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May 2004

Mill Contractor profile

Stepping up production

Vancouver Island logger Jim Cox is looking to step up production both with his harvesting operation, Koprino Logging, and a small specialty sawmill operation he owns, Lukwa Mills.

By Paul MacDonald

Lukwa Mills has a marketing arrangement with major cedar player Terminal Sawmills to supply it with larger cedar, which Terminal remans at its facilities. In addition, Lukwa also offers custom cutting, doing everything from beams to window stock.

Over the past few years, Vancouver Island logger Jim Cox has faced some challenging times with his forest industry businesses. Cox has had to weather the tough economic times facing BC’s coastal logging industry with his contracting operation Koprino Logging, a large stump-to-dump operation. But he has also had to deal directly with the challenges affecting the coastal lumber industry, as well, through his ownership of small specialty sawmilling operation, Lukwa Mills.

Both of the companies are based in Port Hardy, on northern Vancouver Island. In fact, Lukwa is the most northern sawmill on Vancouver Island. Cox purchased Lukwa Mills in 1998, back when cedar markets were booming. While the US market for cedar has remained steady since then, foreign markets are now mediocre. At the time Cox purchased Lukwa, they were selling primarily into Europe, Australia and New Zealand, but into other markets, as well. “The markets were great back then,” he says. “We were selling all over the world. At that time, I blended Koprino and Lukwa together. There was still some tenure that was involved with the mill, and that seemed like it was a good acquisition for us at the time. Then everything started to crash.” In a scenario only too familiar to companies operating on the BC Coast, markets tumbled. Changes in currency values added to the woes. But that was then, as the saying goes, and this is now. These days finds Lukwa Mills up and operating with a new marketing arrangement with major cedar player, Terminal Sawmills Ltd of Vancouver.

Lukwa’s smaller homemade band saw will be joined later this year by a new Timberwolf portable sawmill. In Lukwa’s situation, the Timberwolf will be staying put at the mill site, near Port Hardy.

Lukwa provides Terminal with larger cedar, 4 x 8 or 6 x 10 for example, which Terminal remans at its facilities in Vancouver, and then markets in North American or foreign markets. Lukwa sometimes cuts some hemlock, as well, but Cox admits that it is tricky, as there is not usually much profit margin in hemlock. There are a number of benefits to having a mill in Port Hardy, such as keeping primary production close to the source of the timber and providing local jobs, says Cox. It’s much better than the alternative of chipping the sometimes low-quality wood or towing raw logs down south to mills around Vancouver, he adds.

The North Island community has been hard hit in recent years, especially by the shut down of another resource-related industry, the Utah Mines copper mine in the mid-1990s. Cox has plans to make use of the old—and huge—Utah Mines site both to help consolidate Lukwa/Koprino activities and to ramp up production at Lukwa Mills. Lukwa is presently working with a Duncan Iron Works band mill system that handles over-sized timber, while a smaller homemade band saw, with a Baker re-saw, takes on the more manageable logs. A John Deere 544G wheel loader moves the wood around the yard.

They will have a new Timberwolf sawmill operating by mid-year and are looking to move from their present site to the Utah Mines site, about 20 kilometres from Port Hardy, next year. In addition to adding to their mill production, they may also move their dryland sort there, as well, since it offers access to tidewater and there is plenty of room. “It’s a huge site,” he says. Cox has been operating on the North Island for more than 20 years, and has been working closely with First Nations communities over the years, both as an employer and in joint ventures on the logging side. With additional timber going to First Nations groups in the very near future, he sees the opportunity to get involved with First Nations in further joint ventures. The BC government has already said that it will be re-allocating 20 per cent of the logging rights from licensees and re-distributing those timber rights. (See Timber Clawback story on page 4.)

 A John Deere 544G wheel loader moves wood around the Lukwa Mills site. Logging equipment maintenance is carried out at the Coal Harbour shop (inset photo). On the right is Koprino Logging/Lukwa Mills owner Jim Cox, with driver Stu Smith.

The result for First Nations: their share of the province’s Annual Allowable Cut will more than double, to eight per cent, with an estimated additional three million cubic metres going to First Nations. “We see opportunities coming with the changes in tenure, and would like to get into some niche markets and partnerships with different people, including First Nations groups,” says Cox. The Lukwa mill now produces anywhere from 25,000 to 35,000 board feet a week, and Cox is looking to notch production figures to 40,000 board feet and beyond with the new Timberwolf sawmill. The narrow-kerf Timberwolf sawmills are designed to be portable, although in this case it will be staying put at the Lukwa site. The end result the company is shooting for is a more finished product, and a further expansion into value-added products with the Timberwolf. In addition to the cutting it does for Terminal, the mill also offers custom cutting, doing everything from beams to window stock.

On the logging side, Western Forest Products, a major licencee on the North Island, is their major contract. Western’s parent company, Doman Forest Products, has had its share of difficulties in recent years. Saddled with high debt, it is currently going through a restructuring. “We have had a great relationship with Western in spite of what’s gone on with Doman,” says Cox. “We look to work with long-term relationships on the North Island because we know the area. We’re not involved in the North Coast or the BC Interior—that’s not our style.” Cox’s style is to keep improving things, however. “I don’t know if I’m a visionary, but we’ve got to keep changing–there is no such thing as the status quo in my vocabulary. You have to keep moving forward. “We’ve had to keep expanding the logging and taking advantage of the opportunities because I could see that we were going to have lags and lulls down the road because of the log and lumber markets, and I want to keep our people working.”

Those changes include a new computerized payroll system that will eventually extend to cover other activities at Lukwa/Koprino such as equipment maintenance. “It’s going to evolve, but we want to tie it all together,” says Cox. “It’s a big project, and we only have limited resources.” They currently have an internal e-mail system that helps to keep everyone in the know, a great tool since operations are running seven days a week. They are also utilizing some fairly sophisticated planning tools, such as Gantt charts, to ensure the different phases of logging flow well together, and they are getting optimum utilization of all their resources, from loggers to log loaders. They expect to do about 250,000 cubic metres of harvesting this year, although Cox notes “we’d like to do more,” and move harvesting up to about the 350,000 cubic metres mark.

The change in tenure, and becoming more involved with First Nations, could see that figure rise. They are doing about 7.5 kilomtres of roadbuilding for Western Forest Products, and he says he’d also like to get that up to around 15 kilometres or so. To support their roadbuilding efforts, they recently bought a new Hitachi Zaxis 350 excavator. The machine, powered by a six-cylinder Isuzu engine delivering 315 horsepower, is doing its fair share of work cutting road through some pretty tough coastal geography.

With the tough times of the last few years, there has not be much in the way of brand new equipment for Lukwa/Koprino, other than a few new logging trucks. “We need to get things happening with our equipment, though, and rotate equipment more and get some newer equipment.” When it comes to financing, they have used Forest and Marine Financial of Nanaimo, which specializes in financing independent logging contractors. Cox praises Forest and Marine for its flexibility and industry knowledge. “They’ve been a big help to us.”

In the meantime, they’ve stepped up the maintenance side significantly. The maintenance operations have gone from having three mechanics three years ago to six mechanics today. They have consciously encouraged apprentice mechanics at Koprino, to help ensure the company is well-staffed for the future. Koprino is a traditional, but effective, coastal logging operation, doing hand falling and yarding. They have two Madill 075 super snorkels, a Madill 144, a Madill 122 and two Madill 044 grapple yarders, three John Deere 992 log loaders, and eight off-highway and five highway logging trucks. Looking not too far into the future, Cox is currently kicking the tracks on mechanical harvesting equipment.

He was recently out taking a look at a Waratah processing head on a John Deere platform being employed on another contractor’s operation, and came back impressed. “We’ve got to get into mechanical harvesting,” he says. “We’re not quite at the volume we need to be for that—we still have a lot of large old growth on the North Island. You need 70,000 cubic metres of mechanical harvesting to make it worthwhile.”

Ideally, he’d like to have a saw that cuts off at the grapple, an equipment set-up that would help with a special situation they have to deal with. With the wild weather, and strong winds, on the West Coast, they do a lot of work in blowdown areas for Western Forest Products. “We are chasing blowdowns on a regular basis,” says Cox. “And rather than have our fallers go in to some of these spots, it would help if we could get a machine with a saw and grapple in there to do that work so a faller does not have to be put in the bight.” Cox is a firm believer in keeping all their work in-house, wherever possible. A related company, Goletas Forestry Consulting Group, handles forestry development and engineering for both Koprino and outside companies.

Brooke Cox, his son, heads that up. This approach, he explains, is part of his strategy. “There is not a lot of money to be made in this business and unless you have a solid strategy of doing as much as you can, you are not going to survive. You have to reach out and take advantage of opportunities. We are going to survive by working together, whether that’s being efficient or having a strong focus on our safety program.”

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