May 2006 - The Logging and Sawmilling Journal
MILL PROFILE 2
From idle to active
Four years after being idled, a Terrace, BC, sawmill has started up, with its new local ownership keen on adding value to the wood and taking full advantage of the opening of a new world-class container port in nearby Prince Rupert.
By Jim Stirling
One standout exceeded requirements for the folks at the Terrace and District Chamber of Commerce when they were considering candidates for newsmaker of 2005 in their annual business excellence awards: the Terrace Lumber Company Ltd was the clear choice. The newly founded company rescued a local sawmill from the messy bankruptcy of its previous operators and put it back in production after a four-year hiatus.
Ownership of the sawmill and planer complex is now in the hands of local shareholders. It’s an atypical corporate structure for a forest company these days but one that’s welcomed and working in Terrace. And, significantly, the rejuvenated sawmill is positive indication that the tide of economic fortune is turning finally in favour of northwestern British Columbia.
A roll call of companies have tried their hands manufacturing lumber at the Terrace location in recent history. They include ColCel, CanCel, BC Timber, Westar and Repap’s Skeena Cellulose Inc. When the latter company folded, hopes were pinned on New Skeena Forest Products. But it, too, failed to produce results.
Prospects looked bleak as a courtappointed receiver prepared to lop off company assets to pay multiple creditors. A sawmill in Smithers had been sold earlier to West Fraser Timber, which also operates a sawmill in Terrace. New owners were found for other Skeena mills near New Hazelton and Kitwanga. Negotiations were continuing to re-structure ownership of the pulp mill at Watson Island near Prince Rupert with Chinese- Canadian interests.
The Skeena wood basket was similarly dispersed. The largest parcel, TFL 1, was sold for $4.8 million to Coast Tsimshian Resources, owned by the Lax Kw’alaams band. What remained was the Terrace sawmill which, ironically, was always a solid performer since the Skeena Cellulose days and a major rebuild, despite what was happening around the rest of the company.
The emergence of the Terrace Lumber Company from this saga is akin to a television program—complete with a last minute twist. Moe Takhar, like many business owners in Terrace, was distressed about the Skeena Cell/New Skeena meltdowns and their economic effects on his city. He also had a vested interest.
Terrace Pre-Cut, his family-owned company since 1985, used fibre from the Terrace sawmill in its lumber re-manufacturing business. “I phoned my partner, John Ryan, and we got together for a coffee to see if we could do anything about the situation,” recalls Takhar.
Ryan runs Nechako Northcoast Construction Road Maintenance, which looks after highways in the Terrace and Smithers regions under contract to the provincial government. The two recruited another friend and local businessman, Ernie Dusdal, and the three of them decided to work together. The problem was, how best to do that.
At first, relates Takhar, they decided to offer whatever help they could to a group from the Repap days interested in acquiring and re-opening the Terrace sawmill. (The group did not include the owners of New Skeena Forest Products, says Takhar). For a while, it was like you needed a program to keep track of the changing groups of people working toward putting some sort of deal together to save the mill. But the focus shifted for the three local businessmen: time was of the essence. The receiver had set a date to auction off the mill’s components.
“Our goal was to have the mill run, not be dismantled,” says Takhar. They didn’t want to see the mill—and its jobs—shipped out of town. The drama came down to the eleventh hour. “John phoned me from Vancouver on a Thursday. We had to get serious if we were going to prepare a bid for the sawmill.”
The mill was to go under the auctioneer’s gavel on the following Monday. It worked. “Around 6:30 Saturday night, John phoned and said ‘you own a sawmill’,” says Takhar with a smile.
The next stage was garnering additional financial support for the new venture from the Terrace business community. Takhar says people were ready and willing to invest in a new and accountable chapter in Terrace sawmilling history. Fifty shares were issued, with some investors having more than one and others holding fractions of one. “They’re all local people, mainly business people,” says Takhar. “We have five directors on the board.”
Takhar is president and CEO; Ryan is chairman of the board and Dusdal the secretary-treasurer. The Terrace Lumber Company invested about $4.2 million, which includes the sawmill, its equipment, mobile equipment in the log yard and the land on which the complex sits from the City of Terrace, which Takhar says was wholly supportive of the deal.
The Terrace Lumber Company has acquired a prime asset in the sawmill/planer. Repap spent $42.5 million rebuilding the operation. It started up in June 1988. The design capacity was 1,460 cubic metres of lumber a day primarily for export markets to capture value from the wood profile and the diversity of log sizes.
Key equipment in the two-line mill configuration includes a Porter Engineering scanning system on the log merchandising decks ahead of the cut-off saws and Brunette debarkers. Primary breakdown on the small log side is a CAE quad band saw with Ahlstrom chipping heads and a CAE flying log turner. A customized CAE double cut head rig with a 17.5-degree slant is the main breakdown machine on the large log side.
Both lines have a Coe cant optimizer and there are two Ukiah double arbour edgers. Sideboards from the two breakdown lines pass through a Coe scanning system and four-saw Ukiah top arbour edger. A three-saw Ukiah edger handles remanufacturing. A Valley trimmer system is backed by Newnes bins and Moore Jbar sorter. Lumber is planed with a Stetson-Ross machine followed by Newnes grading, trimming and sorting lines. Terrace Lumber Company’s Takhar says the same basic machines remain.
The mill started up under its new ownership the last week of August, 2005. And, reports Takhar, it went pretty well in the sawmill despite being idle for more than four years. There were some initial issues in the planer and dry kilns to work through. The start-up was assisted considerably by having millwrights double as security watchmen during the downtime.
They could work on machines, bearings and chains in the mill and keep things turning, says Takhar. More of an issue was getting fibre into the mill yard, especially the larger material. Problems there were primarily procedural with the transfer of the TFL to the Lax Kw’alaams and approval of forest development plans. Other sawlog sources for the Terrace Lumber Company include forest licences in the region held and being developed by the Kitsumkalum and Kitselas Indian bands.
A solid core of experienced logging contractors and log haulers remain in the Terrace region keen to keep the wheels moving to deliver the logs required and help train band members where necessary. Takhar was confident the mill operation would gear up from an initial threeday week to one eight-hour shift, five days a week during the winter of 2005-06.
The production level requires about 350,000 cubic metres of hemlock/balsam saw logs a year, about 35 highway logging truck loads a day. “Right now we’re cutting metric sizes for markets in Japan and Korea, and we also produce dimension lumber for the US. The mill cuts both,” explains Takhar.
The one-shift-a-day production schedule means the benefits of 60 hourly workers and six staff are being plugged back into an appreciative Terrace economy. “There are another 70 in the woods and they’re all good paying jobs, not $10 an hour,” adds Takhar. (There were about 138 hourly employees on the payroll when Repap started the mill in 1988).
The mill’s hourly employees are certified with IWA-Canada Local 2171. Most worked for the mill before the shutdown and have up to 36 years seniority in with the union. It’s a huge advantage to have a work force thoroughly conversant with the mill and its equipment, he says. Takhar anticipates running a second daily shift, “But there’s lots of work to do before that happens.”
However, important pieces have fallen into place. The Terrace Lumber Company’s chips are being sent to Pope & Talbot’s Harmac pulp mill on Vancouver Island. IFP Canada Corporation based in Vancouver is marketing the company’s lumber.
Down the line, Takhar is looking at sawmill improvements and other operational efficiencies. One area is upgrading the mill’s computer systems to capture the technological improvements of faster, more accurate decision making. The much-anticipated construction of a modern container port about 140 kilometres west in Prince Rupert has triggered considerable economic optimism. “It’s going to be really, really good for us although it’s still a year and a half away (from completion),” says Takhar. “The container port will benefit the whole northwest, through to Alberta, Ontario and on to Chicago.” Takhar doesn’t foresee access to containers being a problem from the information he’s received. Putting their quality products in sealed containers and having them delivered to the customer is the way to go, says Takhar. Prince Rupert is closer than any other major port to Terrace Lumber Company’s Asian customer base. Takhar says the Prince Rupert container port will also facilitate the next phase in the company’s development. “We’re looking into producing finished products rather than just the raw material,” he explains. “We’d like to go further and finish furniture and home component products here.”
Perhaps the Terrace Lumber Company is poised to become the local Chamber of Commerce’s perennial newsmaker of the year.
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