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Dealing with the downturn

Faced with mill shutdowns as a result of the industry downturn, New Brunswick’s Second Generation Contracting is doing its best to work through tough industry conditions, with the support of its good operators and good iron.

By George Fullerton

Change is an inevitable part of the harvest contracting business, but when your employer shuts down three mills in a period of just a few months, that level of change gets your attention—big time.                 

Byron Connors is one of hundreds of New Brunswick harvest contractors now watching the forest industry with more than the usual level of interest. With the forest industry struggling with a high Canadian dollar, the US housing construction sector in a severe downturn and beetle timber flooding into US and domestic markets, announcements of shift reductions and short-term shutdowns have become common.                                   

When UPM Kymmene announced on June 7 that they were closing their Miramichi ground wood and calendared paper mills for eight months to a year, there was a disturbing shudder felt throughout New Brunswick. The shutdown will throw 600 direct employees out of work, in addition to many hundreds more people who indirectly rely on the mill operations. UPM announced that they would serve markets previously supplied by the Miramichi mills from their other mills in Europe and North America. UPM had permanently closed down their kraft mill operation at Miramichi in 2004 with the permanent loss of 400 direct jobs.                                   

On the morning of June 7, Byron Connors, president of Second Generation Contracting Ltd, was optimistic that UPM’s Bathurst stud mill would stay in production. However by that afternoon, the announcement was made that the Bathurst mill—with 80 direct employees —was also closing down for up to a year. In April, UPM had announced the indefinite closure of their Blackville sawmill. 

Connors is meeting the challenge head-on with a business as usual attitude, at least for the time being. Second Generation Contracting works primarily on UPM Crown land operations which will continue to supply wood to sub licensee mills. “There is no sense worrying about what you can’t change,” was Connors’ reaction to the mill shutdowns. 

But the UPM mill closures have had a major impact on the forest industry in New Brunswick. For wood producers and contractors like Connors and his 60 direct employees, the effect has the potential to be painful. His 180,000 to 200,000 cubic metres stump-to-dump, contracting operation runs five harvesters, four forwarders (plus up to two contracted forwarders), two excavators and two dozers dedicated to road building, and three trucks (plus hired trucks).

“We first got wind of the shutdown at the end of May, about a week before the official announcement. I was in a meeting with UPM and they simply laid the paper on the desk, saying they were shutting down. It was a surprise, but not entirely unexpected,” said Connors.

“I have been around the industry long enough to know that there will be hard times. We have seen them before and we will see them again—it’s the nature of the business. I remember a few years ago, we had just purchased a new harvester and we had run it for a month when the company announced they were shutting down harvesting.  

“That time we were able to find other work here in the province, but this time, with mills down and cut back, there is not much alternative harvesting work.”

Connors said that UPM explained to him that it was “business as usual,” at least for the time being. Connors went on to explain that UPM has in the recent past exported hardwood pulpwood to Europe, and had exported softwood chips outside the province during a labour disruption at the calendared paper mill a few years ago. Connors made no indication if UPM was planning to develop export markets for raw wood fibre. Connors established Second Generation 14 years ago when he bought out his father’s (the senior Byron Connors) contracting operation. At forty-one, Connors is, by his age, almost unique in the forest industry.

“Outside of a forestry college grad we hired this year who is about twenty years old and another guy in his late forties-early fifties, all the rest of my operators are 55 years or older. That kind of age statistic is not a positive indicator for the forest industry. “I don’t encourage my son to look for a career in the harvesting business. It is very intense and if you look at your income for a 24/7 work week, it is simply not a good prospect to look at a career in this business.”

The senior Byron Connors, at 75 years of age, remains active and works steadily around Second Generation’s garage. “He likes to stay involved with the operations. He is also an important sounding board for business and operating decisions. He has seen a lot more of the forest industry than I have, and for many months he had been saying it would not surprise him if they shut the mills down.”

A Logset 8F forwarder is also new to Second Generation Contracting over the last year. They rented the machine for
a couple of months and were satisfied that it would be a productive addition
to the equipment line.

Second Generation currently runs Timberjack 608 machines and new John Deere harvesters with 762C heads, and one with a Waratah 616 head. The newest harvester, purchased in 2006, is a Direct H206 model, with a Waratah 622B harvesting head. “The Direct is a lot bigger and a lot stronger than our other harvesters and the head can handle the biggest wood we have. This past winter we were cutting big white pine and we had to make two cuts to get them felled. The first log was a struggle for the head, but the rest of the tree we could handle no problem. “The Direct has lots of power and weight so it can also work on some significant slopes without any concern. It has worked out very well for us.”

In 2006, Second Generation purchased a new Logset 8F forwarder to run along with their two Timberjack 1410 forwarders and a 16-tonne Rottne forwarder. Connors explained he had rented the machine for a couple of months and was satisfied that it would be a productive addition to his equipment line.

“We like the Logset really well. It went to work right off the float. There were a few new machine issues, like modifying some guarding and re-routing a few hoses, but basically it has performed very well over the first year, with good production and operator comfort.                 

“The Logset has a few more bells and whistles than the Timberjacks, while sharing many of the same basic design features. The Logset travels a little slower than our Timberjacks, but it carries a little more load. We have put 4,000 hours on it with no complaints. It was a good decision for us to try out this new machine from a new manufacturer.”                                   

Connors operates three log trucks and two floats in his operation. When trucking is in full swing, he has seven trucks loading under their Cat loader and four contracted self loader tractor trailers. They also have a fleet of 20-plus pickups for operators to commute in the woods.                                   

The logging crew is basically split into two operations with staggered shift start times so that, if necessary, Byron Connors can be on site to deal with issues or concerns on the same day. “That doesn’t happen very often, but the staggered start times provide the opportunity,” he said.

Connors basically splits his crew into two operations with staggered shift start times (5 am and 7 am). “We stagger start times so that, if necessary, I can be on site to deal with issues or concerns on the same day. That doesn’t happen very often, but the staggered start times provide the opportunity.”                                   

Connors values his employees and works hard to keep them. “It is really tough to find new operators, so I take good care of the ones I have. We pay a good wage and we provide a health program.                                                     

“We also have a bonus program that provides a cash payment when operations achieve more than 95 per cent on quality checks.                                   

“I tell my crews that we are like a hockey team. We all have to play at 110 per cent in order to win at this game. If we all perform at the top of our game, we all share the bonus. If all the players are not there on quality, the team fails to achieve the bonus.”                                   

Second Generation carries out worker training during spring shutdown. In addition to safety training and first aid, they also do a lot of SFI training to support UPM certification. All machine operators are also trained and certified forest fire fighters.                                   

“About 40 per cent of our operations are on some kind of partial cut. In 1990/91 we did a lot of partial cuts and we are cutting in them again now. They look pretty good—there has been significant growth.”                                   

The largest clearcuts Second Generation sees are in the range of 40 to 50 hectares, which means a lot of floating between cuts. Connors explained that in the past there was a seven per cent premium (above clearcut rate) for partial cuts. However, in 2006 UPM removed the premium so that currently all types of harvesting are paid at same per cubic metre rate.                                   

Connors speculated that biomass production may soon become a significant forest product in conventional harvest operations. He pointed to the demand for renewable energy and the interest of forest companies in generating their own energy, thus avoiding or reducing escalating energy costs from the grid.                                   

“Biomass would be a benefit for our operations. We used to have three pulpwood sorts we called the good, the bad and the ugly. When UPM closed the kraft mill, we lost the ugly classification, and we were directed to long butt the red butts at the stump, which leaves as much as three per cent of the stand volume in the woods. We have to handle and cut all those long butts, but we don’t get paid for the work because the wood is not getting to roadside.                                   

“If that low grade wood went roadside for biomass, we’d get paid for that production work and the economy and the environment would benefit from the green energy source.”                                   
Dealing with the mill closures, Connors speculated that when the forest industry in New Brunswick does recover, things will be very different from the current situation. “Things change, that’s part of this business,” he noted.