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Canadian lumber exports to China: a huge success story

A recent resource conference in B.C. highlighted the huge growth the forest industry has seen in lumber exports to China—and that there is still more growth to come.

By Jim Stirling

Wayne Guthrie succinctly summarized what’s been accomplished during the last 10 years with developing the Chinese lumber market.

“Quite frankly, it’s a tremendous achievement,” the senior vice president, sales and marketing for Canfor Corporation, told the audience at the 9th annual B.C. Natural Resource Forum held recently in Prince George. Guthrie was a participant in a panel assessing Asian lumber markets from the perspective of lumber sales specialists representing the big three regional forest companies of West Fraser, Canfor and Tolko Industries.

“We were really starting from scratch in 2002,” recalled Guthrie.

Ten years later, the Chinese market represents about 30 per cent of the lumber produced in the B.C. Central Interior region. “It can be the difference between operating and not,” he declared. “Without the China market in the last five years, some mills wouldn’t have survived.”

Official figures weren’t available at time of writing, but total B.C. lumber shipments to China in 2011 were estimated in the 4.6 billion board feet range.

Guthrie and his fellow panelists were united in attributing the remarkable Chinese emergence to “visionary market development”, spearheaded by the provincial government and its then Forests Minister Pat Bell, the federal government and forest industry associations.

(Bell , the provincial MLA for Prince George-Mackenzie, is now Minister of Jobs, Tourism and Innovation and coincidentally is host of the natural resource forum in Prince George).

Bell’s timing and enthusiasm proved prophetic. It hasn’t hurt that China’s population has hugely expanded during the last 10 years. Or that the country has become a majority urban nation, with a ballooning middle class seeking the provision of better housing and associated services.

The frenetic pace of Chinese growth and housing demand has recently slowed. The dip doesn’t faze Guthrie. “We don’t build markets for a quarter,” he observed. Another billion people are expected to migrate from the country to the cities in the next 10 years. “The demand in China and in other Asian countries is simply immense.”

Fulfilling those potentials, however, will require more work, he cautioned. Canfor’s strategy includes focusing corporate attention on the top 10 national developers in China. They would like to work with these developers to take wood use to the next level, he explained. That process might involve boosting wood utilization in multi-storey buildings and the potential wood component in hybrid buildings; interior walls in concrete construction buildings for example. “The volumes are huge.” Guthrie said he believes there are opportunities for market development in other Asian countries like India, Thailand, Vietnam and Korea. “We now have a model for collaboration.”

Up next on the panel was Hardy Wentzel, Tolko’s vice president sales, marketing and logistics. He explained about 47 per cent of Tolko’s wood production is marketed offshore and about 75 per cent of Asian exports are sold in China.

Wentzel noted there has been a stigma about CLS wood use in China for low quality products. “Now they use the right quality of SPF products in the right applications,” he noted.

Wentzel credited the supply chain in supporting the Chinese market growth.”It takes five to seven weeks from sawmill to dock in China. That’s quite unimaginable.”

Tolko is focusing on several regions in China where the population is large, but the exposure to wood frame construction has been less focused. “In the next 20 to 25 years, there will be about 220 more cities with a population of more than one million people. They’re going to require wood in many forms,” he predicts.

Chris McIver echoed the sentiments of his fellow panelists on government-industry collaboration in developing the Chinese market.

“We’re fierce competitors but the way we’ve worked together has been outstanding,” said McIver, West Fraser’s vice-president, lumber sales and corporate development, based in the company’s Quesnel, B.C. headquarters. About 30 per cent of West Fraser’s lumber products are sold offshore.

“China is an incredible story, really,” agreed McIver He noted the Russian government’s raw log export tax is likely to be dropped in the next year or so. “But the market is so huge and it is so used to our wood. Canadian wood has become the standard,” he added.

McIver also shared a few thoughts about Japan. “For our company, it’s a very significant and mature market.”
The challenge for Canadian wood products industries is to move beyond the 2 x 4 market. “We need to transition to something else.” One possibility is the expansion of wood use in institutional buildings. “Our products, their technology.” Added McIver: “We’re quite bullish on Japan.”

McIver’s comments reinforce the promise of the entire region. “From West Fraser’s point of view, the Asia-Pacific is critical to our marketing strategy going forward. We’re going to stay there.”

Recovery process starts for B.C. town hit by sawmill explosion, fire

By Jim Stirling

The horrific explosion and fire at the Babine Forest Products sawmill near Burns Lake in January shook the forest industry.

It killed two millworkers, injured 19 others, several seriously, and left the central British Columbia town without its major employer and a ragged tear in its social and business fabric.

About 250 people worked in varying capacities for the mill located about 20 kilometres east of Burns Lake. It had an annual lumber producing capacity of 355 million board feet. The cause of the explosion and fire that destroyed the sawmill building but left the planer intact, was still under investigation.

The provincial government assigned cabinet minister and MLA for Prince George-Mackenzie, Pat Bell, as its front person to help launch the recovery process. Bell said he’s contacted regional mills and mines to find alternate employment for Babine’ displaced mill workers. There is a shortage of skilled sawmill workers like millwrights, sawfilers and electricians.

The Central Interior Logging Association has similarly rallied in support of Babine’s contract loggers and truckers, spearheading the search for alternate employment options. Within a day, the association had responses from 17 companies requiring truckers and more than 50 bush jobs, reported MaryAnne Arcand, the association’s executive director, member services.

“When they’re ready to go back to work, we can absorb them and still need more,” Arcand stated.

Others facing collateral damage from the Babine closure include a value added operation and the nearby Pinnacle Pellet manufacturing plant. Babine and sister operation Decker Lake Forest Products are owned by Hampton Associates, a privately-owned firm based in Oregon, with about a 10 per cent share held by the Burns Lake Native Development Corporation.

No rebuild decision had been reached. Long term fibre supply is fundamental to that decision. The mountain pine beetle epidemic is widely forecast to reduce the regional timber supply availability by up to 40 per cent.