Warm Springs is turning to wood chipping for its main source of income.

Slow housing starts, a weakening U.S. dollar and competition from large mills are helping put increased—and in some cases, unbearable—pressure on Northwest lumber and pulp mills.

The Warm Springs lumber mill, which is run by the Confederated Tribes of Warm Springs near Bend, Ore., laid off 60 employees in early May, according to Janet Corbett, the mill's sales manager. Corbett helped the tribe gain certification from the Forestry Stewardship Council (FSC) in 2005 for 430,000 acres of forestland in Central Oregon. But she says slow housing starts and a struggling U.S. economy has significantly brought down the price of lumber in recent months.

The mill cannot win current FSC-pricing wars with larger mills, Corbett says. While Warm Springs is not currently producing lumber, it is producing wood chips for the paper mill industry, Corbett says. The mill still employs about 55 people.

A U.S. Bankruptcy Court recently gave Portland-based Pope & Talbot Inc. the go -ahead to begin liquidating its mills. The 150-year-old, publicly traded company filed for bankruptcy in November 2007. Pope & Talbert sold off four of its eight mills since November, according to the Portland Business Journal.  But when recent deals to sell the remaining three mills fell through, Pope & Talbert was forced to file Chapter 7 liquidation.

A U.S. Bankruptcy Court May 10 placed the company's remaining assets with a court-appointed trustee. The three remaining mills, all located in Canada, remain idle. The company employed nearly 1,000 people in the U.S. and British Columbia.