Lumber News Archives: Oct 2012

Lumber News Archives: Oct 2012

State of the World’s Forests ; US Housing Starts ; Home Sales, US ; Canadian Unions Merge ; Lecours Lumber Closed ; Interfor Appoints ; Fortress Appoints BC Provincial Election ; Madison’s Timber Preview ; Madison’s Investment Rx ; Housing Starts, Canada ; Japan Housing Starts ; US Producer Price Index ; WFP to Upgrade ; Skeena Opening Date Announced ; CEP Ratifies North American Railways ; Labour Agreements ; US Home Foreclosures ; Forestry Workers Lien for Wages Act ; United Steelworkers Release Plan ; Canfor to Restart ; Ligni Bel to Restart Russia China Timber Deal ; Madison’s Timber Preview; Logger Fatality ; Old Skeena Mill Reopens ; More Sawmill Fires ; More Sawmill Fires ; AFPA Announces Forestry Conferences; Hampton Closer to Rebuilding Mill ; US Housing Starts, Home Sales, Sentiment ; Sawmill Fires, Safety Issues

October 31, 2012

State of the World’s Forests

A flurry of reports were released by the United Nations in September; on the world’s forest cover, the forest products market, and a forestry sector outlook for the Russian Federation.

On September 24 the United Nations Food and Agriculture Organization (FAO) released its latest “State of the World’s Forests” report at the opening of the FAO’s Committee on Forestry in Rome, Italy. The Committee is the highest FAO statutory body on forestry, bringing together heads of forest services and other senior government officials to identify emerging policy and technical issues, to seek solutions and to advise FAO and others on appropriate action.
The Report focuses on how sustainable use of forestry resources can help reduce poverty, hunger and climate change. From soil and water preservation to conserving biodiversity, forests play a crucial role in helping countries achieve sustainable development, says the Report.

According to the UN, forests cover at least 31 per cent of the planet, and play a fundamental role in global and national economies, and in FAO’s mandate to reduce hunger, malnutrition and extreme poverty. In its Report the Committee noted that some 350 million of the world’s poorest people, including 60 million indigenous people, depend on forests for their daily subsistence and long-term survival. However, deforestation and forest degradation are contributing to significant losses of soil each year, putting the lives of many in peril. Sustainable agriculture and forestry can reverse soil degradation and help to combat desertification, says the Report.

Committee members mentioned the possibility of ensuring a more regular monitoring of forest cover.

UN Reports

Statistics contained in the UN Economic Commission for Europe (UNECE)/FAO “Forest Products Annual Market Review 2011-2012”, released September 21, indicate that softwood lumber consumption in the UNECE region (Europe, North America and Eastern Europe, Caucasus and Central Asia) remained on its upward path in 2011. A slightly more stable economy and the impact on more receptive and expanding markets, notably in Asia, sparked this improvement, says the Report.

The UNECE region has 42 per cent of the global forest area and produces 59 per cent of the world’s forest products. Even though consumption climbed by 2.3 per cent, to 181 million cubic metres, this figure is still some distance away from the record set in 2007 when UNECE softwood lumber consumption exceeded 232 million cubic metres. According to that Report, these figures will not be replicated in the medium term.

The report describes market developments in five standard sectors, based on annual country-supplied statistics, for wood raw materials, sawn softwood, sawn hardwood, wood-based panels and paper and paperboard.

The consumption of forest products in most of the UNECE region was 10 per cent lower in 2011 than before the global financial crisis, while in Russia, the consumption grew by 9 per cent. Asia, meanwhile, has become a major market for forest products for US and European traders, with China being the largest importer, while the consumption in their own region remained flat. The Report said net export of logs from the UNECE region, which covers 56 countries, to China grew by 28 per cent between 2010 and 2011.

China’s needs are driven both by internal demand and by remanufacture for export back to the UNECE region, the Report said.

Consumption of industrial roundwood in the UNECE region was up for the second year in a row in 2011 but was still 14 per cent lower than before the global financial crisis of 2008.

The FAO and and the Government of the Russian Federation’s “Russian Forest Sector Outlook Study to 2030”, released September 25, urges immediate action on modernizing the Russian forest sector, increasing its investment attractiveness, stimulating domestic demand for forest products such as wooden housing and furniture, and addressing the illegal logging issues and reforming forest public institutions and legislation.

The forest sector in the Russian Federation needs to be modernized using innovations and breakthrough technologies to maximize its potential as a global mitigator of climate change and an important source of timber. Forests in the Russian Federation play a crucial role in stabilizing the globe’s climate. For example, the country provided more than 90 per cent of the carbon sink of the world’s boreal forests in 2000 to 2007. Estimates of the average carbon sink in Russian forests during the past 10 years are between 500 and 700 million tonnes per year.

According to the study, by 2030 the forest area in the Russian Federation will increase by almost 1.5 per cent, from 882 million hectares in 2010 to 895 million hectares, an annual increase of 660,000 hectares. This increase will occur mainly due to the artificial and natural reforestation of abandoned agricultural lands and as a result of forest expansion on non-forested lands and tundra.

The study estimates that if the investment flow in the forest sector increases by five times from its current level of approximately US$2 billion to about US$10 billion per year, roundwood production in the Russian Federation will double by 2030, from 143 million cubic metres in 2010 to over 300 million cubic metres. Under such favourable conditions, pulp and paper production should grow by 2030 from 7.7 million tonnes in 2010 to 25.5 million tonnes, the Report says. Radical improvement in the investment climate in Russia would be necessary to achieve these goals.

US Housing Starts

Quiet celebration broke out across North America this week when the US Census Bureau posted strong housing starts in the US for September, a very unusual time of year for housing starts to rise. Permits, an indicator of new home building for the next two months, also showed strong improvement.

Housing starts in the US surged 15 per cent in September to the highest level in four years, adding to signs of a revival in the industry at the heart of the financial crisis.

Beginning home construction jumped last month to an 872,000 annual rate, the fastest since July 2008, figures showed Wednesday in Washington. An increase in building permits may mean the gains will be sustained.

Home Building, US

Over the past 12 months, work began on 34.8 per cent more homes, the biggest year-over-year increase since April.
Housing starts are now 82.5 per cent above the recession low rate of 478,000 hit in April 2009.

September groundbreaking for single-family homes, the largest segment of the market, rose 11 per cent to a 603,000-unit pace – the highest level since August 2008. Starts for multi-family homes climbed 25.1 per cent.

Construction activity rose in three of the nation’s four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20 per cent in both regions. Construction of new homes and apartments rose 6.7 per cent in the Midwest. Housing starts fell 5.1 per cent in the Northeast.
Building permits grew 11.6 per cent to a 894,000-unit pace in September, beating economists’ forecasts.

The number of permits swelled by 45.1 per cent since September 2011, the biggest annual jump since 1983.

The supply of new homes available for purchase has diminished. There were enough properties on the market in August to last 4.5 months at the current sales pace, matching July as the lowest level in almost seven years, Commerce Department figures show.

Residential construction contributed 0.2 percent points to gross domestic product in the second quarter of this year after 0.4 point in the first three months.

Home Sales, US

US existing home sales fell in September in part because there were fewer homes available for sale. The National Association of Realtors said Friday that sales dipped 1.7 per cent to a seasonally adjusted annual rate of 4.75 million. That’s down from a rate of 4.83 million in August, which was the highest in more than two years.
Sales are still up 11 per cent from a year earlier.
The nation’s inventory of homes – those for sale on the market – fell 3.3 per cent during the month to 2.32 million.

US Home Sales

The inventory of homes for sale fell in September to 2.32 million. At the current pace of sales, inventories would be exhausted in 5.9 months, the lowest rate since March 2006, the NAR said.

The price increase last month was measured against September 2011, and since then distressed sales have fallen to 24 per cent of total sales from 30 per cent.

Still, the share of distressed sales, which also include those w h ere the sales price was below the amount owed on the home, increased in September of this year from 22 per cent in August.

Canadian Unions Merge

Delegates to the Communications, Energy and Paperworks Union (CEP) convention this week in Québec City, QC, voted in favour of forming a new union with the Canadian Auto Workers Union (CAW). The CAW voted in favour of the project in August.

Yet unnamed, this new union will represent more than 300,000 workers in every province of the country, in 22 different major economic sectors. It will be the largest private sector union in Canada, but it will also represent thousands of workers who provide public services.
Madison’s spoke to Dave Coles, newly re-elected National President of the CEP, Thursday for details.

CEP, CAW Merger

“The merger will take six to eight months to complete,” explained CEP President Dave Coles to Madison’s in a phone interview Thursday. “We need to draft a constitution, which will meet the constitutional requirements of both unions, decide on policies, integrate staff, and merge administration and legal departments.

“This we will do in consultation with our members. The entire process will be transparent, details will be made public as we go.”

When asked if the new union will be structured similarly to the United Steelworkers, which formed a Wood Council when merging with the International Woodworkers of America (IWA) a few years ago, Coles answered, “Yes, absolutely. Certainly. The Forest Industry Council will be a very large and important part of the new union.”

Lecours Lumber Closed

Lecours Lumber, based in Hearst, ON, announced Monday the company is being forced to permanently close its sawmill and planing mill located in Calstock.

The sawmill and planing mill are on land held in trust by the federal Crown for the Constance Lake First Nation (CLFN). On September 21, 2012, Aboriginal Affairs and Northern Development Canada (AANDC) served a formal Notice to Vacate the Premises to Lecours Lumber. The Crown would not permit a lease renewal because Lecours Lumber and CLFN could not agree on terms.

Lecours Lumber’s previous land lease expired on December 31, 2008. Negotiations for the renewal of that lease began in 2005, but were not concluded. Lecours Lumber was permitted to remain while the lease renewal negotiations were ongoing.

Lecours Lumber must remove its equipment from the premises no later than November 16, 2012.

About 300 direct and spin-off jobs are predicted to be lost.

Interfor Appoints

Vancouver, BC’s, International Forest Products has appointed Andrew Mittag and Scott Thomson to its Board of Directors effective October 12, 2012.
Andrew Mittag is currently Senior Vice President, Agrium Inc and President, Agrium Advanced Technologies.

Scott Thomson is currently Executive Vice-President, Finance and Chief Financial Officer of Talisman Energy Inc.

Fortress Appoints

Fortress Paper, out of North Vancouver, BC, has announced the appointment of Joe Nemeth to its Board of Directors.
Nemeth has over 25 years of experience in the pulp and paper industry. Most recently, Nemeth held the position of President and Chief Executive Officer of Canfor Pulp Holding.

Fortress Paper also announces that Pierre Monahan will retire from the Board of Directors of the company effective December 31, 2012.

October 24, 2012

BC Provincial Election

With an election looming in BC this spring, its time to start getting informed about future plans for BC forest land base from both sides. The problems and challenges have been well covered in your Madison’s Lumber Reporter: epic amounts of devastation left in the wake of the Mountain Pine Beetle infestation; a forest service that is dangerously depleted of both staff and resources; a forest inventory that has not been updated in two decades; to name just a few.

Madison’s spoke first with NDP Forest Critic Norm MacDonald. Fresh off his tenure on the Mid-Term Timber Supply Committee, which travelled around the province this summer listening to submissions from stakeholders and the public, McDonald laid out the still-forming NDP forest plan.

“Essentially our plan consists of five main parts,” began MacDonald last week in a phone interview with Madison’s. “We will put more public investment into healthy forests, following many of the recommendations made in the Auditor General’s report, the Association of Professional Foresters, the Forest Practices Board, and those gathered at the Timber Committee hearings. We will take a hard look at raw log exports, instead putting an emphasis on greater utilization of the resource. We will establish a community stability commission to formalize government involvement in communities going through transition, or to re-establish a mill that’s having trouble. We will improve the existing skills training programs. We will put in place a wildfire interface strategy that includes perimeter forest tenures.

“The first point I mentioned, forest health, is very important. The NDP plan is to put a focus on resource planning and reporting, to improve current government objectives. We will have five-year planning programs, and submit status reports every ten years. For example with the timber inventory, we will reinventory survey dates every ten years, and forest disturbance every three to five years.

“In terms of reforestation, we would be doing surveys for Not Satisfactorily Restocked (NSR) areas of up to 100,000 hectares. We will plant 50 million seedlings a year. However it is difficult to say exactly what will happen with this in the next two years because the prep work is not being done right now.

“We will build up the research branch again, because the capacity within the Forest Ministry is different than with universities and other research organizations. This effort would have to be done slowly, without adding costs to the industry.

“The BC NDP will put into place a forest health plan that is doable and that will be costed out.”

Politics

MacDonald could not go into detail on the precise economics of this plan just yet because, “before we can put dollar figures on anything there will have to be an internal process. At the moment the BC Liberal’s budget is a moving target,” said MacDonald.

“In the beginning, investment will come from general revenue,” detailed MacDonald. “There is already a system in place to determine the appropriate stumpage, so it is not our intention to fundamentally change the stumpage system. The lumber market is strengthening, as things pick up more there will just naturally be more revenue. There are reasons to be optimistic. We will be careful to build on the useful and successful work done so far to nurture new markets [for BC lumber].”

As it happened, this week the BC Ministry of Forests, Lands, and Natural Resource Operations released its Forest Action Plan, detailing the government response to the Mid-Term Timber Supply Committee’s report. On Tuesday Madison’s attended a media conference call with Minister Steve Thomson and Parliamentary Secretary for Forestry John Rustad, who also just returned from the Timber Committee.

The Forest Action Plan does not contain a lot of specifics, and can be read here http://www.for.gov.bc.ca/hfp/mountain_pine_beetle/mid-term-timber-supply-project/

“This government response to the report delivered by the Timber Committee demonstrates our commitment to continue to invest in forest health and communities,” began Thomson. “We will update the forest inventory, which has been rapidly changing but has now stabilized so we can proceed with our Tenure Inventory Plan.

“We will begin converting from volume to area-based tenure and as a supplemental we will provide security of timber supply for non-sawlog wood. Part of this will be achieved by utilizing marginal stands.”

Rustad went further in saying, “The Ministry is going forward with implementation of all of the Timber Committee recommendations. We will introduce legislation this spring with a view to growing more fibre and getting more value from the landbase.”

In answer to Madison’s question of whether incremental changes coming into effect in the Lakes Timber Supply Area (TSA) following the devastating accident at the Burns Lake sawmill will be used as a model for the rest of the province, Thomson said some of it will be depending on the area and what is the most effective.

“We are taking steps in the Lakes TSA,” answered Thomson. “There are a number of proposals we are discussing with Hampton. Some specifics are related to marginal stands, additional processes with the Lakes Timber Supply Planning Table, and other points. After they are addressed in Burns Lake they may be used in other areas. For example, Williams Lake is already logging marginal stands.”

In response to another media question about the funding, Thomson said, “The funds are in the current existing budget for 2013-2014. That means $100 million over the next three years on reforestation and inventory. In terms of full implementation, the fiscal resource requirements will be addressed by the budget committee.”

Seeking further clarification on certain points, Madison’s had an individual interview with Minister Steve Thomson Wednesday.

“Overall the Timber Committee recommended to convert current volume-based tenures with renewable licenses which will be — whole or in part — area-based. The principle is that if the tenure is area-based, the forest companies will invest in intensive silviculture and get the benefits from increased volume. There would still be Ministry oversight of the land base as there is now and the Forest Act would still apply.

“The challenge will be in determining what that area will be, because the companies want it to be close to their operations.”

When asked about the time frame for this massive undertaking, Thomson said, “We will bring legislation in at the first opportunity, in the New Year.”

The other topic Madison’s wanted to know more about was the promise of more Type 4 silviculture, because this practice is common in regions with private timberland owners and BC — indeed all of Canada — has long been chided for not investing properly back into its forest resource in this manner. The Forest Action Plan states on page 8: a) Starting in 2014/15, we have budgeted $11 million per year for a fertilization program. This will fertilize approximately 21,000 hectares and produce an additional 460,000 cubic metres of timber. This additional volume will be realized 10 years after the last application of fertilizer. b) Type 4 silviculture strategies [ . . . ].

Madison’s asked: If the province is shifting to area-based tenure, who is responsible for funding this intensive silviculture?

“A licensee would apply for area-based tenure, part of the division [between the company and the Ministry] would be approaches to silviculture investment.”

A clarification arrived later by email from a Ministry media contact, which said, “The [Type 4 Silviculture] strategy development is led by the ministry’s district staff and includes input from licensees in the TSA and other stakeholders. Funding comes from the Ministry’s Land Based Investment program.”

However, there seems to be a conflict here. If the conversion to area-based tenure is, in part, motivated by an expectation that forest companies will “invest in intensive silviculture” as Thomson is quoted above, but the funding comes from the Ministry, how is that an incentive for companies to manage the resource base better than the Ministry has been doing?

Madison’s looks forward to seeing further details on these critical issues as they are released.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest policy changes for timber harvesting in Oregon and California, and looks at a recent Oregon report on timber harvesting statistics.

Contact us any time to receive the vital and timely information.

Madison’s Investment Rx

This month’s issue of Madison’s Investment Rx takes a deep look at the latest Canadian lumber production and export figures against recent and historic lumber prices. Of particular interest is an in-depth comparison of this data in 2004-2005 vs 2009-2010 and 2011-2012, as players struggle to find “What is the new normal?”.

Contact us any time to receive the vital and timely information.

Housing Starts, Canada

Canadian housing starts slowed in September on declines in the apartment and condo market, but the fall was not as sharp as expected, Canada Mortgage and Housing Corp data showed on Tuesday.

Housing starts fell to a seasonally adjusted annualized rate of 220,215 units in September. That was down from 225,328 units in August. The August figure was revised up from 224,900 units reported previously.

Canada Housing Starts

The CMHC said September’s slowdown in starts was mostly due to a decrease in the urban multiples market — typically condos and apartment buildings.
The rate of urban starts fell by 3 percent to 203,731 units in September, driven by a slowdown in Ontario’s hot condo sector. National single starts fell 1.4 percent to 67,643 and multiple starts fell 3.9 percent to 136,088 units, according to the CMHC report.

Urban starts rose in the Atlantic region, Quebec and the Prairies, but fell in Ontario and British Columbia, the two provinces that have had the most overheated housing markets in the past several years.

Japan Housing Starts

Housing starts in Japan rose 2.1 per cent over July on a seasonally adjusted basis, to 888,000 units, according to the Japan Lumber Reports.

Housing Starts, Japan

On an annualized basis, Japan’s housing starts in August were 77,500 units, a 5.5 per cent decrease from the same month a year ago. This drop was due to the rush to take advantage of the expiring eco point system, according to the Japan Lumber Reports. Compared to August 2010, new housing starts in August 2011 rose by more than 14 per cent, to 81,986 units.

August 2012 starts for condominiums in the Tokyo region were 3,830 units, a 32.4 per cent decrease from August 2011.

Starts of wood-based units in August 2012 dropped by 8.3 per cent compared to the previous month, to 43,015 units. The share of wood-based units was 55.5 per cent, a 0.9 per cent drop over the previous month, says the Reports.

US Producer Price Index

US producer prices rose more than expected in September as the cost of energy surged, a government report showed on Friday, but underlying inflation pressures were muted. The Labor Department said its seasonally adjusted Producer Price Index increased 1.1 per cent last month.

US PPI

Wholesale prices excluding volatile food and energy were flat last month. That was the lowest reading since October 2011 and fell short of analysts’ forecasts.

Consumer inflation is currently below the Federal Reserve’s 2 per cent target, and many economists think it will trend below that level for years to come.

Overall producer prices last month were buoyed by a 4.7 per cent increase in energy prices. Higher gasoline costs drove the increase. Wholesale diesel prices also contributed, rising 9.2 per cent, the biggest one-month gain since December 2010.

Food prices rose 0.2 per cent, backing off of the faster pace of price increases seen over the summer when a severe drought pushed up the cost of grain and soybeans.

In the 12 months to September, producer prices increased 2.1 per cent, biggest gain since March, after advancing 2 per cent in August.

Outside food and energy, producer prices were restrained by a decline in the cost of communication equipment.

Core producer prices increased 2.3 per cent in the 12 months to September.

WFP to Upgrade

Work is set to begin on Western Forest Products’ $16 million project to upgrade its Saltair sawmill into largest single-line facility on BC’s coast.
Spokesperson Mackenzie Leine told the Nanaimo Daily News Friday the equipment has been purchased that will see the mill’s edgers, stackers and sorters upgraded and contractors are now being selected to complete the work.

She said construction should be completed by next summer. The upgrades at Saltair, which currently employs approximately 140 workers, is part of WFP’s plans to invest $200 million into its sawmills on Vancouver Island over the next three years.

WFP has committed another $6.7 million from its $200-million commitment to upgrade its sawmill in Port Alberni, and Leine said further funding announcements for WFP’s other Island mills should come soon. She said the company is still studying what, if any, investments it wants to put into its two sawmills in Nanaimo, which are currently operating with just skeleton crews until markets improve.

Skeena Opening Date Announced

British Columbia-based Roc Holdings says the Skeena sawmill in Terrace, BC, should be fully operational by November 5.

Spokesperson Gian Sandhu says two lines will be at capacity by next month — and new equipment and even more staff will be hired after that.

He estimates it will take six to eight months to train crews for the second shift and once everything is running smoothly, the mill will directly employ 100 people.

CEP Ratifies

Workers at Domtar‘s Kamloops, BC, pulp mill have voted to accept a contract offer from their employer.

The members of CEP Local 10b voted 87 per cent in favour of a deal recommended by the bargaining committee.

Last week the members voted 99.6 per cent in favour of a strike. The new contract is a 5 year deal.

The Daily News of Kamloops reported the Local received the pattern agreement first signed with Canfor in Prince George. The contract provides lump sum payments of $3,750 in each of the first two years, followed by 2, 2.5 and 3 per cent. It expires in 2017.

October 17, 2012

North American Railways

Canada’s forest industry, as well as other sectors, has long complained about the level of service offered by the country’s railways. Those in remote communities, in particular, are absolutely at the mercy of a sole service provider and subject to unilateral decisions on everything from how many rail cars will be delivered to the state of repair, or disrepair, of those cars. Madison’s has heard endless complaints and examples of poor service, or no service, for years. Indeed, for decades. Too often there is no resolution; in fact a lot of the time concerns aren’t even responded to much less addressed.
The situation got so bad that toward the end of 2011, federal Transport Minister Denis Lebel Monday announced former Alberta Conservative cabinet minister Jim Dinning’s appointment to the Rail Freight Service Review.

Please see the November 11, 2011 issue of your Madison’s Lumber Reporter for details. The Review’s final report was released June 24.

The report makes it clear that commercial solutions are preferred over regulated agreements. In the meantime, a small minority of shippers worked with the federal NDP to introduce a private member’s bill that would regulate service.

The main recommendations of that report were: transport Canada should make the service agreement template available to rail freight stakeholders; transport Canada should make the commercial dispute resolution process publicly available; railways should be encouraged to revise their current dispute resolution processes; industry should be encouraged to review and update the service agreement template; transport Canada should monitor the use of the service agreement template and commercial dispute resolution process.

Logistical Difficulties

At the time of the report, pundits declared that Canadian railways would almost certainly face legislation this autumn in the aftermath of the Rail Freight Service Review. The federal government is now in the midst of drafting new legislation that will be tabled Parliament this autumn, which, among other things, aims to give greater recourse to the customers of both CN Rail and its smaller rival CP Rail in their disputes with the railways, according to the Financial Post September 24.

A spokesperson for Transport Canada said she expects the legislation to be tabled this autumn, says the Post.

Last week things came to a head once again as a group of Canadian industry leaders took it upon themselves to bring their issues to Ottawa.

The group of CEOs and other senior executives from major resource sectors such as forestry, fertilizers, mining, and agriculture converged in Ottawa to deliver the message that “now is the time to address inefficient and inadequate rail freight service,” according to Canadian Transportation and Logistics. The business leaders, all members of the Coalition of Rail Shippers (CRS), brought their message directly to Ministers, groups of MPs, and key officials from Transport, Industry, Natural Resources, Agriculture, the Canadian Transportation Agency, and the Prime Minister’s Office.

The CRS wants the government to implement legislation that would allow more balanced commercial relationships between railways and shippers. This would include the right to a service agreement between a rail company and a customer, backed up by a dispute settlement mechanism.

A recent article in the Winnipeg Free Press complaining about major infrastructure changes without municipal consultation illustrates some of the frustration.

As a federally regulated institution, the BNSF Railway is not obliged to disclose how its land would be used, said the Press September 20, but it’s unclear if Fort Distributors, who is leased that land, was equally immune from municipal or provincial oversight. The sudden appearance of eight massive metal silos along a railway right-of-way in a dense residential neighbourhood without the slightest whisper to a municipal or provincial official, or to the neighbours, raised alarm. This new development will alter the character of the neighbourhood, not just in appearance, but also in the new truck traffic, noise and pollution that will be generated. Again, it seems remarkable that this substantial reorientation of the district can unfold without a process, says the Press. Winnipeg’s legal department is looking into the matter.

On the flip side, railways have complained in the past that municipalities frequently plan new developments without consulting them about the impact, explains the Press. Railways, moreover, were here long before most of the inhabitants, which gives them special rights and privileges.

By comparison in the US, which has significantly more than two national railway companies in operation, the Surface Transportation Board (STB) receives filings and posts decisions openly on its website. However things are not quite as transparent as they seem. Not being a lawyer, Madison’s gave up after 15 minutes of trying to decipher the documents available.

The Surface Transportation Board’s effort to increase arbitration in disputes over demurrage, accessorial charges, and misrouting and mishandling of cars is part of a broader strategy to ease tension on both parties, according to the Journal of Commerce (JoC) on August 2. The railroad regulatory agency recently announced plans to change rules to give shippers restricted to a single railroad service a better avenue to challenge rates.

The drive for more arbitration between railroads and shippers also appears to result from complaints that the agency takes too long to settle disputes. Arbitration not only can save parties time and money, but also encourage shippers and carriers to reach an agreement before a third party needs to get involved.

Unlike shippers, however, the railroads would have to opt-out of the arbitration process, instead of having the choice to opt-in. They don’t like that approach. The “unbalanced” measure could prevent a carrier from seeking a resolution over demurrage with a shipper, said John Scheib, Norfolk Southern Railway’s general counsel, to the JoC.

Shippers counter that carriers can opt-out of an arbitration proceeding by filing the necessary paperwork, a statement the Association of American Railroads (AAR) rejected.

The looming question is whether, given the choice, the railroads would opt-in. There is no evidence the railroads are part of the reason arbitration hasn’t been used more often to settle STB-related matters, and the AAR “fully supports increased use of mediation and voluntary arbitration,” said Louis Warchot, an attorney for the Association.

An editorial printed in the Financial Post by Michael Bourque, President and CEO of the Railway Association of Canada, on August 6 states, “Canadian freight railways are today recognized as among the most efficient in the world. For the past several years, CN and CP have been improving service to customers, working with supply chain partners (such as ports and terminals) and signing commercial service agreements. These efforts have led to a high-performance supply chain, characterized by increased collaboration, efficient service and rail rates that are the lowest in the world. Changes effected by the rail sector have reinforced its role as the backbone of an integrated supply chain that has helped move Canada’s economy to take advantage of growing world demand for Canadian resources. [ . . . . ] The latest myth to be propagated is that railway customers co-operated in the Rail Freight Service Review process because they are interested in commercial solutions. The Report states: ‘Shippers expected the facilitation process to impose solutions that would provide shippers with more leverage in shipper-carrier relationships.’ The most desperate argument is that ‘railways will go back to their old ways’ if they are not regulated further. Well, governments can always intervene. But the real question is why railways would abandon a business model that has led to very high levels of efficiency, that enables their customers to remain globally competitive thanks to the lowest freight rates in the OECD and that also delivers profits to their shareholders?”

Labour Agreements

CEP Local 10b at Domtar‘s mill in Kamloops, BC, voted 99.6 per cent in favour of a strike on Monday night. The union wants to establish pattern bargaining in British Columbia’s pulp sector, using Canfor‘s deal as the pattern. Canfor’s latest contract with its workers includes a 7.5 per cent wage increase over 5 years (with no wage hikes in the first 2 years.) Domtar and the union have scheduled two days of bargaining. The workers have been without a contract since April.

The members of CEP Local 1115 have ratified their proposed agreement with the Cariboo Pulp and Paper Company. The vote was 76.6 per cent in favour with 171 members voting.

US Home Foreclosures

Lenders seized fewer US homes in August, in part due to the rising popularity of alternatives to foreclosure, data analysis firm CoreLogic said on Thursday.
There were 57,000 foreclosures completed in August, down from 58,000 in July and 75,000 a year ago, according to CoreLogic.

Foreclosures, US

There were approximately 1.3 million homes in the foreclosure process, accounting for 3.2 per cent of all mortgages. That was unchanged from July, but it was down from the 1.4 million, or 3.4 per cent, seen in August 2011.

About 3.8 million foreclosures have been executed since September 2008. August was the fourth month of fewer foreclosures.

Still, there were higher concentrations of foreclosures in some areas. In the last year, nearly half of all completed foreclosures occurred in five states – California, Florida, Michigan, Texas and Georgia.

Forestry Workers Lien for Wages Act

The Law Commission of Ontario (LCO) has launched a public consultation for its project on the Modernization of the Forestry Workers Lien for Wages Act. The public consultation is the first stage of a project that will develop recommendations for changes to the Act.

Ontario’s Workers Lien Act

Under the Act, which applies only to Northern Ontario and the County of Haliburton, forestry workers are entitled to claim a lien for wages on certain wood products. The outdated drafting of the Act, which dates back more than a century, frustrates workers’ attempts to protect their interests since complex and costly litigation is required to interpret the Act in contemporary circumstances, according to the LCO.

“Recent cases have shown that the Act does not reflect modern logging practices or legal processes,” said the executive director of the LCO, Dr. Patricia Hughes, “and if it is to fulfill its purpose of protecting workers in the logging industry, reform is essential.”

The Consultation Paper outlines a number of problems with the Act, sets out issues for consideration, and asks a series of questions about those issues. Written submissions on the Consultation Paper will be accepted until December 14, 2012. The Paper also explains how people may provide feedback in more informal ways.

United Steelworkers Release Plan

The United Steelworkers Wood Council this week released its plan for forest plan that works for British Columbia. The United Steelworkers propose a forest policy that creates family-supporting jobs, supports value-added manufacturing, and generates economic wealth for our province, says the release.

USW Forestry Plan

The Steelworker’s five point plans is:

1) Enact an “equivalency fee” on raw log exports at a rate equal to the difference between their domestic and export prices, currently about 50 per cent. Along with reducing log exports, it would provide BC manufacturers such as sawmills, pulp mills and value-added plants with access to BC logs at a fair price;

2) Enact the same policy at the federal level to ensure the fee applies to raw log exports from federally regulated private lands – the prime source of log exports;

3) Move collection of the province’s “resource rents” to the end of the value chain rather than the stump – a change that would make it easier to buy, sell and add value to logs domestically;

4) Create a wood-manufacturing investment fund utilizing BC’s share of revenues from the Canada-US Softwood Lumber Agreement to support efforts to rebuild our province’s manufacturing base;

5) Develop a reforestation strategy that ensures proper management, monitoring and reporting of our forests to secure the future of the industry and the provincial economy. It would create jobs today and healthy, sustainable forests for tomorrow.

Canfor to Restart

Long awaited good news for the people of Radium Hot Springs, BC, arrived this week when Canfor announced plans to restart its Radium sawmill this autumn. The sawmill was closed indefinitely in May 2009 due to the market downturn.

Canfor has been investing approximately $38.5 million in the sawmill since the spring to install a new planer facility and a biomass energy system, and to modify the existing sawmill.

The biomass energy system will utilize the mill’s waste wood.

Canfor is also investing $1.5 million in their Canal Flats mill with the installation of new lumber drying equipment.

Ligni Bel to Restart

Word was circulating around Pictou County, NS, over the weekend that salaried staff, including some supervisors, received letters with offers to return to work from a newly formed affiliate of Northern Pulp, which operates an Abercrombie Point mill.

A late October restart of the former Ligni Bel lumber mill in Pictou County by an affiliate of Northern Pulp Nova Scotia will reboot the local economy, a union official said Monday.

About 70 union workers lost jobs when the mill shut down last December. The mill lost its wood supply when NewPage Port Hawkesbury failed last September.

The mill went into receivership in August, a victim of the NewPage Port Hawkesbury bankruptcy, where it sources raw product, and also of the stalled United States housing market.

Northern Pulp has indicated it will supply the mill with raw product from its Crown-lease lands, with the mill shipping studs to the American and Canadian markets.

Wood chips resulting from stud production will be shipped to the pulp mill.

October 10, 2012

Russia and China Timber Deal

A timber agreement between Russia and China in the works since June has been signed. Plans for the fund – a venture between sovereign wealth fund China Investment Corp (CIC) and the state-backed Russian Direct Investment Fund (RDIF) – were announced in October 2011. The wealth funds of Russia and China announced June 4 they would commit US$1 billion in a joint investment fund worth as much as US$4 billion, raising additional money from third-party international investors. The joint Russia and China Investment Fund (RCIF) is to target transactions in Russian forestry, logistics and agriculture, RCIF’s Chief Executive Officer Kirill Dmitriev said in an April interview with Reuters.

As much as 70 per cent of the joint fund will be invested in Russia and the Commonwealth of Independent States, Dmitriev said in a statement April 29. The first investment was expected in July and was likely to be into one of Russia’s largest forestry firms, which exports a substantial amount of wood to China, Dmitriev said at the time.

It will aim to allow the forestry company to make higher-margin processed wood products in Russia, which it can export. Dmitriev declined to name the company. A source close to the deal said that an initial investment could be around US$200 million for a minority stake.

Timber Deal

On September 7, The RDIF announced it would become a shareholder in Russia Forest Products, Russia’s second-largest forestry products firm, in a deal that would enable the business to produce higher-value processed products. Russian Forest Product holds annual allowable rights to fell more than 4.5 million cubic metres of timber and has long-term leases on 6.4 million hectares of forest. It accounts for around 10 per cent of Russia’s timber exports to China, the RDIF said.

The fund’s first deal would create 1,000 jobs, Dmitriev added, and improve margins by getting Russia Forest Products to sell processed wood instead of raw logs.

Stanley Li, an analyst with Mirae Asset Securities, said the deal made economic sense for both sides, but noted there were likely to be limits to their co-operation, according to the Financial Times. “Russia will probably keep China out of really huge energy investments, like it has had from ExxonMobil or Shell, because those are more politically sensitive,” Mr Li said. “At this stage, timber is something that the countries can do without too much political resistance.”

Vladimir Putin, Russia’s president, has championed a pivot towards resource-hungry Asia in a tacit acknowledgment that Moscow has been slow to exploit economic opportunities on its Asian doorstep. Putin hosted the Asia-Pacific Economic Cooperation (APEC) forum, in the first week of September, at the Pacific port city of Vladivostok in an effort to “market the far-east as attractive for investment”, said Kirill Dmitriev, RDIF’s chief executive officer.
The CIC is facilitating the building of a veneer plant with an annual capacity of 300 million cubic metres in Khabarovsk krai, near Komosomolsk, Russia, according to the Japan Lumber Reports.

The RCIF concluded a blanket cooperation agreement with the coastal provincial government of Primorye for economic growth in the local forest and wood industry, transportation, and traffic infrastructure, says the Reports. This was all part of the APEC conference recently held in Vladisvostok.

RDIF is talking to Australian funds about investment in airport infrastructure and to Malaysian funds about the pulp industry. “We have good relations with each country; they are of great interest to Russia,” Dmitriev said to the Moscow Times in early September, adding that the number of big investors wishing to invest in Russian assets climbed from 25 per cent in October 2011 to 40 per cent in April 2012.

“We are discussing several very interesting projects. We are looking at investment in airports, in Kazan, for example. This is of interest to funds from Australia, which have unique airport management experience,” he said.

Russia’s Far East is certainly rich in resources, including metals, minerals and timber. It is also well placed to be a transit and logistics hub for shipping Russian oil and gas onward to Asia and Asian-made goods deeper into Russia, according to The Economist. Yet the region is also a microcosm of Russia, plagued by the problems that impede business everywhere in the country. “In order to create a factory that’s 100 square metres, you need 100 square metres of documents,” an Asian diplomat laments. Cumbersome customs procedures and poor rail links explain why the export capacity of Vladivostok’s port is minuscule compared with similar ports in neighbouring countries.

The biggest question is whether Russia’s Asian partners care as much about their neighbour as it does about them, says The Economist. Natural resources and energy are of interest, but many Asian countries already have diverse supplies of these. Relations with China, for instance, have become ever less a partnership of equals, with the influence of China’s government now eclipsing that of Russia’s, says Bobo Lo, an expert in relations between the two countries.

With the APEC summit and related investments, Russia has proved that it can pull off big projects in its Far East. Now the region needs less visible, but equally important efforts to improve local governance and economic rules.

Madison’s Timber Preview

The collapse of a major Australian timber owner and sawmill operator this week sent shock waves through the global solid wood industry. A huge investment in a brand-new pulp mill was blamed by some for the bankruptcy.

This week’s issue of Madison’s Timber Preview examines the collapse, and provides the latest regional information on the North American timber harvest and prices.

Contact us any time to access this vital and timely information.

Logger Fatality

The BC Coroners Service has confirmed the identity of a man who died as a result of a logging incident near Bella Coola, BC, on September 23, 2012. The man is Renel Lafleur, aged 19, from Golden, British Columbia. Lafleur was working at a logging camp located at South Bentinck Arm near Bella Coola when he was fatally injured.

Emergency personnel attended the scene and attempted resuscitation efforts. However, Lafleur succumbed to his injuries. The BC Coroners Service and WorkSafeBC continue to investigate this death.

Old Skeena Mill Reopens

Fourteeen months after Terrace, BC’s, last remaining standing sawmill was purchased by a Chinese holding company, machinery is up and running in anticipation of full out production. Skeena Sawmills was purchased from West Fraser by ROC Holdings in July 2011.

Terrace Sawmill Running

The new owners have poured about $6 million worth of upgrades into the mill with plans to spend up to another $15 million in long-term capital spending. The company also owns rights to local Tree Farm Licence 41.

Terrace mayor Dave Pernarowski says it’s exciting to see the mill running for the first time in five years.

“They would like to add another line to their existing production line to accomodate longer logs, and maybe different types of logs coming into the mill,” he said to HQPrinceGeorge.com.

Pernarowski says over a dozen staff have already been hired to take on the new equipment testing underway with logging companies and other spinoffs also benefitting the community.

More Sawmill Fires

In an increasingly disturbing trend, several sawmills in the US experienced fires this week.

The cause of a fire that burned a Redwood Valley lumber mill last week is still undetermined after an investigation by CalFire and the Redwood Valley-Calpella Fire Department, according to RVCFD Capt. Brendan Turner.

The fire started on the northeast corner of the mill and completely burned the building. The blaze also consumed two forklifts, causing their propane tanks to explode, along with a number of household-size propane tanks inside the building, Turner said.

“We were able to narrow down the area of origin, but we were unable to determine the cause,” Turner said. A CalFire prevention officer aided RVCFD in the investigation.

Lumber, mill equipment, and the fork lifts burned in the blaze, according to Turner. The equipment lost included a planer and one used for cutting molding. The fire didn’t spread beyond the one mill building, and didn’t threaten neighboring homes, according to Turner.

Sawmill Fires

A blaze at the Beadles Lumber site in Moultrie, GA, was reported at 6:18 am Tuesday, with firefighters at the scene until about 2 pm. The fire destroyed a wood-drying kiln but caused no bodily injuries nor spread to other property.

The fire was under control about an hour after the initial call, but Moultrie Fire Department personnel stayed on the scene to wet down the still smoldering lumber. Finding the kiln fully ablaze, the firefighters attacked it with ladder trucks before moving in on foot, fire officials said.

The fire department was called back to the scene at 9:10 pm when a passerby saw flames that had flared back up; firefighters stayed until about 10:30 pm that time.

A company representative said that the kiln, built in the 1970s, was a near total loss, but that the effect on production will be minimal if any. The other two kilns, which have excess capacity, will continue operation, and if necessary some wood will be dried at Balfour Lumber in Thomasville, GA, also owned by the company.

There had been previous fires at the kiln but none of this magnitude, the company said.

The owner of a lumber and pallet company in Clinton County, IL, believes a lightning strike may have sparked a fire at the business Wednesday.

The official cause will be decided by the Illinois State Fire Marshal who is on the scene of the blaze.

The owner of Kalmer Lumber and Pallet Company said there was a lot of lightning in the area and then a huge boom.

The fire destroyed a large production facility building and the heavy equipment stored inside, including fork lifts and tools.

Clin-Clair Fire District Chief Rick Musenbrock tells NewsChannel 5 severe weather halted efforts to put the fire out at one point, after he pulled firefighters back to insure their safety.

Musenbrock says intense lightning continued around the fire scene for nearly an hour. No injuries though were reported in the fire.

More than 40 firefighters from various departments were on the scene to assist in the mutual aid response.

No one was injured in the fire.

Several homes had to be evacuated Wednesday night when fire spread from a garage to a lumberyard in downtown Garner, IA.

According to Garner Fire Chief Terry Jass, the blaze started in the garage at about 11:23 pm Wednesday. The flames spread to nearby MaxYield Lumber.
The garage, which was also destroyed, is not owned by the lumber yard. Jass said he doesn’t know who owns the garage.

“It appears to have started in the neighboring garage which was not attached to but was within four inches of the lumber yard,” Jass said.

“It got into the ceiling of the lumberyard and from then on it was history.”

The State Fire Marshal’s Office was due on the scene Thursday afternoon to assist in finding the cause.

Approximately five nearby homes were evacuated because of concerns that the smoke from the lumberyard was toxic due to the burning shingles and fiberglass insulation.

Residents were in their homes Thursday morning, Jass said.

Heim said the building was filled with lumber, shingles and insulation.
He said management is preparing an interim operating plan.

MaxYield Lumber is a division of MaxYield Cooperative.

AFPA Announces

Jason Boucher is the new Board Chair for the Alberta Forest Products Association (AFPA).

Boucher is involved with his family’s sawmill business, Boucher Bros. Lumber Ltd., in Nampa, AB. The business has been an active contributor to the Peace Country for nearly 35 years.

AFPA President and CEO Brady Whittaker welcomed Boucher to the position. “Jason brings a lot of enthusiasm and expertise to our Association.”

The AFPA is celebrating its 70th Anniversary this year. Under Boucher’s leadership, the AFPA Board will focus on promoting the industry and driving innovation to create a prosperous future.

Boucher replaces Mike Putzke as AFPA Chair. Putzke will remain on the Executive of the Association.

October 03, 2012

Forestry Conferences

This week the World Foresty Institute (WFI) and Forest Economic Advisors (FEA) held conferences in conjunction at the World Forestry Center in Portland, OR. There were a large number of excellent presentations on timber supply, log prices, land values, expectations for demand, US housing forecasts, macroeconomic analysis, as well as a strong focus on emerging markets and new technologies. This week Madison’s will give a recap of the most pertinent messages, then will roll out details over the next couple of issues.

The events started off with the FEA’s second annual Forest Products Forum. Principals and economists at the FEA spoke on their respective subjects, as well as representatives from the University of Oregon, Quebec’s Ministry of Natural Resources and Wildlife, and industry.

Beginning with the most general topic, there were two speakers covering macroeconomic issues; Tim Duy from the University of Oregon opened the FEA Forum, while Jeff Savage of Wells Fargo Wealth Management kicked off the WFI speeches. Both had a lot of insight and useful data, but neither were able to offer a particularly glowing picture for the US in the coming two years. The final years of this decade, however, could turn out very well indeed.

Timberland Investment

“Owners’ equity in US real estate has collapsed,” explained Duy. “Damage to household balance sheets and retirement funds is phenomenal.”
Savage pointed out an important statistic that does not get a lot of press, “The labour participation rate is still declining,” he said. “This needs to go up before true recovery can happen.”

The labour participation rate tracks people who want to work but have given up looking for a job for whatever reason. When that miserable situation corrects and people are again encouraged to apply for real jobs, unemployment will increase at first before it starts to go down. When that does happen, more people will be back to work properly.

Moving on to US housing starts, Brendan Lowney of FEA spoke about “Housing and End-Use Outlook” for wood products.
“Housing has underperformed the economy in the last couple of years,” explained Lowney. “In the post-recession we expect it to outperform, however that is contingent on employment.”
While statistics on the inventory of new homes for sale is encouraging, deciphering the data on existing home inventory is more difficult.
“There could be as many as 400,000 homes not currently for sale but in the foreclosure pipeline,” detailed Lowney. “Core-Logic sets the overhang of unsold homes at 1.5 million. The vacancy rate, actual + theoretical, is 1.9 million. Looming foreclosures on first-lien mortgages, those with no payments made in 90 days or more, account for 20 per cent of homes in serious delinquency. This brings the overhang of existing homes for sale to 2.1 million, but that’s probably a bit high due to the recent increase in both pre-foreclosure sales by banks, and in short sales. So we put the overhang at 1.8 million homes.”

“However, due to high headship rates [the number of adults living together under one roof] for several years running, the very recent recovery of home prices, and the huge amount of pent-up demand, we estimate that by 2015 that 1.8 million overhang will have been sucked up into the marketplace,” continued Lowney. “The US is currently underbuilt by 3.3 million homes.”

Madison’s always finds the industry perspective most compelling. Craig Johnston, President of Forest City Trading Group spoke at the FEA Forum on transportation issues in North America, while at the WFI, Jack Jordan of Jordan Lumber & Supply, Daniel McFall of Stimson Lumber, and Don Haid of Weyerhaeuser, talked about recent changes and challenges for their companies.

Echoing Madison’s sentiment, Johnston started out his presentation by saying, “With housing growth and with additional sawmill capacity coming back online, will we be able to move all this wood?

“The lumber segment of US railroads has really shrunk, there are extremely inefficient lumber volumes for railroads and forest products are a slow-moving asset therefore the returns are low. However with trucking, capacity is extremely tight, and spot capacity is even worse.”

Johnston explained that a large segment of trucking business for lumber products is the spot business, booked daily. Producers have been running into significant problems lately in this space. It is a problem in Canada as well, not just the US, as a few of Madison’s sources have indicated in recent months. More information on this critical subject will be coming in a future issue.

The wood manufacturers panel at WFI provided wonderful insight from Jordan, McFall, and Haid.

To a question from the floor asking what is the biggest constraint on capacity, Jordan answered that it is, and has been, hiring workers.
“As a family-owned company, during the downturn we propped up our loggers so that when things turn around we have someone to call,” said Jordan.
McFall said, “Every time there has been capacity expansion [in the past four years] there has been nowhere to sell the product. We approach this with a cost-saving structure, however the customer is an issue.”

“At Weyerhaeuser capital is a constraint,” explained Haid. “If you sell your product will it be at print or will it be a long-term contract at some kind of premium?

“Everyone is extremely risk-averse. Expansion will come after demand is solidly in there. Those who came back too soon, in most cases, they are not around now or were bought out by someone else.”

Fascinating as all this is, it’s just the tip

Hampton Closer to Rebuilding Mill

The Babine Forest Products mill in Burns Lake, BC, will be rebuilt confirmed Hampton Affiliates Monday — assuming certain conditions can be met.
“Hampton is intent to rebuild the sawmill, with agreement from local First Nations and the community,” explained Pat Bell, BC Minister of Jobs, Tourism, and Skills Training, to Madison’s in a phone interview Monday.

Burns Lake, BC, Sawmill

“First Nations are being advised of a new licensee with a renewable harvest of 380,000 cubic metres per year of marginal stands,” detailed Bell to Madison’s. “In the Lakes TSA, stands with less than 140 cubic metres of sawlogs per hectare [low-volume stands], and those in remote locations, will be managed carefully over the lumber pricing cycle. Harvesting these marginal stands will become more economic with higher lumber prices.”

“The community forest tenure will be 150,000 cubic metres per year, and 60,000 cubic metres per year will come off First Nations’ wood lots,” continued Bell. “A combination of all or part of the six First Nations around Burns Lake plus the mill owners will come to a final agreement with existing tenure holders.

“Also, as part of Bill 28, the BCTS previous take-back of 100,000 cubic metres, means BCTS is over-allocated by more than 20 million in AAC. Finally, we will be introducing legislation to convert BC from volume to area-based timber. This is for the province as a whole, not just Burns Lake.”

Madison’s asked when this might happen, now that it has been announced the BC Legislature won’t be sitting this autumn.

“Hampton is not in a hurry so that last point is a long-term plan,” answered Bell.

Asked for a total of the above-mentioned new timber allocation, Bell said, “The adjusted ongoing total will be 6 million cubic metres, that is in addition to the base allocation that Hampton used in its assessment whether to rebuild the mill.”

“Going forward, the government has agreed to six other steps to improve the timber picture,” said Bell.

Please see BC Minister of Forests, Lands, and Natural Resource Operations letter to Hampton CEO Steve Zika here http://tinyurl.com/d3xvn7o

US Housing Starts, Home Sales, Sentiment

US builders started work on more homes in August, driven by the fastest pace of single-family home construction in more than two years. The increase points to steady progress in the housing recovery.

The Commerce Department said Wednesday that construction of homes and apartments rose 2.3 per cent to a seasonally adjusted annual rate of 750,000 last month. That’s up from 733,000 in July, which was revised lower from last month’s initial estimate. Single-family housing starts rose 5.5 per cent to an annual rate of 535,000 homes, the best pace since April 2010. Apartment construction, which can be volatile from month to month, fell 4.9 per cent.

Applications for building permits fell to an annual rate of 803,000. Still, that’s down from a four-year high of 811,000 in July, which was revised higher. The rate of home construction has risen nearly 60 per cent since hitting a recession low of 478,000 in April 2009. It’s still half the pace considered healthy. But the steady gains suggest the housing recovery could endure.

Housing Starts, Home Sales, US

The August gains in housing starts were uneven across the country. They were led by a sharp 20.7 per cent increase in new construction of homes and apartments in the Midwest. Starts also rose 3.7 per cent in the South. But they fell 12.6 per cent in the Northeast and 4.3 per cent in the West.

Confidence among builders rose in September to the highest level in more than six years, according to a survey released Tuesday by the National Association of Home Builders/Wells Fargo. And builders are more confident that sales will improve over the next six months, the survey noted.

Sales of both new and previously occupied homes are running ahead of last year. Home prices are increasing more consistently, in part because the supply of homes has shrunk and foreclosures have eased. And mortgage rates remain near record lows, a strong enticement for potential buyers with good credit.
Sales of previously occupied homes rose 7.8 per cent in August from July to a seasonally adjusted annual rate of 4.82 million, the National Association of Realtors said Wednesday. That’s the highest level since May 2010, when sales were aided by a federal home-buying tax credit.

Sawmill Fires, Safety Issues

Firefighters were dispatched Tuesday night just before 9:00 pm to Ridout Lumber in Cabot, AR. Chief Phil Robinson says the firefighters found smoke in the back of the main structure, resulting from a fire inside the warehouse area. He says it was not contained until 3:30 am.

Investigators have not determined the cause of the fire and there is no damage estimate at this time. Chief Robinson says that while there is some structural damage, the facility will be easily repaired.

Sawmill Inspections, Safety Issues

Firefighters were dispatched to Eldredge Lumber & Hardware at about 6 pm Wednesday, according to York Village Fire Chief Chris Balentine, who was at the scene.

There were no flames, but there was a “light haze of smoke” inside the Route 1 building, he said.

The cause of the smoke was an electrical malfunction in an air-handling unit for heating and air-conditioning, Balentine said. Firefighters found electrical arcing, but no flame, and damage appeared limited to the air-handling unit, he said.

A two-alarm blaze at a Mendocino County, CA, lumber yard that started in the wee hours of Thursday morning stretched into the afternoon as firefighters battled to get the last of the flames out, fire personnel said.

The fire was reported at 2 am at Cerro Pacific Lumber on West Road in Redwood Valley.

The lumber yard covers 20 acres amid the valley’s vineyards and specializes in remanufacturing of redwood lumber, according to its web site.
Firefighters were said to be still out at the scene after noon.

A group of British Columbia agencies has been given two weeks to design a plan to ensure sawmills and other industrial plants in BC are properly inspected for fire risks, according to the Vancouver Sun.

The working group includes officials from the BC fire commissioner’s office, WorkSafeBC, the BC Safety Authority, the public safety division in Justice Minister Shirley Bond’s ministry and the labour branch in Jobs Minister Pat Bell’s ministry.

The decision was taken during a one-hour conference call Tuesday morning with representatives of the agencies after a series of stories in the Vancouver Sun showed that many B.C. sawmills were not being inspected.

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