By Paul MacDonald
B.C.’s ATCO Wood Products will be celebrating its 60th anniversary in 2019—but it’s certainly a young thinking and dynamic company when it comes to business.
Case in point: with nothing in the way of major upgrades, the company has managed to double its production over the last five years.
Located in the West Kootenays region of British Columbia, ATCO Wood Products is a leading producer of softwood veneers and related byproducts. It specializes in manufacturing custom softwood veneer for plywood and engineered wood products customers in both Canada and the U.S.
For almost six decades, the company has been steadily turning out wood products from its plant in the small town of Fruitvale, in southeastern B.C.
And its efforts and achievements have been recognized. The company was the winner of the 2017 BC Export Awards in the Natural Resources Category, and it was selected as the 2018 Canadian Family Enterprise of the Year, by the Family Enterprise Exchange.
Scott Weatherford, the company’s CEO, explains the company has deep family roots; the grandfather of his wife, Rebecca, founded the company in the 1950s.
Scott and Rebecca bought the company in 2007—and a very interesting, and difficult time, to say the least, followed, says Scott.
“I remember working on the deal to buy the company, and things were starting to get a bit iffy in the market, but overall it was still looking pretty good—and we had good projections. I thought we might see a 10 per cent correction.
“When we took over the business in early 2007, we got a couple of months under our belt, and thought, OK, well, this is do-able. It was like riding a bike—maybe a bit wobbly, but we were getting into it.
“Then in May and June of that year, the bottom started falling out of the markets—and each month got worse and worse and worse,” says Scott. “Through the next couple of years, it was really dismal, with a lot of red ink on the books.”
The silver lining, he says, is that difficult times can provide the opportunity to make not-so-easy changes. “In good times, it can be easy to say, well, things are good, why rock the boat with changes. Well, back then, the boat was already being rocked, big time. Lumber was selling for $145 a thousand, and veneer markets were no different.”
Scott and Rebecca, and senior management, recognized that the company had to make a lot of changes if they were going to get through the Great Recession. “We had a lot of great core assets,” explains Scott. “We had our forestry assets, our plant operations with lots of modern equipment, a good location with access to our markets—and we had, and have, a lot of dedicated people.
“The effort became how to bring all those assets together in a new way. We came up with what we thought was a way out.”
A key change is that they took a team approach to the business and the culture of ATCO. Some companies in the forest industry have tried to incorporate a team approach to their business; but being a mature industry, forest companies tend to follow the “we’ve always done it this way, why change now” philosophy.
“Rebecca and I come from completely different backgrounds than the forest industry, though,” Scott says. “We looked at how we had a lot of good people and how we could organize them, and bring everyone together in a way so that we could unlock the potential of all of the assets of ATCO.”
They proceeded to, as Scott says, “bring everyone into the tent”, from senior management to the plant floor, to the people in the woods.
“We shared information with them on the realities of the business at the time, and encouraged them to come along with us.” It was very much an approach of Scott and Rebecca investing everything they had in the company, and employees investing their time and careers in ATCO. “We wanted to figure things out together.”
Together, they were able to survive the downturn, doing things they had not done before. For example, to take advantage of good chip markets, they got into whole log chipping. During the downturn, sawmills, the source of residual wood, were shutting down right and left, but pulp mills still needed chips—and ATCO had chipping equipment.
“We thought, what if we brought logs in and reconfigured some operations. We ended up putting a one-year chipping program together, and taking employees who had been laid off from our veneer shifts, and hiring them for the chipping operation—it was different, but it was do-able. There have been other similar projects, too.”
The company is now thriving, thanks to this business approach and some very healthy wood products markets in the U.S. “That team effort continues today—as a result, it has generated a lot of good ideas about operational changes at ATCO.”
All of the changes, and the change in culture, positioned the company well going into a very significant improvement in the wood products market, including for veneer.
“The benefits of that in terms of added value, reduced costs and everyone being really conscientious about the business model back then has delivered huge benefits for ATCO now,” says Scott. “That culture change saw us making operational changes, and seeing the benefits from those changes.”
One result is that they’ve been able to increase veneer production by a stunning 50 per cent over the last five years, on the same footprint, with pretty much the same equipment.
“The culture change at ATCO has transitioned very nicely from tough markets to good markets,” he says. “We make sure that we are spending dollars wisely, and most of the investments we’ve made have worked out really well.”
With the plant investments, the focus is on making changes that will improve productivity, quality and safety. They have a good safety record, but are not content to rest on that, and are consistently looking at ways to improve.
With equipment, they have made strategic smaller investments, says Scott. “There have been no wholesale replacements of large lines. But we work closely with equipment suppliers to understand what new things they are working on.”
This means working with veneer equipment and associated suppliers such as Ventek (which is now part of USNR), Elite Automation, and Raute.
On the equipment side, their cutoff saw is home-made, and the mill is equipped with a VK Kodiak debarker. They have a Bruks drum chipper that screens through a BM&M screen, and a Universal hog. The plant is equipped with an AJ Equipment dust cyclone (multiclone).
The equipment line-up also includes a Raute charger, a Premier Gear lathe, Ventek scanner, Raute clipper, all with controls by Elite Automation. They also have a Raute stacker, with controls by Raute.
The plant includes an Acrowood veneer chipper that screens through a BM&M screen, and a REFORM Knife Grinder.
And, Scott adds, they are not afraid to be early adopters of technology or equipment. If it means being the first or second to implement it, they’re fine with that. “We may not be on the leading edge, but we’re not far behind,” he says.
It’s critical, Scott added, to extract the most value and make the most use out of each part of every log that comes in the yard.
He notes they have done a good deal of electronic upgrades. “On our lathe, we’ve replaced every computer, motor, and electronic device.” They’ve implemented new control systems from Elite Automation to make use of the latest technologies. A Ventek Multi-Point Diverter system has been installed to better sort product.
A recent significant addition was the installation of a new dust collection system, from Corbilt Welding and Fabrication, and Wrangler Engineering. The Corbilt Group of Companies includes Corbilt Welding and Fabrication Ltd., AJ Equipment Installations Ltd., and Wrangler Engineering Ltd. The Enderby, B.C.-based firm is a full service design, fabrication and installation company. Wrangler Engineering Ltd’s primary focus areas includes the design of dust solutions for existing equipment, including low pressure collection systems in addition to design solutions for existing OEM equipment.
Besides the new equipment, there is also an increased focus on quality at the company, and ATCO now has a Quality Assurance Manager.
“We’ve also done a lot of work looking at the various impact of variables on the quality of veneer and the production process, such as different knives, different lathe settings, and how that impacts quality,” says Scott. “We want to deliver the quality characteristics that are important to our customers.”
The upgrades also extend to mobile equipment in the yard, with an investment in a new Cat 980M wheel loader, from Cat dealer Finning, and they also have a John Deere 624, from Brandt Tractor, to feed the veneer plant. They have a number of Cat forklifts around the plant.
A recent new initiative for ATCO involves setting up a landscape division, to sell products such as landscape ties from the small cores leftover after peeling, and packaged bark. To achieve the latter, they have acquired screen equipment from overseas manufacturers, to process bark that is ground from the Universal Hog.
It is, says Scott, a matter of figuring out how they could fit into that market. ATCO is not a giant company, but they are also not a small portable mill operation that might not have enough material to get into the landscape market in a reasonable way. “We are in between and we have a fair amount of material.” It would also help to diversify their use of hog material, which is presently transported and used to generate power at an Avista plant across the U.S./Canada border. “We want to add more value, and it just makes good business sense to explore the landscape market.”
Though it is the driving force, and the major component of the company, the veneer manufacturing plant is one of four parts of ATCO, the others being forest land ownership, forest management, and a short-line railway (see sidebar story on the railway on page 44).
The company owns 25,000 acres of forestlands, and also has two Crown forest licences. This part of B.C. has a fair amount of private land, with railway land grants dating back to the 1800s. ATCO also manages other private forest landholdings. It is, in fact, one of the largest forestry management companies in the West Kootenays, with licenses and contracts to sustainably manage over 350,000 acres.
“We see the forest management side as an opportunity to grow and take our 60 years of forest management expertise and provide that to other land owners,” says Scott.
Depending on the client and their needs, ATCO can provide a full roster of forest management services, or specific services such as planning and silviculture.
The forest management work the company does for other landholders helps them to achieve some economies of scale with that operation. The company takes pride in its forest management history, and that it has built up its forest management group. All of their foresters and forestry technicians are in-house. “The only things we contract out are the harvesting, log hauling and tree planting—we do everything else,” says Scott. “And there is 60 years of knowledge and experience we can bring to the table.”
Since ATCO has solid relationships with other mills in the region, they can also effectively market the timber from these other landholdings, in addition to their own.
Log sales, and trading, is really second nature to the industry in this part of the province, due to the unique nature of the resource, and the varied nature of the industry. The region is home to the Kootenay Mix Forest, a diverse forest of 13 different species, many of which can be present in a single hectare of land.
“We could have fir, spruce, cedar, larch, hemlock, balsam and deciduous, all within the same cut block,” says Scott. “It can be a challenge harvesting, because of all the different log sorts required. But it makes for a vibrant trading relationship in the region because every mill is specialized. A cedar log will go there, a sawlog will go someplace else, the high specialty timber goes to another operation, and and a peeler log will come to us.” ATCO produces veneer in four species: Douglas fir, larch, spruce and hemlock.
The end result is that the right log is more likely to end up at the right milling operation, so the best use is made of the timber resource.
Even though ATCO is a private land owner, Scott says the company is not necessarily an advocate of more private land ownership in B.C. “I think the Crown model has also worked well. It’s a public resource with a stumpage system that more or less reflects the market.”
Like many in the industry, though, he has concerns about the stability of the provincial timber harvesting base, the “Working Forest”.
“With it being a public resource, you get all the different competing users on the land base coming forward, recreational, conservation, industrial—and from our perspective, the working forest components of B.C. forests tends to get pushed to the bottom.
“It always seems like the forest industry is being asked to give up some more—and then some more, and then some more.
“We’ve seen an erosion in that timber landbase and that concerns me. Every acre you take out of that landbase is definitely going to impact jobs somewhere in the forest industry. There needs to be more recognition that the working forest of B.C. has an important place, and that competing values on the land can co-exist.” He noted that ATCO consults on a regular basis with recreational users, such as ski clubs, with both its private and Crown lands.
Though there may be landbase challenges ahead, Scott says they are very excited about the future, and ATCO’s opportunities. “The world is really waking up to the benefits of using wood,” he said. He noted that some of their customers are moving beyond producing just sheathing plywood to engineered wood that can suit specific applications. “One of our customers is developing Mass Plywood Panels—there are some exciting things going on that are going to increase the demand for veneer. It’s an exciting time for us and we’re really bullish on the future for veneer and veneer-based products.”
It may be one of the best kept secrets in the business: ATCO Wood Products has the only rail link between Vancouver and Winnipeg with a U.S. railroader.
For decades, the Nelson & Fort Sheppard short line running south to the border was owned by U.S.-based railroad company, BNSF. The rail line was spun off by BNSF in the late 1990s, and had been purchased by a local businessmen, and the line, and its maintenance, was not a top priority.
“So I approached him and said that if he was ever looking to get out of the rail business, to please let me know,” says ATCO CEO Scott Weatherford. “He showed up at our office the next morning, with a box of financials, asking me to make an offer.”
In a sense, ATCO ended up buying the eight-mile rail line by necessity. “We’ve always shipped our veneer using that rail line, to plywood mills in Washington and Oregon,” explained Scott. “It would be really difficult to operate our business without that rail link. It’s not cost effective to ship into the U.S. by truck, and I’m not even sure we’d be able to get all the trucks we’d need.
“We had no great aspirations to be railroad people, but it’s crucial to our business,” Scott added.
They have since made investments in modernizing the rail line, and have actually started marketing services to other companies in the industry.
“It’s a unique situation,” says Scott. “It’s the only place between Vancouver and Winnipeg where a rail link comes into Canada—we have the short line, and we can ship directly on to the BNSF network.” That’s a plus, since BNSF has the largest freight railroad network in North America.
ATCO has set up a rail reload, and they are now bringing in lumber and wood-related products from other companies, and shipping it on their line, to connect up with BNSF.
“We are looking to more fully utilize this rail asset that we have,” says Scott. “It’s similar to what we do with the mill: we want to do more with what we have, with a little investment here and a little investment there.” Ideally, they like to leverage the heck out of all their assets.
So what is it like to own your rail line, even a small one?
“It’s kind of fun most days,” says Scott. “But when something goes wrong, it really goes wrong, and it can be expensive to fix. It’s very capital intensive.”
But a bonus is the public train rides the company does twice a year for the community, with the passenger car that the rail line came with. It would also, says Scott, make a great backdrop for a movie. “I’m still waiting for Hollywood to discover
it, and give us a call,” he says, with a laugh.
On the Cover:
A new Sennebogen 830 M-T at the Cameron River Logistics operation in northern B.C. moves 16-foot CTL logs from truck to rail for the Dunkley sawmill. Watch for the next issue of Logging and Sawmilling Journal, and a feature story on how a Sennebogen 830 M-T log handler’s stacking ability has boosted yard capacity for Saskatchewan’s Edgewood Forest Products (Photo courtesy of Sennebogen).
Securing safer sawmills
Forest industry veteran—and safety advocate—Kerry Douglas has seen safety become a higher priority over the course of his 48-year career, with more focus on mill safety, especially in areas like dust containment.
B.C.’s Conifex Timber goes south…
B.C.-based Conifex Timber is doubling its production capacity with major sawmill investments in the U.S. South—including a significant upgrade to its El Dorado mill.
Capital investment delivers production boost
Ontario sawmiller Lavern Heideman & Sons has invested $17 million in its operations, and it has paid off big time, with an expected production boost of 60 per cent.
Idaho mill gets high tech makeover
The Idaho sawmill of Woodgrain Millwork is definitely on the upswing, thanks to a high tech makeover with equipment from suppliers, including HewSaw and Bosch Rexroth.
Going full tilt…
Tilt Contracting’s Russ Parsons has grown his operation, thanks to a strong focus on having logging equipment that delivers on B.C.’s steep slopes—and counts himself fortunate for having a solid crew, both at work and on the home front.
Upping veneer volume
Family-owned ATCO Wood Products has been able to double its production of veneer products over the last five years, with a series of smaller equipment upgrades and changes—and a team approach at the company.
Sawmilling is sometimes like a box of chocolates…
Operating a small sawmill for Saskatchewan’s Vernon Heatwole can be like Forest Gump’s box of chocolates, in that he never knows what kind of unusual lumber order the next phone call will bring.
Keeping their options open—even with logging equipment
Maintaining their independence and keeping their options open—including being open to buying and selling equipment at any time—has paid off for veteran logging operation D & L Rehn Contracting.
Mountains of wood residue
A hog fuel working group that had sought workable solutions to the problems presented by the growing volumes of wood residues on the B.C. Coast has found there are no easy solutions to dealing with these mini-mountains of residual wood.
Saskatchewan sawmiller Dean Christiansen has taken a leap forward in equipment with an upgrade to a Wood-Mizer LT70 electric band sawmill, which has allowed him to double his production potential.
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.