Taking it a step further
BC contractor Ted LeRoy decided to expand and set up logging operations in Costa Rica. When things didn’t work out with the client, he opted to take things one step further and set up the company’s own sawmill in the Central American country.
By Paul MacDonald
BC logging contractor Ted LeRoy says that throughout his more than 38 years in the forest industry, he’d never thought of setting up business on the sawmill side. Until two years ago, that is. “It’s really the last thing I’d thought I’d ever be doing,” says the Vancouver Island logger, who owns Ted LeRoy Trucking and harvests upwards of 500,000 cubic metres a year on the BC coast. “But we’re quite excited about it.” The multi-million dollar project he’s talking about involved setting up a sawmill thousands of kilometres away in the Central American country of Costa Rica.
The company, Fiberica S A, started operating on a one-shift basis this spring, turning out 100,000 board feet a shift of locally harvested wood Gmelina arborea for both local Costa Rican markets and export overseas. LeRoy’s interest in Costa Rica dates back to the early 1990s. Down there on holiday, he travelled around the country scouting for business opportunities. He heard that Stone Container, now part of the large multi-national Smurfit group, had planted 14,000 hectares of Gmelina, a fast-growing wood native to Asia, in Costa Rica.
Stone was looking for a couple of logging contractors to handle the 600,000 cubic metres of harvesting. “Stone was looking for fibre on the pulp and paper side back then,” LeRoy explains. “They were going to send chips back state-side to an Alabama plant.” Agreements were struck and LeRoy started doing some roadbuilding and harvesting for Stone. In 1998, Stone was taken over by Smurfit, and the decision was made to sell off the Costa Rica operation to local management. LeRoy carried on doing work for the now locally-owned company, which was undercapitalized. “We harvested for them for about 18 months,” he says.
They had to eventually withdraw their services, however, because of problems in getting paid. That’s the point at which LeRoy decided that, rather than move his equipment and leave Costa Rica, he’d go the whole nine yards. They continue to log, but these days they are harvesting for their own newly-assembled Fiberica S A sawmill in the nearby town of Rio Clara, in southern Costa Rica. “No one had really looked at it from the lumber products potential angle before,” he says.
This type of white wood, Gmelina, with its long fibre and good chipping quality, was naturally seen as pulp wood. “But we looked at it differently and saw that we could cut furniture stock, mouldings and door stock for the local and export market.” Chips still leave the plant for a local particleboard plant, but they are a byproduct. And there is strong interest in the main solid wood product. Shortly after start-up earlier this year, they had already received queries for product from as far afield as China.
A Canadian company setting up a sawmill in Costa Rica, and then dealing with a customer in China illustrates the global nature of the business these days, says LeRoy. “It’s a big market out there. There is a lot going on outside of North America that people don’t realize. There are two other Americas out there with wood, Central America and South America, and South America is huge compared to Central America.” In terms of a business environment, Costa Rica—unlike some neighbouring countries which have been subject to political unrest—is politically stable, having elected democratic governments since the 1940s. LeRoy had very few problems in setting up the sawmill.
The company took a unique approach to assembling all the equipment for the Costa Rica mill. LeRoy called on Paul Beltgens, who operates a neighbouring added-value operation on Vancouver Island, Paulcan Enterprises, for some assistance. Together, the two men scoured auctions and mill sites in Western Canada and the United States, sourcing equipment. As a result, the weigh scale is from Alberta, a debarker is from the BC Interior, some breakdown equipment came from Washington State and other equipment came from the now-closed Timber West mill at Youbou on Vancouver Island.
Virtually all of the equipment in the Costa Rica mill is used. “We put a lot of thought into the sawmill at the beginning to make sure things would flow right,” explains LeRoy. The mill is dealing with all small wood, one size (with a maximum size of 21 inches), and one species, so a high production operation is the way to go. Once they determined the set-up, it was off to the races—or at least off to the equipment auctions. After purchase, the sawmill equipment was all transported to the main Ted LeRoy Trucking shop/yard in Chemainus, BC.
The mill was completely modified for assembly there, and then carefully disassembled for transportation to Costa Rica. The electricals—containing all the computer equipment for the mill—were pre-wired and set up in a steel shipping container for the journey. The equipment—a massive 60 truck loads of it—was moved to a deep water ship at the port of Chemainus for the trip to Central America.
The pieces of this huge Meccano sawmill set had to be relatively small. “We were restricted in that the widest piece we could move from the port in Golfito, which is 20 kilometres from the mill site, along the highway was 15 feet,” says LeRoy. “So everything had to fit within that.” The main equipment includes a VK 21” debarker, Sodderham 15” chipper canter, a Schurman 12” double arbor gang edger, a Powell pony edger, a Brunette automated trim line and a Nicholson chipper. The boiler for the mill came from Weyerhaeuser’s now closed White Pine operation in Vancouver. And once on site, the assembly process was a challenge, right down to the foundation.
As the closest ready-mix plant in the area is over 300 kilometres away, they had to set up their own concrete operation. The site, including the mill, the log yard and chip yard, is six acres and all concrete, all poured by hand. On the equipment side, Lignomat supplied two Hildebrand Engineering dry kilns, the only new machinery on site. These were set up in the spring, and further kilns will follow as demand dictates. The product quotes they were working on for the Chinese customer—should that deal go through—would mean the eventual installation of up to five kilns.
The kilns are a key part of the operation, says LeRoy. “The Gmelina wood is very similar to our western hemlock in that it can trap water when you dry it.” The larger pieces take longer to dry, so they are going to try to stick to 5/4-inch production if they can. “The drying cost could get burdensome if you have to dry it for a long time.” All of the wood produced from the mill is FSC certified and includes chain of custody. “I just think that in terms of marketing this wood around the world, that’s the strongest certification you can get, with recognition in Europe, North America and other areas,” says LeRoy. “We felt that if we were going to go for certification, we should go for the most recognized one.” The wood chips they are selling will also, in turn, be certified, which may give the particleboard mill a marketing edge as well.
Besides international markets, there is a strong emerging furniture industry locally. There is also a fair amount of added-value finishing, such as window frame manufacturing. A local company, Portico SA, produces doors for customers such as major retailers Home Depot and Lowe’s. While LeRoy is talking to companies from all over the world, the decision on who they are going to supply is going to come down to more than just getting the highest price. “We want to build some long-term relationships, too. I don’t want to be moving around from one market to another. I don’t want us to be chasing people for sales. I’d rather have a few larger reliable clients.” The falldown material from the mill will be used to manufacture pallets. Banana producer Chiquita, with operations in the region, uses 1.8 million pallets a year. “And that’s just one company,” notes LeRoy.
Even though their production numbers are small compared to Canadian mills, the Fiberica operation is, in fact, the largest sawmill in the entire country. It requires 150,000 cubic metres of Gmelina logs annually (on a one-shift basis), but there is still a lot of under-utilized timber. The 14,000 hectares of Gmelina that Stone Container planted years ago is growing around 600,000 cubic metres of timber a year, only a fraction of which is harvested. LeRoy says they would eventually like to control about 5,000 hectares of land, which would easily sustain the sawmill. “We’d still buy wood, but we’d like to have a guaranteed supply of our own for at least a single shift.”
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