With the Arkansas Economic Development Commission (AEDC) on Thursday approving a $750,000 bond guaranty to a Texas-based investment group, the former ArkLam and Unit Structures plant in Magnolia is set to see new life at its 1202 Shanhouse Drive mill. The state funding measure was the first public step in creating at least 40-60 jobs over two years in the city. The Magnolia plant, most recently under the name ArkLam, had been closed since 2015. The new jobs are expected to pay approximately $35,000 annually.
The state funds were approved for Texas CLT LLC of Timpson, Texas. The group is also expected to invest $3 million initially in the project.
The new occupiers of the roughly 20-acre property located just southwest of Southern Arkansas University’s Physical Plant will not specialize in the same traditional glued laminated beam business that the Magnolia plant manufactured for 50-plus years, but instead, it will produce the similar, yet more environmentally sustainable and fire resistant cross-laminated timber (CLT) technology.
The Nacogdoches, Texas-area investment group is already familiar with the timber business. Brant Cobb, chief operating officer of Texas CLT, also owns Cobb Lumber Co. in Timpson. There, it manufactures and supplies clients with utility poles, pilings, timbers, posts, geotextiles, lumber, and erosion controllers.
The CLT market, though, is seen as an emerging and fertile investment area. Unlike many wooden products, CLT is much more fire resistant due to its highly compressed fillings, more environmentally friendly, and lighter than the traditionally laminated beams.
CLT involves gluing together layers of boards, such as two-by-fours, at 90-degree angles and pressing them into a large panel of wood of up to 10 feet by 40 feet and up to a foot thick. Such products have been approved for construction of buildings that are up to 18 stories tall, Cobb said.
“There is an emerging industry where people use these [cross-laminated timber] panels in buildings,” said Bryan Scoggins, director for business finance at AEDC.
A residence hall on the campus of the University of Arkansas, in Fayetteville is being built using the technology, said Mike Preston, executive director of the commission.
“Basically using wood where before you would have used steel or concrete,” Preston said.
The wood technology is greener, sturdier and more energy efficient, Scoggins said.
Texas CLT researched the project for more than a year and was aware of the plant in Magnolia, Scoggins said. The company knew it would have access to some experienced workers, plus Magnolia is near the raw material sources, Scoggins said.
Cobb expects to be operating in January.
“Obviously the work and hiring of people will start much sooner than that,” said Cobb, who plans to move to Magnolia. “We expect to be over there and on the ground in October and hiring our first people in November.”
Texas CLT will hire 40 or more workers in the beginning and get up to 60 fairly soon, Cobb said.
Cobb, who anticipates investing $3 million initially but much more over the next three years, is a zealous salesman for the cross-laminated timber technology.
Market conditions are excellent for laminated beams, Cobb said.
“The products we’ll be making will replace concrete and steel construction materials,” Cobb said. “The environmental impact we will have by replacing concrete and steel will be very significant.”
A cubic foot of concrete releases 20 pounds of greenhouse gases into the atmosphere. A cubic foot of steel releases over 30 pounds of greenhouse gases.
“If you build it with wood, it removes 17 pounds per cubic foot of greenhouse gases,” Cobb said. “There’s nothing magical about that. That is just the nature of concrete, steel and wood.”
The laminated wooden beams are less expensive than the other building products, Cobb said.
Cobb gave the example of a Candlewood Suites hotel that was built with steel and another one built with wood. The one made with laminated beams was 31 percent cheaper than the one constructed with steel, he said.
Southwest Arkansas also has an abundance of timber, Cobb said. As recently as two years ago, the state of Arkansas had a surplus of 360 million tons of standing timber that was growing by 10 million tons a year.
There was only one cross-laminated timber manufacturer in the country, D.R. Johnson Lumber Co. of Riddle, Oregon, two years ago. Now there are two more before the Magnolia plant goes online.
“Our whole focus is to provide building materials that clean up the environment,” Cobb said. “That is our underlying mission, to reverse the trend.”
Since the Magnolia building was built in the 1950s, a series of owners – the latest being a 10-person local investment group led by Michael Kinard – have all produced laminated beams.
“We’re just going to broaden the market and offer a broader spectrum of laminated beams,” Cobb said.
According to Columbia County real estate records, ArkLam, or Arkansas Laminating, purchased the plant in 2012 from Unit Structures LLC. It had owned the property since January 1996, after purchasing the business from Engineered Wood Systems, Inc., 10 years prior. The 2012 ArkLam investors, whom still own the land, are expected to lease the plant property to Texas CLT.
Magnolia Economic Development Director Cammie Hambrice and Magnolia Mayor Parnell Vann have been intimately involved since March in helping Texas CLT fill the vacant ArkLam mill.
On Friday, Hambrice said the process came rather quickly, but the pieces are now in place for the town to benefit.
“We’ve been working on this since early spring, locally,” she said. “It’s really the first big project since the city took over economic development.”
Hambrice and the mayor were and still are in regular contact with all partners involved. They have traveled to Little Rock to meet with AEDC, and the Arkansas Development Finance Authority, plus spoken frequently with the Magnolia investors, and the Texas group led by Cobb.
Even as AEDC has already approved its bond measure, and the Texas group pledged its investment, the city council of Magnolia will still need to grant final approval for its local economic tax dollars to be spent on the project.
“Locally, we will have skin in the game,” said Hambrice.
Hambrice added that the Magnolia economic funds will aid in the hiring of new workers.
“We will run a cost-benefit analysis, and then the city council will have an opportunity to review the information and vote to allocate funds to the project,” she said in a Friday statement. “I received a call yesterday from Drew Williams, AEDC Project Manager, informing me of the $750,000 bond guaranty approval.”
The exact economic funding amount the city will invest has yet to be disclosed.
Hiring for the new workforce will be performed through area firms such as Workforce Services, Manpower, and ESA Staffing. Hambrice also said that former ArkLam workers will be contacted for the new job openings.
With such an emerging market, the investment is thought to be a sound one for all parties involved.
“It’s really picking up steam,” Hambrice added.
Vann on Friday also highlighted just how perfect of a fit the CLT business is for Magnolia.
“Located in the timber basket of south Arkansas, we have the resources they need,” he said.
(Editor's Note: Portions of this article were contributed by David Smith of the Arkansas Democrat-Gazette)