Lumber News Archives: September 2010

Lumber News Archives: September 2010

Latest Data on North American Lumber Production ; Green Energy Plan, Ontario ; California Wildfires State of Emergency ; Pine-Beetle Built College ; Spelter Joins FEA ; Weyerhaeuser Lays Off ; Canadian Lumber Exports ; Madison’s Timber Preview ; Housing Starts, Canada ; Japan Housing Starts ; US Wildfires ; 200 BC Forest Workers Win Severence ;Log Home Building ; US Economic Outlook ; New Brunswick Forestry Changes ; Wildfire Update ; Pine Beetle Utilization ; Madison’s Timber Preview ; Wildfire Activity Moves Into US ; Forest Industry Recovery Forecast ; Another Labour Contract ; AbitibiBowater- Newfoundland Spat ;

September 26, 2010

Latest Data on North American Lumber Production

Lumber industry agencies, government economic departments, consultatnts, and Statistics Canada release data for the first half of 2010 tracking solid wood production in
various regions of North America.

Quarterly Lumber
Mixed Results

Fast on the heels of last week’s issue
of your Madison’s Reporter detailing the
significant increase of Asian demand for
Canadian lumber
for the first six
months of 2010, releases from the Western Wood Products
, the Alberta Forest Products Association, Forisk Consulting, the
Campbell Group, and Quebec’s Pribec
Softwood Market Report
show vastly
differing opinions on the state of North
America’s forest industry.

Data released Wednesday by Statistics Canada shows that Canadian capacity
utilization (higher utilization rates result
from greater production) improved in Q2
2010, with the total Canadian industry
moving up to 76 per cent, from 74.4 per
cent in 1Q 2010. 2Q 2009 total industrial
usage rate was 68.1 per cent. Manufacturing has recorded a similar pattern of
improvement: a current level of 76.7 per
cent in 2Q 2010 compared with 75 per
cent in 1Q and 65.4 per cent 2Q 2009.
The recent gains reflect the growth in
the overall economy.

Forestry and logging moved up to
89.9 per cent of capacity in the latest
quarter. This was a 9.9 percentage-point
increase versus the previous quarter, and
21.1 compared with 2Q 2009. Sawmill
shutdowns have played a significant role.
Increased demand for wood chips has
also been a contributing factor. Publishing and paper manufacturing, at 88 per
cent of capacity, have picked up in North
America along with economic recovery
and more advertising.

Capacity utilization in the construction sector edged up from 72.1 per cent to
72.9 per cent, as production in residential
construction rose 2.8 per cent.

As if to further highlight the differences in rate of recovery between Canadian
and US lumber producers, improved data
for Alberta lumber producers is offset by
continued troubles in the US northwest.
Alberta Forest Products Association member companies shipped 721.7 million
board feet between April and June 2010
with a value of $196.7 million, according
to the AFPA. Part of this production came
from the secondary manufacturing sector. Shipments were up 9 per cent from
Q2 2009 and 7.8 per cent from Q1 2010.
The value of lumber products also saw
a significant increase, up 47.6 per cent
from the same quarter a year ago.

Due to continued depressed home
sales locally and difficulty accessing
timber, Swanson Group, out of Glendale,
OR, announced August 19 it was closing
its Glendale sawmill indefinitely, laying
off 90 workers, and cutting operational
hours at its Roseburg stud mill from 60
to 20 hours per week. Swanson Group
cited a poor housing market as one of
the primary reasons for the layoffs, but
also blamed the US Federal Government
for a lack of timber sales, and competition from Canadian wood product manufactures.

Forest Grove Lumber in McMinnville, OR, earlier this year also closed a
mill, laying off 50 workers.
The Oregon wood products industry saw its first job growth in four years
during 2Q 2010, according to a report
released in late August by the Oregon
Office of Economic Analysis
. However,
that trend isn’t expected to continue,
says the government agency. Oregon’s
wood products industry is expected to
lose 3.8 per cent of its workers this year,
while the industry is anticipated to add 4
per cent to its workforce in 2011 and add
7.2 per cent in 2012, but the state would
still have 10,000 fewer jobs than in 2006.

Conditions may improve over the next
two years; however, the industry may
never again employ as many people as
before the recession, says an agency
press release dated August 27.
The Oregon timber harvest in 2009
was the lowest since the middle of the
Great Depression at 2.75 billion board
feet, according to state forest economist
Gary Lettman.

“The preliminaries I have
coming this year show it’s going to be
just about the same,” Lettman said to the
“This is not once in a generation. It’s
far beyond that. This is, perhaps, once
in a century type stuff,” said Butch
Bernhardt, spokesman for the Western
Wood Products Association
, in the same

Today, western US lumber mills are
running at 55 per cent of their capacity,
Bernhardt said. To see what’s happening, compare Oregon’s timber harvests
to historical numbers, said Lettman. The
cut on public and private lands last year
was 2.8 billion board feet, the lowest harvest since 1934.
More than 35 per cent of the state’s
wood products work force has been
idled since 2006, said Brian Rooney, regional economist for the state Labor Department. More than 27 per cent of the
state’s loggers hung up their caulks in
that period, he told the Register-Guard.

According to the Western Wood Products Association however, American production of softwood lumber from January to June was 3.7 per cent higher than
for the same period last year, topping out
at 12.3 billion board feet In particular,
apparent consumption rose 3.1 per cent
while imports from Canada surged 15.2
per cent.

Adding to the pile of doom-and-gloom,
Forisk Consulting’s September 15, 2010,
update indicates pine sawtimber prices in the US south will be 6.4 per cent
lower in 2011 than expected six months
ago. Results vary across states, with
Alabama, Arkansas, Georgia and South
Carolina best positioned to rebound
quickly as lumber demand strengthens.

According to Forest Economist Dr. Tim
Sydor, “Expectations for key macroeconomic factors – such as GDP and housing starts – have, frankly, proven to be
way off-base. GDP grew faster than expected, but housing starts are expected
to remain 30 per cent below 2009 projections. As a result we’ve adjusted our forecast of US softwood lumber consumption
downward by 6.3 billion board feet for
2010. Lower lumber demand means lower stumpage prices, and pine sawtimber
prices in the South have been revised
downward by nearly US$1 per ton for the

In contrast, the Campbell Group’s August issue of Timber Talk found that
China’s log imports surged, benefitting
Pacific Rim exporters, and in the medium-term, China’s lumber demand outlook is very positive. North American
year-to-date lumber production is ahead
of 2009 levels, but still well below the
2006 peak. The issue also points out that
the continuing strength of the Canadian
dollar favours US lumber producers, explains author Bruce Glass.

“As a sign of improved markets for
forest products in early 2010, global
trade of logs increased by almost 20 per
cent during t1Q 2010 as compared with
the same quarter in 2009. An estimated
67 million cubic metres of softwood logs
were traded in the world in 2009, which
can be compared with over 95 million m3
in the record year of 2007,” says the issue.

Who to believe? Well, the numbers
don’t lie, so its just a matter of identifying
the spin.

“There have been numerous recent
temporary mill shutdowns, but few mills
are being permanently shuttered,” said
the same Gary Lettman, economist for
the Oregon Department of Forestry in
the latest issue of the Campbell Group’s Timber Talk.

Green Energy Plan, Ontario

As part of its “Green Energy Act” passed last year, the Ontario government set an
ambitious target to phase out coal plants in 5 years. As part of an effort to phase out all
coal plants in the Canadian province of Ontario by 2014, the Ontario Power Authority (OPA) is working with power-plant owners to close facilities down or transition them to
burn biomass.
One such facility, the 211-MW Atikokan Generating Station, will be the first to move
entirely to biomass.

This week, the government of Ontario directed the OPA to draft a
power purchase agreement with the plant’s owner, Ontario Power Generation.
Ontario Power Generation owns three other coal plants in the Province, and has said
it wants to convert all three by 2014.

According to Biomass Magazine, the coal plant will
require about 99,000 tons of wood pellets per year.
The combination of robust feed-in tariffs for renewable energy and a mandate to close
all coal plants will speed up the conversion process in Ontario. If the Ontario government
is successful in its effort, the US may look to the province as a model for shifting away
from coal.

Ontario Green Energy

However the
energy policy came under attack Thursday
from global industry and trade officials,
who said restrictive rules increase the cost
of renewable energy.

Just days after Japan challenged
Ontario’s legislation at the World Trade
Organization, WTO director-general Pascal Lamy urged governments to liberalize
energy trade and limit the use of tariff barriers and preferential procurement rules.
In a report submitted to the WTO
on Thursday, the World Energy Council urged governments to eliminate tariffs on
a long list of energy technologies, including turbines and solar panels, and to reduce non-tariff barriers.

Energy executives warned that preferential policies result in higher costs and
will impede commercialization of renewable energy and other clean technologies
needed to combat climate change.

California Wildfires State of Emergency

California Governor Arnold Schwarzenegger on Wednesday declared a state of
emergency in Southern California’s Kern County, scene of a wildfire that has burned
more than 6,000 acres. About 1,500 firefighters had 50 per cent of the fire contained
Wednesday evening, a Kern County Fire Department spokesman said.
The fire has destroyed at least one home, threatens many more and prompted evacuations, the office said.

Wildfires, California

Another forest fire
in the southern Sierra Nevada grew to
more than 8,100 acres on Wednesday, but
a fierce air and ground attack helped slow
its advance and put containment at 65 per
cent, fire officials said.

Fire commanders say aircraft would
be important Thursday in keeping the
fire from high-risk areas in the region 110
miles north of Los Angeles.
The nearly 13-square-mile fire has destroyed one home and threatens 250 more
since breaking out Sunday in the Lower
Kern River Canyon southwest of Lake Isabella. Portions of the communities of Bodfish and Havila are evacuated.

Pine-Beetle Built College

The Okanagan’s Centre of Excellence in Sustainable Building Technologies located
in Penticton is British Columbia’s first building to use pine-beetle kill wood as a standin for Forest Stewardship Council certified lumber.

The two-storey, 70,000-square-foot
structure is built entirely using wood-frame construction.
The post-secondary facility, which will both promote green-construction methods
and use its green features to teach students about sustainable building techniques, has
been designed by CEI Architecture Planning Interiors to meet the Living Building Challenge (LBC).

Beetle-Kill Building

The LBC sets out
a series of ambitious, environmentally
friendly requirements for buildings that designers CEI architects say exceed LEED
Platinum standards. One requirement of
the challenge is for net-zero energy and
water consumption. That means all the
energy Okanagan College uses must be
generated on site. Another requirement is
that the building be built with 100 per cent
local and environmentally sensitive materials.

The Centre of Excellence will be one of
the most energy-efficient buildings of its
size in North America. It will feature polished concrete floors on some levels that
will be heated and cooled with an in-floor
radiant system, the largest array of photovoltaic solar panels in Canada outside
of public utility companies, and a rooftop
with green spaces that use local flora.

As of June 30, 98 per cent of the building’s construction had been tendered.
The project is being built with federal and provincial funding, is expected
to open in spring 2011 and will house approximately 800 students.

Spelter Joins FEA

Forest Economic Advisors LLC has announced the hiring of prominent wood products analyst Henry Spelter.


Mr. Spelter was
a long-time analyst
for the US Forest
Products Laboratory
in Madison, WI
where he authored
more than 100 reports covering developments in the
wood products markets including a series of benchmark
studies profiling
the softwood lumber and structural
panel sectors.

He has developed an extensive model of lumber demand and has collaborated
on a comprehensive analysis that examined
the competitiveness of the US forest products

Spelter will assume the role of lead analyst
for FEA’s Wood Biomass Forecast Service publications. He will continue to author his
monthly publication Lumber Markets – Status
& Trends under the FEA brand.

Weyerhaeuser Lays Off

Weyerhaeuser Corp. is cutting two shifts
from around-the-clock operations, laying off
17 employees at its OSB plant in North Louisiana.
Decreasing demand for its product, which
is used in home construction, led to the decision to cut back at the North Louisiana plant,
company spokesman Mike Wolff said.

The layoffs happened Monday, and no
word on whether the workers will be offered
jobs at other Weyerhaeuser plants. Rumours
abound with industry sources this week that
there are more layoffs and re-assignments,
including among office staff.

September 17, 2010

Canadian Lumber

It would appear that this week the whole world woke up to what Madison’s has been saying for the past two quarters: Asian demand for lumber is not going away. The traditional wisdom that solid wood is put to different uses in China, Korea, and Taiwan than it does in North American, Europe, and Japan continues to be true. Most customers in those Asian countries are looking for economy and utility grades because the wood is either used for concrete forming or for infill walls and roof trusses so appearance is not important. The other main use for Canadian lumber, in China especially, is for pallets and crates, which explains the continued demand for an exact four metre length.

Asian Demand

When the market shifts, and as US demand continues to be soft, there have been times this year when the #2&Btr price starts to look pretty good compared to the UT/#3 and Economy?#4 grades. As happened this week, canny Asian customers immediately switched up, and start buying appearance grade instead of the lower grades.

Like a sleeping dragon awakening, Asian demand for Canadian lumber has multiplied consistently and rapidly by such a magnitude throughout 2010 that industry watchers can no longer feasibly say that this is a short-term trend. This very week Madison’s sources report “excited” Chinese customers requesting regular shipments of large volumes of Canadian lumber on a weekly basis.

For the first six months of 2010 China imported 1.6 million cubic metres of lumber products from Canada, compared to 909,000 cubic metres for the same time period in 2009, a 176 per cent increase, according to the July issue of China Wood. Imports of lumber from the US increased by 170 per cent, to 593,000 cubic metres.

In the same period, imports of logs to China from Canada rose by 227 per cent, while those from the US rose by 344 per cent. Log imports from Russia fell slightly.

The effect of this new, important customer for Canadian wood on the lumber industry is not yet entirely known. However one inescapable fact does seem to be emerging: Canadian lumber producers will not switch capacity back into the US when demand from that country returns. It took Canadian mills on the west coast an agonizing amount of time, almost 18 months of consistent Asian inquiry, to reconfigure their processing equipment to metric sizes. There is zero interest on the Canadian side of reconfiguring measurements back to board feet.

Lumber exports out of the US continue to languish. From the looks of things, premium grade European producers will not return to North American east coast hardwoods, having generated a new supply chain from Indonesia and the African continent. Extremely conscientious about sustainability issues, European customers have succeeded in forcing exotic timber suppliers to comply with international certification requirements. Having put a focus on exporting logs out of the west coast instead of finished lumber, US lumber producers have not fostered a customer base in Asia.

This means that US mills must now wait for demand from US home builders to return to get business back on track.

Lumber futures this week took off more than anyone had expected. Immediately, those on the fringes of the industry trumpeted this to be a signal of recovery for the lumber industry.

Lumber Advances to Three-Month High as Traders Roll Contracts” announced a Bloomberg BusinessWeek headline Thursday.

Whoa: Lumber Makes a Break for It” declared the Wall Street Journal also on Thursday.

Thursday Business in Vancouver claims “Lumber reaches four-year high, but volatility reins in forest industry“.

Of course these commentators continue to advise caution. First among them is Jim Nelson of Marketing and Communications at PricewaterhouseCoopers, who today released PwC 2010 Q2 Global Forest, Paper & Packaging Industry Net Earnings Summary.

“Most of the largest Western Canadian-based companies reported improvement in the second quarter of 2010 compared to the same period in 2009. The aggregate loss of $255 million for the region included $302 million in asset impairment, severance and closure costs associated with the closing of Catalyst’s Elk Falls paper mill and Coquitlam paper recycling operations. [ . . . ] In the second quarter of 2010, ten of the largest US-based forest and paper companies reported net earnings of close to US$2 billion, up from earning of US$914 million for the same period in 2009.”

This report is of course based on 2Q results. While releases for 3Q and 4Q 2010 are still months off, strengthening demand from Asia for Canadian lumber points to continued improving financial statements.

With increasing attention from the Asian market, Canadian lumber producers have a tiger by the tail. The ride can be breathtaking while the tiger is running the direction you want to go. But there’s always the chance that the tiger will make a sudden turn and come back to bite you.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview looks at newspaper advertising sales statistics, as well as newsprint and other paper grade prices and global inventory levels.
Contact us any time for a subscription.

Housing Starts, Canada

Canadian housing starts fell in August for a fourth straight month and new home prices edged lower in July for the first time in 13 months, demonstrating further slowing in the sector, which had led the country out of recession.

Housing starts slipped a greater-than-expected 3 per cent in August to a seasonally adjusted rate of 183,300 units, Canada Mortgage and Housing Corporation said. The monthly decline hit both urban single-family homes and multi-unit dwellings, which fell 3.6 per cent and 3.7 per cent, respectively.

The new housing price index slipped 0.1 per cent in July, against forecasts for a 0.1 per cent increase. Home prices rose 0.1 per cent in June..

Canadian Housing and Exports

Building permit figures released Wednesday show a 3.3 per cent decline in July over June, to $6.4 billion, according to Statistics Canada. Permits were up by 5.4 per cent to $1.05 billion in July over June thanks to confidence in the residential sector.

Canada’s trade deficit rose more than three times expected to $2.74 billion in July as exports to the United States sank due to anemic demand, while overall imports surged to their highest level since November 2008, Statistics Canada data showed.

Exports fell 0.7 per cent to $32.80 billion in July, dragged down by weak demand for machinery and equipment and forestry products. But analysts were heartened by another jump in imports, up 2 per cent to $35.54 billion, led by energy products and autos.

Japan Housing Starts

July housing starts in Japan rose 4.7 per cent compared to July 2009, to 68,785 units, accordingto Japan Lumber Reports. Seasonally adjusted starts were 772,000 units, up 2.9 per cent from June but the fourth straight month of starts less than 800,000.

Housing Starts, Japan

Units built for owners have increased for nine consecutive months except for July, while publically financd unit starts increased by 70 per cent, says the Reports.

While units built for sale and codominium starts were 60 per cent less than 2008 levels, the former jumped 30 per cent and the latter was up 40 per cent from June. Detached units increased for seven straight months, specifically in metropolitan Tokyo they gained nearly 40 per cent.

Wood-based units were up 6.1 per cent, with a 58.2 per cent share of total starts.

US Wildfires

With heavy rains for the past two weeks, British Columbia’s wildfire season is over. In total this year 322,378 hectares of forest was burned compared with 244,000 last year. More hectares were burnt in the worst six weeks of fires than in any full season of the past 10 years, said provincial fire coordinator Kim Steinbart.

Although there were 3,000 fires in 2009, and just 1,600 in 2010, this year’s were bigger and “very active.”
The financial cost, however, is lower this year than last — $190 million, compared with $312 million at this time in 2009 — although the total area burned is greater.

Firefighters were able to keep the Fourmile Canyon fire, outside Boulder, CO, contained at about 30 per cent Friday. Yet that fire has burned 6,422 acres, destroyed 172 structures and incurred $4 million in claims to date, according to the National Interagency Coordination Center.

Housing Starts, Japan

Approximately 700 firefighters have been battling a wildfire just outside Boulder, Colo., for five days. Meanwhile, Boulder residents are preparing to evacuate any time as the Fourmile Canyon fire spread to within 10 miles of the city.

Colorado Governor Bill Ritter has authorized US$5.2 million in state funds to help pay to fight the fire, which has forced 3,500 people out of their homes.

Meanwhile, one person died while more than 50 households were totally burned by wildfire which have devastated San Bruno, California. Apart from the burnt households, 120 houses were also said to have partial burns.

Strong winds whipped south-central Utah’s Twitchell Canyon wildfire to nearly 11,000 acres on Thursday, and crews still had no estimate for containment of the blaze that was first sparked by lightning seven weeks ago.

Since being reported in Fishlake National Forest on July 20, the fire has been allowed to scorch extensive swaths of mixed conifer and shrub lands some seven miles east of Manderfield Reservoir.

200 BC Forest Workers Win Severence

BC’s Labour Relations Board has upheld a ruling that will see close to 200 people receive millions of dollars in severance pay. The workers lost their jobs when Carrier Lumber permanently shut down its Valemount, BC, sawmill in 2009.

United Steelworkers local 1-417 was issued an arbitration award last January, but Carrier Lumber alleged that it was denied a fair hearing. Now the Labour Relations Board has ruled there is no basis for overturning the award.

It’s a huge win for working people in resource communities, said union president Marty Gibbons.
Employees will get 10 days pay for every year worked.
The company said it’s still considering its legal options, including another appeal.

September 13, 2010

Log Home Building

The BC Log & Timber Building Industry Association has a big convention planned on September 23 and 24, 2010 at the South Thompson Inn in Kamloops BC. Chaired by Gord Borgstrom Senior Director, Community Economic Development, Mountain Pine Beetle Response Division of the Ministry of Community & Rural Development, conference attendees include Forestry Innovation Investment, and the National Research Council, and possibly UBC Wood Sciences, as well as log home suppliers throughout British Columbia. At issue are new building codes for log homes expected out of the US early next year. The EU is expected to model their own new log home regulations on whatever the US announces.

New Regulations

“While log home building is a niche market, there are more than 130 companies making log homes in British Columbia, all in rural communities,” Dalibor Houdek of FP Innovations told Madison’s in a phone interview.

“In 2006 there was $75 million worth of log home exports out of BC,” explained Walter Bramsleven, of Sitka Log Homes Inc. and the BC LTBI, to Madison’s.
A new set of standards for the design and construction of log homes developed by the International Code Council Consensus Committee on Log Structures became available for builders, architects, building officials, and inspectors in May 2007. The International Code Council Standard on Design, Construction and Performance of Log Structures, approved by the American National Standards Institute was the first of its kind, and was intended to facilitate and promote the design, construction and installation of safe and reliable structures built with log timbers.

Considered by industry as the first step, these new building standards are now in effect. The next set of standards are expected to focus on energy efficiency.

In a letter to its members, the Log Homes Council within the US National Association of Home Builders called attention to changes to International Energy Conservation Code that could have far reaching consequences to the industry. The 2009 International Energy Conservation Code published in March 2009 includes significant changes to the minimum insulation requirements and efficiencies of HVAC systems. It will mean that all logs sold above the Mason Dixon line will have to be a minimum of 8″ thick, according to the US Log Homes Council.

“The US and other countries are putting into place new regulations for energy efficient buildings in general,” continued Houdek. “This will naturally affect log home builders. [ . . . ] While wood-framed homes can easily switch from 2×6 to 2×8’s to increase insulating value, logs are only so big so we have come up with other ways to construct more energy efficient log homes. These include using new materials to make the logs tighter so less air can pass through, sealants, gaskets, caulking, chinking, vapour barriers and rain screens.”

Houdek and FP Innovations have just published a book, “The Illustrated Guide to Log Home Construction From Log Shell to Finished Home” to help log home suppliers provide a product that is in compliance.

“If a builder can’t prove they will meet the new building requirements, they won’t get a permit,” said Houdek.

This is not Houdek’s first foray into addressing more energy efficient log homes. He published “Thermal Properties of Log Homes” in the August 2002 issue of the International Log Builders’ Association’s Log Building News.

“The energy efficiency of a home is determined by so-called R-values (resistance to thermal flow) of building segments such as walls, floors, roof, windows, etc, and by the air tightness of the building envelope,” explained Houdek in the piece. “It is apparent that the logs used for log homes are only as large as is practical for a log builder. In my experience the majority of companies use logs averaging between 12-16 inches in diameter at midrange. That, combined with the average width of the lateral groove ranging between 2-4 inches, almost predetermines the maximum R-value one can expect from such a log wall.”

It is this R-value that will be targetted by the new regulations.

Houdek continues, “Each of the following items were shown to account for larger portions of the total heat loss:

  • the ridge area of vaulted ceilings
  • the joint between the plate log and the roof
  • the protrusions of logs through the exterior walls (both frame and log)
  • the connections between the floor and a sill log
  • the connection of the log wall with the frame wall
  • the window/door–to-wall log interfaces
  • the log-corner interface.”

Houdek’s new book details methods to decrease this heat loss.

“Due to the complexity of log construction and the inherent shrinking and settling of logs as they dry, the likelihood that something will go wrong is higher with log buildings than with conventional homes. [ . . . ] It is important that all log-to-log joint design and applied sealants are capable of maintaining the seal between individual logs throughout the life of the building,” according to the book’s introduction. “This publication focuses exclusively on finishing the log building. It covers provisions right from the foundations to ensure that the sill log will be tightly sealed, all the way to the installation of kitchen cabinets in a manner that will allow the logs to settle without damaging the cabinetry.”

Anxious to provide information and solutions BC’s Log Home and Timber Frame building sector in time for the new building codes, the BC LTBI conference agenda will focus on identifying and addressing regulatory and policy barriers that hinder expansion of the BC industry, and developing a strategic international market development and expansion action plan.

Specific issues identified to date that the project will attempt to address include:

  • the need for an internationally recognized insulation rating for Log Homes (hand-crafted and machine profiled);
  • identification and revision of BC building code regulations that add unnecessary additional costs to Log and Timber Frame House construction in BC;
  • examination of the possible “carbon footprint” advantages of Log & Timber Frame homes compared to traditional dimension lumber & vinyl clad construction; and
  • identification of additional opportunities to increase international market penetration for BC’s Log Home and Timber Frame building sector.

Madison’s will report on the outcome of this important conference, and keep readers up to date on new log home building regulations as they are rolled out in the US and in Europe.

US Economic Outlook

Small to medium-sized businesses, acknowledged as the mainstay of the US economy, have cut out their extra employees and are barely able to support family members in the works. But mom-pop business is not where stimulus help is targetted. As noted in the Washington Post on Thursday, September 2: “With the recovery faltering . . . President Obama’s economic team is considering another big dose of stimulus in the form of tax breaks for businesses -potentially worth hundreds of billions of dollars, according to two people familiar with the talks. Among the options are a temporary payroll tax holiday and a permanent extension of the research and development tax credit.

US Economy

The private sector unexpectedly cut 10,000 jobs in August compared to a gain of 37,000 in July, ADP Employer Services said.

The US manufacturing sector grew faster than expected in August but private employers unexpectedly cut jobs, showing the economic recovery still faces headwinds.

Last month, US 2Q gross domestic product data showed the economic recovery slowing as the boost from an US$814-billion government stimulus package and business inventories rebuilding faded.

The number of buyers who signed contracts to purchase previously occupied homes increased in July but remained well below last year’s levels, a sign that demand for housing remains weak.

The National Association of Realtors said Thursday its seasonally adjusted index rose 5.2 per cent from a month earlier to a reading of 79.4.

The index was still down 19 per cent from the same month last year. June’s reading was the lowest on records dating to 2001.
In other data on Wednesday, US mortgage applications for home purchasing and refinancing increased last week as interest rates hit a new low, a glimmer of hope for a housing market that has weakened again after the expiry of a government tax credit for home buyers.
A third report on Wednesday showed construction spending dropped 1 per cent to an annual rate of US$805 billion, the lowest since July 2000.

New Brunswick Forestry Changes

The provincial NDP is promising to hike stumpage fees to log on NB Crown land and to offer woodlot owners a multi-year silviculture funding package.
Meanwhile, NB Premier Shawn Graham is promising to create 20,000 jobs in the province if his Liberals form government again after the September 27 election. Graham says his party’s strategy includes an emphasis on development of modular fabrication and component construction industries.

NB Election Promises

New Brunswick’s NDP is also committing to increase the stumpage fees that companies pay to cut trees on Crown land by one per cent if it is elected in the upcoming provincial election. The increase would be added at the time the land-use strategy review was launched.

Genevieve MacRae, the party’s candidate for York North and the forestry critic, said the NDP’s policy would also look into biomass and biogasification opportunities in the province.

“We need to [ . . . ] develop our forest sector for the long term, taking advantage of our established industries but ensuring the viability of our private woodlots,” MacRae said in a statement.

2,700 jobs created will be in northern New Brunswick and 1,000 of the promised jobs will be in Miramichi if Shawn Graham’s Grits are elected.

Wildfire Update

The worst seems to be over in British Columbia, but other parts of the world continue to struggle with wildfire danger. A new wave of wildfires has erupted in southern Russia, leaving eight dead, 18 injured and more than 1,000 homeless. The Russian Emergency Situations Ministry released the grim statistics, saying that 532 buildings and 20 villages had been consumed by the flames in the latest conflagration. 2,500 firefighters battled the blaze, which is in Volgograd and Saratov provinces.
Wildfires continue to spread rapidly fed by heavy winds, low rainfall and dry air. On Thursday, Russia’s Emergencies Ministry deployed aircraft to extinguish the fire, noting that oil storage facilities are located in the area.

Wildfires Globally

The biggest wildfire in Idaho, and at one point the largest active wildfire in the US, was fully contained Wednesday. The Long Butte Fire burned more than 300,000 acres just west of Hagerman. Fire crews took advantage of the cooler weather to get a grip on the flames. Meanwhile, the Harris Complex Fire, burning near Horseshoe Bend, ID, is about 45 per cent contained. It’s burned nearly 2,100 acres. Crews also predict they’ll have that entirely contained by the weekend.

The Wildland Urban Interface and Fire Prevention program of Texas has issued a warning for the upcoming dove hunting season because a wildfire can be easily ignited by a spark from an unattended campfire, lit cigarette or the muzzle of a gun.

British Columbia’s campfire ban was lifted on September 1 for most of the province due to a decreased risk of wildfires, including the Coastal Fire Centre, the Sea to Sky region, Prince George Fire Centre, Cariboo Fire Centre, and in Vancouver Island provincial parks.

September 07, 2010

Pine Beetle Utilization

Changes to pine wood wrought by the beetle and its associated bluestain fungi have challenged pulp mills, but industry researchers funded by Canada’s federal Mountain Pine Beetle Program and Forestry Innovation Investment have found solutions that may even save mills money, says the April 2010 issue of Information Forestry, published by the Canadian Forest Service. When pulp mills first processed beetle killed pine, kraft mills faced a slippery problem. Treating the wood produces soap—a mix of fatty acids and resins usually skimmed, converted to tall oil, and burned in lime kilns to reduce fossil fuel use in chemical recovery.

Breakthroughs and Developments

“When the beetle first struck, mills were swamped with soap because the pine trees reacted by trying to pitch out the invading beetle,” explained Vic Uloth, chemical recovery specialist at FPInnovations in Prince George.

This soap was sinking to the bottom of the black liquor tank, thus the concentrator began gumming up, and the recovery boilers began producing too much steam. Uloth found that adding canola plant waste to the mix increased the fatty acids sufficiently to make the soap float. Uloth and colleagues recently tried adding canola waste to the kraft process in trial runs at West Fraser’s Cariboo Pulp & Paper Mill in Quesnel. Results were promising, and they hope to integrate the process into industry, which could save each affected mill up to $2 million a year.

Sawmill operators also increasingly face the challenge of processing beetle kill, needing to adapt operations to accommodate an increased diet of checked (split) logs. Checking is a result of rapid drying of the log after death caused by the beetle. This condition makes it more difficult to extract lumber value and volume from each piece processed.

FPInnovations and BC Forestry Innovation Investment in June released sawmill software called “Return to Log Calculator for Checked MPB Logs“, which was designed to help measure the impact of the epidemic on their bottom line. The proprietary software simulates how check severity affects the outturn of individual lumber grades. After the operator enters costs, prices, and mill production statistics, the software calculates break-even costs for different logs, operating margins, and lumber recoveries.

Sawmills using this software will be better prepared for the challenges posed by the beetle situation rather than being caught by declining log quality and reduced sawlog availability. An important selling feature of the software, says FPInnovations Sawmill Operations Scientist Joel Mortyn, is that it comes pre-loaded with parameters related to actual beetle-kill check severity based on data collected by the software program. Sawmill operators will be able to develop recovery strategies based on the predicted volume, check severity, and diameter of beetle-killed logs entering the sawmill in future. This may include developing a sorting strategy for logs or changing the sawmill’s production strategy by aiming at recovery of specific grades based on the characteristics of the beetle-killed logs entering the mill.

Preventing the spread of the pine beetle in Alberta and beyond continues to be of critical importance. In their presentation at July’s International Congress on Environmental Modelling and Software in Ottawa, ON, Liliana Péreza and Suzana Dragicevicb of Simon Fraser University explained that salvage harvesting is the most effective strategy to affect pine beetle infestation rates. In a study titled “Exploring Forest Management Practices Using an Agent-Based Model of Forest Insect Infestations“, the researchers proved that sanitation and salvage harvest strategies diminish the total loss of timber in a period of five years. The use of this management technique generates a reduction of 25 per cent in the number of forest stands killed by pine beetle, compared to leaving the salvage behind in the absence of a management strategy.

The outcomes reveal that the implementation of this technique reduces the mortality rates of pine trees by successfully controlling the pine beetle population, because the outbreak is contained by cutting down all the healthy and mature trees with the purpose to reduce the wood loss.

This might seem like a drastic and severe solution, but it’s preferable to abandoning the healthy trees to become infested within the ever-growing volume of dead and dry beetle-kill wood, while the pine beetle infestation marches resolutely on.

And what of the existing beetle kill, that which is too long-dead and dried out for even composite wood technology? Madison’s has reported regularly on new technology in biofuels, and continues to be on the look out for further developments.

Cobalt Technologies, out of California, announced in April it had made a breakthrough in producing biobutanol from beetle-killed lodgepole pine feedstock using a drop-in replacement for petroleum and petrochemicals. While the product is primarily used as an industrial solvent, biobutanol is also a liquid alcohol fuel that can be used in today’s gasoline-powered internal combustion engines. Cobalt Technologies is currently collaborating with Colorado State University to evaluate the fuel’s viability for use in commercial vehicles.
According to company spokesperson Rick Wilson, harvesting the affected trees could not only produce low-carbon fuels and chemicals, but could also create jobs and establish a “foundation for a sustainable biorefinery industry. With this breakthrough, we’ve been able to turn a problem into an opportunity. If we use only half of the 2.3 million acres currently affected in Colorado alone, we could produce over two billion gallons of biobutanol — enough to blend into all the gasoline used in Colorado for six years.”

Word gets around fast, and on August 20 the city of San Jose, CA, and venture-backed Harvest Power announced that there could someday be biomethane fueling stations around the city, according to the Silicon Valley / San Jose Business Journal. A second venture, announced at the same time, involves Cobalt Technologies, which is in the early stages of designing a demonstration-scale plant to process wood waste and manufacture an estimated 1 million gallons annually of biobutanol.

Working together, these new ideas can help pulp and lumber mills run profitably using beetle kill, reduce the scope of further infestation beyond British Columbia, and use the existing feedstock littering forest floors after the pine beetle moves on.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines AbitibiBowater’s exit from bankruptcy protection, slated for October 2010, and court actions between the company and the province of Newfoundland-Labrador, and in US bankruptcy court.

Contact us any time for a subscription.

Wildfire Activity Moves Into US

On Friday, the Bitterroot National Forest fire west of Hamilton, MI, had grown to approximately 300 acres.
50 lightning-caused blazes that erupted Thursday afternoon in southern Idaho and the Boise, ID, area came after an estimated 250 to 300 residents were evacuated from the Tamarack Resort area Thursday. The Hurd Fire there more than doubled in size from 550 acres late Thursday to nearly 1,300 acres, or two square miles, early Friday, said US Forest Service spokeswoman Laura Pramuk.

Tuesday night 650 firefighters had joined the battle to fight fires burning near Lebec in Kern County, CA. The fire had consumed 1,300 acres officials reported, but no homes or lives had been lost. By Wednesday night, revised GPS readings reduced the acres burned to 1,000. There were 33 hand crews, 87 engines, 10 bulldozers, 9 water tenders and 8 helicopters on the job with 1,029 firefighters. The fire was 60 per cent contained as of Friday morning.

Wildfires Burning

The Downing Mountain fire near Helena, MT, was reported at 8 pm Thursday and grew to 300 acres by Friday morning. Ravalli County authorities began knocking on doors at 3 a.m. Friday, warning residents about three miles west of Hamilton that a fire in the Bitterroot National Forest was threatening their homes. Meanwhile, Helena National Forest officials hope cooler weather and higher humidity Friday will help slow the 2,800-acre Davis Gulch fire burning on Stemple Pass northwest of Helena.

A strong wind in the gorge fueled a fire on the Washington State side of the Columbia River Gorge and it quickly grew to more than 1,200 acres by early Friday morning.

While the fire ban has been lifted in some areas of northwest British Columbia and cooler temperatures and some rain are forecast for this weekend, the end to forest fire season in the province is still some weeks away. Fires have already charred more than 300,000 hectares of BC forests in 2010, an area larger than Metro Vancouver.
Losses from Russian wildfires may top US$300 billion, Biodiversity Conservation Centre Director Alexei Zimenko said at a Thursday press conference.

Prime Minister Vladimir Putin last week sacked Russia’s top forest official over criticism that he did little to combat deadly forest fires that were unleashed by a record heat wave and blanketed Moscow in smoke.

Forest Industry Recovery Forecast

Three consecutive years of major losses for wood producers will come to an end in 2010, and profitability is forecast to reach $1 billion as early as 2012, according to the Canadian Industrial Profile-Summer 2010, published by The Conference Board of Canada in collaboration with Business Development Bank of Canada.The gradual recovery in the US housing market and increased exports to China will both contribute to growth in the industry.

Forestry Recovyer

Paper producers lost $3 billion in the past two years, but more modest losses of $139 million are expected in 2010. After reaching a nadir last summer, sales and production are trending upward, and profits of $366 million are forecast in 2011. Within the industry, the recovery will be uneven – some segments of the industry are expanding, while others continue to shrink in size.

Another Labour Contract

Fast on the heels of the 4-year agreement between the USW and CONIFER, the Steelworkers Wood Council membership ratified a deal this week with Western Forest Products.

The collective agreement covers wages, benefits, union security and severance pay for permanent partial closures in both logging and manufacturing. The union said it had not expected to make major wage gains in the present climate, but believed it had achieved the objectives of opposing concessions and securing important improvements to the wording of contracts, according to the Comox Valley Echo.

AbitibiBowater- Newfoundland Spat

AbitibiBowater’s moves to take Newfoundland-Labrador to a NAFTA court over the provinces’ 2009 expropriation of the company’s hydro and timberland assets could impact Canadian government involvement in British Columbia’s upcoming legal tangle with the US Coalition for Fair Lumber Imports over the 2006 Softwood Lumber Agreement.
“I have indicated that in future, should provincial actions cause significant legal actions for the government of Canada, that the government of Canada will create a mechanism so that it can reclaim moneys lost,” repeated Prime Minister Stephen Harper Thursday on several occasions.

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