When Oregon State University leaders decided in 2014 it was time to replace the aging home of its forestry school, they wanted more than a new building. They wanted a statement.
The new Peavy Hall would symbolize the rebirth of the state's timber industry by showcasing its signature innovation: cross-laminated timber. With its ambitious use of wood that's been fortified to rival steel, Peavy Hall would underscore Oregon's place at the forefront of a revitalized forest products market.
But the general contractor saw significant risks in using an untested CLT manufacturer, like the one hired to supply the Corvallis project, and wanted financial cover, documents obtained by The Oregonian/OregonLive show . School officials, instead, moved forward with a new builder in December 2016.
In March, a 1,000-pound section of the third floor buckled and crashed onto the floor below. Engineers traced the panel's failure to the glue and determined at least five other panels showed signs of delamination. The closer they looked, the more bad CLT panels they found; by August, at least 85 were marked for replacement.
Peavy Hall made a statement all right: about the risks of new technologies and getting caught up in the enthusiasm of the next big thing. The months of delays, the experts and engineers, and the replacement panels will add millions to the cost of a project that already has climbed nearly 32 percent, to $79 million, since construction began.
The Peavy problem comes after years of efforts by state officials to promote a technology they view as an economic engine for rural Oregon. The state's timber employment has fallen 62 percent since its 1980s heyday, from about 80,000 to 30,000. In 2015, the state deemed the development of cross-laminated timber buildings "essential" to the state's economic interests.
The panels were made by DR Johnson, a venerable Douglas County timber company and newly minted CLT manufacturer, whose president, Valerie Johnson, sits on the forestry school's board of visitors.
OSU officials initially said they knew few details of the DR Johnson contract. It was actually a British Columbia-based subcontractor, StructureCraft, that signed that contract, they noted.
But documents obtained by The Oregonian/OregonLive show that StructureCraft had no choice but to hire DR Johnson. Buried deep in a 1,300-page "spec book," OSU included a requirement that the CLT panels used in Peavy Hall be manufactured within 300 miles of the job site. Only DR Johnson met that requirement.
The laminated timber movement sustained another blow this summer when developers, citing construction costs, pulled the plug on the Framework building, a 12-story building planned in Portland's Pearl District. It would have been the tallest wooden tower in the country.
Tom Williamson, a Vancouver-based consultant and expert on the wood technology, said the setbacks, particularly the problems at Peavy Hall, won't make it any easier for Oregon to become an important player in the market.
"You've got a new product coming on line and the last thing you need is a failure," he said. "The concrete industry is all over this. You just can't afford any black eyes early in the development."
On Aug. 1, the Oregon Building Codes Structures Board adopted groundbreaking language allowing wood-framed buildings as high as 18 stories, three times the effective current limit.
It is the latest move in the state's long and sustained effort to make Oregon the epicenter of CLT and other mass timber components.
Gov. Kate Brown, her Republican gubernatorial opponent Rep. Knute Buehler, and her predecessor, Gov. John Kitzhaber have hopped aboard the CLT bandwagon. State and local officials have spent millions hosting symposiums, funding design competitions and mass timber think tanks.
Cross-laminated timber has been in use in Europe for more than two decades. It established a North American beachhead in Canada and is just now finding its way into U.S. construction. Studies predict it could grow into a $4 billion market in this country alone.
The fabricated wood offered politicians of all stripes the rare public policy two-fer: the possibility of reversing the long painful decline of timber-based employment in Oregon with an industry that boasts positive climate change attributes. Boosters claim CLT buildings store carbon while such competing materials as steel and concrete actually emit greenhouse gases.
"It's hard to overstate how important we considered rural economic development, it was like the holy grail," said Scott Nelson, Kitzhaber's adviser on business and economic matters.
CLT won't replace the tens of thousands of logging and mill jobs that have disappeared in the last five decades.
But the increasingly popular material could create many as 17,000 jobs, according to a 2017 study conducted by VertueLabs, a nonprofit.
Not everyone buys the buildup. Environmentalists are dubious about the industry's claims of being better for the planet. Firefighters' unions across the country believe tall wooden towers pose an unacceptable fire risk.
"You're replacing concrete and steel with a flammable material, that's problematic," said Alan Ferschweil, head of the Portland Fire Fighters Union. He said a CLT building like Peavy — a three-story structure — he has no issue with. But a 12-story tower like Framework should never have been approved, he said, noting that Portland Fire Bureau's tallest ladders can only reach seven stories.
Developers recently scrapped plans for the first cross-laminated timber tower in Manhattan, citing financial reasons. But they folded after the New York firefighters' unions signaled their opposition.
"I spoke out against this project out of concern for the citizens and the firefighters of the city of New York," said Jake Lemonda, president of the United Fire Officer Association.
As far as Oregon political leaders are concerned, the wood panels are sound. CLT passed rigorous and repeated flammability tests. So confident are state leaders of CLT technology that in 2015 they declared it "essential" to Oregon's economic interests. That cleared the way for building code changes that culminated this month with the new 18-story limit.
There was another key constituency with doubts about the laminated timber. The folks who own the mills and the logs weren't convinced of the market demand. In November 2013, the OSU forestry faculty invited prominent Vancouver, B.C., architect Michael Green to Corvallis to drum up excitement. Green, who had delivered stirring Ted Talks on the advent of high-rise wooden towers, wowed the 50 industry executives in attendance - including Valerie Johnson. The second-generation president of DR Johnson said it persuaded her to expand into the new market.
Paul Barnum, former executive director of the Oregon Forest Research Institute in Portland, said the CLT movement is delivering on its early promise. "The wood products industry hasn't had a lot to get excited about over the last two decades," he said. "We've been down for quite a few years. Now, this thing is like a freight train coming through. We're seeing buildings designed and built with these new panels that are beyond beautiful."
Walsh Construction, a longtime general contractor in Portland, was thrilled in 2015 when it was tapped to build Peavy Hall. The job included building its replacement and an adjoining Advanced Wood Products Lab totaling about 85,000 square feet. Estimated price tag: $46 million.
But once it got a closer look, Walsh had concerns about the university's reliance on DR Johnson. The company had just been making CLT panels for a year and there was no backup plan.
"DR Johnson has no previous experience with a CLT project of this size and complexity," Walsh officials wrote in an October 2016 memo to university officials. "We know that DR Johnson has recently obtained and installed the equipment to do this fabrication yet they have little experience with the equipment and little experience with managing the extensive coordination... that precedes the production."
But OSU was firm about using DR Johnson. The company, located deep in the heart of Oregon's ravaged timber country, had fulfilled the forestry faculty's cherished dream when it rolled the dice and invested in CLT fabrication.
The company declined to disclose the amount of its investment, but industry experts say such plants can cost $8 million to $30 million. The state provided DR Johnson with a $100,000 loan for the plant.
University officials make no apologies for including language in the architect's bid package that effectively gave the job to DR Johnson. It only makes sense for the school to hire an Oregon company, spokesman Steve Clark said.
The stipulation ruled out the other CLT maker in the Northwest — Penticton, B.C.-based StructureLam, which has been in the business since 2011, four years longer than DR Johnson. Penticton is more than 500 miles from Corvallis.
When it became clear the university wouldn't budge on the supplier, Walsh pressed for more money. It proposed that OSU pay Walsh 1 percent per month interest on all funds paid by Walsh to subcontractors. OSU refused and terminated Walsh. It hired another Portland-based general contractor, Andersen Construction.
OSU agreed to pay Andersen $63 million, 37 percent more than it would have paid Walsh, which university officials attributed to on escalating construction costs.
Crews at construction sites are accustomed to high-decibel noises. Circular saws scream, hammers bang and bulldozers roar. But the thunderous crash that emanated from Peavy's second floor on March 14 was far outside the norm.
Workers who rushed to the scene were met by a chilling sight: One of the panels that made up the second-floor ceiling, had come apart. A piece roughly 20- by 4-foot and weighing half a ton, had collapsed and fallen to the floor.
"I'd never heard of this happening before," said Green, the Canadian architect OSU eventually hired to design Peavy Hall. "It was absolutely unsettling."
In a March 19 memo to university officials, Andersen delivered the bad news.
"It appears that at least 2 CLT billets manufactured by DR Johnson for the Peavy structure have a fabrication defect," the company said. "These two billets were cut into six floor panels."
What followed was a protracted and frustrating effort to determine the extent of the damage and a strategy to resume construction.
Because CLT was so new, there was no accepted protocol for testing.
DR Johnson fell on its sword in April, publicly taking responsibility for the bad panels. An internal audit revealed that crews had been instructed "to warm the lumber in stacks under tarps," that were then glued together to make the panels. "Some temperature variations inadvertently caused premature curing of the adhesive, resulting in poor bonding," the company said.
Johnson, the company president, declined requests for an interview.
That same month, OSU stated its continued confidence in DR Johnson and its plan to rely on the company to fabricate the replacement panels. Internal emails, obtained by The Oregonian/OregonLive through a public records request, show that OSU recommended against a suggestion to stop all payments to DR Johnson.
Nearly four months have elapsed since the testing began. Clark, the university spokesman, said taking core samples from every one of the 700 panels and testing them has proved more time consuming than anticipated.
Clark added that the various parties and experts have finally reached a consensus on construction and work on Peavy resumed last week. But clearly, there are some issues they disagree on, including the number of panels that need replacement.
The new Peavy Hall is divided into Zones 1, 2 and 3. Forty bad panels were found in zone 1. In zone 3, the panels were never installed and were being stored at DR Johnson's facility. But testing of the panels showed 45 of the 71 would need to be replaced.
Zone 2 is where the collapse occurred and is at the center of some dispute over how many panels need to be replaced. Clark declined to say how many panels were used in zone 2.
Clark said added costs have not been fully tallied and, in any case, the university vows it won't pay any of it. Subcontractors are lawyering up. Insurance companies are getting involved. The university's ambitious symbol of new good times in the timber industry could well end up in a protracted legal fight.
Skeptics say the Peavy Hall debacle is the perfect opportunity to stop the zoning and building code changes and reconsider its safety and soundness.
"The OSU building is a godsend," said Fershweiler, of the Portland Fire Fighters' Union. "They found a defect. Now, they need to take a break and listen to all the stakeholders."
Enthusiasts disagree and predict Peavy Hall will do nothing to slow CLT's momentum. "This was a manufacturing blip," said Barnum.
"I think it's a localized issue," added Green, the Vancouver architect. "There's no loss of confidence in the industry that we're seeing."
The publicity over Peavy seems to have had little negative impact on DR Johnson's CLT business. The company has 30 new employees and is running two shifts a day to meet demand.
"DR Johnson continues to receive great interest from projects up and down the West Coast," Valerie Johnson said in a written statement. "Our CLT facility in Riddle is running two shifts and is booked with jobs through next Spring. We have always believed this product will bring opportunities to Oregon's rural communities, and nothing has shaken our faith in that potential."
As for Oregon State, administrators are "enormously frustrated" at the technical problems and the long delay, Clark said. The university now hopes Peavy will be complete and ready for occupancy by September 2019, a full year behind the original schedule. But it will not move off its requirement that any questionable panel be replaced, he said, no matter how long it takes.
"Has this been a black eye? I prefer to think of it as a learning moment that we hope will never happen again," Clark said.