June 2003 - Mill Upgrades
Firmer footing for Elk Falls
TimberWest’s Elk Falls sawmill is now on a firmer operational footing following some mill changes and a $10-million upgrade.
By Paul MacDonald
When you’ve spent a couple of decades in the sawmilling industry, you can develop a pretty good sense of what needs to be done with a mill. That was pretty much the situation when Ed Vervynck visited TimberWest Forest Corporation’s Elk Falls sawmill in BC in the spring of 2002. “I came in, took a quick look around the mill and within 10 minutes I knew that the place could go,” says Vervynck, who was acting as a consultant to TimberWest at the time. Elk Falls had certainly been operating then, but at the time it was going into the red financially.
These days, Vervynck, who was subsequently hired as general manager of the mill, now oversees a re-worked operation that is solidly in the black. Key to this turnaround has been a change in what is produced, how it is produced and the solid support of employees. Senior management at TimberWest has been so impressed with the changes that they approved $10 million of capital improvements for the mill, located in Campbell River on Vancouver Island. Just as you can say of an older house that needs some renovations that it has “good bones,” the Elk Falls operation did indeed seem to possess that quality. There had been a major $20-million upgrade—including a re-worked log merchandising area and the installation of a double length infeed chip ‘n saw unit—in 1995. But the mill was in dire need of a solid overall maintenance upgrade.
Since the mill was not profitable in recent years, steps were taken to trim costs, and maintenance is where some of that cost cutting was done. Rather than go ahead with large scale, and expensive, maintenance programs, the mill applied resourceful, but temporary, solutions to equipment problems. This approach can seem to be prudent, and sometimes it is the only option due to a lack of money. But it eventually comes around to, putting it mildly, bite you in the butt. “The people here had put their heart and soul into keeping the mill going, but at some point investments, rather than repairs, have to be made,” says Vervynck. He has been able to take a different approach. “At any operation I worked at we always tried to make sure our mill was in top shape,” he says. “It makes sense to invest in a solid maintenance program even in the bad times because when the good times arrive you just want to be able to run flat out.”
The situation Vervynck and his new team—mill manager Terry Hamilton, director of marketing and transportation John Burch and financial head Don Quan—met with was an interesting one. The equipment, workers and the timber all seemed to be there at Elk Falls, but some major changes were required in how they were breaking down the log and how pieces were handled. They have since overseen a number of mill improvements over the last year, reports Vervynck. “When we first came in, the mill had problems with consistent lumber flows, and were having to chip recoverable lumber and lose recovery. It was far too much of a chipping operation and far too little of a lumber operation.”
With the initial log breakdown, they couldn’t produce sideboards because there were too many bottlenecks in the mill. “One of the first things we had to do was tweak the back-end,” says Terry Hamilton. “Some people might think the main chip ‘n saw line was the problem, but really the bottleneck was at the back end. “We couldn’t get the lumber out of the mill at the back end. So other than getting recovery up, there was initially no sense speeding up the production at the chip ‘n saw until we could improve and increase lumber flows.” There were no big expenditures of capital at the back end to improve flow. Lumber transfers were modified, creating smooth flows and removing bottlenecks. “There were a lot of feed and speed issues,” says Hamilton. “There were too many bottlenecks.”
Some immediate improvements initiated were the installation of a hurry-up transfer section added to the top of the unscrambler in the pre-grade area to separate boards and mechanical improvements to the main chipper conveyor, increasing operational uptime, in addition to other troubleshooting projects. “I call it tweaking, but it smooths out flow,” says Hamilton. “You have to get it smooth—it can’t be stop/go, stop/go.” The sawmill manager and supervisor’s offices had been in the beautiful, high-ceilinged main office just off the sawmill site. But to take on these and other tasks in a hands-on way, the new management team decided that these offices should be moved directly into the mill.
Hamilton’s office is pretty much action central for what’s happening in the mill. He can see what’s going on in some 16 areas of the mill, with four video monitors, each split into four views. “When I’m in my office, I can see everything,” he says. But he is more likely to be tracked down on his cell phone, rather than in his office, because of the time he spends out in the mill. “The philosophy is that everyone who is involved with the mill is located in the mill,” Vervynck says. “When there’s a problem in the mill, everyone is handy to resolve and view the problem. The first one on the scene may be the manager.” Sometimes it can be difficult to win employees over when a new management team is introduced to a sawmill environment, but such was not the case at Elk Falls.
There was a conscious effort to achieve involvement from everyone on the mill floor. “We wanted things to go a certain way at the mill,” explains Vervynck. “But we wanted, and needed, to work with everybody. We could not have turned things around without the cooperation of both staff and hourly employees.” The $10-million investment in the upgrade (see sidebar story for equipment details) spoke volumes about TimberWest’s commitment to the mill. And the fact that the operation is scheduled to go to a third shift this summer also reinforces the ambitious goals new management has for the operation. In recent years, Elk Falls, perhaps more so than some other coastal mills, has seen its share of temporary closures due to high timber costs and tough markets. “We let the employees know that, as long as we were doing well, we would not shut down,” says Vervynck. “And we showed that the company was willing to invest money and spend it on well-thought-out improvements that will contribute directly to the bottom line.” Key to having the bottom line in the black has been an overall change in the cutting program at Elk Falls. The adjustments have sometimes been subtle, however.
Vervynck gives an example: “Before, we would have a 20-foot block and be cutting for wane-free 10-foot 2x4s. “The recovery loss you sustain to get that wane-free large piece is significant, only to take it and cut it in half at the trimmer to get the two pieces. We now shoot for 10-foot boards right from the start, and with 10-foot blocks, and gain on recovery. We’ve increased overall recovery here at the mill by 10 per cent, which is a big number.” The mill requires 800,000 cubic metres of timber on an annual basis, some of which comes from TimberWest’s private and Crown lands, with the balance bought on the open market.
Parent company TimberWest is primarily in the business of supplying logs to the open market, whether that market is in Canada, the United States or elsewhere. With more than 800,000 acres of land, it is the largest private forest landowner in Western Canada and harvests 2.3 million cubic metres off this land annually. It also holds two Tree Farm Licences and other Crown tenures, harvesting 1.2 million cubic metres off that land every year. The sawmill does not receive any preferential treatment from its parent company in terms of log supply. “We work with the logs that are allocated to us,” says Hamilton. “We get some pretty good logs, but we also get some pretty small logs.”
And essentially, Elk Falls is paying international open market prices for its logs. This puts it in a good position, in terms of where the BC industry is going. The provincial government has already said it intends to move the industry towards more open market prices. “We are ahead of the curve, really,” says Vervynck. “TimberWest has made the statement that Elk Falls will be paying international prices for its logs.” Though the mill can handle up to a 28-inch diameter log, it works ideally with between an 11- and 12-inch log. “We’re basically a one-line dimension mill,” explains Hamilton. “We’re pretty successful at cutting Genban, basically Japanese dimension product.” But with the lacklustre markets there, the mill’s director of marketing, John Burch, has been overseeing sales into other markets. Appropriately enough—since Japan is still a major market—the mill now seems to have moved into a “Kaizen” operations mode, following a flurry of improvements. Kaizen is the Japanese term for constant improvement. “You can always find something to improve, no matter what sawmill you are at,” says Vervynck. “It’s an ongoing process.”
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