CLICK to download a pdf of this article

Business-minded logging

Long-time B.C. coastal logging contractor Ted Arkell of Dyer Logging has found the challenges of the business have changed over three decades in logging, with a need to be far more business-minded to make a return on your equipment investment these days.

By Paul MacDonald

It’s sometimes interesting how people get involved in becoming a logging contractor.

For Ted Arkell of B.C.’s Dyer Logging, which operates out of the small town of Sayward, north of Campbell River, on Vancouver Island, it came down to getting a phone call in the late-1980s.

At the time, Arkell was a woods superintendent with a forest company, overseeing logging and roadbuilding operations. “The fellow who owned Dyer Logging at the time wanted to retire so he phoned me up and asked me if I was interested,” he recalls. Arkell laughs and says it had been “one of those days” at work, and his answer was quick: yes, he was in.

The equipment line-up at Dyer Logging has changed substantially since Arkell bought the company almost 30 years ago.

“In those days, we had a couple of steel spars and a small grapple yarder, and were doing maybe 85,000 cubic metres a year.”

These days, they are doing upwards of 250,000 cubic metres a year, most of that for Western Forest Products.

Ted Arkell ( right) and son, Kelly Arkell, of Dyer Logging take pride in the contributions the company makes to the communities on northern Vancouver Island, and the well paying jobs Dyer Logging provides to employees.

The business side of logging has also changed. The downturn that hit the forest industry like a Mack truck reinforced to logging contractors that they are in the logging business—with the emphasis very much on the business end of things. Perhaps more than ever, loggers have to be right on top of their game, and be very hands-on managers.

“The challenges of the business have changed,” says Arkell. “The returns on the logging business aren’t what they were—it is a heck of a lot more challenging environment now to make the financial return justify your investment in equipment,” added Arkell.

In January of each year, Arkell gets together with other coastal logging contractors at the Truck Loggers Association convention, held in recent years in Victoria. Arkell is a past president of the TLA.

Contractors will meet over a coffee, in informal get-togethers, at the convention.

“We all have different backgrounds, but we all now have one thing in common: we all understand a balance sheet,” he says. “We all get that first and foremost we are running a business—and it’s logging second. It’s not the other way around. You need to approach it that way for the business to be successful and sustainable.”

For contractors on the B.C. coast, there are now fewer business opportunities, with fewer customers to work for in logging. Dyer Logging, for example, does most of its work for Western Forest Products, now the major licencee on the coast. They also do some logging for log brokers, and timber sales.

Dyer Logging runs a few different brands of logging equipment. They have two Cypress 7280 grapple yarders, both of which are in good shape. One went through a rebuild at T-Mar Industries, in Campbell River, about six years ago. The other yarder went through a major overhaul prior to Dyer purchasing it. The third grapple yarder is an older Madill 044 which was rebuilt at the Madill facility in Nanaimo a number of years ago and is still pulling its weight, production-wise, thanks to the focus on maintenance at Dyer Logging.

They run four Madill 3800C hydraulic log loaders, a Madill 075 Line Loader, a Hitachi EX400 and EX330 excavators for roadbuilding work, and a Cat D8. Their most recent purchase was one of the new 3800C log loaders, picked up in 2014. They have one Western Star highway truck, with most of the trucking contracted out to Kurt Leroy Trucking Ltd.

Dyer Logging takes pride in its long-term employees. Larry Ruff (right, with a Madill 3800C loader) retired after 30 years at with the company, and now fills in part time. It’s a family affair for the Ruff’s at Dyer Logging: Larry’s father and brother both worked at Dyer Logging.

The processing work, at least so far, has been subbed out by Dyer Logging, with the subs using Waratah and Southstar heads. But Arkell says they are now seriously looking at purchasing some processing equipment for their own use. “We’d sooner own the equipment and do it ourselves, but at a business level, it’s a matter of having a continuous program to justify purchasing it. It gets close but we haven’t quite got to that threshold, volume-wise, yet. It’s all a matter of what makes the most sense, business-wise.”

Last year they had steady work for the processing equipment from September through to March; but they then move into higher ground, and have limited use for a processor.

Western Forest Products wants its timber harvested within a condensed period of time, so that means its contractors such as Dyer Logging work seven days a week, much of the year.

The strong maintenance program at Dyer Logging positioned the company well going into the downturn, as they relied on working with existing equipment, rather than looking at getting anything new, through the lean times. “We already had a good solid maintenance program in place. And we really need that, since we are running seven days a week for Western much of the year.”

Their well-maintained equipment, along with low overhead, gave them the advantages they needed to survive. Of three logging contractors in this area of Vancouver Island in 2008, Dyer Logging is the only one still operating today.

“Going into the downturn, we had low debt and we’re very hands-on,” said Arkell. “It’s important to keep your overhead and your fixed costs low, with a strong focus on maintenance—you don’t want to let your equipment deteriorate, due to lack of maintenance.”

When it comes to repairs, it’s all about safety first, and then prioritizing what needs to be done, he says. “Our mechanics understand that at times they have to do what they need to do to keep equipment running safely, and keeping production going. We’ll fix what needs fixing. It will then go to the top of the list for repairs, when it is possible to do that—we’ll then swap the components out, or send it out for repairs.” This approach gives them the ability to be flexible, but also get the necessary work done.

Lower fuel prices are helping things out a bit for all logging contractors these days, including Dyer Logging. And the lower value of the Canadian dollar has definitely helped the industry overall, in terms of selling lumber to the U.S. But there’s a bit of an offset there for logging contractors, as they see higher prices for some logging equipment and parts produced in the U.S.

“It’s hard to see if you’re gaining or losing with lower fuel prices after you factor in the higher equipment costs, with the low dollar value. I think we might be gaining a bit overall, but how long will the cost of fuel stay down for?”

After some very lean years, contractors would seem to have a solid case when discussing improved rates with the major forest companies, all of which are reporting healthy profit levels these days.

Many coastal contractors, like Dyer Logging, have been around for decades, and they provide well paying jobs in the communities where they are based. Dyer Logging has been around for 72 years, for example.

“The company has been supporting families on northern Vancouver Island for more than 70 years—we’ve had two generations of families working here,” says Arkell. They have a log loader operator who recently retired whose father worked as a faller for the company. Guys retire after 30 years-plus with the company. The company also takes a lot of pride in supporting the communities of Sayward and Campbell River.

Loader operator Grant Gibbons has been with Dyer Logging and predecessor companies for 37 years.

That kind of longevity, stick-to-it-iveness and stability needs to be recognized by the industry—and government, too, says Arkell. “I think that is something to be aspired to, providing you are being competitive in the market.”

Arkell, like the other long term contractors, faces different cost structures vs. start-up logging operations. “The crew has been here a long time, and that is something that should be encouraged and supported in the industry—but there are higher costs with that. With long term employees, there is a legacy cost you have to support.”

Arkell notes that while Dyer Logging can very ably compete—and perhaps out-perform—new entrants to logging in terms of production, they can’t necessarily compete with them on costs. “It’s not a level playing field, when you look at labour costs. We can’t afford to compete with the lowest common denominator in the market.”

In spite of the challenging times facing the industry, Arkell remains positive about its future. But it’s going to need some solid people to lead it. “More than ever, there is a need to attract talent and good managers to the industry for it to have a good future.” Sustainable business and quality employment are key to this.

Arkell pointed out the Logging Fundamentals Training Program put on by Western Forest Products on Vancouver Island as the right direction to go, in terms of getting more people in the industry. “We’ve picked up a couple of people from the program. It’s a good idea. You get people coming out of the program who have received proper training for the industry—who have learned to log safely. It all helps.”

Arkell says their skillset requirements for employees are definitely higher than they were 10 years ago. “We are expecting more of our employees, so you are going to have to put more resources and money into training—it’s that simple.”

And that comes back to having the funding, and logging rates, to do the training. It’s important that the forest companies, as much as they want inexpensive fibre, see that a well-trained, sustainable and safe logging workforce is in everyone’s interest—including their own interest. If reasonable returns on investment are not there, Arkell says the industry could see more contactors making hard-nosed business decisions to exit the industry, and move into other sectors, such as construction, that offer better margins.

“For a lot of people, logging is a way of life. But some people will wake up and say, hey, if the financial returns on their investment are not there …”

That said, some of the talent that the industry lost in the downturn to the Alberta oil patch may be trickling back, with cutbacks there due to low oil and natural gas prices.

At the recent Truck Loggers convention in January, B.C. Premier Christy Clark announced that the provincial government would be placing ads in Alberta, inviting skilled workers to move to B.C. and work in the province’s resource industries.

Arkell notes that Dyer Logging has been fortunate in that—as noted—it has some very long term employees, as well as some new folks. They have a couple of heavy duty mechanics in their early-30s.

“The biggest challenge we have is maintaining a continuous operation year-round, or as close as we can get to that. For young guys, supporting a family, that is especially important.

“We want to keep the work happening and hang on to our people.” Arkell notes that between the work they do for Western Forest Products, and additional logging, they’ve been able to achieve that in the last few years for their 45 employees.

But the big crunch, employee-wise for the logging industry—whether it is on Vancouver Island at one end of the country, or the island of Newfoundland at the other end—is still to come.

“We have a number of guys in their 50s and 60s who are going to be retiring,” says Arkell. In some situations when the labour situation is especially tight, the industry has even brought back some retired guys. “There’s the odd guy out there operating equipment who is in his 70’s,” he says. “But that is not going to be sustainable much longer.”

An approach Dyer Logging is taking to try and deal with this is giving their crews as much experience as possible. “You might have a log loader operator who can load logs efficiently, but who has not hoe chucked in tough ground. We give them the opportunity to train and be able to do that, too.”

It gives the operators more experience, and in turn, it makes them more productive, and flexible, for the company.

“Especially with the younger guys that come in, you want to expose them to all of the phases in logging, and the equipment in the operation, so they are as versatile as possible. We’re lucky in that we have guys who can run more than one type of machine, so we are able to switch them around—it helps make the operation more flexible.”

The challenges aside, Arkell remains positive about the future. “I think it’s a great industry. I think it has a great future, the coast industry in particular. And hopefully, the opportunities become true opportunities for both sides, the contractors and the licencees.”

Arkell likens the forest resource in B.C. to a pie. “The government and people of B.C. have to get a slice of the pie, their return on the public resource. The major companies operating the conversion facilities and doing the marketing, need a slice. And the contractor who does the harvesting—and supports the small communities in B.C. and provides employment—needs a slice of the piece.

“It’s about balance and a fair slice for everyone.”