By Heather Hudson
If you’ve ever wondered what government-funded business loans and grants can do for a business and its community, look no further than Manitou Forest Products.
The Northern Ontario Heritage Fund Corporation (NOHFC) recently funded the First Nations-owned Manitou Forest Products sawmill with more than $900,000 for new equipment and building refurbishments that will increase production and allow year-round operation of the sawmill building, creating seven or more full-time jobs. It’s the second time they’ve worked with the organization to help build their business—and Manitou General Manager Dale Kaemingh says the funding is a game changer.
“Without NOHF, it would be a struggle for us,” he says. “The funding is a good incentive for us to expand, modernize and grow.”
The historic Manitou sawmill sits on land owned by the Rainy River First Nations situated in the tip of northwestern Ontario near the U.S./Manitoba border. According to Kaemingh, it was built in the early 1970s as a small operation owned and managed by the Rainy River band, which had a hardwood licence and a contract with CN Rail to cut lumber for wooden railcars and rail ties. After only a handful of years, the mill shut down, likely due to wood shortages and market conditions, he said.
In 1980, Rainy River First Nations approached a few business owners in the nearby town of Emo, Ontario, with a proposal to invest in the sawmill to get it up and running again. Kaemingh had just graduated from high school and was working for his dad, the owner of a number of businesses. He and two partners entered a rental agreement with the band to run and manage the sawmill—and called it Manitou Lumber. The mill instantly created jobs for First Nations community members, but plans to expand were made challenging by the rental agreement.
“There was never a lot of money back then and no real margins. If we had to fix something in the mill, it just didn’t happen. The business owners didn’t own it and the band didn’t have money to fix it,” said Kaemingh.
“I realized for the business to expand, we needed to change from a rental agreement into a partnership.”
In 1998, Manitou Lumber and Long Sault Lumber, the Rainy River First Nation’s company, combined their assets and partnered to become Manitou Forest Products. With 51 per cent, the band has majority ownership of the company; Kaemingh owns the remaining 49 per cent.
“I think we formed one of the first partnerships with First Nations communities. In the 1990s, there weren’t a lot of those,” said Kaemingh.
Today, Manitou Forest Products operates in the original sawmill on Rainy River First Nations land. They produce approximately five million board feet each year from a wood basket in the Rainy River district, which comes from two to three forest management plans in the area.
“We primarily saw white pine and red pine, with small amounts of ash and cedar,” explained Kaemingh. “Our allocation level is enough to be sustainable and to fit within the provincial guidelines. We have about 25,000 cubic metres of allowable cut that we’re allowed to harvest from the forest within the 200 kilometre radius around our mill.”
With a limited supply of wood, they make the most of what they have, using dry kilns and planer molders to create value-added products such as pine flooring, wall paneling, log siding, timber framing and square timbers for log homes. They also partner with Norbord, a local OSB producer, to take their raw product stock and add value by turning it into rim board used for building homes and apartment blocks.
Although the business once did its own logging and harvesting, they now farm it out to contractors. Kaemingh says about 30 to 50 per cent of the logs that come in the yard come from under Manitou’s licence. The rest comes in from other contractors in the area. “We’re a huge land base, so there’s no such thing as getting a block of pure sawlogs. We might get a block that’s only 25 to 50 per cent sawlogs and the rest is pulp that may go to a paper mill or stud mill that cuts 2 x 4s or the OSB mill that cuts aspen.
“The balance of the wood supply that comes in is from the open market. There are about 15 to 20 logging contractors in this area. Some of them are First Nations and others hire a fair percentage of First Nations members who are trying to get into the forestry side of things.”
The number of Manitou employees fluctuates between 30 and 40. Out of their minimum staff of 30, more than half are First Nations. The business is governed by a board of directors which includes Kaemingh and his son Tanner, and members of the Rainy River First Nation band.
“Our goal is to try to promote from within the community whenever we can. Everybody gets a chance,” said Kaemingh.
Manitou Forest Products is on a mission of continual improvement. Eight years ago, they did a $1.2 million expansion; $650,000 came from a loan and grant from NOHFC to add two new specialty dry kilns and a new planer/molder that can do more specialty wood projects. They added two SII dry kilns, each with capacity of 35,000 board feet. The natural gas-powered kilns are front loading, with heat recovery ventilation. The moulder was a Leadermac Speedmac 630, 7 head with 8” X 12” capacity. Their new moulder is a newer version Speedmac 730SP, 7 head 8” x 12” capacity, which offers more flexibility, says Kaemingh.
Their latest improvements, funded in part by the NOHFC, are focused on modernizing the sawmill itself. They’re replacing aging equipment that will allow for more production and efficiency. Plans include:
Kaemingh says these improvements will create five to 10 part-time and full-time employees to work the new lines. “We’ll need two additional staff for the new saw line on the Wood-Mizer and more manual labor to pile lumber with more wood coming out. We’ll also need more staff on the planer operation, which leads into maybe needing another millwright.”
The cost of this round of improvements was initially expected to be $1.9 million but it climbed to $2.3 million thanks to the higher than anticipated U.S. exchange rate and tariffs on steel products coming from the U.S. “The extra costs caught us off guard but at that point we were two years into the planning stage and there was no turning back,” said Kaemingh.
With experience putting together a successful proposal for NOHFC, Kaemingh knew the process would take time and require meticulous attention to detail. “They have tough criteria. It took two years and almost a year of back and forth making sure everything was covered before they’d sign off on the loan.”
Manitou hired accounting firm BDO to help them build a business plan. “We looked at the increased yield, production and revenue we’d generate from the improvements to see if we could afford to go that much in debt. The numbers had to match or else it didn’t make sense,” he said.
NOHFC will fund 50 per cent of a project up to a maximum of $1 million. “We had to finance the rest. And they don’t just hand you the money. You have to have financing in place, buy the equipment and make the improvements before they reimburse you.”
About 75 per cent of their $913,000 funding is a loan; 25 per cent is a grant.
Their plan was approved last August, they started the expansion and renovations in September and were finishing up at year end.
The sawmill has come a long way since its humble beginnings in the 1970s. Kaemingh and the First Nations owners are looking at transitioning to the next generation. If their past is any indication, they have a recipe for success.
On the Cover:
Ben Hokum Lumber has completed a major upgrade at their sawmill, located at Killaloe, west of Ottawa. The mill directly employs more than 100 people and produces white pine, red pine and aspen lumber. With a view to improving efficiency, the company looked at various options to upgrade the entire milling operation—and decided the best strategy would be to replace the small logline with a ‘small to medium’ saw line. Read all about the details of the upgrade beginning on page 12 of this issue of LSJ.
B.C.s silviculture sector rising to the challenge...
B.C.’s forests—hit by beetles and two successive big wildfire seasons—are in need of rehabilitation, and the province’s silviculture sector is rising to the challenge, ramping up to meet the need for seedlings.
Ontario’s Manitou Forest Products has recently added to their mill production facilities with equipment that will help increase production, and create more jobs—and it’s been a game-changer for the company
Increasing production—and flexibility
A big capital investment by Ontario’s Ben Hokum Lumber will increase their lumber production—and the flexibility of the sawmill to meet the needs of its customers.
Things are cooking for New Brunswick logger
Bolstered by demand for wood from both sides of the border—and his son entering the business—New Brunswick’s Jeff Cook is optimistic about the industry, which has prompted him to carry out some equipment upgrades.
Site prep success
A project by an Alberta silviculture site prep contractor to mount a Swedish Bracke mounder on a John Deere skidder has met with success—with the equipment combo delivering solid results in the number of hectares prepared.
Included in this edition of The Edge, Canada’s leading publication on research in the forest industry, are stories from Alberta Innovates and Canadian Wood Fibre Centre (CWFC).
The Last Word
The B.C. forest industry is starting to look at, and carry out, commercial thinning, by necessity, notes Jim Stirling.