2 Idaho forest products companies to combine

Bennett, which produces about 185 million board feet of wood annually, and Riley Creek, which is more than three times as big, said large home improvement retailers demand suppliers be large enough to guarantee delivery of lumber products.

As a swooning building market causes rivals including Portland, Ore.-based Stimson Lumber to shutter mills in traditional timber towns such as Coeur d'Alene, Idaho, and Bonner, Mont., Bennett and Riley Creek said their combination could eventually lead to expanding the combined 550-person work force at four mills located in northcentral and northern Idaho.

"This is not a defensive move at all," said Dick Bennett, who will remain on the new company's board of directors. "It opens up more markets for us. Home Depot and Lowe's don't want to do business with a mill only producing 100 million board feet. We'll have enough volume where we can take on a fairly good contract with them."

Riley Creek already supplied the two retailers, though Bennett did not, he said.

The combination could help gird the one-time competitors for what industry experts forecast will be a steep drop in U.S. demand for lumber caused by a spiraling housing industry decline. Just three years ago, prices for Douglas fir were $422 per 1,000 board feet, but that's dropped by nearly half.

"Housing starts are so far down, it's affecting the dimension lumber market," said Serena Carlson, a spokeswoman for the Intermountain Forest Association. "Prices on raw logs are dropping and are at some of the lowest levels we've seen."

Bennett, who acknowledged the region's timber economy is "about as tough as I have ever experienced," said his family will own about a third of the new company.

Marc Brinkmeyer, owner of Riley Creek Lumber, will have the remaining two-thirds and will be the chairman.

Terms of the transaction weren't disclosed.