Making lumber is a bit like peeling a banana. The peels, in this case 16-foot lengths of bark-clad hemlock, are stacked beside a small sawmill here at Treeline Inc., a diversified forestry operation on the access road to Lincoln.

But that waste wood has value. Last fall, Treeline could turn the slabs into chips and truck them an easy 17 miles along the Penobscot River to feed a biomass power plant in West Enfield. Maine lawmakers had recently approved a $13.4 million taxpayer subsidy that allowed a new owner to restart the unprofitable facility.

The subsidy reflected a deep concern about what has happened to Maine’s forest products industry, a dominant force in the state’s economy for nearly a century. Over the past decade, paper mill closures and shifting markets have diminished the industry to a point where the rural Maine forestry businesses most dependent on pulp and paper – the loggers, truckers, sawmill operators – have been forced to envision a new future.

After some encouraging signs this year, though, they are coping with a number of setbacks. That has led companies such as Treeline to realize they must become more nimble and diversified to survive the downturn and be positioned for new opportunities.

The West Enfield biomass plant is a case in point. Power production has never gotten back to normal. And when the owner had trouble paying suppliers, Treeline stopped regular deliveries. That was February. Now the company is hauling chips 100 miles north to another plant that turns wood fuel into electricity, the ReEnergy biomass power station in Ashland. Trucking costs have soared from $150 to $400 a load.

From the Portland Press Herald: