US Forest Service to Address Forest Health ; Leading Economic Index, US ; Sawmill Worker Casualty, Log Truck Driver Fatality ; US Housing Starts ; Corner Brook Receives Loan ; BC Election: Forestry Platforms ; Catalyst Paper Announces . . . ; US Forest Service to Address Forest Health ; Leading Economic Index, US ; Sawmill Worker Casualty, Log Truck Driver Fatality ; US Housing Starts ; Corner Brook Receives Loan ; BC Election: Forestry Platforms ; Catalyst Paper Announces . . . Forestry Funding, UN Conference ; Madison’s Timber Preview ; Suspicious Sawmill Fires in British Columbia; Canadian Housing Starts ; Housing Starts, Japan ; US Timber Production Bill ;Lumber Transportation Problems ; Madison’s Timber Preview ; Asian Long-horned Beetle Eradicated from Canada; Buchanan’s Longlac, ON, Mill to Restart ; Big River Sawmill to be Running Soon ; British Columbia’s Wood Waste [Residue] for Rural Communities Program ; Aspen Planers Buys . . . Mountain Pine Beetle Genome ; Madison’s Investment Rx ; Tembec Sells Skookumchuk ; USW Ordered to Pay Severance; Stella-Jones Reports; BC Prescribed Burns ; Domtar Closes Line ; Cascades Announces . . . ; Sawmill Operations ; New Brunswick Invests ; Kelso Makes Offer for EACOM ; US Environmental Ruling on Logging Roads ; Housing Starts, US; EACOM Reports ; Centurion Announces . . .
April 30, 2013
US Forest Service to Address Forest Health
The Integrated Resource Restoration program, a major US Forest Service (USFS) pilot program which treated some 800,000 acres of federal forestland in 2012, exceeded or met its goals in almost every performance category, a USFS press release said April 8. The program decommissioned 738 miles of roads, enhanced 933 miles of stream habitat, and resulted in the sale of more than 850,000 cubic board feet of timber. The program was initiated to help protect forests from catastrophic wildfire in 2012, and improve the condition of three major watersheds in the interior West.
But leaders of Western states say the program does not go far enough and are campaigning for more action from the Forest Service.
The Western Governors Association, lead by Utah Governor Gary Herbert, asked the federal government Tuesday for expanded resources to protect national forests from bark beetle infestations, susceptibility to wildfires, and other threats to the ecosystem. They favour enlisting the timber industry in the effort.
The governors asked Agriculture Secretary Tom Vilsack to form a “forest industry task group” to find ways for private loggers to help manage the forest and lessen the government’s workload. For example, loggers might help remove dead branches and trees that can easily ignite, while marketing salvageable wood. The governors said more needs to be done to prevent problems before they spread and grow more costly.
Forest Management and Restoration
According to the governors, in 2010 the forest service used just 30 per cent of its budget for forest management, down from nearly 70 per cent three decades ago. Currently, most of the agency’s budget pays for fire suppression, administrative support, and research. Meanwhile, sequestration has eaten away at the USFS’s firefighting resources, which the agency says it must cut by 37 per cent.
On Tuesday, USFS Chief Tom Tidwell told a US Senate committee the agency will lose 500 firefighters and 75 fire engines and have less money to spend on aircraft.
The USFS says it has spent more than US$100 million each year to combat the bark beetle epidemic. Since 2009, the beetles’ reach has diminished by nearly 60 per cent, according to the agency’s data.
On April 11 the National Association of Home Builders (NAHB) added its voice to the discussion by urging Congress to support draft legislation unveiled by House Resources Committee Chairman Doc Hastings (R-WA) that would require the USFS to actively manage its commercial forest lands and increase timber production on federal lands.
Testifying on behalf of NAHB before the House Natural Resources Subcommittee on Public Lands and Environmental Regulation, Justin Wood, vice president of construction for Fish Construction NW, based in Portland, OR, said that the legislation would benefit rural communities and boost harvesting on federal lands by requiring the federal government to implement active forest management plans. With lumber one of the most volatile-priced building materials and a major component in home construction, Wood also pointed out that proper federal forest management policies are tied to affordable housing.
NAHB research shows lumber and wood products account for 15 per cent of the cost of construction for a single-family house. Lumber prices soared as the housing recovery gained momentum in 2012. For example, prices of oriented strand board, are up 92 per cent since last April, said the NAHB. Framing lumber is also seeing price increases upward of 28 per cent, according to the NAHB.
These higher costs drive up the cost of construction, which in turn, drives up the price of a new home. This is of particular concern in the affordable housing sector, where relatively small price increases can have an immediate impact on low- to moderate-income home buyers.
“NAHB research shows that for every US$1,000 price increase for a median priced new home, over 232,000 households can no longer afford that home,” said Wood. “Federal forests supply a mere 2 per cent of the wood used by the forest products industry, and it is important for Congress to take a deep look into what barriers the Administration is facing in pursuit of increased harvesting on federal lands.”
Chuck Ray, of WoodWorking.net, wrote in a piece Thursday, “the good news for the lumber producers, and the bad news for lumber users, is just getting started.
“Softwood lumber is currently over the inflation-adjusted price, which means that particular market is stronger now than it was in 1995. [ . . . ] However, prices are still well below the inflation-adjusted rate, which would be around US$512/mbf today. That means that the structural grades are still not as high in real dollar terms as they were in 1995. Which also means that they could, and should naturally, go higher still.”
“One thing is for sure…with all the other prevailing conditions mentioned above, if the housing market continues any kind of increasing trend at all, lumber prices must surely break through and establish new historical highs. It all depends on the global economy. If things continue to hold up, lumber companies will do very well, perhaps turn in historical profits for a few years. And lumber users will increasingly feel the pinch in the cost of raw material,” detailed Ray.
Meanwhile, in Colorado,the past failure of the timber industry has usually been blamed on the USFS making fewer trees available in light of environmental resistance to logging. While the beetle-kill epidemic and catastrophic wildfires may have taken some of the edge off the latter concern, forest industry experts are now more worried that cuts to the Forest Service’s budget may hinder making wood available through forest management.
Nancy Fishering, the Colorado timber coordinator for the Intermountain Forest Association, estimates that US$150 million has recently been invested by the new owner of the Montrose timber mill, now known as Montrose Forest Products, and the mill in Saratoga, WY, owned by Saratoga Forest Management, which has historically handled much of the wood harvested in North Park, CO. Saratoga was mothballed for five years, and the Montrose mill hasn’t been operating even close to capacity for about that long, as well, said Fishering to the Aspen Business Journal.
Elsewhere, the Idaho state Land Board on Tuesday approved a 2014 plan calling for harvesting 249 million board feet — the highest logging level in decades. Annual timber cutting on state endowment land has been fixed at 247 million board feet for several years, but next year’s plan includes a one-time adjustment due to various factors in certain regions of the state, according to Spokesman-Review via the Idaho Press-Tribune. Idaho’s 2002 timber plan volume was 175 million board feet.
The 2014 plan won approval of some of Idaho’s biggest sawmills and wood products companies. Tom Biltonen of Bennett Lumber says the state’s timber sale program is a key driver of the company’s long term viability.
“About 1 million acres of that land is forested, and that generates about US$50 million in income,” said Dave Groeschl, state forester and deputy director of forestry and fire at the Idaho Department of Lands, referring to the financial returns of timber sales and commercial interests that are generated for Idaho public schools.
Leading Economic Index, US
The index of US leading indicators unexpectedly declined in March for the first time in seven months, a sign the world’s largest economy will cool.
The Conference Board’s gauge of the outlook for the next three to six months fell 0.1 per cent in March after climbing 0.5 per cent in the prior two months, the New York-based group said Thursday.
Sawmill Worker Casualty, Log Truck Driver Fatality
A mill worker who died Wednesday afternoon at the Redwood Empire Sawmill in Cloverdale, near Santa Rosa, CA, was trying to clear a jam in an automated tree debarking machine when he became entangled in some equipment and was killed, authorities said.
A logging truck driver was killed in British Columbia on April 8. The death is the second direct harvesting fatality of 2013 in British Columbia.
The Cloverdale Fire Protection District responded to the fatal incident at the mill on McCray Road around 1 pm Wednesday, Battalion Chief Rick Blackmon said to the Press Democrat.
The Sonoma County coroner’s office has identified the worker as 43-year-old Raul Samano Lule of Ukiah. Lule was pronounced dead minutes after firefighters were dispatched to the McCray Road mill. He was found near a conveyor belt in the main sawmill of the facility, Blackmon said.
Details of the incident remained unclear Thursday. The California Division of Occupational Safety and Health was investigating the workplace death.
Company officials from Redwood Empire, a division of Pacific States Industries, in San Jose, CA, did not respond to inquiries beyond issuing a statement saying they were “deeply saddened” by Lule’s death.
BC Truck Logger Fatality
The BC logging truck driver was fatally injured while attempting to cut free a log that was not positioned properly in the load. After using a chainsaw to buck a section of the log free, the remainder of the log swung around and struck the driver.
This incident occurred on West Thurlow Island, which is located east of Campbell River.
The incident is under investigation.
A Forest Industry Safety Alert has been issued by BC Forest Safety Council.
US Housing Starts
US homebuilders broke the one million mark in March for the first time since June 2008 said the US Commerce Department Tuesday. The overall pace of homes started rose 7 per cent from February to March, to a seasonally adjusted annual rate of 1.04 million.
Apartment construction led the surge, jumping nearly 31 per cent to an annual rate of 417,000, the fastest pace since January 2006.
By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 per cent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 per cent higher than it had previously estimated.
Applications for building permits declined 3.9 per cent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.
Housing Starts, US
March’s pace of homes started was nearly 46 per cent higher than in the same month in 2012.
Housing construction fell 5.8 per cent in the Northeast but gained in the rest of the country, led by a 10.9 per cent rise in the South. It rose 9.6 per cent in the Midwest and 2.7 per cent in the West.
And construction firms have stepped up hiring in recent months. They added 18Japan,000 jobs in March and 169,000 since September, according to the US Labour Department.
Corner Brook Receives Loan
The government of Newfoundland and Labrador is giving Kruger‘s Corner Brook Pulp and Paper a $90 million loan.
The loan won’t kick in until new contracts are in place for all the union at the mill.
“Corner Brook Pulp and Paper is a key employer and a strong contributor to our economy. The mill is important not only to the west coast, but the entire province. Government has clearly stated that we will provide support only when negotiations for a new contract are concluded for all eight unions at the mill,” said provincial Natural Resources Minister Tom Marshall.
The loan will be used by Kruger to address challenges in the industry.
The provincial government has invested $58 million in Corner Brook Pulp and Paper from 2004 to 2012 in various projects. This amount does not include Power Purchasing Agreement sales of $65 million which provides a source of revenue for the paper mill.
BC Election: Forestry Platforms
The provincial election in British Columbia kicked off this week, with both major parties giving some indication of their forestry platforms.
NDP Leader Adrian Dix has released a multimillion dollar election plan that he believes will help grow and improve B.C.’s forest industry, but critics say the proposal makes promises that will be hard to keep.
In Prince George, BC, Monday, Dix announced the five-point forestry plan that would see $310 million invested in the industry over five years if his party wins the election in May.
The NDP leader announced his government would invest in skills training, to improve forest health, to expand global markets for B.C. lumber and to cut raw log exports, while it reinstates a jobs protection commissioner.
The BC Liberal Party immediately criticized the plan, saying it lacks policy details.
The Liberals also place forest health as a top priority but have delayed needed inventory work until the beetle epidemic is over. The resulting inventory will then be more accurate, the Liberals say. The Liberals also brought in tighter controls on log exports in January.
The Liberals intend to continue with their current forestry strategies, said Steve Thomson, minister of Forests, Lands and Natural Resource Operations this week.
Catalyst Paper Announces . . .
Catalyst Paper’s President and CEO, Kevin Clarke, will step down from his position later this spring.
Clarke told the company that with the company’s recent restructuring completed successfully, now is the right time for a leadership transition.
“Kevin steered Catalyst through a pivotal three years and the Board of Directors extends its appreciation to him,” said Chair Les Lederer.
Clarke will continue in his role for an interim period through June 2013 to assist in a smooth transition. He plans to return to his home in New York State. A search for his successor is underway.
April 22, 2013
Funding for Forestry, and UN Conference
Just as the North American lumber and panel markets have embarked on a stellar recovery, a slew of recent funding announcements will help the industry move into an improved business cycle. The governments of British Columbia, Canada, and Russia have released new or renewed funding for various forest industry projects.
The Government of Canada chose the Council of Forest Industries (COFI) annual convention last week to announce an investment of $19.5 million in five projects in Western Canada. The Investments in Forest Industry Transformation (IFIT) program will help bring to market new and innovative forest products, said a Natural Resources Canada press release April 4. Minister Joe Oliver also announced $10.9 million in funding for the 2013–14 Expanding Market Opportunities Program, including support for a Canadian wood products trade office in India.
Please see the October 22, 2010 and the March 25, 2011 issues of your Madison’s Lumber Reporter for details on federal Green Transformation Funding.
Also at COFI, BC Premier Christy Clark announced that the province is investing $8.4 million to build new markets for BC wood products at home and in major markets around the globe, including China and India. Nine associations will receive $6 million from the province for international market development. The remaining $2.4 million is for BC’s Wood First program, which promotes the use of wood as a preferred building material in mid-rise and non-residential construction, and advances BC’s reputation as a global leader in wood innovation.
Global and Canadian Forest Industries
The Government of Canada announced April 8 two financial contributions, totalling $4.8 million, in support of Quebec‘s forestry industry, through the Canada Economic Development’s Quebec Economic Development Program
The non refundable grants are:
• $3.8 million for FPInnovations; and,
• $1 million for the Quebec Wood Export Bureau.
“The Government of Canada supports Quebec forest industry aid organizations that, like FPInnovations and the Quebec Wood Export Bureau, promote innovation and market development and contribute to the diversification of the economy and job creation,” said Denis Lebel, Minister of Transport, Infrastructure and Communities. “The forestry industry is an economic sector that represents nearly 60,000 jobs in Quebec and it is crucial to support it,” he added.
Never one to make small moves, Russian President Vladimir Putin said Thursday to a State Council meeting that Russia will earmark 400 billion rubles (US$13 billion) to finance 118 priority projects in the country’s forestry industry to make the sector attractive for investment and address its long-term problems.
The existing system for forestry project selection, which favours large production facilities for timber processing, should also cater for small and medium businesses, Putin said, adding Russia also needed universal methods of support for all businesses which could bring economic and social benefits. Up to 20 per cent of logging, or about 35 million cubic metres of timber, in Russia is illegal, with economic damage from illegal timber sales estimated at up to 30 billion rubles (US$970 million) annually, according to WWF Russia and World Bank data.
Elsewhere, on Monday at the Tenth UN Forum on Forests in Istanbul, Turkey, Turkish Minister of Forestry and Water Works, Veysel Eroglu, called on world countries to establish a special fund for forestation, according to WorldBulletin.net.
“Rich countries with high greenhouse gas emissions need to spend money on forestation. Let us all come together and establish a fund for forestation. Turkey will support such a project,” Eroglu underlined.
The United Nations Forum on Forests kicked off its Tenth session (UNFF10) with calls for action at all levels to promote the health of a vital resource that covers nearly a third of the globe and provides an invaluable variety of social, economic, and environmental benefits. Around 1.6 billion people – including more than 2,000 indigenous cultures – depend on forests for their livelihood. Forests are also the source of three-fourths of global freshwater, help to regulate the impact of storms and floods, and store carbon from the atmosphere. As well, more than three billion people depend on forests for wood for cooking and heating.
The forum was attended by nearly 2,000 participants, including over 1,200 delegates coming from 197 countries.
“Let’s be very clear. The challenges to maintain this precious gift of nature and to manage it in a sustainable way are many and very serious,” Under-Secretary-General for Economic and Social Affairs, Wu Hongbo, told the opening of the session.
Established in 2000 by the UN Economic and Social Council, the Forum is the only international body that addresses all forest and tree policy issues. Its current session – the first to be held outside of UN Headquarters – will consider a range of measures to improve sustainable forest management and conclude with an outcome document. UNFF10 aims to catalyze actions to reduce deforestation; improve the economies of people who derive their livelihoods and sustenance from forests; increase the forests under protection; and increase assistance to developing countries to improve forest management.
Turkish Prime Minister Recep Tayyip Erdogan kicked off the Forum Monday with a heartfelt speech that touched upon the environmental cost of “cruel competition” and financial inequalities that see thriving richness at the expense of the poor, warning participants against a wide range of global environmental threats from pollution to scarcity of water.
“Humanity now needs to question how a bag of pasta ended up on the shelf before buying it,” Erdogan said. “We need to start thinking of the tragedies a litre of oil, or cubic metre of gas, or a bag of coal has witnessed in the making.”
Erdogan’s speech caused a strong reaction from the delegates and United Nations officials, with Director of Secretariat of the United Nations Forum on Forests Jan McAlpine later describing the speech as “underlining the relation between humans and forests.”
Hongbo also defined the session as “historic” due to its location, and Turkey’s commitment as “undeniable.”
Discussions are under way at the Forum on a global development agenda beyond 2015, the deadline for achieving the anti-poverty targets known as the Millennium Development Goals. At the same time, Member States are discussing the creation of a set of sustainable development goals, as agreed at the UN Conference on Sustainable Development (Rio+20), held last year in Brazil. National level policies for forests have far-reaching implications for global sustainable development. The formal forestry sector’s contribution to global gross domestic product is estimated to be nearly US$468 billion annually.
As government delegations and distinguished experts at the Forum discuss policy formulation on the contribution of forests to economic growth, social enhancement and environmental sustainability, a key issue will be adequate and sustained financing – another item on the Forum’s agenda.
Set up by the UN Economic and Social Council in 2000, the Forum meets every two years. Its current session, which is being held away from UN Headquarters for the first time, will consider a range of measures to improve sustainable forest management.
Leading Economic Index, US
The index of US leading indicators unexpectedly declined in March for the first time in seven months, a sign the world’s largest economy will cool.
The Conference Board’s gauge of the outlook for the next three to six months fell 0.1 per cent in March after climbing 0.5 per cent in the prior two months, the New York-based group said Thursday.
Sawmill Worker Casualty, Log Truck Driver Fatality
A mill worker who died Wednesday afternoon at the Redwood Empire Sawmill in Cloverdale, near Santa Rosa, CA, was trying to clear a jam in an automated tree debarking machine when he became entangled in some equipment and was killed, authorities said.
A logging truck driver was killed in British Columbia on April 8. The death is the second direct harvesting fatality of 2013 in British Columbia.
The Cloverdale Fire Protection District responded to the fatal incident at the mill on McCray Road around 1 pm Wednesday, Battalion Chief Rick Blackmon said to the Press Democrat.
The Sonoma County coroner’s office has identified the worker as 43-year-old Raul Samano Lule of Ukiah. Lule was pronounced dead minutes after firefighters were dispatched to the McCray Road mill. He was found near a conveyor belt in the main sawmill of the facility, Blackmon said.
Details of the incident remained unclear Thursday. The California Division of Occupational Safety and Health was investigating the workplace death.
Company officials from Redwood Empire, a division of Pacific States Industries, in San Jose, CA, did not respond to inquiries beyond issuing a statement saying they were “deeply saddened” by Lule’s death.
BC Truck Logger Fatality
The BC logging truck driver was fatally injured while attempting to cut free a log that was not positioned properly in the load. After using a chainsaw to buck a section of the log free, the remainder of the log swung around and struck the driver.
This incident occurred on West Thurlow Island, which is located east of Campbell River.
The incident is under investigation.
A Forest Industry Safety Alert has been issued by BC Forest Safety Council.
US Housing Starts
US homebuilders broke the one million mark in March for the first time since June 2008 said the US Commerce Department Tuesday. The overall pace of homes started rose 7 per cent from February to March, to a seasonally adjusted annual rate of 1.04 million.
Apartment construction led the surge, jumping nearly 31 per cent to an annual rate of 417,000, the fastest pace since January 2006.
By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 per cent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 per cent higher than it had previously estimated.
Applications for building permits declined 3.9 per cent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.
Housing Starts, US
March’s pace of homes started was nearly 46 per cent higher than in the same month in 2012.
Housing construction fell 5.8 per cent in the Northeast but gained in the rest of the country, led by a 10.9 per cent rise in the South. It rose 9.6 per cent in the Midwest and 2.7 per cent in the West.
And construction firms have stepped up hiring in recent months. They added 18Japan,000 jobs in March and 169,000 since September, according to the US Labour Department.
Corner Brook Receives Loan
The government of Newfoundland and Labrador is giving Kruger‘s Corner Brook Pulp and Paper a $90 million loan.
The loan won’t kick in until new contracts are in place for all the union at the mill.
“Corner Brook Pulp and Paper is a key employer and a strong contributor to our economy. The mill is important not only to the west coast, but the entire province. Government has clearly stated that we will provide support only when negotiations for a new contract are concluded for all eight unions at the mill,” said provincial Natural Resources Minister Tom Marshall.
The loan will be used by Kruger to address challenges in the industry.
The provincial government has invested $58 million in Corner Brook Pulp and Paper from 2004 to 2012 in various projects. This amount does not include Power Purchasing Agreement sales of $65 million which provides a source of revenue for the paper mill.
BC Election: Forestry Platforms
The provincial election in British Columbia kicked off this week, with both major parties giving some indication of their forestry platforms.
NDP Leader Adrian Dix has released a multimillion dollar election plan that he believes will help grow and improve B.C.’s forest industry, but critics say the proposal makes promises that will be hard to keep.
In Prince George, BC, Monday, Dix announced the five-point forestry plan that would see $310 million invested in the industry over five years if his party wins the election in May.
The NDP leader announced his government would invest in skills training, to improve forest health, to expand global markets for B.C. lumber and to cut raw log exports, while it reinstates a jobs protection commissioner.
The BC Liberal Party immediately criticized the plan, saying it lacks policy details.
The Liberals also place forest health as a top priority but have delayed needed inventory work until the beetle epidemic is over. The resulting inventory will then be more accurate, the Liberals say. The Liberals also brought in tighter controls on log exports in January.
The Liberals intend to continue with their current forestry strategies, said Steve Thomson, minister of Forests, Lands and Natural Resource Operations this week.
Catalyst Paper Announces . . .
Catalyst Paper’s President and CEO, Kevin Clarke, will step down from his position later this spring.
Clarke told the company that with the company’s recent restructuring completed successfully, now is the right time for a leadership transition.
“Kevin steered Catalyst through a pivotal three years and the Board of Directors extends its appreciation to him,” said Chair Les Lederer.
Clarke will continue in his role for an interim period through June 2013 to assist in a smooth transition. He plans to return to his home in New York State. A search for his successor is underway.
Madison’s Timber Preview
Madison’s Timber Preview this week examines changes to the US Forest Service philosophy which will double the allowable cut on federal forestlands in Washington State and Oregon. The US House hearing Thursday about a proposal for logging the O&C Lands in Oregon is also looked at.
Contact us any time to receive this worthwhile and timely information.
Suspicious Sawmill Fires in British Columbia
Two separate fires at British Columbian lumber manufacturing plants this week are being investigated as suspicious.
A fire at the KDL wood fencing factory in Fort St. James, BC, is under investigation, according to the Prince George Citizen Tuesday. Mill co-owner Ben Hoy said the damage was significant. The fire was noticed at about 5 a.m. April 5. The mill is located in the industrial area so municipal firefighters arrived as soon as the alarm was called in.
Hoy would not speculate on the the potential spinoff effect until after the full extent of the damage was calculated.
BC Sawmill Fires
Deemed Suspcious
KDL Group has an overall employment base of 150 people in their various departments. They have an array of resource industry activities, including logging, road building, forestry management and more. The company was started up in 1975 by David Hoy who eventually passed operations on to the next generation.
In Prince George, the cause of a Wednesday morning blaze that wreaked $50,000 damage to West-Hill Lumber’s sawmill and office building has been deemed suspicious, said Prince George Fire Rescue to the Prince George Citizen Thursday.
The mill and office were not in use at the time and there was no one at the site, assistant fire chief Drew Larsen said, when 18 firefighters from fours halls armed with six fire apparatus were called to the scene at 3:35 a.m.
They found the office building engulfed in flames with the roof already collapsed. A second smaller building nearby caught fire as a result of the first blaze. Efforts were hampered by limited access due to the heavy snow still around the buildings.
Canadian Housing Starts
Canadian housing starts unexpectedly increased for a second month in March, Ottawa-based Canada Mortgage & Housing Corp said Tuesday.
Housing starts were 184,028 at a seasonally adjusted annual pace during the month, up from a revised 183,207 in February. Home starts have increased since January’s reading of 163,945 units, which was the lowest since 2009.
Housing Starts, Canada
The seasonally adjusted annual pace of urban starts decreased by 2.7 per cent in March to 157,217 units, led by a 6.6 per cent decline in single urban starts to 60,558 units, said the CMHC Tuesday. Multiple urban starts remained relatively unchanged at 96,659 units in March
.
March’s seasonally adjusted annual rates of urban starts decreased in Ontario by 15.7 per cent and in Quebec by 13.5 per cent. Urban starts increased in Atlantic Canada by 27.1 per cent, the Prairies by 13.8 per cent, and British Columbia by 13.1 per cent.
Canadian municipalities issued building permits worth $6 billion in February, a 1.7 per cent increase from January, according to Statistics Canada also Tuesday. Higher construction intentions in the non-residential sector in eight provinces, led by Alberta, more than offset a decline in the residential sector. Despite February’s advance, the total value of building permits has been trending downwards since late 2012.
With gains in all three components, the value of permits in the non-residential sector increased 18.9 per cent to $2.4 billion, following three months of declines. Non-residential construction intentions rose in every province except New Brunswick and Nova Scotia.
Construction intentions in the commercial component increased 13.2 per cent to $1.5 billion, continuing an upward trend that began in late 2011.
Construction intentions in the residential sector fell 7.2 per cent to $3.6 billion in February, the ninth decrease in 12 months. Residential construction intentions have been pursuing a downward trend that began in mid-2012.
Housing Starts, Japan
Total February housing starts in Japan were 68,969 units, a 3 per cent increase over one year ago, according to the Japan Lumber Reports. The latest figures continue the consecutive increase of the past six months.
Seasonally adjusted starts were 949,000 units, a 9.4 per cent increase over January and the highest in four months. Building of new condominium units increased by 15.9 per cent compared to February 2012, with many of the new buildings containing more than 100 units each.
Meanwhile, new 2×4 rental units were 3,816, a 14.6 per cent increase over one year ago. Wood-based units were 35,727, comprising 51.8 per cent of total new construction.
US Timber Production Bill
Further to US federal and state movements to improve forest management and increase the timber harvest on federal lands discussed in this week’s issue of Madison’s Timber Preview, Washington State Congressman Doc Hastings (R), Chair of the House Natural Resources Committee, introduced legislation Thursday that would encourage the increased production on federal timber lands. The bill, “The Restoration Healthy Forest for Healthy Community Act” was highly praised and supported by the National Association of Home Builders.
Hastings’ bill would also extend the Safe Rural Schools law to allow counties to transition back to payments from active forest management instead of from the federal budget. By increasing the harvesting on federal lands, which supplies 2 per cent of the wood used by the forest products industry, an easing of escalating prices would be seen and housing would remain at affordable prices.
April 17, 2013
Lumber Transportation Problems
It never ceases to amaze Madison’s that commodity manufacturers and logistics players grasp shifts in a marketplace only in retrospect When North America’s forest product’s industry was at the beginning of the epic downturn just experienced, the reaction of producers and infrastructure managers to curtail activity lagged significantly. By almost an entire year in fact.
Lumber industry veterans will remember that through 2007 the large-volume, low-cost producers in British Columbia continued to run as much wood, and ship into the US, as they had been in mid-2006 when volumes were breaking records. At that time there came to be too much lumber in the supply chain. In the same regard, the Canadian railways were causing absolute conniptions with sawmills by repeatedly sending many more rails cars than were needed. In both cases, to a certain degree, the reasons given for this delayed reaction to market conditions was that companies based their yearly planning on the volumes of the previous year.
Just when a lot of analysts and economists are still warning that the US economy might not yet be in recovery, the housing market and housing starts are definitely improving. A mortgage lending giant, government-funded Fannie Mae, said it booked net income of US$7.6 billion in 4Q 2012 and US$17.2 billion for the year, according to Forbes Tuesday. More importantly, for the first time since its 2008 government bailout, Fannie Mae was able to pay down some of the taxpayer rescue without additional borrowing. For the full year, the firm returned US$11.6 billion to government coffers. Compare that with 2011, when it paid US$9.6 billion in dividends but drew US$25.6 billion, and 2010 when it paid US$7.7 billion and drew US$15 billion. To date, of the US$116.1 billion Fannie Mae has drawn from the Treasury it has repaid just US$31.4 billion, said Forbes.
North American Railways, Trucks
In other good financial news, US residential construction companies have kept their months-long rally running in early 2013, and real estate-related companies are lining up to go public.
It should be obvious to everyone by now that new building in the US is ticking up. It is certainly nowhere near historical averages, but it is well past the bottom. So why is it taking so long for the suppliers and transporters of building materials to react by increasing trade more than they currently are? One reason is the continued difficulty in getting credit, the other is that many players are being extremely cautious. The US and European economies are by no means in good shape so there is a prevalent belief that holding back for just a while longer might be a good idea. Just in case things turn downward again.
Meanwhile, the movement of solid wood products on the railways in particular is proving difficult to say the least. Some in the industry say that during a growth period, especially if its in the spring, this is not at all surprising.
The Ontario Forest Industries Association and its Quebec counterpart said to the Globe and Mail on March 27 that shipping delays resulting from a lack of rail cars being provided by major rail carriers are seriously hurting sales and share of market. The Quebec Conseil de l’industrie forestière said there are serious constraints on the shipment of softwood lumber to the US, leading to “substantial losses of market share” and a diminished export capability.
CN spokesperson Mark Hallman explained to the Globe and Mail that CN Rail’s car supply for forest products is based on shipment forecasts and commitments from customers over the prior year. CN has sufficient fleet to meet the demand based on those forecasts, but anything above those levels “now requires additional freight cars and in today’s market the lead time to obtain such cars is 12 to 18 months,” he said.
There were also references to the weather in Hallman’s explanation, but that is difficult to understand since the weather is always bad in parts of Canada and the US at this time of year.
A well-established solid wood producer in BC explained to Madison’s in a phone interview Thursday that rail cars have been few, and slow in coming, but that this is not entirely unexpected given the season and that the forest products industry is just ramping up after an extended downturn. Weather-related problems in the prairies and the US mid-west are creating issues for empty rail cars coming back to Canada’s west, and at the same time mills are running well and want to ship their wood, said the source. The mills feel they can’t get rail cars fast enough.
When a producer has 30 rails cars worth of product ready to ship but only 20 cars arrive, that causes frustration, the source said. This problem was worse, apparently, a month or so ago, but is being incrementally rectified, the source explained.
As a result, demand for trucks is increasing. When lumber prices are on the way up, the longer mills take to ship the longer it takes to show that profit.
“People just want to get the wood out and post some numbers,” said the source. “It’s worse when this happens in a down market, then the mills are repricing and might lose their entire margin.”
It is normal at this time of year, as spring takes hold and lumber sales pick up, for a problem with rail car availability to come up.
“This plays out more years than not,” said the source. “We get backed up in March, then make hay in April and May.”
Madison’s and the source spent a few minutes reminiscing about how things were a couple of years ago, when there were empty rail cars everywhere and the railways were trying to charge companies for those sitting at their mills. Please refer to the October 22, 2010 issue of your Madison’s Lumber Reporter for details.
Madison’s contacted another source Thursday, this time a wholesaler in southern Ontario who deals in both Ontario and Quebec wood products. This source found the lack of rail cars quite a dire situation. They said that the railways are shortchanging their shippers’ rail car supply, so the mills are looking for any truck they can find.
“In just the past month-and-a-half, the trucking companies started charging 20 per cent more than their regular rates,” the source detailed.
In contrast to the BC experience, it doesn’t look like this problem will be resolved any time soon in eastern Canada, the source and Madison’s agreed. It is not so easy to just switch to trucks in Ontario as it is in BC, it seems.
“The trucks here are more specialized,” the source explained. “They run lumber into the city then concrete and steel back.
“I can’t remember trucking ever being this bad,” said this long-time lumber trader. “Just as more business is happening, there are fewer trucks.”
This source believes the problem is not going to go away with the weather.
“The whole industry reduced capacity, sawmills shut down, rail cars were decommissioned, truckers were going broke and sold out,” the source said.
In the end, there might be a time lag but the reaction of transportation players is indeed coming to be. Last week, Greenbrier Companies, designers, manufacturers and marketers of railroad freight car equipment in North America and Europe, announced that it received new orders in January, February, and March for 5,400 railcar units valued at approximately US$575 million. Greenbrier also sold double-stack intermodal platforms, box wagons, and various types of covered hopper wagons, while it secured orders for 700 automotive-related rail vehicles for North America, and open and closed carriers for Europe.
As well, the size of the North American revenue-earning freight-car fleet increased 1 per cent in 2012, but still didn’t return to pre-recession levels, said Railinc’s annual “North American Freight Railcar Review” Wednesday.
Madison’s Timber Preview
This week’s issue of Madison’s Timber Preview examines the latest log price data for various North American jurisdictions, as well as for New Zealand, against recent lumber price trends.
Contact us any time to receive this worthwhile and timely information.
Asian Long-horned Beetle Eradicated from Canada
The Canadian Food Inspection Agency (CFIA) Friday declared the Asian Long-horned Beetle successfully eradicated from Canada.
The Asian Long-horned Beetle is not native to Canada and was first detected in the cities of Vaughan and Toronto, ON, in 2003. Following the detection, the CFIA conducted visual surveys to determine how widely the pest had spread, and the extent of the damage it had caused to many broadleaf trees, such as maple, birch, elm, poplar and willow.
A Ministerial Order was subsequently established around the southern part of the City of Vaughan and the north east part of the City of Toronto to prevent further spread. As part of the eradication effort, nearly 30,000 trees were also removed from the area.
The Asian Long-horned Beetle was last detected inside the regulated area in December 2007. It has never been detected elsewhere in Canada.
Buchanan’s Longlac, ON, Mill to Restart
CBC News reported Friday on plans to restart the Long Lake Forest Products, part of the Buchanan Group of Companies, mill in Longlac, ON. The mill will be allowed to reopen without having to repay the $24 million the company owes Ontario taxpayers.
Buchanan’s Longlac Restart
Due to bankruptcy, new companies have been formed, Longlac Lumber and Nakina Lumber, that now hold the assets of the mills.
These new companies have no stumpage debt with the province. According to a spokesperson for the Ontario Minister of Natural Resources, all the debts of Long Lake Forest Products are being dealt with through the Bankruptcy and Insolvency Act legislation and the applicable court processes.
Andrew Foulds, NDP candidate for Thunder Bay – Superior North, told the CBC that Buchanan owes taxpayers about $80 million in unpaid stumpage and loans and he wants to see workers and taxpayers protected this time.
“I mean some forestry workers across the northwest have lost everything and families and communities have been decimated,” Andrew Foulds said. “We don’t want to go through this again.”
Longlac Lumber hopes to have the mill restarted by the summer, returning 300 jobs to the community of Greenstone.
Big River Sawmill to be Running Soon
Carrier Forest Products has had a handful of specialized contractors working since February to get it’s BIg River, SK, facility back into “ready mode” for eventual production, according to News Talk 650 CKOM Friday. Carrier is also using the kilns in Big River to dry wood from its Prince Albert, SK, facility to take advantage of stronger lumber markets.
Work will ramp up in the coming months as the company eyes for a possible start-up date in August. However, it’s a loose timeline with the company waiting on new equipment for the mill that won’t be delivered until autumn.
Carrier Lumber Saskatchewan Mill
Carrier acquired the Big River sawmill from EACOM Timber in 2011 and officials at the time said they wanted to align the start-up with the Prince Albert Pulp Mill.
It appeared a wrench was thrown into Carrier’s plans last month when vice-president of operations for Paper Excellence, Dale Patterson, announced the restart of the pulp mill was behind schedule and at least a year away from production, said 650 CKOM.
Having the pulp mill operating is important, Kordyban said because it would be the ideal buyer for its chips, a byproduct produced in the milling process.
British Columbia’s Wood Waste [Residue] for Rural Communities Program
British Columbia is expanding a program called Wood Waste 2 Rural Heat that helps turn wood waste into heat for buildings and homes in rural communities in the province’s interior, the BC Ministry of Jobs, Tourism and Skills Training announced Wednesday.
A total of $240,000 will be invested in over two years in the Wood Waste 2 Rural Heat project. $50,000 will be coming from the Ministry. The provincial government is partnering with:
• Columbia Basin Trust (donated $60,000 to the program)
• Southern Interior Beetle Action Coalition (donated $60,000 to the program)
• Omineca Beetle Action Coalition (donated $36,000 to the program)
• Cariboo-Chilcotin Beetle Action Coalition (donated $35,000 to the program)
Rural British Columbia has a reliable fuel supply of wood waste [residue] produced by ecosystem restoration projects, community forests, woodlots and other small tenure holders. Converted into pellets and chips, this woody biomass can power heating projects for smaller communities and businesses, a practice that has been hugely successful in Europe, most notably throughout Austria.
Wood Waste 2 Rural Heat staff will work with First Nations, local governments and organizations to explore the feasibility of new bio-energy projects and develop business plans in the Villages of Telkwa and Lumby, the District of Clearwater plus more.
To help rural BC communities make the leap to wood biomass heating systems, this project – formerly known as the Green Heat Initiative – will work at the local level to develop business plans that identify technological solutions and financing opportunities.
Aspen Planers Buys . . .
Aspen Planers has purchased the former Ardew Wood Products mill site in Merrit, BC, according to the Merrit Herald Thursday.
Ardew Wood Products exhausted its timber supply and closed on January 11, 2013. The company was started by Erik Norgaard 47 years ago.
The purchase price has not been disclosed, nor has Aspen Planer’s plans for the site, said the Herald.
April 10, 2013
Mountain Pine Beetle Genome
The devastating mountain pine beetle infestation, which has already destroyed more than 18 million hectares of lodgepole pine forest in BC as well as significant forestland in Colorado, Montana and other US states, seems poised to keep moving eastward through central Alberta. Scientists and forest rangers in Alberta have been fighting a multi-front battle to prevent the beetle jumping from the predominantly lodgepole forests of western Alberta to the jack pine which dominates the east of that province, and indeed the vast Boreal forest covering most of Canada. An important new tool has just been discovered to help in this fight.
The genome of the mountain pine beetle has been decoded by researchers at the University of British Columbia and Canada’s Michael Smith Genome Sciences Centre. This is a first for the mountain pine beetle and only the second beetle genome ever sequenced. The genome is described in a study published Tuesday in the journal Genome Biology.
Scientists can now take a clear look into how the beetles can cause so much devastation, and why.
Christopher Keeling, research associate at the genome centre, told the Globe and Mail Wednesday that decoding the beetle’s genome will allow scientists to uncover some of the pine beetle’s secrets – such as how it can survive the bitter cold. He said the information can also be used to help manage the epidemic in the future. This breakthrough opens up research for not only pine beetles, but for all beetles and weevils.
The research revealed a large gene variation among beetles that is almost four times greater than that of humans.
Please refer to the April 22, 2011 issue of your Madison’s Lumber Reporter for background on the Tria Project’s work decoding the pine beetle, fungus, and jack pine genomes. The Tria Project is an interdisciplinary group which was formed in 2008 by researchers at the University of British Columbia, the University of Northern British Columbia, the University of Alberta, and the Canadian Forest Service.
“The fundamentals of the Tria Project are to map the genetic landscape of all three,” explained Keeling to Madison’s in a phone interview Thursday. “The genetic makeup of the fungus which lives on the beetle [and causes the blue stain] had previously been discovered. Now we have the bark beetle genome. As for the trees, members of our research team are looking for the express genes, those tuned in on specific tissues like the bark and the phloem, rather than working on the entire genome.”
Incredibly, conifer genomes are five times bigger than that of humans, while that of the pine beetle is “about four times greater than the variation among humans”, said a UBC press release Tuesday.
Successfully Decoded
“This discovery is important for us to understand how the beetle can adapt to new environments,” continued Keeling. “The beetle’s natural habitat ranges from Mexico right up to the BC/Yukon border. There are great variations of environment and climate between these areas, so now we can identify which beetles are more suited to surviving in new environments. For example we can target the beetles which would be more vulnerable to the cold winters of Saskatchewan.
“This is the beginning of more work that can be done to fight the pine beetle using genetic information. We have no idea what will happen in Alberta; jack pine is a naive species when it comes to the pine beetle, jack pines were never infested by pine beetles before.”
Barry Cooke, Research Scientist in Spatial Dynamics of Insect Populations at Natural Resources Canada, has been working on target modelling, to predict how the beetle is going to move east.
“There are three main elements to the work we, at NRCan have been doing,” said Cooke to Madison’s in a phone interview Thursday. “We had access to some of the new genome data as Chris Keeling’s group were making their discoveries. One of the things we can use this genome information for is epidemiological spread modelling. Using the genome test, we are screening various beetle populations, genotyping to characterize individual sequences. This tells us something about the likelihood of a beetle population dispersal, like the one from BC into Alberta, happening again. Population dispersal is a major random variable in fighting infestation.
“We have confirmed that an entire generation of mountain pine beetles have reproduced in jack pines. The Tria Project research to identify the genome markers in pine trees will help us better fight beetle migration because the markers tell us specific details about both with the beetles and the trees.
“The probability of a mountain pine beetle outbreak depends on a small population getting a foothold on a tree. In fighting the beetles’ spread, details start to matter tremendously. So targetting can get very precise information about mates, hosts, the ability of adult beetles or eggs to detoxify the tree’s resin, and more. We already know a lot of this about lodgepole pines but not about jack pine. We don’t know what the outcomes are going to be in jack pine, we can’t just transfer the knowledge we have about the BC beetles in lodgepole pine to Alberta beetles in jack pine.”
“Once the genome is sequenced, screening will find the gradient,” continued Cooke. “For example, with adaptive functionality. Different populations of beetles will adapt differently to cold temperatures.”
When speaking to Keeling, Madison’s asked if this knowledge could be put toward the efforts in Alberta to use pheromones to draw migrating beetles into traps.
“Yes, understanding the beetle’s genome could potentially be used to target the olfactory sense,” replied Keeling. “At this point what we have is essentially the gene encyclopedia of the bark beetle. We can now start to understand reproduction, development, host colonization, and more.
“We could target the antennae, we could release something into the environment at low levels which would turn off the beetle’s antennae or olfactory sense.”
Cooke also mentioned pheromones.
“There are eight different growth rates which we now have the ability to predict what will happen,” said Cooke. “One of these are chemo receptors [or pheromones]. With targetting we can identity the specific points in the genome to block the senses, both for the trees and for the beetles. Researchers have identified and been using attracting and repelling chemicals in BC and Alberta. With this genome information, these efforts can now be incredibly specific. We can make it difficult for the beetle to find a host or to find a mate, for example.”
Since this research was publicly funded in Canada, the genome information was freely filed at the GenBank Tuesday when the Tria Proejct’s report was released. That means that any chemical or pesticide company can use it to develop a tool made specifically to fight the mountain pine beetles’ progress across North America.
While efforts to stop the beetles’ spread eastward across Canada are currently being fought in Alberta, this work has many applications for the future of BC’s forests as well.
“In the long term, the beetle population in BC could come back,” explained Keeling. “Right now the younger trees are vulnerable. And in 60 years, as the forest regrows, there will be danger because the trees will be of generally the same age.”
As the pine beetle infestation grow to epic proportions in BC, one of the discoveries researchers made was that the similar-species, similar-age of the second growth made it very easy for the beetle to spread quickly.
Madison’s Investment Rx
The March issue of Madison’s Investment Rx went out to subscribers at the begining of this week.
The latest lumber production, rail traffic, and cargo container data is examined.
Contact us any time to receive this vital and timely information.
Tembec Sells Skookumchuk
Tembec Inc Tuesday reached an agreement to sell its NBSK pulp mill in Skookumchuck, BC, to Paper Excellence Canada, a subsidiary of the Indonesian pulp and paper giant, for $89 million, which includes working capital.
Closing of the transaction is expected to occur in 2Q 2013.
“This transaction supports the continuing transformation of the Company and the reshaping of its business portfolio,” stated Tembec President and CEO James Lopez in a press release.
This mill, where 290 employees currently work, started up in 1968.
USW Ordered to Pay Severance
The United Steelworkers union was ordered Wednesday to pay severance owed to workers laid off from the Flavelle sawmill in Port Moody, BC, when it was sold by Interfor in 1999. The Labour Relations Board found that the union, then the IWA, had entered into a settlement agreement with Intefor, but failed to obtain group severance pay for the 62 workers affected, according to the Canadian Press.
Sawmill Worker Severance
More than 80 former mill workers retained lawyers, said CP. The union had made extensive efforts to obtain severance for the workers but ultimately failed in the courts.
USW Local 1-3567 President Brian Harder explained to Madison’s in a phone interview Thursday that changes to the labour code prevented the union from collecting benefits from the employer for their members.
“Ultimately the government changed the laws since 1999, and backdated them,” said Harder. “The amount of the payout has not been settled yet. We should find that out in 12 weeks.”
Stella-Jones Reports
Stella-Jones, based in Quebec, is increasing its dividend 25 per cent following record annual sales and profits last year and the prospects of benefiting from a North American recovery in 2013.
Stella-Jones Year-End, 4Q
Stella-Jones reported year-end 2012 net income of $73.1 million, up 31.2 per cent from the previous year. Sales were up 12.1 per cent to $717.5 million.
For 4Q 2012, Stella-Jones said net earnings were $16.5 million, on sales of $159.3 million. That was up from $13.4 million, on sales of $147.5 million in the final three months of 2011.
Stella-Jones’ existing business decreased about nine per cent due to lower advanced delivery of railway ties in the quarter and a planned reduction in the tie recycling business.
The company is spending about US$11 million to a new railway wood treating facility in Georgia that will serve railways in the fast-growing Florida and Atlanta, GA, areas.
BC Prescribed Burns
British Columbia is planning on conducting prescribed burns in the following areas, the Ministry of Forests, Lands and Natural Resource Operations said Tuesday:
• Bald Range area – 150 ha, approximately 11 km west of Summerland;
• Satellite Hill – 36 ha, approx. 6 km south of Lumby and Highway 6;
• Woodward Creek – 16 ha, approx. 20 km west of Lumby; and,
• South Fork – 32 ha, approx. 12.5 km east of Cherryville.
Prescribed Burns, BC
The burns will be conducted some time between March 28 and May 15, depending on weather conditions, said the BC Ministry of Forests, Lands and Natural Resource Operations Tuesday.
These burns will assist with ecosystem restoration and will occur in several phases during this period.
Historically, grasslands and open forests in the Okanagan have been renewed through frequent, low-intensity ground fires.
The reintroduction of managed, low-intensity ground fires to these grasslands and open forests is intended to restore and maintain plant communities that are native to these areas.
Domtar Closes Line
Domtar‘s A-line pulp machine in Kamloops, BC, shut down at the end of the work Monday, the company said in a press release.
The final number of jobs lost will be 125 once the phase-out concludes this spring. Thirty jobs have already been cut.
The unionized workers rejected the company’s transition and layoff plan in a vote on January 31. Although both sides continue to meet regularly, a transition plan has not been agreed upon.
It appears likely that employees with seniority will be able to bump junior employees from the mill’s B-line.
Domtar announced this closure in December. The shutdown of the A-line will result in a permanent curtailment of Domtar’s annual pulp production by approximately 120,000 air-dried metric tons of sawdust softwood pulp.
The Kamloops pulp operation will continue to operate its remaining pulp manufacturing B-line with an annual capacity of approximately 350,000 air-dried metric tons of softwood kraft pulp and employ approximately 300 people.
Cascades Announces . . .
Mario Plourde has been named as the successor to Alain Lemaire, as President and CEO of Cascades, the company announced Tuesday.
Plourde is currently Cascades’ COO. The transfer will take place on May 9, following a two-year transition period.
Lemaire will continue to serve as Chair of the Board of Directors. Alain Lemaire’s brothers, Bernard and Laurent, will also remain active in the company, continuing to serve on the Board of Directors and the Executive Committee, and participating in the company’s strategic planning.
April 03, 2013
Sawmill Operations
Warming springlike weather on the west coast of North America this week heralded a flurry of news of sawmill investment and re-openings across the continent. After a long, dark, dreary lull of six years, the business of producing and selling solid wood is buzzing back to high gear.
The most exciting announcement this week was out of the Sinclar Group, that the Lakeland Stud Mill in Prince George, BC, is going to be rebuilt. That mill, along with Hampton’s Babine sawmill in Burns Lake, BC, suffered a tragic explosion in the early months of 2012 and was completely devastated. Hampton Affiliates have also announced their intention of rebuilding the Burns Lake mill.
Sinclar Group president Greg Stewart, accompanied by local United Steelworkers Union president and city councillor, Frank Everitt, and acting mayor Cameron Stolz, notified media Wednesday that the new mill in Prince George will continue to produce stud lumber, and will be integrated with the current planer mill. He added that the mill will have the most advanced safety protocols to ensure a safe work environment. Construction is expected to begin this summer, with completion in summer of 2014. There will be a few less employees, with the need for only 100 compared to the previous 160. Stewart said the final design plans haven’t been completed.
“It will still be a stud mill,” explained Stewart to Madison’s in a phone interview Thursday. “But instead of just being ALS, it will also run metric sizes to serve customers in Asia.”
When asked, Stewart specified China, Korea, and Vietnam as countries were Sinclar could continue to grow its market base.
The new mill will be more efficient, thus the need for fewer employees than the previous mill.
“We will be going from three shifts to two,” Stewart said.
He was not able to say, as yet, what kind of volumes the new mill will produce.
“We have 750,000 combined cubic metres of timber supply annually,” said Stewart in answer to Madison’s question. “There is good fibre supply available for this mills, which gives us more security than some mills in the area.
Stewart said the company decided to make the announcement now, even though the reconstruction plans are not finalized, “to provide comfort to employees and the community”, and expressed his appreciation “of the support locally and by industry through this whole process.”
Investment, Re-Openings
Also this week International Forest Products announced an agreement to purchase two timber properties in the Kootenay region of British Columbia. The Vancouver-based company said the deal, which is still subject to regulatory approval, will give it an additional annual cut area of 174,000 cubic metres and will also increase production at Interfor’s sawmill in Castlegar, BC.
Ric Slaco, VP and Chief Forester at Interfor, explained to Madison’s in a phone interview Thursday, “A few years ago Interfor bought the Grand Forks and Castlegar, BC, sawmills from bankrupt Pope & Talbot. Since then both mills have resumed operation. This new tenure helps support additional logs going to Castlegar. We will be able to increase our shifts and reduce fears of log supply issues. This is a very positive signal to local communities that Interfor is investing in the Kootenay region of BC.
“Since the Springer Creek Forest Products mill in Slocan, BC, closed, these tenures have been inactive. So this is positive news for local harvesters as well. Also, [Mercer International’s] Celgar mill will benefit from Interfor’s increased sawmill operations in the Kootenays.”
The agreement to purchase needs the usual regulatory approval, but “we’re not anticipating any problems,” said Slaco.
“The tenure we will be purchasing, TFL 3, is well located geographically because it is adjacent to Interfor’s existing TFL 23. This is a logical and complimentary addition to our existing timber harvesting operations,” Slaco detailed.
There was more good news this week out of lumber producing companies in the US.
Saratoga Forest Management, in Saratoga, WY, restarted operations Monday at a mill that had been out of operation for a decade. That sawmill will employ up to 50 loggers and have a total of 80 employees.
Wyoming Governor Matt Mead (R), said the Wyoming Department of Workforce Services offered the mill a US$50,000 training grant for new employees so they would be prepared to use specialized equipment to help deal with the effects of Wyoming’s bark beetle infestation, according to the Wyoming Business Report.
Mead said the mill is a partnership between the National Forest, the state of Wyoming, and private industry. The mill was purchased in April 2011 by Gary Ervin of Oregon.
And on Wednesday, North Carolina state officials said a lumber processor plans to open a plant in Halifax County, creating 40 jobs over the next three years, according to WRAL radio. Meherrin River Forest Products will invest more than US$1.8 million in its Weldon, NC, plant, which was previously a sawmill and headquarters for Coastal Lumber.
Meherrin River Forest Products qualified for a performance-based grant of up to US$80,000 from the One North Carolina Fund, which provides financial assistance to attract business projects to the state.
The grant is contingent upon proof of job creation and receipt of a local funding match, said The Daily Herald. Other partners that helped with this project include: the NC Department of Commerce, NC Community Colleges, Halifax County, town of Weldon, and the Halifax County Economic Development Commission.
Back in Canada, a large sawmill in Nova Scotia started up recently as a result of the resurgence in lumber demand from the US, according to the Chronicle Herald March 13. At the beginning of March, Scotsburn Lumber, in Scotsburn, NS, entered full production, with 80 people manning two shifts in the sawmill and one shift at the planing mill.
First reopened this autumn, that mill was closed by former operator Ligni Bel in November 2011 after NewPage Port Hawkesbury declared bankruptcy and shut down the Point Tupper pulp and paper plant. A five-year run of low softwood lumber prices had weakened the mill’s financial position and last August, Ligni Bel declared bankruptcy. The pulp mill was bought by Paper Excellence, which owns the nearby Northern Pulp plant at Abercrombie Point, NS.
Since its re-opening, 80 per cent of the workers laid off at the Scotsburn sawmill in 2011 have come back to work.
The mill will produce 100 million board feet of lumber per year, making it one of the Nova Scotia’s two largest mills.
Just before press time Friday Atlanta,
GA-based Georgia Pacific announced it is
investing invest nearly US$400 million in
its plywood and lumber operations in the
coming years. The money will be used to
expand plants and upgrade equipment in
several states. In addition to Georgia, the
company has operations in North Carolina, South Carolina, Alabama, Mississippi,
Arkansas, and Texas.
The effort would increase Georgia-Pacific’s overall capacity by approximately
20 per cent. Start-up would be expected in
the second half of 2014 through the beginning of 2015.
Since 2006, the Georgia-Pacific building products business has invested close
to US$1.5 billion in capital for property and
equipment upgrades and acquisitions.
New Brunswick Invests
In an announcement that fits perfectly with today’s story in your Madison’s Lumber Reporter, the government of New Brunswick said Thursday it has a new export strategy, designed to get more of that province’s businesses to export their goods. The five-year plan, entitled Growing Global Markets, aims to get 175 companies to sell overseas, said Premier David Alward.
The strategy will create more than 4,000 jobs in existing export sectors, such as seafood and forestry products, as well as new export areas, such as information technology and biotechnology. New Brunswick has the capacity to generate $700 million in exports and the government has come up with 10 initiatives to help make that happen, said Alward.
“[This strategy will] create new opportunities, diversify our markets into Europe, into China, into other parts [of the world],” he explained.
Justin McGuigan of Riverbend Log Homes is looking to China as a place to sell his cedar log home kits.
“We can absolutely grow,” McGuigan, who has been to China once so far and plans to go back again later on this year, said to CBC. “There is huge hunger for our product there.”
Kelso Makes Offer for EACOM
Investment firm Kelso & Co announced Friday morning a friendly takeover offer of EACOM Timber Corp that values the mill operator’s equity at $181.8 million, a 46 per cent premium to its recent market price. Kelos is offering 38 cents cash per share — eight cents above the Thursday closing price.
Kelso Bid
Eacom Timber, which owns eight saw mills in Ontario and Quebec, said its directors, senior executive officers, and certain significant security holders have signed lockup agreements representing 44 per cent of the company’s common stock.
“We are pleased with Kelso’s offer, which recognizes the company’s inherent value,” said Terry Lyons, chair of a special committee of Eacom directors.
US Environmental Ruling on Logging Roads
The American Forest and Paper Association (AF&PA) issued a news release Friday after the Supreme Court ruled that runoff from logging roads is agricultural rather than industrial waste.
AF&PA Responds to Supreme Court Ruling
AF&PA President and CEO Donna Harman said in a press release, “We are pleased with the court’s decision. Logging road runoff has been successfully regulated through state best management practices for more than 35 years. This decision provides the clarity needed for businesses that relied on Environmental Protection Agency’s interpretation that logging activities are exempt from Clean Water Act permitting requirements.
“AF&PA intends to remain fully engaged in congressional and EPA deliberations that relate to ensuring access to an adequate supply of fiber for paper and wood products facilities. We also will continue to defend against continued litigation that threatens our industry.”
Housing Starts, US
The Commerce Department said Tuesday that US housing starts rose 0.8 per cent last month to a 917,000-unit annual rate. Permits for future construction jumped 4.6 per cent to a 946,000-unit rate, the quickest since June 2008.
US Housing Starts
Construction of one-family properties climbed 0.5 per cent to a 618,000 rate, the highest since June 2008, from 615,000 the prior month. Single-family building permits rose 2.7 per cent in February to a 600,000 annual rate.
Work on multifamily residences such as apartment buildings rose 1.4 per cent to an annual rate of 299,000.
Two of four regions showed gains in February starts, led by a 37.5 per cent jump in the Midwest. New construction rose 18.4 per cent in the Northeast. Starts decreased 7.2 per cent in the West and 5.7 per cent in the South.
Meanwhile, the National Association of Realtors said Thursday that existing home sales increased 0.8 per cent to an annual rate of 4.98 million units last month, the highest level since November 2009. The January sales pace was revised up a 4.94 million units from the previously reported 4.92 million units.
The median home sales price in February rose 11.6 per cent from a year ago to US$173,6000.
Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for a quarter of overall sales last month, up from 23 per cent in January.
Investors bought 22 per cent of homes in February, with first-time buyers accounting for 30 per cent of the transactions.
Elsewhere, US home prices rose 6.5 per cent in the 12 months ending in January, the biggest year-over-year jump since 2006, as values surged on the West Coast and in the area including Nevada and Arizona, the Federal Housing Finance Agency said Thursday.
Prices haven’t declined on a monthly basis since January 2012, the housing finance agency said, indicating that the recovery has solidified.
EACOM Reports
EACOM Timber reported Tuesday net earnings of $4.29 million, compared to a net loss of $47.41 million in 2011.
The 2012 results include a gain of $15.2 million on disposal of property, plant, and equipment destroyed by fire whereas the 2011 results included an impairment charge of $15 million, partially offset by a gain of $4.34 million on the sale of the Big River mill and a $3.77 million recovery of income taxes.
EACOM’s net sales in 2012 were $248.94 million, down 11 per cent against sales of $279.97 million in 2011.
Centurion Announces . . .
Centurion Lumber Manufacturing is pleased to announce that Peter Barton has joined the company from Welco Lumber Corp. Peter will be focused on the expansion of Centurion’s domestic and international lumber and plywood business. Working from the North Vancouver office, Peter can be reached at (604) 603-5129.
Centurion is involved in the manufacturing and trading of lumber, veneer, plywood, and other forest related products.