The digital revolution takinga toll on wood chips

By Tony Kryzanowski

About a month ago, my local newspaper, the Edmonton Journal, announced that it would no longer print a Sunday newspaper because of declining ad revenues. It may also only provide online access to the newspaper to subscribers outside the city as another part of its survival strategy. These decisions will reduce the Journal's newsprint consumption considerably—and consequently likely reduce the demand for wood chips from the Journal's newsprint provider.

This got me thinking about the influence that the growing use of the Internet, social media, Blackberries, I-Phones and digital cameras are having on the forest industry. Related to that, what ails the Canadian forest industry is not only fewer houses being built in the United States, but also the significant reduction in market demand for wood chips resulting from the large retraction in pulp and paper industry production over the past decade.

To put the pulp and paper industry's retraction into perspective, Natural Resources Canada reports that more than 44,000 people were laid off from the pulp and paper industry because of permanent closures and curtailments between January 2003 and April 2009, impacting 200 communities across Canada.

In many areas of the country where pulp or paper mills have shuttered operations, sawmills are finding it extremely difficult to dispose of their chips, especially since most provinces don't allow them to burn their wood waste in old-fashioned beehive burners any more. In other words, these days when the pulp and paper sector sneezes, the solid wood sector catches a cold.

Take digital photography for example. In my early years as a contract writer, my articles included a large selection of printed photos. Many people my own age still have drawers full of photos that we intend to sort out into photo albums or scrap books some day. About three years ago, I made the leap to digital photography and haven't printed one photograph on paper since. They all exist on CDs or portable hard drives, still waiting to be sorted out some day.

The close relationship between the solid wood sector, the pulp and paper sector, and the sale of wood chips hit home for me during a recent business trip through Saskatchewan. The province has done an admirable job of reallocating its significant wood resource to revitalize what was a collapsed industry, but the reality is that so much of the future of the province's industry revolves around one important piece of the puzzle—the pulp mill in Prince Albert. The closure of the longstanding Weyerhaeuser pulp mill about seven years ago not only put 700 people out of work, but it also handcuffed many lumber producers because suddenly they had no economical market for their chips.

Even today, one of the most advanced sawmills in the province, owned by B.C.-based Carrier Lumber and located in Big River, remains shuttered, not only because of the lack of a significant market for softwood lumber, but also because of no economical way to sell their wood chips.

Although the Prince Albert pulp mill has been purchased by a company called Paper Excellence, no firm date has been set to re-open the pulp mill. So a large portion of the forest industry in the province remains in a holding pattern, and the consequences of a long delay continue to ripple far beyond area sawmills. Many of the province's longstanding logging contractors and their bankers are tired of waiting. Many logging contractors have liquidated their equipment fleets or have put all new purchases of equipment on hold given the uncertainty in the industry.

The reduced domestic demand for paper products because of increased use of the Internet, social media, and mobile communication devices is creating a major headache for North American pulp and paper mills. However, the phenomenon is too new for anyone to have established any solid benchmarks.

Industry projections show increased global demand for paper. Perhaps that is true, but my sense is that most of that growth is outside North America. I need to look no further than my children and their collection of digital devices—I-phone, I-Pod, I-Pad, laptop, and cell phones capable of taking high quality photos and transmitting them instantaneously to social media sites like Facebook, to draw the conclusion that paper use has dropped markedly in North America. Sure, my boys will read a book—on their e-readers, while simultaneously staying in touch with their friends on Twitter.

Given the attraction of digital communication now favoured by young adults vs. traditional forms of paper-based communication, I expect demand for traditional paper products to continue to decrease significantly. Because of this trend, I believe the demand for wood chips will also continue to decrease. Therefore, sawmill operators shouldn't hesitate to invest in non-traditional uses for their wood waste such as chips, shavings and bark. Using it to produce bioenergy for use in-house or in kiln operations, or selling the raw material to green energy producers seems like the simplest option to keep sawmills open and to save jobs over the long term.

September 2012

The digital revolution takinga toll on wood chips