For one of the state’s most iconic employers, it’s time to reinvent or die.

A former lumber salesman for Weyerhaeuser recently asked The Mirror about rumored layoffs at the company’s headquarters in Federal Way. He was among 1,500 Weyerhaeuser employees laid off in 2008, with most of those jobs being local. Despite being a top lumber salesmen, he said, the layoff was a surprise.

Today, the company’s hardships and downsizing are no surprise. Weyerhaeuser has closed mills and laid off thousands of workers nationwide. The housing crash has hampered the company’s homebuilding subsidaries. In 2008, the company sold its container board packaging and recycling business for $6 billion in cash to pay down debts. In Federal Way, downsizing has vacated thousands of square feet in office space. The Federal Way headquarters now employs about 1,300, with further staff reductions ahead, according to a spokesman who declined to give more specifics.

However, the bigger issue is Weyerhaeuser’s rapid reinvention in these economic times — especially after the housing bubble burst. In today’s economy, the timber giant’s key to survival has everything to do with real estate. The company will officially convert to a real estate investment trust (REIT) upon filing next year’s tax return.

Weyerhaeuser owns millions of acres of timberland across North America. The corporation will focus on these real estate holdings, its key asset, with 90 percent of profits going to investors. The REIT status marks a significant tax savings.

Jon Talton wrote in the Seattle Times that Weyerhaeuser’s new direction recalls a mentality that contributed to the nation’s economic mess: “With the REIT, big investors will win, at least in the short term, as the wealth it took a century to create is picked clean.”

In October, Weyerhaeuser reported a third-quarter profit of $1.12 billion; about $1 billion came from income tax adjustments related to the REIT conversion (which will be retroactive to Jan. 1, 2010). The company reported that the weak housing market led to lower demand for logging and wood products, a trend that will continue in 2011.

Weyerhaeuser has survived for more than 100 years, starting with a small office in Tacoma, then growing into a global powerhouse. “To Wall Street, forests are no longer about wood; they’re about money,” wrote Daniel Jack Chasan in a Crosscut.com article on Weyerhaeuser’s REIT conversion. The article raises a valid point: Investors see Weyerhaeuser’s value not in what the company makes (wood products), but in what it owns (forests). That said, the average citizen sees value not in REIT conversions and dividends, but in whether Weyerhaeuser survives as a local employer.