If Colville had a skyline, it would be dominated by the 128-foot crane at the Vaagen Brothers Lumber plant. A giant claw drops into truck beds, retrieves timber and puts it into piles.

The logs keep coming in. But Duane Vaagen, the company’s president, frets over the future of the industry as he makes the rounds of his expansive, high-tech plant surrounded by forested ridges and slopes.

“What really drives this industry is the forest itself,” Vaagen says. But it’s not the forest that’s disappearing, he says. It’s the lumber mills.

One mill in Arden, Wash., seven miles south of Colville, planned to start laying people off this week and ultimately shutter the facility in early 2012. But suddenly Boise Cascade bought it from Portland-based Stimson Lumber and announced last week that it would keep it running.

It was a reprieve not just for Arden — a blink-and-you-miss-it settlement of a few trailers, a shuttered bar and a boarded gas station on Highway 395 — but also for Stevens County as a whole. While the Arden mill and its 67 workers got a reprieve, Colville, Chewelah and the county’s other towns have seen their jobs and populations decline as timber struggles.

“The thing that I see is that those are the better paying jobs in the area and the better paying jobs have discretionary income and they’re going to spend their money here,” says Peter Griessmann, owner of Haus of Hardwoods, a hardwood retailer down the road from the Arden plant.

Standing in a darkened warehouse strewn with polished, hewn wood, Griessmann yelled goodbye to a departing employee late one evening.

“See, there’s a guy I may have to lay off in a week.”

The deal between Boise Cascade and Stimson Lumber is still being finalized.

“There was a rumor going around that we were going to shut them down when we made a purchase,” says John Sahlberg, Boise Cascade’s vice president of communications. Their plan is to shut down the plant at the end of the year, lay off and re-hire all the employees when the plant opens again on the first Monday of the New Year.

However, without providing hard numbers, Sahlberg says they may not hire back all the workers. And already, some of them have started jumping ship.

One of them is Ed Qualey.

Qualey left Stimson when the layoff was originally announced, and took a job with Vaagen. “[Vaagen] saw the future. He saw it was going to be small logs and it worked for them,” says Qualey of Duane Vaagen and his high-tech plant.

While the Stimson plant focused on larger pine and cedar trees, Vaagen opted for small-diameter trees that would normally be ignored.

“To make the forest healthy, we need to log the little ones,” Vaagen says, otherwise those same trees will become fodder for forest fires. Plus, he’s selling the lumber halfway around the world. “[Before] we would have burned it. Now it’s being made into plywood.”

While his business is successful, Vaagen says he wouldn’t have been able to absorb all the laid-off Stimson employees. On the door to his headquarters, a sign tells job seekers to check for postings at the Worksource down the street. He isn’t hiring.

The Stimson mill in Arden had been ailing for a while. One hundred and nine workers were laid off in 2008, and Stimson’s sale of the Arden mill means the company will no longer have any operational mills in Washington, though Stimson still has mills over the mountains in North Idaho.

Jeff Webber, vice president of manufacturing for Stimson, says the Arden mill became unprofitable because of the housing collapse and technological innovations that competed with the cedar and pine that it turned into window frames and other fixtures.

“That mill, the way it was tooled, didn’t fit what the marketing plans are and what it was good at,” Webber says.

Sahlberg says Boise Cascade may combine the Arden plant’s operations with other mills in Kettle Falls or change the type of timber it processes in order to stay solvent.

Arden’s story is not unique. In 2000, the Inland Northwest region, which includes Stevens County, had 21 operating timber mills, according to the Washington Mill Survey, which is conducted every two years by the state Department of Natural Resources. In 2008, there were 14. Four of the seven that closed in that time were in Stevens County.

National forests in Eastern Washington have also become less productive. In 2009, 96.2 million board feet were harvested from the region’s national forests. In 1991, it was 284.3 million.

“When construction is in fact down nationwide, it puts a long-term impact on timber [that] is used for the construction trade,” says Arum Kone, the Employment Security Department’s regional labor economist for Eastern Washington. And when recessions hit, the timber industry tends to innovate rather than rehire all their employees.

As a result, Colville’s economy has diversified into manufacturing and other industries, says Kerry Burkey, the area administrator for Worksource in Stevens County. He says the town will survive the upheavals in the timber industry.

“Clearly anytime that a business … has an opportunity to continue to produce and be productive in the community, that’s a real plus for the whole community,” Burkey says of the Arden mill’s purchase.

The latest U.S. Census data shows that Colville lost 300 people in the past decade. The town’s mayor, Dick Nichols, blames diminishing job opportunities.

“The mill located in Arden has been in operation for decades, and regardless of the number of people employed there who lose their jobs, it’s going to have an impact on the area,” says Nichols. “And 60 employees is a good employer for our area.”

For Vaagen, Colville and his business are intertwined. His father started the operation in the early 1950s, and he still lives in the town where he was raised.

His son now works at the mill, making him the third generation of Vaagens in the business.

“Burn the bridge,” Vaagen says, when asked about his company’s future. “We have nowhere to retreat to.”