Two BC entrepreneurs have set up a mediumsized sawmilling operation on Vancouver Island and are finding ready marketsfrom Belgium to Israelfor the timbers they are producing.
By Paul MacDonald
When it comes to the production of dimension lumber in Canada, it’s hardif not impossibleto beat the major forest companies at this game. Their large, modern sawmills are extremely efficient, easily turning out millions of board feet of product every week.
Knowing that, two Vancouver Island entrepreneurs decided to strike off in a different direction from commodity products like dimension lumber and also based their production on wood that is in plentiful supply on the BC Coastsecond growth hemlock.
“The toughest part of doing business for any sawmill operation on Vancouver Island is getting fibre,” says George Donnelly, who started up Cowichan Lake Timber Ltd with business partner Fred Neuffer. “And we knew that our mill was going to be eating up a couple of truckloads of timber a day, so we focused on a fibre, hemlock, that a lot of the other mills did not want.”
They also knew that they would not be able to keep a conventional sawmill, producing dimension lumber, “fibred up.” “We would never find enough fibre and even if we could, we would be competing with the big sawmills, and you may as well forget about that,” says Donnelly.
Focusing on specialty products has proven to be a smart move. Mid-sized Cowichan Lake Timber is now producing timbers up to 16 inches by 16 inches that are shipped all over the world, from Belgium to Israel. A large part of the business is done through brokers, though the company itself handles about 30 per cent of the mill’s sales.
The seeds for the start-up of Cowichan Lake Timber actually lie in the closing of another mill operation. In 2001, forest company TimberWest made the decision to close down its sawmill in the community of Youbou on central Vancouver Island.
George Donnelly was working as a product supply manager at the Youbou mill, and after its closing moved on to a Weyerhaeuser mill operation. But it was not long before he started thinking about starting up a sawmilling operation. The Youbou closure had also left Fred Neuffer, who had been running an addedvalue operation, Karlite Manufacturing, using wood from the Youbou sawmill, pondering the future. The two got together and started Cowichan Lake Timber. “We talked about it and in the end, we thought, what the heck, let’s do it,” says Neuffer. The two then proceeded to put together a very solid business plan, to obtain financing. And then they worked on obtaining timber.
In the first few years of operation Cowichan Lake Timber was started in 2002the mill was getting 90 per cent of its wood from TimberWest. But as TimberWest sold more of its timber offshore, the company approached the Cowichan Lake Community Forest Cooperative for timber. “They have a forest licence in the area, and we approached them to see if they could help keep the mill fibred up,” says Donnelly. The logging is done in the community forest by Teal-Jones Group and Island Pacific Logging.
“The community forest has been fantastic, they’ve been a great partner for us in supplying timber,” says Donnelly. “I think there needs to be more community forests around. They sure help promote small business in the forest industry.” Donnelly is on the board of the community foresta good fit, considering his sawmilling expertise. A number of other individuals from the area, with diverse interests, also sit on the board. Cowichan Lake Timber, as seen with the closure of the Youbou mill, is bucking the trend on the BC Coast. In recent years, there have been a number of mill closures as companies grapple with high log costs and low returns on capital. The Cowichan Lake mill equipment is almost a living, and working, history of coastal mills.
“With our operation, I can probably point out a piece of equipment that we’ve been able to pick up from just about every mill on the coast that has been shut down,” says Neuffer.
The mill has structural steel, infeed chains and a log deck from Youbou. And while it may not date from the Flintstones era, their debarker originally came from mill facilities in Ocean Falls, BC, that were shut down 30 years ago. It’s dubbed “The Bedrock Barker.” It had been warehoused for most of that time.
They essentially started with an infeed deck and an outfeed deck on the sawmill. “That was it. We’ve just added to it from there. We’ve usually done something every year,” says Neuffer.
Buying used equipment has been a great way to go, says Neuffer. “For us, it’s really been the only way to go. If we had to buy all this equipment new, we could not justify going into the businessthe financial returns would simply not be there with that kind of huge investment.” But in the midst of all this used iron was one brand spanking new piece of equipment: a Select double-cut, six-inch band sawmill. “It’s worked real well for us,” says Neuffer. “We knew from the start that we weren’t going to be able to buy a really big piece of mill equipmentit was just too costly. And even if we did that, we did not have the timber to make the investment worthwhile.
“But we wanted something that could get us solid production numbers. So we decided on a Select, which we call a small sawmill on steroids. We haven’t regretted buying it for even a second.” The Select, and associated equipment, have worked well at producing the mainstay of Cowichan Lake Timber: timbers. The closure of TimberWest’s Youbou mill had actually left a gap in the market. One of the big markets for the mill was large timbers, up to 35 feet long. And that is a gap that Cowichan Lake Timber is now filling nicely.
Neuffer recalls that production was modest when they first started upin the first six months, they only cut 300,000 board feet.
“We thought that was pretty good. But this year, if things work out well, we should do just over four million board feet,” says Neuffer. They have added equipment to the operation, putting in a small Valley Machine Works edger, a timber deck and are looking to put in a larger edger in the near future.
Donnelly, with his quality control background, makes sure all the product going out the mill gate meets customer specs. “We’ve been very careful about quality control.”
It may sound basic, but they focus on doing what they say they are going to do, and delivering the product they say they are going to deliver to the customerand doing it on time.
“Quality and appearance is everythingwe’ve never had a claim against one of our shipments. We want to make sure there is consistency, so when a customer phones us with an order, they know they will get exactly what they are asking for. And with the brokers we are dealing with, the last thing they want is a customer phoning them up, questioning them about the delivery time or the quality of the wood.”
Some of their product ends up in the Japanese market, and Donnelly notes that they have high standards. “The Japanese demand quality, and they get it.” Much of their business has developed through what could be termed the wood products grapevine. They have large, regular customers that they sell to all the time, such as Taiga Building Products A lot of product, 30-foot long 12x12s, for example, goes into the Alberta oil patch, for drill mats. Their production ranges from 6x6 up to 12x12s, the latter representing about half their business. “That’s probably one of the higher priced timbers we sell. There’s really nothing else you could break logs down into and get more value. When you’re talking second growth hemlock, it’s a good fit,” says Donnelly.
“We don’t do much over 12x12,” he adds. “That would be a special order because it’s tough to find a log that big.” That said, they did some 16x16 timbers for a recent dock construction project in Newfoundland.
Filling such “one-off” orders can be done with relative ease, says Donnelly. “That’s one of the things we can do that the big mills can’tthe brokers will get small orders from builders, they want five of this, seven of that, and we can take those orders and fill them without costing a lot of production time or cutting the wrong grade.
“You don’t want to be wasting a log to cut just one 30-foot, 2x10 piece. We manage the timber to make sure the right log is going into the right order. We can get that extra value, which the big mills can’t do. They are production driven.” With Donnelly’s mill background, Cowichan Lake Timber is just as scrupulous in ensuring they are getting recovery, and returns. “At the Youbou mill, we tracked everything, and we were very rigorous in making sure we got the returns. And we’ve continued to do that here.”
Taking care of the financial and production details, has obviously paid off. Five years on, Cowichan Lake Timber continues to do well. The partnership between Donnelly and Neuffer has worked out very well. Neuffer, with his background as a welder and fabricator, is extremely adept at keeping their mill equipment going, and adding to it, as required. Donnelly takes care of buying the logs, and production. “It’s really a good fit,” says Donnelly.