald ash bore that just took out all the ash up in the northern Arkansas forest, I mean, just devastated. Up there. We have the What is that thing called the tip moth beetle that gets in young young pine trees and it messes up the top of the tree and it won't ever form a good tree if you if it gets in there. And we have to watch when we plant because if you plant at the wrong time, you encourage that beetle to get into new little new new tracks, and you have to start over again with them. There's a thing called an ips beetle, and it it'll just attack a tree here and then maybe over a couple acres over it'll get another tree and get another one and and that's possibly the most destructive though it doesn't look it financially because it doesn't get enough trees that you can send a logger into, get them in with the southern pine beetle that you hear about, they'll get 40s and 80s. And they've taken out just huge forests in Texas, just just you know, hundreds of 1000s of acres. And if you get in front of them and start cutting back toward them, you can stop it. And then if you get in quickly enough, even though the beetle killed it, you use the timber. Ips. You just lose those big trees here and they're all over your place and it isn't very noticeable but if you add them all up, it's a big loss. So yeah, we have lots of predators we're dealing with.

Matt Waller  24:53  
And please forgive me for some of these questions because I know nothing about the timber business, but are weeds a problem?

Peggy Clark  25:06  
When you if you are it put it's a management style you're using is to go in and and take when it first rates to sit maturity take the entire forest down and and plant little seedlings all over the grass and the the faster growing trees get up ahead of it for two or three years, and they'll choke out your pine seedlings. In a lot of cases, it depends on what kind of vegetation emerge that you get. But yes, the grass can choke out the things, the little seedlings. And at a certain age, you'll need to go in and and do a spray to kill all the vegetation and allow the pine to get ahead of that ground cover. And then they'll go along pretty well.

Matt Waller  25:55  
You've learned a lot about you know a lot about timber lands, and the timber business in general. Did you, did you learn it growing up? Or did you learn most of it after you started having to run the business?

Peggy Clark  26:12  
I have two sisters, and then my mother and my father, and sitting around our table, my poor father never got the floor to tell us anything. I didn't really know what the poor man did, because he never got a chance to talk. That's not too big of an exaggeration. No, my daddy, he did not talk shop with his daughters. When I came back, that was the most valuable time I spent was spending time with him. And at the end of every day, we kind of go our different ways there after a while and I would show up at the house. And we'd sit on the porch and swing and he would explain so so many things. Not not only the practicalities and all but the philosophy behind what we did and why we did it and where the important pieces were and what could get you in trouble and what would be okay. And I remember when he died and he had not been sick at all. He just had a heart attack one day and I think he was gone within an hour of its onset. And I remember thinking at that time, oh my stars, what did we not get to you know what Black Beast is around the next corner that I'm not going to know how to handle? Because we never talked about it. You know, that's, that's, you know, where's the thing that's gonna get me now. Still looking for that Black Beast. He covered the subjects pretty well, so far.

Matt Waller  27:41  
Peggy, I've heard about this concept of cross laminated timber, and we built a dorm with it on campus. Adohi Hall. And I'm, I'm wondering will that have any impact on your industry?

Peggy Clark  28:02  
I'm really pretty excited about the the little bit I know about that. That it very well may. And indeed, what cross laminated timber is, it simply put is they line up two by fours. And lay them down and glue them together. And then they get another row of two by fours. And they turn them 180 degrees to the first ones and put them on top of them and glue them together. And then they go back to the direction that they were sort of, you know, building little log cabins. And they keep switching these two by fours back and forth. And they can make these things as long as the two by fours are. And they can make them as tall as they want. And these can replace the structural material in buildings in this country. And what is surprising to me is that every single way they seem to test this material, whether they are looking at it with a green factor, or whether they are looking at safety or whether they're looking at flexibility. Whether they're looking at cost, everything that they've looked at it is beating the socks off of steel and reinforced concrete. And the building codes have approved this material for up to 18 stories now. So the door is open to begin building instead of using steel structures to use what they call this mass timber as the core of these buildings now, and they can build other parts of the building out of this material and they can build them in the warehouses so that construction sites aren't delayed by weather and they put the pieces together and take them to the site and sort of assemble these buildings with with this material and it air conditions more cheaply because steel gets hot inside buildings, it bends more in the in the in the weather it it has just turned out, it's better in hurricanes, it's you and believe it or not, you cannot set it on fire that thick together timber, you just can't get enough heat there to get cause it gets catch on fire. And the building that you're talking about in the dorm that that came in, it's I think it's a four story dorm and two big pieces. They're two big wings. That came in ahead of schedule and under budget. And there was also a storage facility for your library up there that also came in. But now we don't have any way to make this in the United States. You know, universities are looking at it. And now and to get the material for that they had to go to a company and I think it was Austria to get to get this cross laminated timber. But since then there they've opened a plan outside of Conway that now can make this and the Walton family is building a new center, their new headquarters, and they have said they're going to use this material to this wood material. It's going to come from the trees from Arkansas. And if if this, the potential that this building material shows and in fact, the the the architectural school is, is working and incorporating in design courses on using this material, and there's going to be a new wood design center up, there is going to be the Anthony center for wood design in Fayetteville that we're all excited about. So I think that could be a huge, huge player in upcoming markets. When people get more familiar with it and learn about it. It's beginning to happen all over the United States, there are mills that are beginning to pop up lots of places.

Matt Waller  31:50  
So thank you so much for being with me today. Peggy

On behalf of the Sam Walton College Business, I want to thank everyone for spending time with us for another engaging conversation. You can subscribe by going to your favorite podcast service and searching be epic B E P I C.

Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair and professor of supply chain management. He is also the host for the Be EPIC Podcast for Walton College.

 

Walton College's EPIC values -- Excellence, Professionalism, Innovation and Collegiality -- are the heart of Dean Waller’s podcast. Since the beginning of the series, Waller has interviewed business professionals, industry experts, CEOs and Walton College students to bring listeners first-hand accounts directly from the entrepreneurial world.

 

Waller is an SEC Academic Leadership Fellow and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain,” published by Pearson Education. He is the former co-editor-in-chief of Journal of Business Logistics. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.

 

Waller received an M.S. and Ph.D. from Pennsylvania State University and a B.S.B.A., summa cum laude, from the University of Missouri.





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