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Weathering the timber turmoil

Thunder Bay’s Marcri Logging—a major player in northwestern Ontario logging—has downsized, and is now focusing more than ever on best utilizing its logging equipment as it holds on for better times in the industry.

By Tony Kryzanowski

Marcri Logging—Thunder Bay, Ontario’s largest logger—has downsized to adjust to the reality of Canada’s struggling forest sector, but the million dollar question for the company’s owner is whether that will be enough.

The company’s annual cut has been reduced from one million cubic metres to 600,000 cubic metres, resulting in staff layoffs and the sale of some of the company’s forestry equipment. The company had owned five Peterson Pacific portable chippers. Now it is down to two chippers.

“The turmoil in the forest industry has had a tremendous impact on our business,” says company owner Mario Letourneau.

But Letourneau is not so downhearted that he is prepared to throw in the towel just yet. Having been in the forest industry since the early 1970s, he realizes that the industry has seen its fair share of upheaval. It’s the uncertainty that is his biggest challenge at the present time.

“We’re still struggling with what is going to happen next,” he says. “As far as the future, that’s a good question. I ask myself that every morning. I wonder what is going to happen tomorrow and whether I want to stay in. I’d like to keep going because I have a son who is very interested in the business; he loves it, and he works very hard. At the end of the day though, it’s a matter of economics and finances.”

Letourneau’s concerns are well founded considering the number of recent mill closures.

Marcri Logging owner Mario Letourneau manages one of the largest logging companies working in the Thunder Bay area.

Needless to say, forestry is big business in northwestern Ontario, stretching along the TransCanada Highway from Terrace Bay to Fort Frances. The fallout of the area’s recent forest industry challenges is visible in just about every community along this corridor. While mining is contributing to the economy of area towns like Ignace, many residents are still smarting from the sudden closure of the local sawmill, which Bowater closed indefinitely after investing $18 million in a modernization and expansion of the mill in 2000. The layoff of 29 direct employees and 20 contractors a week before Christmas in 2006 came as a complete surprise, according to the town’s mayor.

Even when facilities are closed and valued employees are offered forestry jobs in neighbouring communities, it often means commuting over an hour to work. This creates a lot of extra stress and expense for people who own properties in smaller communities dependent on the forest industry and who are unable to sell those properties at a reasonable price so they can move closer to work; there’s very little to draw people to resource towns like Ignace.

Letourneau knows exactly how they feel since he has offices in both Thunder Bay and Ignace, and at one time conducted a significant amount of his logging and chipping in that area.

Marcri Logging manages both a round wood stump-to-mill operation as well as a portable chipping operation. Depending on the fibre mix in each cutblock, both operations may work side by side or one after the other. Bowater was one of the first Canadian companies to switch to in-the-woods chipping and its model has been adopted and modified by other companies such as Alberta-based pulp producer, Daishowa-Marubeni Inc.

Marcri Logging operates nine John Deere 753 and 853 feller bunchers equipped with Gilbert heads. Letourneau says John Deere’s purchase of the Timberjack line was a positive move because the company has improved on what was already proven technology that was well-respected by loggers. Furthermore, the tilting and rotation features on the Gilbert head make his bunchers extremely versatile.

There are 14 John Deere skidders in the Marcri Logging fleet, and they are all either model 648 or 748 units. Letourneau believes in standardizing equipment brands as much as possible to minimize the amount of parts that the company needs to keep in inventory. Four of the company’s five delimbers are John Deere and one is a Caterpillar. They are all equipped with Denharco 4100 delimbers.

“We went with Denharco delimbers because of the telescopic boom,” says Letourneau. “For our part of the world, we don’t have huge wood, so I think the Denharco is the way to go. It’s proven to be a pretty good machine.”

For loading round wood, Marcri Logging operates two Cat 325 CFM carriers with Rotobec attachments.

The company contracts a portion of its chip hauling and all of its round wood hauling. It uses Western Star trucks for its own chip trucks. The haul distance for either round wood or chips is up to 300 kilometres from Thunder Bay.

It’s not just the drop in US housing starts that is the main culprit contributing to Letourneau’s stress these days. For Marcri Logging, it is a lot of little things. For example, contractors working in that area of Ontario are operating under the “marten guidelines,” set up to maintain bird habitat. But following the guidelines means that they are only allowed to harvest a certain number of hectares at a time. The result is that only a portion of a cutblock is harvested in one year. A company may be required to come back the following year just to harvest 100 metres of wood left over from the previous year.

“We used to have huge blocks of wood—we’d be in an area for two to three months,” says Letourneau. “Now, we have two floats every day just moving equipment. About 20 per cent of our equipment is on a float doing nothing because the blocks are so small or there are little pieces here and there. It’s very, very expensive.”

Letourneau’s description of day-to-day operations also helps to explain why logging is so much more expensive in Eastern Canada compared to Western Canada, where loggers can typically expect to stay put in a particular area for several months at a time before having to move equipment and camps. The strategy to control the mountain pine beetle has changed that situation somewhat, as loggers are being asked to harvest smaller blocks of trees already infested or susceptible to a beetle attack.

There are 14 John Deere skidders in the Marcri Logging fleet, and they are all either model 648 or 748 units. Company owner Mario Letourneau believes in standardizing equipment brands as much as possible to minimize the amount of parts that the company needs to keep in inventory.

In Marcri Logging’s case, the high cost of labour is also having an impact on the company’s bottom line. Letourneau left the construction industry in Connecticut in 1981 to take a logging contract in Thunder Bay, at a time when all logging contractors in the area used unionized labour and many forestry companies ran their own camps. Over time, Marcri Logging was the only logging contractor left and he was asked to take on all the protected employees and to run all the logging operations for Bowater in both Thunder Bay and Ignace. It worked well for many years, but over time, the requirement to use more expensive unionized labour has made it a lot harder for Letourneau to compete with contractors using non-unionized workers. For example, he must pay his employees a set hourly wage whereas other contractors are compensated by the cubic metre, which allows them to set their own wage for employees.

The number of protected employees has dropped from about 1,000 to only 400, meaning that eventually changes may be required if the number of protected employees continues to drop.

For now, LeTourneau is just hoping that the business will continue to operate so that he can provide an opportunity for his son to stay in logging.