Alberta’s Sundance Forest Industries has recently invested $11 million to reduce its input costs andin a province with a labour crunchto further automate its operation.
By Tony Kryzanowski
Several recent capital investments are paying off on a couple of fronts for Alberta’s Sundance Forest Industries. The company has invested $11 million to reduce its consumption of natural gas and to further automate its value adding processes within the SunPlus Specialty Wood Products arm of the business, located west of Edson.
The company’s operations manager, Rod Goldie, says installation of the Wellons energy plant, which burns one-third of the wood residuals produced annually by the sawmill, will generate annual savings of $2 million to $ million in reduced natural gas consumption. Heat from the energy plant is used for the company’s dry kilns as well as to heat its buildings. This project cost $6.5 million and was completed in October 2005. Goldie adds that the company would eventually like to operate a full cogeneration plant using its wood residuals as the feedstock.
A further $4.2 million was spent in 2006 to purchase a Danish-built System TM Optikap-400 auto chop saw, a System TM Opti-Stack 000 stacking system and a Woodeye Cross Cut autograder. Like so many other Alberta companies, Goldie says Sundance is feeling the labour crunch and more automation means less manual labour.
“Our motivation with this investment was the optimization of staff and wood resources,” Goldie says. “To compete in the global market, you have to get more automated plus you have to get more from your fibre. It gives us more throughput of on-grade material and a better ability to meet the needs of niche markets.”
As sawmills go, Sundance Forest Industries is unique for many reasons. The sawmill is not a producer of traditional commodity products. “We are a hybrid mill,” says Goldie. “We are a sawmill that produces value-added products that we sell to all different markets throughout the world.”
All told, he says Sundance Forest Industries has produced about 2,000 different products from its nearly exclusive diet of lodgepole pine. This includes furniture grade wood, window and door framing, tongue and groove products, decking, siding and building components for the Asian market. More specifically, the company produces rough lumber in 25, 2, 40, and 6 millimetre thicknesses, which are often used as Japanese prefab housing components, furniture, or laminated interior and exterior furnishings. The company produces a wide variety of J-grade lumber aimed specifically for the Japanese market. In terms of tongue and groove products, Sundance produces a unique 2x6 log cabin profile. It has a tongue and groove that keeps the siding stable and secure.
The sawmill consumes about 600,000 cubic metres of wood annually to produce about 1 0 million board feet of lumber. “We try to stay away from the main commodity lumber products,” says Goldie. “Our customers tell us what they want.”
The company usually plans its production on contracts three to six months in advance, but also derives some of its income from what Goldie calls, “spot sales.” It manufactures 2x4 and 2x6 product from its lowest grade lumber.
Because the company is so strongly focused on value-added products, it logs year round and it is not uncommon to see only a week’s worth of log inventory in the yard to minimize fibre degradation. Goldie says this is definitely a constant challenge, as compared to many other commodity sawmills that harvest most of their wood in winter when the ground is frozen and stockpile it in the yard usually for several months.
Sundance Forest Industries does not like any mountain pine beetle infected wood because wood products manufactured from this wood fibre are not accepted in China or Japan, where the company markets many of its products. Goldie says these Asian customers will not accept blue-stained wood products mixed in with non-stained lumber. Although studies prove otherwise, they believe that beetle-killed wood does not have the same strength properties as non-beetle killed wood.
When asked how the growing presence of the beetle in Alberta will impact the sawmill, Goldie says beetle infected forestsso farare further north and have not had an impact on the sawmill’s fibre supply, although Sundance’s woodlands department has implemented a strategy to reduce the impact when the beetle moves south.
Sundance has achieved Sustainable Forestry Initiative (SFI) certification on its provincial Forest Management Area (FMA), which is not only a benefit to the environment but also important from a marketing standpoint, proving to its customers that it is practising sustainable forest management. The company also purchases a portion of its wood supply from private sources, even from other area forestry companies.
Logs that enter the sawmill are between 10 and 16 feet long. The sawmill operates two breakdown lines supplied and installed by Sweden’s Soderhamns, featuring a number of Vislanda edgers and chipping disc components, capable of processing logs between .5 inches and 20 inches. Logs are scanned with profile information gathered about every centimetre to calculate the maximum value recovery from each log.
“We produce 17 different sizes of lumber from our logs,” says Goldie. “Also, because we are a value-added mill, we try to keep our products as wane free as possible.”
Once edged, trimmed and stacked most of the green lumber is dried down to between 10 and 12 per cent moisture content, which is typical of furniture or laminate grade stock. Steam conditioning is used before and after drying to give it more stability.
Sundance Forest Industries has two buildings separate from its main sawmill where the lumber is constantly being visually graded, ripped, chopped, trimmed, moulded and fingerjointed to capture the maximum value from each stick of lumber. The Sundance yard is an amazing array of packaged wood products in a variety of dimensions. Most of their competition comes from value-added wood product manufacturers in Europe.
The overall manufacturing operation includes three quality control labs where the variety of products produced by the company undergoes a battery of tests to ensure that each product meets the exact specifications demanded by each customer.
In 1996, Sundance opened SunPlus Specialty Wood Products Ltd, which represents one of the two value-adding facilities on site. The 80,000 square foot SunPlus remanufacturing facility tends to handle the processing and packaging of smaller value-added wood products.
This facility produces about 110 million board feet of the businesses’ total output. Together, SunPlus and Sundance employ about 225 people.
Goldie says the new softwood lumber agreement with the United States has had a significant impact on Sundance Forest Industries because all of its lumber productsnot just commodity lumber are now subject to the calculation of duty for products exported to the US. “We have not shipped to some customers in the United States because neither we nor our customers can absorb the costs associated with the duty,” says Goldie.
The marketing of the company’s products is handled through its onsite sales and marketing department as well as Interex Forest Products in Vancouver, a marketing company owned by six of Western Canada’s forest products companies. These are Sundance, Ainsworth Engineered, Carrier Lumber, Dunkley Lumber, Millar-Western, and West Chilcotin.
There are many unique aspects to the Sundance operation, including how the sawmill got to be where it is today with the current owner. The mill’s history dates back to the beginning of the Great Depression in 19 1, when Edson area resident Arthur Corser and his brothers purchased a small sawmill at the junction of the Erith and Embarras Rivers, about 22 kilometres south of the present mill site.
The purpose of the sawmill was to cut lumber and railroad ties. The mill was moved to what was known as the Erith site where they set up a steam-powered sawmill. The sawmill was sold and incorporated as Erith Tie Co Ltd in 1949. It operated for 0 years, with the biggest change being the replacement of the steam plant with an electrically operated mill. A new sawmill site was purchased in 1978, overlooking the Sundance Valley, but construction was halted in 1979 due to unstable timber prices and timber availability.
Once a timber supply was secured, the dream of a new sawmill began to take shape almost a decade later when Erith Tie Co Ltd. was renamed Sundance Forest Industries. The remaining members of the Corser family involved in the business added three new partners. These were Mercurious Pacific from Sweden, Winstyle from Hong Kong and the China International Trust and Investment Corporation (CITIC) based in Mainland China. This helped to secure the financing for the current sawmill development.
In 1991, the Corser family and Mercurious Pacific sold their interests to the remaining partners, and in 1999, CITIC Canada became the sole shareholder. CITIC was established by the Chinese government in 1979 and is responsible for promoting the opening up of China to outside capital. It has expanded its mandate to include investment outside of China. It now owns 7 subsidiary financial institutions within and outside of China.