Timber shortages in B.C. are now hitting home

By Jim Stirling

It may have been inevitable but the reality is still a shock. Timber shortages have hit home in British Columbia. And that’s why upcountry, where it still gets cold in winter, the near term prospects for the regional forest industry are looking bleak as the weather.

There are plenty of trees left in B.C., of course, but just not in the right ages, species and locations to sustain the high volume commodity lumber producing industry with a specific diet of spruce-pine-fir. The mountain pine beetle put paid to that.

In the 1990s, the beetles were affecting worrying volumes of B.C.’s homogenous lodgepole pine stands. Everyone knows what happened after that. Perhaps the forest industry’s prolonged and successful salvage efforts to harvest the affected pine created an illusion of normalcy. But the volumes that could be salvaged for large scale lumber production have now been salvaged.

The warming climate that so dramatically accelerated the pine beetles’ proliferation is now causing population surges in a range of other endemic forest “pests” including the spruce bark beetle. The changing weather is also spawning forest wildfires of unprecedented size and unpredictability. The 2017 wildfire season alone removed an estimated 22 per cent of Quesnel’s AAC and 18 per cent in the Williams Lake region.

The industry’s response to all this and the continuing softwood lumber pricing issues with the U.S. are reflected in production curtailments and shutdowns of uncertain durations at sawmills and other wood processing plants throughout the B.C. Interior.

West Fraser Timber, for example, cut third shifts from its sawmills in Fraser Lake and Quesnel mills to remove some 300 million board feet—or 13 per cent—from its “normal” production levels. Canfor Corp. resolved to reduce production from its B.C. sawmills by approximately 10 per cent during the fourth quarter of 2018, primarily through a reduction in operating days.

Tolko Industries has laid off about 100 workers at its Quesnel sawmill. Conifex Timber has cut production at its Fort St. James sawmill, impacting up to 200 workers. Interfor Corp has cut production at its three B.C. Interior mills. The list will likely be longer by the time this is read.

These large forest companies have long known about impending timber shortages and have taken action. Some of have been busy for years acquiring investment opportunities outside B.C. and Canada. The focus has been the U.S. southern pine belt where the resource remains plentiful and large B.C. based companies have the expertise to process and market it. Canfor has 16 operations in the region.

But the eyebrow raising investment for Canfor is the recent purchase of 70 per cent of Sweden’s Vida Group for $508 million. Vida is Sweden’s largest privately owned sawmilling company, with nine sawmills producing about 1.1 billion board feet of spruce pine lumber a year. It also operates a range of value added plants. “This transformational growth will allow Canfor to further diversify and secure a world-wide fibre supply to meet the growing demand of our customers for high quality wood products,” said Don Kayne, Canfor’s president and CEO when making the Vida announcement. The revealing words used by Kayne are “transformational” and “secure a world-wide fibre supply.” They indicate a shift in company philosophy.

West Fraser, which prides itself on being a low cost wood product manufacturer, operates more than 45 manufacturing plants in the U.S. and western Canada and now has mills in nine southern states. Interfor has about three billion board feet of annual capacity generated by its 18 mills in North America. Conifex Timber has been a more recent U.S. investor with a major upgrade of its Arkansas sawmill and the purchase of two other operations in the region. Tolko, too, has ventured south of the border with a recent acquisition of a 50 per cent stake in a Mississippi sawmill, and has invested in a joint venture in Louisiana (see the story on page 26 of this issue).

Changes in corporate thinking were reflected on the equipment side. Caterpillar, of all manufacturers, announced a pending agreement with Weiler Inc to sell its purpose-built forest business. This includes wheeled skidders, tracked and wheeled feller bunchers and knuckleboom loaders.

All of these sawmill production curtailments and foreign investments negatively  impact B.C. Interior logging contractors and truckers. It means less money circulating in the communities around B.C. reliant on the forest industry.

“The scary aspect of this whole story is, while the balance sheets have been repaired through the good times for the sawmills, contractors are left with balance sheets that have not grown any fatter,” David Elstone, executive director of the Truck Loggers Association recently told the media. The Interior is already suffering from shortages of equipment operators and logging truck drivers.

So where does all this manoeuvring leave the B.C. forest industry? Canfor’s Kane responded to that issue following the Vida deal. “We still believe long term B.C. is well positioned geographically to grow the Asian market for sure, let alone the U.S. market. However with some of the AAC reductions that you’re all familiar with due to the mountain pine beetle and some of the recent forest fires we’ve all had to deal with the last couple of years, the expansion opportunities are certainly limited in B.C.” There you have it. Succinctly stated.

Now B.C.’s NDP government needs to recognize the situation and set the regulatory table so the ingenuity of the provincial forest industry and First Nations can craft creative solutions. The process needs to quickly improve access to the wood fibre that IS available to produce a suite of products on a sustainable basis.

Logging and Sawmilling Journal
February 2019

On the Cover:
A commitment to staying innovative and cutting edge through continuous improvements has been the key to continued business success for Vancouver Island company Coastland Wood Industries—and recent capital investments reinforce that solid approach (Photo courtesy of Coastland Wood Industries).

Cutting Edge social media for the forest industry
Through her company Cutting Edge Sacha, Ontario’s Sacha Gendron is very ably demonstrating the power of social media in promoting the wood products industry—and encouraging more women to work in the Canadian forest industry.

Perseverance pays off for B.C. sawmiller
Perseverance has paid off for sawmiller Jason Alexander, with his cedar operation in Valemount, B.C. now having a new wood supply agreement, allowing him to expand the operation, and employ more local people.

COFI Conference coming up
Logging and Sawmill Journal previews the B.C. Council of Forest Industries’ annual convention, being held April 3 to 5 in Vancouver, the largest gathering of the forest sector in Western Canada—an event that attracts industry CEOs and executives, senior representatives from customers, as well as government and First Nations leaders.

Canucks head south … to Louisiana
A new sawmill recently started up operations in Louisiana, and it has a strong Canadian connection in its ownership and equipment, through B.C.-based Tolko Industries and the BID Group.

B.C.’s Resources Expo show gears up
Work is well underway for the next Canada North Resources Expo (CNRE) being held May 24-25 in Prince George, B.C., and the interest level in the show from exhibitors—such as suppliers of logging and heavy construction equipment—is high.

Making the switch to cut-to-length
Quebec contractor Luc Beaulieu made the leap to mechanized cut-to-length harvesting with some gently used refurbished logging equipment, and the switch has served him—and his woodlot customers—well.

Family forestry legacy
The Scott Family of Revelstoke, B.C., truly runs a family logging operation, and they’re keenly interested in seeing the family legacy continued—but like a lot of B.C. contractors, they’re facing challenges in achieving that goal.

Coastland’s continuous improvements
Veneer producer Coastland Wood Industries’ business strategy of continuous improvements has delivered solid results for the Vancouver Island-based company.

The Edge
Included in this edition of The Edge, Canada’s leading publication on research in the forest industry, is a major feature story from the Canadian Wood Fibre 
Centre (CWFC).

The Last Word
Timber shortages in B.C. are now hitting home, says Jim Stirling.

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