Newspaper article The Florida Times Union

Rayonier: A Different Kind of Forest Products Firm; Jacksonville-Based Company's Focus on Its Performance Fibers Division Creating Opportunities for New Consumer Products

Newspaper article The Florida Times Union

Rayonier: A Different Kind of Forest Products Firm; Jacksonville-Based Company's Focus on Its Performance Fibers Division Creating Opportunities for New Consumer Products

Article excerpt

Byline: MARK BASCH

You may not realize it, but there's a pretty good chance you've consumed a product today made at Rayonier Inc.'s wood fiber mills. And we're not suggesting you've been eating pieces of paper.

Jacksonville-based Rayonier is often referred to as a forest products company, which conjures up images of newsprint and cardboard boxes. But Rayonier is not exactly a paper company.

"About the only thing we have in common with a paper mill is the raw material," said Michael Bell, manager of corporate relations at Rayonier's performance fibers plant in Jesup, Ga.

That mill and another Rayonier facility in Fernandina Beach takes wood chips from trees and processes them into materials used in a wide range of consumer products, from maple syrup to baby diapers to computer display screens.

"We've always tried to differentiate ourselves from the paper and forest companies," said Chairman, President and Chief Executive Officer Lee Nutter.

"We don't make a pound of paper. We're almost more of a specialty chemical business," he said.

During an investor presentation last month, Nutter tried to explain the performance fibers business by showing a slide of various consumer products that use Rayonier's material, including Kodak film, Wishbone salad dressing and Crest toothpaste.

"We don't make any of these products, as the ad goes. We make them better. I like to think of it that way," Nutter told the investors.

But the performance fibers business, which accounted for $582 million of its $1.2 billion in 2004 sales, tells only half the Rayonier story. The company is the seventh largest owner of U.S. timberland with about 2 million acres in Florida, Georgia, Alabama and Washington (plus another 250,000 acres in New Zealand). And it recently formed a new real estate subsidiary called TerraPointe LLC to evaluate the development potential of about 200,000 acres of that timberland between Savannah and Daytona Beach.

The company, which has been publicly traded since 1994, restructured itself last year as a real estate investment trust, or REIT. This is a type of real estate company that pays out most of its earnings to shareholders as cash dividends.

The combination of a REIT structure and its niche in performance fibers makes Rayonier an unusual company in the "forest products" space.

"This is a unique company," said Nutter.

A LUCRATIVE NICHE

Rayonier moved its corporate headquarters to downtown Jacksonville from Stamford, Conn., in 2000, reflecting its focus on the Southeast, where it owns 1.7 million acres of its land. But Rayonier was actually formed in the Pacific Northwest nearly 80 years ago. Its name is a play on Mt. Rainier and one of the first products to use its wood pulp, rayon.

The company began buying timberland in the Southeast in the 1930s and opened its first East Coast mill in Fernandina Beach in 1939. A second mill in Jesup opened in 1954, and that facility now includes a state-of-the art research facility for its performance fibers division.

Jesup is the center of much of Rayonier's activity with about 1,000 of the company's 2,100 employees located there, making it the largest employer in Wayne County, Ga.

Rayonier produces 582,000 metric tons of performance fibers a year in Jesup, and another 150,000 metric tons in Fernandina Beach, pronouncing itself as the world's leading producer of specialty cellulose products. About two-thirds of those sales are made outside the United States, primarily in Asia and Europe.

"We're recognized around the world as the leader in these niche markets," said Bell.

One of Rayonier's leading competitors, Weyerhaeuser Co., produces 140,000 metric tons a year of cellulose fibers, said Weyerhaeuser spokesman Frank Mendizabal.

"There's only two U.S. producers, them and us," he said.

"They're certainly bigger than we are," said Mendizabal, adding that Weyerhaeuser is a more diversified forest products company. …

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