By MIKE OBEL

NEW YORK (AP) ¿ Timber and wood products company Weyerhaeuser Co. said Tuesday it closed two mills in Oklahoma and Oregon, as demand for lumber to build homes remains weak.

The closures at the company's mills in Wright City, Okla., and Dallas, Ore., will affect about 307 workers, leaving Weyerhaeuser's total employment at around 19,000, spokeswoman Shannon Hughes said. The shuttering of its Wright City mill is indefinite, she said, while the Dallas closure is permanent.

Including the latest shutdowns which eliminated a total of 500 million board feet of capacity, the company has reduced its softwood lumber capacity by nearly 20 percent in 2009.

Since Jan. 1, the Federal Way, Wash., company has closed 10 mills for wood products and virtually all its sites have scaled back operations.

"Demand for wood products continues to decline due to a slowdown in the housing market," said Tom Gideon, executive vice president-forest products at Weyerhaeuser. "Unfortunately, extraordinarily weak market conditions in the homebuilding industry require that we take decisive action."

So far this year, Weyerhaeuser has announced the shuttering of four softwood lumber mills with a total yearly capacity of 870 million board feet. Another 280 million board feet of capacity has been cut by eliminating operating shifts at other mills, bringing its year-to-date lumber capacity reduction to 1.15 billion board feet.

That comes to about 19 percent of its 2008 capacity of 5.96 billion board feet.

"The reduced lumber capacity reflects sharp reductions in both demand and prices," Longbow analyst Joshua Zaret said. Last year, U.S. lumber consumption plunged about 22 percent, he said, and this year the average national softwood lumber price is down nearly 20 percent ¿ falling to levels not seen since 1985.

Lower lumber demand has also led Weyerhaeuser to cut harvests.

"We are seeing some pullback in our western harvests, and that will continue because it follows the California housing dynamics," Mike Branson, senior vice president-timberlands, said Friday.

In afternoon trading, Weyerhaeuser shares rose $1.39, or 5.6 percent, to $26.32.
Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.