April 2005 - The Logging and Sawmilling Journal
The sawmill operation at McDonald Ranch and Lumber in BC has weathered some tough times, but has been ably overseen by industry veteran Doug McDonald, who—at 84—still goes in to work every day.
By Paul MacDonald
“How much do you need? Is that S2S? When do you need it by? That won’t be a problem. We’ll have it ready for you.”
So goes the conversation on one end of the line at McDonald Ranch and Lumber, as Doug McDonald takes down the details of an order from a local customer. Not much different from the sales patter that goes on at medium-sized mills all across Canada—except that McDonald, who is now 84, has been doing this for more than 50 years. And he shows no sign of stopping.
Retirement and golf are not, as the saying goes, in his vocabulary. “I don’t see much point in chasing a ball around,” he says. “Besides, I still enjoy the business. It keeps me active and keeps me thinking.”
These days, Doug works with son Glenn on the lumber side of McDonald Ranch and Lumber, an operation in the East Kootenays of British Columbia. The ranch side of the operation is run by Doug’s younger brother, Andy, who is only 74, and his son, Cam. “Andy is the cowboy in the family and I’m the sawmiller.”
Over his five decades plus in the business, McDonald has seen the sawmill/planer operation grow from a small offshoot of the ranching business, to a business on its own. “We started out with just a circular headrig and edger and as time went by, we’ve upgraded the equipment,” he says.
These days, the equipment line-up includes two debarkers, a Morbark rosserhead and a Bradson ring, a Morbark double circular head rig, Mainland edger and a Wood-Mizer quad head thin kerf band saw. They can adjust the band saw to cut anywhere from one inch up to 12 inches. “It’s quite versatile,” says Doug.
Versatility is key to moving wood at McDonald Lumber. Using local fir, larch, ponderosa pine, SPF and western red cedar, they produce boards, decking, dimension lumber, studs, railways ties and large timbers for residential framing.
And all of the fibre gets used. Bark goes to a bark plant in Elko, BC, sawdust goes to a pellet plant in Eureka, Montana, and the chips stay on this side of the line, going to Tembec’s Skookumchuck pulp mill.
McDonald Lumber does a fair bit of business with American customers. The mill is on Highway 93 and is literally only minutes away from the border leading to Montana, and the growing communities in the northern part of the state. It also does a lot of regional business in BC, and more may be on the way. There is a lot of talk in this part of the province about tapping the extensive coal fields for natural gas, which could get the economies—and housing starts—happening in nearby communities such as Fernie, and Cranbrook. More local housing starts and general construction would only be good news for McDonald Lumber.
Part of the timber used at the McDonald mill comes from the ranch side of the operation. They have 2,000 acres that—in addition to supplying them with wood—is used for pasture land for their 400-head cow/calf operation.
Historically, having a sawmill and ranch operation has worked out pretty well for the McDonald family. For the longest time, there was a balance there—when lumber was down, the cattle side tended to be up, and vice-versa.
“Cattle and lumber both work in cycles,” says Doug. “We’ve had some pretty good years.” But with low lumber prices over the last few years, and the crisis over BSE in the beef industry, it’s been tough. “It’s hard when both of them are down at the same time.”
Interestingly, there are actually few synergies between the two businesses—sawmilling and ranching—beyond sharing a common land base. There is some sharing of equipment; the sawmill forklifts are also used to move hay bales to the sheds, but that’s about it.
Since the ranch provides only a portion of the timber the mill requires, McDonald Lumber has to go outside for additional timber. They now have about 500,000 board feet of quota that was acquired over the years. Since the mill is turning out anywhere from 1.5 to 2 million board feet of lumber annually, on a single-shift basis, they also bid on timber sales, and there is a small amount of private timber available.
The challenge lies sometimes in getting extra timber. On Crown land, there has been a great deal of environmental pressure for set-asides in the nearby Rocky Mountain trench. “They want to save the larger trees, so we are left with the smaller wood,” says Doug. “Things seem to have gone 180 degrees over the years. At one time, we had to work exclusively in the big wood—we’d get fined for cutting anything under 14 inches. Now, we’d get fined for cutting the larger trees.
“It doesn’t make a lot of sense since the old growth trees there get pretty shaky once they reach a certain size, and they don’t stay standing for long after that.”
With their own timber, and successful bids on timber sales, the harvesting is turned over to logging contractors. McDonald Lumber is not doing enough harvesting to justify having their own equipment—their preference, anyway, is to focus on the sawmilling. “We give the contractors a set price, and it’s their decision on how to harvest it. They might use feller bunchers from time to time, but most of it is cut and skid,” says Doug.
The one saving grace the sawmill operation has these days comes from a strategic move Doug made almost 20 years ago: in the early 1980s, he decided to build a small hydro-electric plant across nearby Phillips Creek, to supply power to the mill.
McDonald Ranch and Lumber has actually had hydro power since the 1920s, when Doug’s father built a small hydro operation to run their then-small sawmill and the farm. The mill later received power, which was supplemented by diesel power. But in the 1980s, Doug looked at what then appeared to be very high energy prices, and decided there had to be a better way. He started to do some planning, and approached government agencies for funding. He was turned down. At one point, a major Vancouver engineering consultant said the cost of the project would be $1 million—with the consultant’s fees representing $80,000 of that figure.
Undaunted, and not believing that figure, McDonald moved ahead. The dam was constructed in 1982 and they purchased a used 750 KW/225 RPM, 2300 volt General Electric generator. Along the way, they received some important direction and equipment from a company in the region, Thomson and Howe Energy Systems, of Kimberley, BC, which specializes in small hydro control equipment.
The project was temporarily stalled due to poor cattle and lumber prices, but in the spring of 1984, the powerhouse was completed, sub-stations built and the electrical connections made. The sawmill was electrified in May, followed by the planer. The total cost: a bit more than what that consultant had quoted for his fees alone—about $100,000.
At one time, the plant, dubbed “Mac Hydro,” was able to meet all the needs of the mill year-round, but the operation has since grown and now requires more power. They have installed and tied in a 240kW diesel electric that is used in the winter when water flows on the creek are down, reducing power generation. “That has been really key to our sawmill operation, and one of the reasons we’ve been able to survive in the last 10 years,” says Doug.
Survive and even get into some new markets. Doug notes they now produce paneling with their planing operation, and some flooring. “We could do a lot more flooring,” he says. They’ve given some thought to setting up a separate operation just to do flooring. They even have the dry kiln, yet to be installed, to dry the product. “But it takes a lot of capital,” says Doug. “Even if you have all the equipment, it takes money to pull all the pieces together.”
As a mid-sized operator, Doug has some advice for would-be sawmillers: keep it small or go really big. “A good way to go for someone wanting to start out would be one of those portable sawmills,” he says.
Mid-sized operations like McDonald Lumber, and large sawmills, face the onerous tasks of having to deal with government bodies and quasi-government bodies, like the WCB. “It takes a lot of time and it’s a lot of paperwork.” Budding sawmillers have a choice, he says. They can shoot to be a reasonable size so they can achieve some economies of scale, and make it worthwhile dealing with all the government paperwork. Or they can keep things simple, and just go the portable sawmilling route.
These days, Doug has passed on a good deal of the sawmill operation to son, Glenn. “At my age, it’s pretty much up to the next generation to make the decisions on what to do with the company. But if I were 10 years younger, I’d try to modernize it more.”
In recent years, the US countervail on Canadian lumber has effectively drained away money from sawmills small and large. That revenue would have certainly come in handy—and may still be available if it is refunded to Canadian producers—to do some capital upgrades at these mills.
There seemed to be some light at the end of the tunnel this past summer, at least on the lumber side. Lumber prices were up and decisions on the countervail continued to be made in Canada’s favour. And should a softwood deal be in the offing, sawmill upgrades at operations of all sizes, including McDonald Lumber, may become more the rule than the exception.
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