By Paul MacDonald

One lesson that was learned during the economic downturn in the forest industry was the importance of diversification—in both customers and in the kind of work that you do.

That’s an approach that Kelly Sunderman of Black River Contracting Ltd, of Clearwater, B.C., applied to his business—but in advance of the downturn.

“We were primarily a road maintenance company when I got involved with the business,” he explained. “My father-in-law started the business in the mid-1980s, and had a couple of road graders for doing the road maintenance work.

“But I decided to diversify the business into logging, doing right-of-way clearing, and roadbuilding,” he says. “We needed to get away from doing just forest industry–related work, so we would not be as badly impacted when a downturn occurred.” And it did occur.

One of their biggest customers now is BC Hydro, whom they do new road construction for. And with the Kinder Morgan pipeline project recently getting the ok from the federal government, Sunderman is expecting there might be some clearing and roadbuilding work to come from that project (see sidebar story).

On the forest industry side, they do work for forest company Interfor, the B.C. Ministry of Forests, and some work for Canfor and West Fraser, from time to time.

Expanding and diversifying the workload has meant an increase in equipment for Black River Contracting at times, from the initial two graders. “Depending on what work we have on the go, we’ve had as many as six graders, though we have three graders now,” he says. The number of graders they have now reflects the milder winters they are seeing in the B.C. Interior, and that Black River’s contracts are won by bid, rather than being long term contracts.

“When I first got involved in the business, the winter was the busiest time for us, with the amount of snow we’d get,” Sunderman explained. “We used to do 70 per cent of our work in the winter, and 30 per cent in the summer. But that has now reversed.

“We’re no longer seeing the snow pack we used to have, and that’s one reason why we have fewer graders on the ground now. In the winter, we used to have six graders and and we were busy. But now there is less snow, and it seems like the winters are warmer and shorter. Those kind of changes are part of us having to diversify.”

Back in 2000, the two graders the company had were both Champion machines. “As far back as I can remember, my father-in-law was always a big Champion guy.”

The operation has since purchased a John Deere grader, and also they also run Deere and Cat excavators. They also have a gravel operation, where they have a Cat loader and Kenworth trucks. “We’re a bit all over the map, when it comes to equipment,” says Sunderman.

Most of the servicing is done by employees, often in the field.

“Just due to the nature of the business, anyone who has been operating equipment for 10 or 20 years can turn a pretty good wrench, and do basic repairs,” says Sunderman. Their younger operators are more familiar with the computer technology on the machines, so it can make for a good balance between the traditional mechanical side and the technology side of the equipment.

“We have a full shop in Clearwater, and we’ve done complete rebuilds of the graders, and have lots of experience, particularly with the Champion and Volvo graders,” he added. “We can build a grader from the ground up with the equipment we have in our shop now.”

Sunderman notes that the Internet can be a great source of equipment parts. “You have to shop around these days, and the Internet is a great tool for doing that. It puts you in contact with people you did not even know existed, who have parts.”

It can connect with someone who just has a specific part, or someone who is parting out an entire piece of equipment.

“We just did a rebuild on one of our graders, and we sourced parts from all over Western Canada,” he says.

In recent years, Sunderman says they were running equipment a bit longer than he would have liked, but that was due to the milder winters, and the industry downturn.

“The last few years, I have been focusing on upgrading and renewing equipment, and getting late-model equipment.” Their excavators are fairly new—all of the machines have less than 6,000 operating hours on them. And they have a fairly new grader, with about 4,000 hours on it.

“We’re trying to move to newer equipment now—and have upgraded our screening equipment in the gravel operation, too.”

The average age for their operators is in the 45 to 50 year-old range, which is a concern for them, like the rest of the industry.

“That’s something we’ve become more aware of,” says Sunderman. “I’ve made a concerted effort this year in particular to hire younger guys that we can kind of nurture and bring along. I like to bring them on fairly green, when they are younger, in their early to mid-20s, and groom them, to see if they are interested in staying on in the industry.”

But they are a different workforce, with a different background and training, he says.

“The young guys coming out of school don’t really have the logging experience, where you are trained from the ground up. They go to operator schools, where they get equipment training for general and civic construction, rather than the training they need in the bush.”

Roadbuilding in B.C., with its varied geography, can be region specific, he notes.

“If you bring in a roadbuilder from the Kootenays vs. where we are, in the North Thompson, it’s way different terrain. Where we are, you could be dealing with good material or it could be a lot of rock, and wet material. So we have to be really good at managing our job sites.

“If you are building road in another area, on Vancouver Island, for example, you have to be really good at building around rock, and blasting,” he added.

“The North Thompson is kind of a strange creature, when it comes to roadbuilding. Right now (late in the year), we’re rebuilding about nine kilometres of road and putting in two kilometres of new road. And it’s that time of year when you can basically only open up about half-a-kilometre at a time because if it snows or rains, it saturates the ground. But if it’s the middle of summer, we can go great guns because it’s really dry. But then fire danger ratings can get high.

“You have to be really aware of where your equipment is, and what your guys are doing. So you have to be careful how you manage your job site.”.

Sunderman noted they get into roadbuilding and road maintenance in some pretty high ground at times, with a lot of switchbacks.

“We do lots of road maintenance and construction for high lead logging operators.”

He says that’s one of the reasons why they added a John Deere six wheel drive grader to their equipment line-up, to deal with the steep ground in the winter.

When it comes to blasting for road, Sunderland is happy to leave that to the specialists, who in their case is Leaverite Drilling and Blasting, run by Larry Chenier. Leaverite has eight rubber-tired and track rock drills in its fleet, including Terex, Rockmaster, Montabert and Atlas Copco equipment.

“We’re not doing blasting on a day to day basis, and Larry and his guys have lots of experience,” says Sunderman. “Blasting is not a big enough part of our business to get into it, and it’s something that they specialize in.”

Black River Contracting used to have some of its own harvesting equipment, with a buncher and skidder, but they made the decision to sell that equipment, and sub this part of the work out, during the downturn.

“We had to make the decision about whether we wanted to get bigger into logging or smaller—at the time, there was a lot of bid work through BC Timber Sales, and prices were really going into the tank. We’re just not big enough in terms of volume, so any harvesting work we have now is subbed out.

“My thinking is we want to be a road maintenance and construction company. We want to be good at what we do, but we don’t want or need to do everything.”

Over the years, this area of the province has been impacted by the mountain pine beetle, and the operation saw a lot of work for BC Hydro, as a result. “BC Hydro was finding a lot of dead pine along their right-of-ways and hydro lines, so we did a lot of major tree falling for them.”

Sometimes this resulted in them moving operations around a fair bit, on short notice, but there is less of this now as the beetle trees have been harvested.

Sunderman says they are now more easily able to plan ahead work for several months.

He says that their efforts at building their reputation in road maintenance and roadbuilding are paying off, as customers view them as the “go to” guys for road work.

“We’ve built our brand,” he says. “And we’re building a reputation as a company that can do a number of different things. With the roadbilding and our gravel pit, that can go hand-in-hand, because the equipment can be interchangeable.”

They have a large gravel and screening operation in Clearwater.

“When we are doing road construction or maintenance projects in the bush, we can take equipment from the gravel operation to the bush, because it is all mobile. It’s a big advantage to be able to shift equipment around.”

Part of the diversification was to also get involved in low-bedding their own equipment, so it can be easily moved around. “We want to be able to move our equipment quickly and respond to our clients,” says Sunderman. “We got into low-bedding primarily for our own equipment, but now we do it commercially, as well.”

With the forest industry being relatively healthy these days, Sunderman says they may decide to step up their activity in the industry. “The more a particular business can keep us busy, the happier I am to stay with it. But I always need to focus on diversification for us. That’s the lesson we’ve learned.”

Prior to joining Black River Contracting in 2000, Sunderman did not have a great deal of forest industry experience. In fact, his work experience was mostly on the financial side.

“I grew up around Clearwater, so I grew up around the logging industry, but did not have a lot of industry experience,” he says. His background in credit and finance certainly came in handy when things got tough during the industry downturn. “Having a financial background can be extremely helpful, especially when the industry is going through lean times, and every buck counts. It helps when you know how to read the books.”

His background has been especially helpful in terms of costing out equipment. “I’m able to look at my equipment and get a real understanding on a daily basis what my costs are vs. what I am making. Years ago, I would be chasing business to get the work—but you really have to understand that you need to make X amount per hour or per cubic metre with your machine, to make a go of it.”

Each week, he runs a spreadsheet program on expenses so that, at the end of the month, there are no, or few, surprises on the cost side.

“That’s one of the reasons I don’t run equipment as much as I used to,” he says.

“There is a lot more to running the business than just being on the equipment. If I put in 50 hours a week running a machine, things would not be looked after in the office, or in other areas of the business.”

Sunderman still does a lot of the low-bedding work, though, and fills in on running the other equipment, as needed. “I really enjoy doing different things, rather than sitting in one seat all the time,” he says.

Thinking back to his time in the financial industry, Sunderman said it was interesting work, but not something he wanted to have as a career. “Even then, I couldn’t see myself driving a desk long term,
that’s for sure,” he says, with a laugh.

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