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Plywood going up—literally

B.C.’s Thompson River Veneer Products Ltd is benefiting from the general upturn in the economy, and sees demand for its plywood growing with building codes now allowing an increase in wood structure heights.

By Paul MacDonald

Doug Webb and a group of partners developed a business plan for Thompson River Veneer Products to meet what was then a market need for dry commodity veneer in B.C. But as the market changed, they’ve switched gears and are now focused on plywood production.

Pending changes in Canada’s building code regulations have Canadian lumber producers looking for expanded markets in the residential construction market. But the move to the use of more wood in higher residential buildings is also expected to benefit the country’s plywood mills, as well.

“We’re seeing some significant changes in how wood, especially engineered wood such as plywood, is being used,” says Doug Webb, manager of Thompson River Veneer Products Ltd, (TRVP) a Kamloops, B.C. producer of plywood and a dry veneer supplier.

According to reports, the federal body that establishes the standards for building codes—the National Building Code of Canada—is preparing to raise the cap on wood-structure heights to six storeys from four storeys. And the decision could open up additional business opportunities for the industry, both on the lumber side and plywood side.

Some provinces are already there. B.C. changed their code to six storeys from four storeys in 2009, and Ontario recently followed suit.

Webb sees the plywood sector as benefiting from this change, as plywood, rather than OSB, is used more often in the construction of these residential buildings.

“We’re kind of bullish on where things are going,” says Webb, a veteran of the solid wood and engineered wood sectors of the industry.

Such changes, along with healthy Canadian housing construction numbers, are encouraging for TRVP, an independent operation that started operating in 2006. After a decade of doing consulting work through the 1990s and early 2000s, Webb and a group of partners developed a business plan in 2004 to meet what was then a market need for dry commodity veneer in B.C.

“The market research indicated there was a shortage of dry commodity veneer in the B.C. Interior, where most of the province’s plywood mills are located,” explained Webb. “We invested in leading edge technology on the dry veneer side of the business, and went for used equipment on the plywood side—our intention was that the primary source of revenue for the company would be the dry veneer.”

The installation of a state-of-the-art Coe (part of the USNR group) veneer dryer was completed in 2006, along with the plywood press line, in a new 75,000 building, on a 12 acre site.

That investment in leading edge equipment has paid off, says Webb, as the dryer continues to work extremely well for them.

“At the time, it was the first of its type, and had features that other veneer dryers didn’t have,” he explained. “Coe was really interested in doing some pioneering work with the dryer, and we supported that, and it’s worked out really well for us.”

In addition to the Coe dryer, the line includes Metriguard and Ventek scanning and grading systems to ensure consistent quality. They have a 12 bin dry veneer stacker that has proved to be extremely efficient, Webb says. Among the companies involved in the project were Systematic Mill Installations, Stolberg Engineering and Logan Construction.

On the plywood side, virtually all of the equipment was purchased used. “It was equipment that was made in B.C. or Washington, so it was all equipment that we were familiar with,” said Webb.

At the time they were shopping around for equipment, there were some major closures of plywood plants in the U.S. A lot of their equipment came from a former MacMillan Bloedel plywood plant in Alabama. This included a Globe pre-press, a press loader and unloader from Durand-Raute, and a hot press that was built at Burrard Drydocks in North Vancouver, a shipyard operation that at one time also built manufacturing equipment for the forest industry.

Webb says they were able to achieve some significant cost savings in buying used equipment vs. new, but they also had some rebuild costs by going this route.

“We certainly had challenges until we got the equipment working to where we wanted it, but I think we are there now. It’s still older equipment, but it works reasonably well for us.

“Given what we have for equipment and capacity, we’re faring pretty well for use of the capacity, but we still have room to improve,” he said. They are working with some faster curing resins to reduce press times, but still keep quality high.

Thompson River Veneer Products is quite a bit different than most B.C. plywood producers in that they don’t have their own log supply—and the headaches that can come from that—and they don’t produce their own plywood materials, the veneer and the interply material.

Webb notes that TRVP is quite a bit different than most B.C. plywood producers in that they don’t have their own log supply—and the headaches that can come from that—and they don’t produce their own plywood materials, the veneer and the interply material.

“This is the first operation I’ve worked at in my career that we don’t have to deal with log supply—the other operations typically all had logs and lathes, and that makes the operations bigger and complex,” But it is hardly a piece of cake, he quickly added. “We don’t have log supply issues, but there are always challenges with the business, even with veneer supply,” says Webb.

TRVP started up just as the industry was going into a downturn, and Webb says the years following were extremely challenging for the company. “From 2007 to 2009, those were not kind years to anyone in the forest industry. It was very difficult for us, but we managed to keep things going.”

As with most forest industry manufacturing operations, there is only so much that can be done in terms of trimming costs during a downturn—all operations have some fixed costs, and TRVP is no different in that respect.

To deal with one of their major cost areas, the company participates in BC Hydro’s Power Smart program, to achieve energy efficiencies. Internally, they worked hard to focus on cost control and productivity through those difficult times, says Webb. “To the best of your ability, you just buckle up and try to get it done.”

And through those years, and in the years since, the market has changed, he says.

“Some of the plywood plants we were selling dry veneer to had expanded and modernized their own veneer capacity, so it reduced the need for our dry veneer product.”

The focus has changed for the company; though it is still produces both dry veneer and plywood, most of its sales revenue now come from plywood.

The veneer the company custom dries and cuts comes from a number of sources, mostly B.C., but sometimes from the U.S., depending on the value of the Canadian dollar. A low Canadian dollar makes veneer sales there attractive, but on a bigger scale, it also helps to keep American-produced plywood out of the Canadian market.

“Where the dollar is at right now, around 80 cents, and with strong housing markets both side of the border, is a good situation,” says Webb.

When the U.S. housing market dropped, it had a huge impact on Canadian lumber producers; but it also affected companies such as TRVP, which primarily sells its plywood into the Canadian market. “Canada was a bit more resilient, but it certainly impacted all our wood products, and prices were very suppressed.”

Webb noted that TRVP has some strong alliances with its suppliers. “We worked together with them, and we’re still with them now that things have turned around. That strategy has paid off and has fostered some strong relationships with the companies that we buy product from.”

Thompson River Veneer Products equipment includes a state-of-the-art Coe (part of the USNR group) veneer dryer (above), along with a plywood press line.

With a solid equipment set-up, improvements in recent years at TRVP could be characterized more as tweaking. They have added a Globe glue spreader, so they now have three spreaders, and an edge profiler and tongue in groove equipment. They have also added two Toyota forklifts to the operation.

Webb says they have a strong preventative maintenance program at the plant, especially on the dryer, to make sure they are able to achieve maximum efficiency.

The plant runs three shifts, five days a week, with maintenance done on weekends.

Interestingly, most of the employees they hire—and hired, when the plant was first set up—have no experience in the forest industry.

“I prefer that,” says Webb. “It sounds like a challenge, but with good people, they want to learn and want to be part of developing solutions, and the growth of the business. Our workforce has been very accommodating, working with us during the start-up of the new mill, and right through the downturn.”

TRVP has about 85 employees now; like a lot of the forest industry these days, they are finding it difficult to find good people.

“What we look for in an employee is pretty simple, really,” says Webb. “We have a pretty busy workplace, so they need to be able to work in that kind of environment—and we look at their work history.” In perhaps a reflection of the times, Webb says out of 10 people interviewed after an initial screening, perhaps one or at most two, might be hired.

One of the reasons Kamloops was chosen as a location for the plant was its then-ample supply of labour, along with proximity to material supply, customers, and a good transportation infrastructure. But they now have to compete with mines in the area for people, and the oil and gas patch in northern B.C. and Alberta draws skilled people away.

“We need to hire quite a few more people to bring this mill up to where we want it, in terms of capacity,” says Webb.

And the future success of the company lies in its people, to a large extent, he added.

Any expansion they do will involve capital, but a major focus will be on the contributions of employees towards growth and innovation. “We have always done it that way,” says Webb. “You can usually achieve a lot more benefits through the power of people than the power of money. You can throw money at something, but you can achieve a lot with employee buy-in, having people involved from the very start.

“I’ve seen where if you don’t do that—and you can make an investment in equipment, it doesn’t run well.

People make iron run—it’s not the other way around, he says.

Their careful selection of employees is very important, says Webb. He says that has been one of several things that have led to the success of the business.

“The others would be the equipment we have and the way the plant was designed, and our investors and core operating group, who are also investors.”

Since they are an independent plywood and veneer operation—and are not owned by a forestry giant like West Fraser or Canfor—they don’t have access to a deep-pocketed parent company. So being lean and resourceful is just part of their DNA, really. “It also allows us to be pretty fast on our feet, and make decisions quite quickly—and push the button on those decisions.”

With the upturn in the market, TRVP is looking at increasing capacity over the next year or so; some of that may come from hiring additional people, and some by making equipment additions. “We’re just in the process of analyzing the best way to do this,” says Webb.

There was a lot of foresight when the facility was first built—it was designed and engineered for expansion. “There are a lot of things—the size of the electrical system, the sprinkling system, the fire suppression system—that were designed for expansion. At the beginning, when we were building the plant, it hardly cost us anything to do, but it sure would cost us a lot to do now.” Even structurally, extra footers were put in place with the thought of future expansions.

“So, we’re looking at how we can make this place bigger. But we want to make sure that we design and build something that will offer good long term growth, and also offer long term return for our investors.”