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Logging and Sawmilling Journal November 2014

February 2016

On the Cover:
The world’s leading steep slope innovators from New Zealand and North America will be at the Steep Slope Logging Conference and Field Demo being held March 2-3. Further information on the conference which is being presented by Logging & Sawmilling is available at www.steepslopelogging.events. (Photo of a Tigercat LS855C configured for steep slope logging courtesy of Frank Chandler, Technical Forest Solutions, LLC.)

Campbell River’s goal: reviving the forest industry
The city of Campbell River, B.C. has set up a Forestry Task Force—chaired by a forest industry veteran—to revive the forest industry in the Vancouver Island community.

COFI convention—Where to from here for lumber markets?
With softening lumber markets in China, and a still slowly recovering U.S. housing market, the industry has definitely got some challenges ahead of it, all of which will be discussed at the Council of Forest Industries annual convention and trade show, coming up in Kelowna, B.C. April 6-8.

White River’s sawmill lines are white hot
Ontario’s White River Forest Products sawmill is intent on being one of Canada’s most efficient sawmills, and that effort recently received a $15 million capital investment that will significantly boost production.

Climbing steep slopes—with the ClimbMAX
B.C.’s Tolko Industries was the first operation in North America to use a winch-assist forestry machine—the ClimbMAX steep slope harvester from New Zealand—and their experience so far has been positive.

Remote Operated Bulldozer system tackles B.C.’s steep slopes
Island Pacific Logging has been using the steep slope Remote Operated Bulldozer (ROB) winch assist system—developed in New Zealand—on Vancouver Island since last summer, and it’s working so well that the company has agreed to be the North American distributor for the system.

Getting the most out of every scrap of wood
Producing everything from solid wood products to shavings, the Lewis Mouldings and Wood Specialties mill operation in Nova Scotia is known for its high wood utilization.

Log handler ably handles east coast weather
Groupe Savoie tried out a number of log loading machines for the millyard at their sawmill in Quentin, New Brunswick, and decided on a Sennebogen 830 M-T, a log handler that is able to handle the cold—and wet weather—that hits the region.

The Edge
Included in this edition of The Edge, Canada’s leading publication on research in the forest industry, are stories from the Canadian Wood Fibre Centre and Alberta Innovates - Bio Solutions.

The Last Word
Whatever happens in the forest industry in 2016, it sure as heck isn’t going to be boring, says Jim Stirling.

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The year ahead for the forest industry: it sure ain't going to be boring

By Jim Stirling

It’s just as well that the Canadian forest industry has learned to be durable and adaptable. Those attributes look to be in demand as 2016 progresses.

Predictions are fragile confections at best, influenced as they are in unexpected ways by outside forces. The forest industry needs to muster its resilience and reactions as those forces unfold. And the economic soothsayers need to keep their excuses close to hand.

Take a glance, for instance, at Canada’s non-domestic lumber markets. It really wasn’t long ago that market category primarily meant the United States’ demand for dimension lumber. That dependence has waned to more sensible levels, but the U.S. lumber market remains vital to Canadian lumber producers, as well as providing a useful barometer to economic health on a global scale. The much anticipated recovery from the depths of the last recession has been slower and more uneven than many pundits predicted.

But it is happening. The U.S. economy has been consistently recording quarterly growth in excess of two per cent for more than a year. The U.S. registered an annualized increase of 2.1 per cent in 2015’s third quarter gross domestic product figures. Canada’s growth averages around half that, attributable to our reliance on export commodities like oil and gas and minerals. U.S. housing starts—the key statistic to many Canadian lumber producers—are increasing like the overall economy, but oh so gradually.

Events elsewhere are sending their ripple effects into the U.S. demand equation. Quebec’s forest industry, for instance, has long developed traditional markets in Europe for wood products. But recent European currency value declines against the U.S. dollar erodes some of Quebec lumber manufacturers’ price advantages. Partly as a result of that, the province looks to increase shipments into the U.S. Europe is not the only market experiencing slowdowns in lumber demand. It’s a similar situation throughout the troubled Middle East and Asia.

Forest consultant and analyst Russ Taylor neatly summarized the U.S. market realities. “All the suppliers are trying to increase production two, three, five per cent and consumption is growing at about one to two per cent.” One interpretation from that is that it’s going to be tough to hang on to the U.S. market share under the present circumstances—let alone increase it.

Then, of course, there’s China: the market that kept many sawmills operating during the gloom of the recession, especially in British Columbia. But everyone knew—didn’t they?—that annual levels of demand for lumber in China during its heady days of double digit growth were unsustainable.

Taylor says homebuilding has declined by about 17 per cent during 2015. B.C.’s lumber shipments to China were 4.9 million cubic metres to the end of the third quarter of 2015. That represents a 14 per cent drop from the same period of 2014. “Flat” is the word Taylor used to describe the overall China lumber market prediction for 2016. Japan and other Asian markets aren’t yet in ascendancy and appear unlikely to register the sustained growth in economic activity that stimulates new lumber demand.

At the time of writing, there’s little measurable progress on re-negotiating a softwood lumber agreement with the U.S. The grace period for a new agreement expires at the end of October. The inaction contributes to further uncertainty for Canadian lumber producers and by extension the whole forest sector. Not knowing if there’s going to be a new deal or what shape it might take effects investment decisions for logging contractors and forest companies and negatively reverberates through small forestry town Canada.

In B.C. the uncertainty is further skewed by timber supply. The mountain pine beetle epidemic’s bite is destined to get deeper unequally through many pockets of the interior. Saw logs and their prices will be at a premium. More sawmilling capacity is likely to be lost as a result.

Aboriginal title and its impacts on resource extraction are lowering their own clouds of uncertainty. The Supreme Court of Canada’s 2014 ruling granting the Tsilhqot’in title to specified lands in their traditional territory captured everyone’s attention. The potential impacts were much analyzed but the on-the-ground ramifications for the forest industry have so far been relatively benign. One possible reason is the forest industry in B.C. at least has long had business relationships with aboriginal groups which, by and large, have worked harmoniously.

But another Supreme Court of Canada decision rendered last October represents a new element of uncertainty. Not to mention a potentially toxic can of worms. The Supreme Court in its decision effectively recognizes aboriginal title and allowed two First Nations the right to file a class action suit against a private company. The Saik’uz and Stellat’en First Nations took on Rio Tinto Alcan and the impacts of the company’s Kenney Dam on the Nechako River and their aboriginal rights. Aboriginal groups, which claim more than 100 per cent of the provincial area, in light of this latest Supreme Court decision, now have the right to sue private companies for damages, not just governments. Resource development is now even more firmly in lawyers’ hands, which is not a productive development for anyone else involved.

There is one prediction, however, that isn’t clouded with uncertainty: 2016 ain’t going to be boring.