Auburn's Forest Concepts LLC was started by three guys and a chain saw, Jim Dooley jokes.

In 1998, Dooley, a former Weyerhaeuser Co. executive and forest engineer, teamed up with two other Weyerhaeuser alums, Ken Chisholm and John "Jocko" Burks III, to form a company to find new uses for scrap timber left in the woods by big logging companies.

The three men saw "a big opportunity in the gap between where the multinational companies were going and the resources available," Dooley says. Their first product, ELWd Systems, was developed to take advantage of new environmental requirements being put in place to protect salmon. They used small logs and limbs to create wooden structures that could prevent erosion and improve salmon habitat in streams.

Forest Concepts' second product was inspired by the Washington Department of Ecology. The state agency was struggling with herbicides leaching out of the straw it spread to control erosion in watersheds. Dooley was part of a team the department put together to study the problem.

"Why not create a wood-based material?" Dooley asked. "It makes sense if you are restoring forest soil to use forest materials."

Meanwhile, the U.S. Forest Service was grappling with massive wildfires in the West. Forest Concepts was able to secure a grant from the U.S. Department of Agriculture's Small Business Innovation Research program to develop a material that could rival straw in controlling erosion in watersheds and burn areas.

But turning wood into straw for the federal agency proved nearly as challenging as spinning straw into gold for Rumpelstiltskin.

Dooley ran 400 controlled experiments on the wood mulch he was creating, testing its performance with the assistance of the USDA Forest Service Rocky Mountain Research Station, in Moscow, Idaho.

By 2005, the company was ready to begin commercial production using the "muncher" Dooley had created. "A paper shredder on steroids," the muncher rips scrap wood into straws one-tenth of an inch thick.

With wildfires raging in Washington and Oregon, the startup produced 100 tons of wood straw that first year. They found a supply of scrap wood at companies producing wood veneer for furniture.

"We knew we had a tiger by the tail," Dooley says.

Wood straw has several advantages over agricultural straw, Dooley says. It lasts longer—about four years—before decomposing. Additionally, it doesn't leach herbicides or harbor invasive weeds as commercially grown straw may do. Forest Concepts buys its scrap wood from local furniture manufacturers, which use only a thin layer from the outside of the log to produce veneer for wood cabinets and other items.

A regular-size bale weighs about 50 pounds and covers just under 300 square feet. That amounts to 150 bales an acre, although steeper slopes may require more bales to prevent erosion. Wood straw can be spread by hand, by special blowers or, in remote burn areas, by dropping loosened bales from a helicopter.

A year after launching the product, Forest Concepts hired former biotech executive Mike Perry as CEO to help raise capital. Perry was able to bring in about a half-million dollars to help kick the company into higher gear.

With wood straw driving sales, the company's revenue jumped from $695,000 in 2005 to $865,000 in 2006, Perry says. In 2007, revenue hit $1 million. Perry estimates 2008 revenue will be slightly less, around $900,000.

The challenge this year will be to boost production, Perry says. The company currently has seven employees: three engineers, an ecologist, a patent attorney, and two "business guys," Perry says.

After the recent forest fires in California, Forest Concepts was asked to provide enough wood straw to cover 2,000 acres of scorched soil. The request would have required production of 20,000 large bales of wood straw within a three-week period, Perry says. However, the company currently is able to produce only about 600 large bales a week, so the order went to another company.

"The choke point in our growth is our production capacity," Perry says. "The product awareness and demand is out there. It's a question of having the production available."

Besides its use in burn areas, wood straw is also being used to control erosion around scores of abandoned mines being cleaned up by the federal government.

Local municipalities are also using wood straw as mulch for trails. Recently, the city of Kent bought wood straw to mulch the more than two acres surrounding the new ShoWare Center at Kent where the Seattle Thunderbirds hockey team plays. The product is also being used in some vineyards in California, Perry says.

The increasing interest in alternative energy could boost sales of a baling machine the company makes. The baler can bundle anything from switchgrass to Christmas tree stumps into an easy-to-transport cube. And last summer, the company rolled out Shredz, a wood fiber to be used in making feedstock fuel for biorefineries.

One of the company's largest customers, Mountain West Helicopters LLC, of Alpine, Utah, last week invested $50,000 in Forest Concepts for a minority stake in the company.