Chapter 5

The Phillips Forest Property,
Shasta County, California

The Phillips clan has owned and selectively managed its ponderosa pine forestlands in Shasta County, Calif., for nearly 150 years. Photo by Marty Knapp.

Members of the Phillips family have lived on their land in Shasta County, Calif., since the first of them homesteaded there nearly 150 years ago. The rich forests of pine, cedar and Douglas fir that grace the property have always been an important part of the Phillipses' livelihood, and the family has operated its own sawmill for more than a century.

Today's generation of family members use the fine-grained wood grown on their land to make specialty products including wooden boxes for the packaging of compact disks. By controlling the chain of value from seedling to final product, they earn more revenue from fewer trees than when the family sold only traditional products like lumber, logs and pulp. A relatively low rate of harvest has allowed stocking in the Phillips forests to rise to impressive levels, and it continues to rise. Average tree sizes also have increased, and stands are healthy.

For its present-day success the family owes considerable thanks to an earlier generation of Phillipses, four brothers who managed the forests and sawmill from World War II through the 1990s. These four added manufacturing to the family's milling operation and created a diverse forest with an abundance of large old trees.

The brothers -- Arthur, Lewis, Edmund and Clayton -- were raised on the land with seven other siblings. After World War II they returned home to resume the family lumber business. But large, new mills had gone up in the area, forests were being logged at an increasing rate, and rising supplies caused the price of lumber to sink.

"They came back and reassessed their values and what they were trying to accomplish," says Gary Hendrix of the four men, who were his uncles. Hendrix lives on the property and helps manage the modern operation. His uncles did not like the prospect of compensating for low prices by hiking their logging volumes, so they decided to reduce their harvest rates and started making wooden fruit boxes for sale to growers in the Central Valley.

In this way they saw value where others had not -- value in the products that could be made on-site and value in standing timber. This approach supported the Phillips brothers and sustained their large, old-growth pine and cedar forests for the next half-century.

The uncles are gone now, but their reverence for the forest has been passed down to the current generation. "They taught us conservation values that were immeasurable," says Hendrix.

"Every time we went out they talked to us about the health of the forest, and the inter-relationships that took place in the life of the forest," he recalls. "They said it would provide for us but that we needed to take care of it."

His uncles' tradition of ecological forestry has left Hendrix and others in the present-day Phillips clan with stands of large ponderosa pine and incense cedar, which are logged selectively and bring a healthy financial return. High-quality wood and wood products are the keys to the Phillips family's continuing success.

The Early Days

The 984-acre Phillips forest property lies near the hamlet of Oak Run, northeast of Redding, Calif., where the Sierra Nevada meet the Cascades. Elevations range from 2,000 to 3,000 feet, and some parts of the property receive a remarkable 100 inches of precipitation per year, supporting lush stands of mixed conifers and hardwoods.

Two-thirds of the standing timber is ponderosa pine. About a quarter is incense cedar. The remaining tenth is Douglas fir, with some sugar pine and white fir sprinkled around. Several species of oak and other hardwood grow on the property.

In the spring the grass and wildflowers are thigh-high. Clearwater streams cross the Phillips lands, creating riparian corridors and providing water for wildlife. Black bear, mountain lion, fox, coyote, turkey, deer and elk are found here. One old-growth stand is home to nesting vultures, and is left untouched for that reason. Ravens nest above the family sawmill.

When settlers of European descent started to settle permanently in eastern Shasta County following the California gold rush, they encountered a landscape in which frequent fires created park-like stands of pine interspersed with grasslands and manzanita. Benefiting from these fires were the local Achomawi people, who had long lived here, hunting and gathering in the oak and pine savannas.

The settlers began cutting the ponderosa pine, first milling them for mine timbers during the gold rush and then for lumber as towns developed. Lands were cleared for ranching and agriculture. Disease and conflict reduced the Indian population, and while some ranchers continued to use fire to perpetuate the open-grown stands of ponderosa pine, by the late 1800s efforts were made to suppress all fires.

Isaac Phillips first homesteaded in the area in 1854, and in the following years he and his wife, Emma, homesteaded more acreage. In 1896 their eldest son, Edmund, led the effort to build the family's first sawmill, and this marked the Phillipses entry into the lumber business. Located on Little Cow Creek, it was a "mulie mill" in which the water of the creek turned a wheel that moved a vertical saw blade up and down.

Edmund married Lillian Young and they raised 11 children of their own on the homestead, including Arthur, Edmund, Lewis and Clayton, and all helped with the mill and forest operations. When the original mill burned, it was replaced in 1913 by a circular saw, still powered by the water of Little Cow Creek.

In 1931 Edmund and his sons bought 600 heavily timbered acres four miles southwest of the mill. A few years later they moved the mill to the new property, and it remains here today. When it was moved it also was converted from water power to steam power, with wood-fired boilers, which gave the saws more power and freed them from reliance on creek flows that were sometimes inadequate. The mill continues to rely on steam power to this day.

To make a living on lumber the family had to sell a lot of it, and from 1900 to 1940 the family probably harvested everything it grew, if not more, says Ed Smith, a present-day Phillips descendant who spends much of his time working in the forest and mill operation.

When the four Phillips brothers went off to military service during World War II they shut the mill down and left it in the hands of a caretaker. After the war they returned to Oak Run, expecting to resume their lumber business on the land.

But times had changed: Expanded lumber output from large new mills was bringing down prices, and the brothers found it hard to make ends meet in the failing lumber market. So they chose another path. Rather than rely only on sawed lumber or raw logs, they would make and sell finished products.

Adding Value Saves the Family Business

Making the change required an investment of money. Under a federal veterans' retraining program, Arthur obtained government funds to expand the brothers' operation, and they built a box factory next to the main sawmill. They installed resaws, planers, molders and nailing machines, and started making fruit lugs and olive boxes for the farmers in the nearby Central Valley.

"Their decision to go to specialty products basically saved them," says Smith.

In hopes of rebuilding their stock of standing timber they decided to harvest only the dead or dying trees on their property, not the green and growing trees. So frugal that they would not cut a tree until it was dead or nearly dead, the four brothers lived reclusively in the place they were born and dedicated themselves to running the mill, making wooden boxes and stewarding their forests. They survived on a modest but sustainable income and didn't overharvest their forests while doing so.

"They had a lot of love for this land. They never had children of their own, and it was like their child," says Hendrix. "They embraced this land in a really genuine way."

Standing timber inventory on the Phillips property started to rise again (and has been rising ever since). The pine and cedar that dominated the property grew larger and larger.

Arthur, Lewis, Edmund and Clayton had nephews and great-nephews, eager to learn about running the mill and managing the family forest by helping the older men with the work. Gary Hendrix's regular job was teaching, allowing him to spend every summer on the property in Shasta County. He started a new line in the box factory: gift boxes for wine.

Gary's son Gregg started helping his great-uncles as a teenager, and in 1990 he moved onto the property fulltime to work more closely with them and learn the logging and mill operations. Now Gregg Hendrix is the manager of the Phillips operation, and resides on the land with his wife, Molly, and their three children, who represent the sixth generation of the Phillips clan to live on the homestead. Ed Smith also has spent much time on the property since his retirement, learning and assisting with the forest and mill operation.

The Mill

The mill complex comprises four main buildings standing in a five-acre clearing that also accommodates the homes where the Phillips brothers lived. The first building houses the main saw, which cuts whole logs into slabs, or "cants." The second building contains an array of band saws used to cut cants into boards. The third is the custom box factory, and the fourth is the machine shop where all the tools, belts and saw blades are maintained.

Electricity has never come to the Phillips forest property, so the mill runs the way it has since 1937 -- on steam. Each of the four buildings houses its own boiler and steam engine. Belts transfer power from the steam engines to the machinery and the blowers, big fans that route all sawdust from mill operations to holding tanks. Except for some of the more modern staplers and chop saws in the box factory, most equipment was manufactured around the turn of the 20th century.

"At the end of the Second World War, after all the small lumber mills started going out of business, my uncles purchased about four different small steam-powered lumber mills and brought all of that equipment in here," Gary Hendrix says. "We have a lot of reserve equipment and engines and things, so if we do have problems, we have several spares."

Uncle Edmund Phillips even manufactured bolts and screws in the machine shop in order to avoid a trip to town.

The sawmill's steam engines are completely fueled by wood and subsist almost entirely on waste from the mill itself. From the slab wood that comes off of the logs, the bark and any scraps are sawed into burnable pieces on a little swing saw and fed into the steam boiler. The planer makes enough shavings to completely sustain itself as well, but some shavings are used in the box factory, which makes only a little fine sawdust. Once the spare shavings and end pieces from the mill are depleted, slash from logging operations contributes to fuel the boilers.

Unlike the situation at many mills, there are no stacks of wastewood lying around the Phillips operation; everything goes back into powering the mill. Gregg Hendrix says that other small saw mills in the area beg him to take loads of boiler wood from them. He says, "If I can keep my easy wood coming in long enough, their piles are going to get so big they'll have to load it up and bring it to me!"

The New Century

The loss of the last of the four Phillips brothers in the late 1990s was felt throughout the family and throughout the operation in Shasta County. The workhorses who lived into their 80s and ran the place for so many decades could not be replaced. But their successors have followed in their path and taken some major new steps as well.

They have protected the property from future fragmentation, development or overharvest by granting a conservation easement to the Pacific Forest Trust. The easement also reduced inheritance taxes that would have led to the destruction of the integrity of the Phillips forestland, Ed Smith says.

Today's family members also are starting to thin the forest in order to create a healthier landscape and one less vulnerable to fire. Since trees in a thinned forest grow more vigorously, these harvests are a continuation of the uncles' efforts to increase stocking by growing bigger trees. "Our goal is to have six trees per acre over 30 inches in diameter," says Smith.

When the uncles took over operations in 1934, the Phillips lands held perhaps 2 million board feet of timber, Gary Hendrix estimates. Today, because of the four uncles' stewardship, the family land contains an estimated 20 million board feet of standing timber. The family hopes to increase this amount to 25 million board feet within two decades -- even as they expand their business and slightly increase harvest volumes.

Under the easement, the rate of harvest is limited to 20 percent per decade, which at present works out to about 400,000 board feet annually. In the future, as stocking increases, harvest volume can increase, too.

Fruit lugs are a thing of the past in the Phillips operation. At the box factory, Gregg, Gary, Ed and a small crew of hired workers now manufacture custom wooden wine boxes and boxes for the packaging and display of audio tapes and compact disks. In addition, they are starting to make straight-grained tongue-and-groove flooring and siding. The flooring and siding have met with initial success and the family wants to increase this line.

Most of the dead and diseased pine sawed into "box shook," the raw material for boxes, had a distinct blue stain along its tight grain, explaining why salvaged ponderosa pine is referred to as "blued pine." Blued logs brought (and bring) less money at lumber mills, but for the boxes made at the Phillips mill it is quite suitable.

Blueing is a cosmetic factor and not a drawback in either the boxes or the flooring, Gregg Hendrix says. "We're finding that people really love the blued lumber in floors and boxes.".

Overcrowding and Fire Danger

Perhaps the biggest challenge facing contemporary managers of the Phillips forest is overcrowding on most of the property. Nearly a century of fire suppression, combined with the four uncles' refusal to cut green trees, allowed many areas that were once heavily harvested to come back into rich and well-stocked forest stands. However, this approach also created a dense and crowded forest.

Below the scattered old-growth ponderosa pine visible on the property, the understory is thick with young pine, incense cedar, Douglas fir, white fir and black oak. "Lewis and Art used to talk about a forest that you could walk through when they were kids," Gary Hendrix says. "That forest isn't there anymore. It's completely grown in."

In the absence of fire, the amount of down and dead wood also has increased greatly, and contributes further to a large, highly combustible fuel load. In the Sierras, the longer forests go without burning, the greater the fuel accumulation and the greater the hazard of a calamitous fire.

The family has begun an ambitious thinning program to reduce the dense and flammable understory, leaving a greater proportion of large, fire-resistant trees. Some of the logs from the thinning harvests are sold as raw logs and some are sawed into building materials at the Phillips mill. Trees in the understory not large enough to make saw timber are sold or used for poles, fenceposts or fuel.

"You get a much better product through thinning," explains Ed Smith. "You get faster rates of growth on the trees remaining, and more wood. Trees grow best if they don't have to compete for water and sunlight."

Ecology, Habitat and Wildlife

Despite the focus on harvesting standing dead trees, plenty of snags remain standing -- an important factor for wildlife and biodiversity, since snags provide food and shelter for many species. The rate at which the Phillipses have harvested dead pines has not kept pace with actual mortality. Downed logs also are plentiful on the Phillips property, further rounding out the ecosystem. In addition, the family purposely leaves snags in certain areas, recognizing their importance.

The interest in a natural ecosystem is not new. The current generation of the Phillips family inherited this interest from their predecessors. "The values our uncles gave us with regard to forestry is what is really important," says Gary Hendrix. "We were taught that the forest provided for us, and that we were never to misuse it. For them, the forest had a life of its own. They loved their land and their trees."

Because the uncles had long fenced out cattle that roamed freely on neighboring properties, wildflowers are profuse on the Phillips land. "A lot of the flowers that do not exist out where the cattle ran free are abundant here," says Hendrix. "I would say we have the pleasure to live in what most people would have to go to a state park to see."

Logging and Roads

The family originally logged with two-man saws and horse teams, then acquired a steam tractor. Later on, gasoline-powered tractors were added, and chain saws made falling easier.

Because the soils on the Phillips lands are clay-rich and easily compacted, logging is not conducted during the wet months of the year. Occasionally a long dry spell in the winter will allow access, but most harvesting takes place in the late spring, to supply the stack of logs the mill operations will require throughout the summer months. Another reason the Phillips crews don't harvest in the fall is concern that logging slash can harbor bark beetles in the winter if it doesn't have time to dry before the rains come.

Although family members used to do their own logging, they now focus more on the mill and box-making operations, and have begun to hire contract crews. The crews carefully fall large trees to minimize damage to younger growth, de-limb them on site, and pick them up with a rubber-tired skidder. They made the change from a steel-treaded skidder to one with rubber tires in the late 1990s and it has been a great improvement, says Ed Smith, because it leads to less soil disturbance and compaction.

The crews transfer the logs to the Phillipses 1950s logging truck for transport back to the mill. When the logging site isn't far from the mill, they haul the slash back as well, and use it as fuel for the steam. When slash is left on-site, it is lopped and scattered.

Many of the narrow, winding roads on the Phillips forestlands have been in place for 50 to 100 years. With infrequent road use, maintenance does not require lots of attention; the road erosion problems they do encounter usually come from trespassers who rut up the roads and destroy water bars.

Typical yearly maintenance involves clearing out water bars and cutting back brush or fallen trees from the roads. Only the main haul road that is shared with a local industrial owner is rocked. Gregg Hendrix does most of the water bar maintenance during the first good rain of the winter, when it is easier to see where the water is heading and easier to dig.

On areas near the main road, he tries to discourage trespassers. "I keep the roads so small and overgrown and pot-holed that nobody wants to drive their vehicles on them because they'll scratch their paint. It keeps most of the people out of there."

Economics

Modern sawmills won't pay more than $100 per thousand board feet for salvaged, blued ponderosa logs, Gary and Greg Hendrix say. But when the same wood is turned into specialty boxes at the Phillips mill and factory it brings gross revenue of $4,000 to $5,000 for the same thousand board feet.

In the year 2000 the Phillips operation turned out approximately 80,000 boxes, Ed Smith estimates. Most of these were small boxes for the packaging of audio books on compact disks, made by a concern in Marin County, Calif.

At the box factory the title of the book is scorched into the side of each box with a custom-made branding device, adding further to the boxes' appeal, he says.

To process between 30,000 and 40,000 board feet of lumber into finished products, the Phillips crews work eight or nine months a year: approximately 30 days logging, 15 to 20 days milling the logs and the rest of the time manufacturing boxes, conducting maintenance and performing miscellaneous chores. The mill could process a lot more wood than it currently does, Gregg Hendrix says. "If you wanted to run it all the time and you had a crew of five young guys who were willing to put in eight hours a day and work hard -- you know, young guys being about 75 or younger -- you could easily put in 5,000 board feet a day without even pushing the mill very hard."

Marketing costs are low. "We don't scramble for customers. We haven't looked for any customers recently," he says. Even a new product like the tongue-and-groove flooring has not needed advertising. "It's been taking off, spreading by word of mouth, mostly in the neighborhood," he says.

Mortgage and rental costs are zero. Everything is paid for, and the family owes money on nothing. Nor do they have any rent payments. "We don't have to rent a big building and didn't have to buy thousands of dollars worth of equipment to make all of this happen," Hendrix says.

Fuel costs remain low. While the staplers and some other, newer machines at the box factory rely on electricity supplied by a diesel generator, most of the Phillips operation remains steam-driven. Chips and sawdust from the main saw, planers and bandsaws are blown into a trench and then carried by conveyor to a wagon. It is then carted to a holding tank and shoveled into the boiler for boiler wood.

While it's fun to be unique, Gregg and Gary admit that they would use electricity if they could get it. They just missed being on the grid by a couple of miles and deem it too expensive for them to connect. The homes on the property have generators.

The steam mill might not be as quick as an electric mill, but the family is enormously fond of the steam operation. Not only does it take care of its own waste, the mill is much quieter than modern machinery.

Though lacking some conveniences and requiring a lot of upkeep and repair, the steam mill is the family heritage. It fuels their livelihood, and Gregg Hendrix can say he's one of the last of the old steamers.

"We could make a little more money if it were all diesel- and electric-fueled," he says, "and we've debated on it. Not that I was ever going to do it, because I'm making money right now paying the guy to fire the boiler and I love it. We love doing the steam operation, and as long as we can get by with it, we will."

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