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November 2005  - The Logging and Sawmilling Journal

 

SPOTLIGHT

Restructuring Leads to Upgrade

Industry restructuring has resulted in Tembec’s Chapleau, Ontario operation going to three shifts and starting what will eventually amount to $20 million of upgrades and changes to the mill.

By Tony Kryzanowski

The trend towards the closure of smaller local sawmills in favour of larger regional sawmills is continuing in different parts of Canada.

The recent restructuring of assets by Tembec and Domtar in northeastern Ontario is having a significant impact on some smaller communities while boosting the prospects of larger centres like Hearst, Chapleau, and Kapuskasing.

Mel Jones, general manager of the Tembec sawmill in Chapleau, says issues such as the softwood lumber duty, cost of electricity, parts, materials, fibre costs and labour are the driving forces behind the changes taking place, particularly in that region of the country. “The softwood lumber tariff costs us between $30 and $40 per thousand board feet right off the top,” he says.

When it was announced that Domtar would close its sawmill in Chapleau in June 2005, Jones says it was initially an upsetting day for Tembec employees.

Many had relatives and in some cases, spouses, who were suddenly thrust on to the unemployment line by Domtar’s announcement. The forest industry has been the heart and soul of the community for generations.

However, once Tembec announced its intentions to bolster its ranks—to operate on three shifts—by recruiting firstly among displaced local workers, this helped bring a level of comfort back to the community. Jones adds that community leaders have also seen the wisdom of the restructuring, especially considering the gains that Tembec has already made in productivity at its sawmill and its capital investment plans for the future. “The mayor and council have recognized that it is better to have one very efficient mill versus two mediocre mills that are subject to the ups and downs of the industry,” he says.

As part of the provincially-sanctioned agreement concerning the reallocation of forest resources in northeastern Ontario, Tembec has acquired a portion of Domtar’s Chapleau softwood fibre allotment and fibre exchanges, bringing its total wood basket to a sustainable 660,000 cubic metres. The sawmill will actually process more softwood fibre by acquiring more wood through exchanges with area pulp mills.

Mel Jones, general manager of the Tembec sawmill in Chapleau (left). “We’ve done improvements by tweaking the existing process, working with employees and creating a mindset of setting priorities that give equal consideration to safety, productivity and cost.”

The experience in Chapleau shows why many major Canadian forestry companies are looking seriously at the efficiency gains possible from a single, centralized operation. “To start with, we’ve been able to realize in excess of a 20 per cent reduction in costs and each month that continues to improve,” says Jones.

 

Another unexpected benefit from progressing to three shifts is that there is less movement of employees and fewer saw changes, resulting in a 10 per cent sawing efficiency improvement per hour.

By advancing to three shifts, the sawmill has increased its employee base from 123 to 145. The increase in staff has occurred almost entirely for the purpose of bringing the third shift on stream, without hiring any additional administration and only one shift supervisor. This means that administration staffing now sits at almost the same level as when the sawmill operated on two shifts. One astute move on Tembec’s part
was hiring Mel Jones as general manager. He was previously employed as the general manager of Domtar’s sawmill in White River, Ontario for 15 years. The successful turnaround story at that sawmill through the efforts of Jones, his supervisory team, and local employees was nothing short of remarkable, making him an excellent candidate for taking Chapleau to a higher level of achievement.

Jones describes his move to Chapleau personally as a breath of fresh air and an opportunity to get back to basics after achieving all that he thought was possible in White River, without any further capital investments. What he likes about Tembec’s management style is that head office gives local managers a lot of autonomy, allowing them to operate the sawmills as entrepreneurs—as though they owned the sawmill themselves, but within company guidelines.

Since coming on board with Tembec, Jones and his Chapleau team have reduced processing costs by 20 per cent and are on track to further reduce the sawmill’s overhead costs per thousand board feet another 15 per cent by the fall of 2005, for a total savings of 35 per cent with practically no capital investment.

Despite aging technology, the Chapleau sawmill remains one of Tembec’s top lumber producers. Equipment changes are on the way, however. Both the small and large log lines are slated to be replaced.

“We are quite proud of the fact that we’ve had no capital spending,” says Jones. “We’ve done all these improvements by just tweaking the existing process, achieving design capacities, working with the employees, and creating a mindset of setting priorities that give equal consideration to safety, productivity and cost. So there is more of a consistency of flow and a sense of urgency.”

The sawmill will now produce 150 million board feet of random length softwood lumber on a three-shift basis, as compared to 85 million board feet only a few years ago on a two-shift basis. Only 62 million of that production was kiln dried.

Unlike White River, where Jones walked into a situation of poor management and labour relations that included a strike in 1990, he says the work culture in Chapleau was already quite good when he arrived. Tembec purchased the mill from Weyerhaeuser in December 2003, and as Weyerhaeuser is a systemsoriented company, the sawmill already had an excellent health and safety record.

“When Tembec took over, we wanted to combine the record of health and safety achievements with getting the mill up to be a productive and profitable operation as well,” Jones says. He describes the relationship with the local union as excellent.

Now that there has been significant progress in creating a healthy and productive work environment in Chapleau, Tembec is prepared to begin spending considerable sums of money to modernize the two-line sawmill.

It has a five-year strategic plan to invest in excess of $20 million in new equipment, with the most recent installation being two high speed Nicholson A8 tree-length debarkers.

There have also been upgrades to the sawmill’s five kilns and installation of Allen-Bradley variable frequency drives on its planer—to replace capacity-restricted hydraulic drives—at a total cost of $3 million. One major decision taken by Tembec in Chapleau was to purchase three of the dry kilns made available by the closure of Domtar’s sawmill, increasing its kiln drying capacity from two to five kilns.

Replacing its obsolete debarkers will also help the sawmill improve its uptime at the front end of the production line and improve chip quality. Jones says the sawmill was lucky to achieve 60 per cent acceptable chip quality with its old debarkers and was paying hefty chip penalties. It currently provides 35 per cent of the nearby Marathon pulp mill’s chip requirement, and by going to three shifts, it is generating enough residual fibre to allow a local co-generation power producer to expand its production.

An unexpected benefit of Chapleau moving to three shifts is that there is now less movement of employees and fewer saw changes, resulting in a 10 per cent sawing efficiency improvement per hour.

 

While Tembec improved its drying capabilities at the sawmill by acquiring three kilns from Domtar’s dismantled Chapleau mill, very little was spent on these units while they were in operation. So a general maintenance and upgrading was required.

The change to variable drives on the sawmill’s 16-knife Newman planer will increase production from 1,300 to 1,450 feet per minute, while stabilizing production consistency.

The sawmill currently depends upon outdated primary breakdown technology, specifically, two, first generation, ARI curved sawing units. In 1985 when the units were installed, this was cutting edge technology.

However, the Swedish company, ARI, no longer exists, the accompanying software is written in Swedish, and technical support is no longer offered for either the equipment or software.

Jones says given these constraints, it is a testament to the ingenuity of Chapleau employees that these units still operate at an acceptable productivity level.

Also, the small log line is limited to only a two-board solution and anything larger than a 10-inch diameter log on the large log line is wastefully chipped down rather than producing sideboards. Both these scenarios translate into considerable fibre recovery loss, which the sawmill hopes to rectify by planning for a new small log line in 2007 and large log line in 2008.

The sawmill’s edging capability is a bright spot in the mill. Jones says the USNR high-speed optimized edger is very efficient and runs at about 1,200 feet per minute. After the edger, lumber proceeds to a Newnes trimmer/optimizer and then to a 35-bay sorter.

What Jones says he likes about the layout of the Chapleau mill is that the sawmill and planer mill operate separately, which means that they can organize more uniformly sized lumber charges for the dry kiln and plan specific production runs for the planer.

Tembec has already installed an in-line moisture detector at the planer mill
and plans to also install an automatic grading system. There is also plenty of space to potentially install a machine stress rated (MSR) station to capture more value from the finished product.

With Tembec now the only remaining large softwood lumber producer in Chapleau, when just a few years ago there were three sawmills, the community realizes that it needs to build a more diversified forestry presence. To that end, community leaders have struck a committee to investigate any and all valueadded forest product manufacturing opportunities, in an effort to provide more employment and boost the local economy.

 

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