Lumber News Archives: Oct 2013

Illegal Timber Harvesting ; Madison’s Timber Preview ; CN Rail Labour Contract Talks Stall ; UK Timber Shortage ; US Builder Confidence : October 2013 ; Oregon’s Forestry Employment ; Large Timberland Sale Politics and Lumber Exports ; Labour Negotiations Move to Southern Interior ; Canada Housing Starts ; Housing Starts, Japan ; 2013 US Foreclosures Drop Compared to 2012 ; Canadian Trade : August ; Ear Falls to Restart ; Universal Acquires . . . ; Stella Jones Buying . . . North American Trade ; British Columbia Wildfire Tally ; China’s Wood Demand Expectations : 2015 ; Newfoundland Mill Closes Due to Log Shortage ; Canada Wood Group Updates ; G-P to Upgrade Dudley Timber and Wood Fibre Sectors ; Madison’s Timber Preview ; BC Sawmill Issued Stop-Work Order Due to Dust ; North America Transportation Statistics ; Cedar Mill Fire ; GP Signs Deal ; Timber and the Economy ;

October 30, 2013

Illegal Timber Harvesting

Fast on the heels of the US Lacey Act and Europe’s EUTR legislation prohibiting the import of illegally harvested timber, this week Australia officially approved it’s own similar law.

Australia’s parliament on Monday passed legislation to ban the import and trade of illegally logged timber, joining the United States and European Union in clamping down on a global trade in stolen timber that Interpol says is worth about $30 billion a year, said Reuters Monday. The Australian laws, five years in the making, impose fines, jail, and forfeiture of goods, and oblige importers to carry out mandatory due diligence on timber and timber products sourced from overseas.

The Australian government says about 10 per cent of the more than AUD$4 billion (US$4.12 billion) of timber imported annually is illegal, and that illegal logging globally causes environmental and social damage estimated at AUD$60 billion a year.

Most illegal logging occurs in tropical forests, especially in countries with lax law enforcement, corruption, poor forest management, and underfunded conservation programs. A report published by Interpol last year suggested that large amounts of illegal timber are “laundered” through legitimate forestry enterprises, including the plantation sector.

The Australian laws impose a maximum penalty of five years jail time and a fine of AUD$275,000 for a company, or AUD$55,000 for an individual, if they knowingly, recklessly, import or process illegally logged timber products.

New Legislation in EU, US, Australia

Amendments to the US Lacey Act ban trade in illegally sourced timber, wood and paper products within the United States and internationally. Failure to comply means fines, jail time and forfeiture of goods.

In Europe, the EUTR — which came into effect in March — aims to stop illegally logged timber being sold in the EU, by regulating the list of timber and timber products, whether harvested in the EU or beyond, sold within Europe. Government buying of timber makes up 19 per cent of the EU’s annual GDP, which amounted to €2,100 billion in 2009.

An investigative project by students from UBC’s Graduate School of Journalism, released at the beginning of October, uncovered the criminal, environmental, and social consequences of the illegal timber trade, one of the largest black markets in the world. Ten graduate students in UBC’s International Reporting Program spent a year travelling to Indonesia, Cameroon, and Russia to investigate stories of communities affected by illegal logging and bring awareness to North American consumers who are buying furniture, paper, and building materials made from this wood.

In Russia’s Far East, students discovered that massive amounts of illegally logged Russian hardwood are shipped to China, where the wood is turned into inexpensive furniture and other items for export to western consumers. In Indonesia, a student team challenged a representative of one of the world’s biggest paper companies on its damaging environmental history. In Cameroon, students encountered a scheme to deprive indigenous people of their livelihoods in their community forest.

Almost US$40 million worth of timber was seized by Interpol’s illegal logging crackdown, Operation Lead, in 2013, and on-going seizures are revealing the true scale of the problem. When Operation Lead was first undertaken, US$8 million worth of timber was seized.

This year, in mid-February, Interpol arrested nearly 200 people and seized 2,000 truckloads of wood in one of the biggest raids ever on suspected illegal timber operations in Latin America. The raid, Interpol’s first international operation against large-scale illegal logging, was carried out in 12 Latin American countries alongside national agencies from September to late November 2012. About 50,000 cubic metres of wood was seized, with an estimated value of about US$8m (£5.25 million), according to details released by Interpol.

While these new regulations were always expected to severely limit, if not eliminate, the import of illegally harvested timber in the developed world, there is concern among politicians and stakeholders that emerging markets might not be so concerned with such niceties.

Almost half the timber Chinese companies exported from Mozambique last year was not supposed to leave the southeast African country, nor even the forest in some cases, according to Reuters Monday. Now both countries are stepping up efforts to crack down on the illegal logging that costs Mozambique millions of dollars a year and put its forests at risk.

In July, Mozambican authorities caught Chinese company Mozambique First International Development trying to export 20 containers of illegally harvested wood. The company’s license to harvest its forest concessions has been suspended for a year.

Renewed cooperation between Mozambique and China’s forestry departments comes in the wake of several investigations by the Center for International Forestry Research (CIFOR) and others, revealing ongoing illegal activities by Chinese timber corporations. In response, efforts to tackle graft in the forestry sector are being ramped up. Mozambique’s anti-corruption body began an investigation of several government officials, and representatives from China’s State Forestry Administration visited Mozambique’s Directorate of Lands and Forests in May, said Reuters.

Most recently, the two countries began crafting a Memorandum of Understanding (MoU) for cooperation in the forest sector, which should be completed by the end of the year. The upcoming MoU could address not only illegal logging, but also aspects like community forest management, and preparation for the United Nations’ REDD (Reducing Emissions from Deforestation and Forest Degradation) programme. But experts remain cautious, as similar MoUs have been weak.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest data on US mortgage rules, mortgage insurance, federal penalties to banks, and financial results of lender companies.

Contact us any time for this worthwhile and timely information!

CN Rail Labour Contract Talks Stall

Canada’s government is closely monitoring a dispute between the railway workers’ union and Canadian National Railway, and is urging both parties to continue talking, a spokesperson for Labour Minister Kellie Leitch said on Tuesday.

The Teamsters said Monday that talks had broken down, raising the possibility of a strike or a lockout at the country’s largest railway operator once a union-set October 28 deadline is passed, according to the Globe and Mail Tuesday.

CN Rail Labour Talks

The Teamsters Canada Rail Conference, which represents 3,300 conductors, train, and yard workers and traffic co-ordinators with Canada’s largest railway company, said Monday that CN’s decision last week not to extend a conciliation process could lead to a strike or a lockout on October 28. The collective agreement expired on July 22.

The union said the talks have stalled over CN’s demands for concessions that would force workers to work longer hours with less rest time between trips, according to the Toronto Sun Monday. Wages and the retirement plan are not central issues in this bargaining round, the union said.

The union said the company’s demands fly in the face of its statements about safety being a priority.

A CN spokesperson said the company does not comment on the substance of ongoing labour negotiations, but stressed that CN’s bargaining proposals would not in any way compromise the health and safety of TCRC members.

CN remains optimistic it can negotiate an amicable settlement with the TCRC to avoid labour disruption in Canada Mark Hallman said to the Sun in an email.

Hallman also noted that the company has comprehensive safety programs in place designed to prevent accidents.

UK Timber Shortage

The “Grown in Britain” campaign this week launched a report detailing proposals to boost Britain’s domestic forest industry. The construction industry was hoping that the report would contain suggestions for increasing the amount of British-grown timber available for new buildings, said The Economist Thursday.

But the report merely suggests that there is a need for “generating more demand” for British wood by improving “wood culture” among the general public.

Although the UK’s production of sawn timber increased by 22 per cent between 2008 and 2012, according to the Forestry Commission, production is now levelling off due to bottlenecks in the timber-processing industry. A 2011 report said that 40 per cent of potential British timber production is lost due to a lack of business investment in processing facilities.

UK’s Timber Future

Other factors have increased demand for local timber over the last few years. For instance, a trend to build more houses out of wood rather than traditional clay brick has boosted demand for local supplies, said The Economist. Nearly 30 per cent of new houses in England are soon likely to be timber framed, according to the Structural Timber Association. In Scotland, that figure has already reached 72 per cent.

New regulations that force companies to use low-carbon materials have also boosted demand for locally-grown wood. New EU labeling codes have encouraged builders to use more locally-sourced materials by insisting that “embodied carbon” emissions, due to transporting materials, should be included in the environmental reckoning for new buildings. Firms have also become fussier about what materials their buildings use since big British companies are now forced to report the level of carbon emissions they produce.

But sourcing wood for new buildings in England has become a particularly tough task in recent years due to supply shortages. Benedict Binns, at the Centre for the Built Environment, claims that finding English-grown timber has become “very difficult” for their projects. Even those willing to pay premium prices, like building preservation experts, say they cannot find the locally-produced timber they need.

US Builder Confidence : October 2013

The National Association of Home Builders/Wells Fargo housing-market index fell to 55 in October, from 57 in September, the NAHB reported Wednesday. A prior September estimate pegged the level at 58, which matched the highest reading since 2005.

Results above 50 signal that builders, generally, are optimistic about sales trends.

“Interest rates remain near historic lows and we don’t expect the level of rates to have a major impact on sales and starts going forward,” said David Crowe, NAHB’s chief economist. “Once this government impasse is resolved, we expect builder and consumer optimism will bounce back.”

Despite the recent decline, pent-up demand is supporting builder sentiment, which has increased 34 per cent over the past year, outpacing home-construction growth.

Oregon’s Forestry Employment

A recent report of labour trends on Oregon’s South Coast showed a rise in payroll employment across several industries, but one industry that’s seen a great rebound since the recession is the wood product manufacturing industry, said KCBY October 11.

An Oregon Employment Department Report shows wood manufacturing jobs in Coos County have grown by nearly 200 jobs since December of 2010.
Eric Farm from the Menasha Corporation says housing starts have made a dramatic rebound. “Over the last three years, we’ve went from about 600,000 starts a year to almost 900, and almost a million a year,” he said.

Farm says home construction has a positive effect on all the workers involved in the process. “All the way back to loggers out in the woods, truck drivers, you’ve got the wood moving on the rail now, so all those it’s just a real ripple effect,” Farm said.

A local manager who buys from wood manufacturers says the sales side is also thriving. “We’ve brought in cabinets from local Oregon manufacturers and we’ve just been selling them like crazy, and just business in general has been up pretty steady for the past three years,” said Randall Shelman, manager for LNL Lumber.

Manufacturers say it’s not easy to predict the future, but they do expect the growth in the industry to continue in Coos County, according to KCBY.

Large Timberland Sale

Molpus Woodlands Group, out of Jackson, MS, has agreed on behalf of a unidentified client to buy about 73,000 acres of timberland located around Birmingham, AL. The close of the purchase is set to occur in installments starting this month. Terms were not disclosed.

Dick Molpus, president of the timberland investment management firm, says the timberland is located in 13 counties. He said the land consists of Loblolly pine plantations distributed among all age classes. Michael Cooper, the firm’s general counsel, declined to identify the buyer, who he said is an institutional investor, and declined to identify the counties where deals are pending.

Molpus currently manages about 1.5 million acres of timberland investments in 17 states.

October 22, 2013

Politics and Lumber Exports

This extended US government shutdown has begun to affect that country’s exports, while Bank of Canada economists warn that Canadian export volumes will likely drop in 4Q 2013.

According to the Wall Street Journal Wednesday, “The US government’s partial shutdown is beginning to gum up trade, with companies unable to gain approval to import or export computer gear, lumber, steel and other products [ . . . ] All pesticide imports to the US have been halted, according to the Environmental Protection Agency, which must approve them but has had more than 90 per cent of its staff furloughed. Some US technology companies can’t fill overseas orders.”

Other US government departments besides those in trade are affected by the shutdown. Logging operations became a victim of the federal government budget impasse after the US Forest Service (USFS) suspended timber contracts on federal lands throughout the nation. According to the USFS, 2.5 billion board feet of timber was harvested from 150 national forests in 2012, a 2.5 per cent increase over the 2.44 billion board feet cut in 2011. The USFS says loggers have taken 2.8 billion board feet out of federal forest in the first three quarters of 2013.

In an October 3 letter to regional foresters, Craig Bobzien, Acting Director of Forest Management at the USFS, directed timber sales contracting officers to send notices to 450 logging operations “to delay or suspend operations until notified otherwise.”

North America

Logging has been shutdown on 150 national forests nationwide. The loggers were given seven days to finish cutting and hauling out logs on sites where they have already been working.

The logging suspension will eventually impact mills that make wood products. In Montana, the eight mills affected derive eight to 14 per cent of their logs from public lands.

Scott Kuehn, president of the Montana Wood Products Association, told Land and Timber Talks Wednesday, “It’s a big deal for all of us. This is our final big push before the snow comes. We’re all scrambling. We all can’t just move to private or state lands in order to get by.”

Steve Brink with the California Forestry Association said about a dozen of his group’s members will be affected by the suspensions, although, so far, none have received shutdown notices from the contract officers who control the timber sales, according to ProSales Tuesday.

Brink says it’s difficult to determine the cost of the shutdown on logging companies. “Every woods contractor’s situation will be different as far as cost,” he says. “Many would do their erosion control this week, and then pull their equipment out, go to another job, and not come back this season when the suspension is lifted.”

Meanwhile, Bank of Canada Senior Deputy Tiff Macklem said Tuesday that Canadian growth forecasts need to be pulled back, “We are now expecting growth in the third and fourth quarters of this year to be in the 2 per cent-2.5 per cent range before strengthening next year as the rotation to exports and investment gains momentum.”

The Bank of Canada had previously forecast growth of 3.8 per cent for 3Q of this year and 2.5 per cent the following quarter, said the Financial Post October 1. However, the new adjustments followed a weak 1.7 per cent increase in 2Q 2013, which was still much better than the 1 per cent reading the bank had originally expected.

“[ . . . ] recovery in US housing, in particular, is creating new demand for Canadian exports of lumber and building supplies,” continued Macklem. “Japan and Europe are in tentative recovery mode, even as China has slowed to a ‘still-solid pace of 7.5 per cent, and confidence is growing.’ Of concern, though, is increased financial volatility and weaker growth.”

As for BC, that province’s economic growth rate will drop from 1.8 per cent last year to a four-year low of 1.5 per cent for 2013 — dragged down by sluggish job growth, slowing housing investment and a dip in consumer spending, according to RBC’s latest provincial outlook.

But the forecast suggests that increasing exports and more capital spending on major projects next year will help the provincial economy rebound to a more robust 2.7 per cent growth rate in 2014. BC merchandise exports rose nearly five per cent in the first seven months of 2013, with wood-product exports surging 29 per cent – driven by stronger sales in the US and China. Exports of metals, machinery and equipment, natural gas, electricity and various food products also showed improvement.

“Wood product exports surged impressively by 29 per cent—driven higher by stronger sales in the US (up 51 per cent) and China (up 31 per cent)—although part this increase reflected a substantial rise in softwood lumber prices,” says the RBC’s Provincial Outlook September 2013 report.
By comparison, the latest Washington State Department of Natural Resources Economic and Revenue Forecast states:

Pacific Northwest log prices have also moved up sharply after being fairly flat for 2011 and most all of 2012. The price for a ‘typical’ DNR log delivered to the mill climbed dramatically to a nominal high of US$587/mbf in April, the highest price since 2000. The log price has fallen off a bit in August to US$564/mbf, mimicking the recent drop in lumber prices.

Projected timber sales volumes for fiscal years (FY) 2014-2017 are unchanged from the June Forecast. Timber sales volumes are now predicted to be 540 mmbf in FY 2014 and about 500 mmbf in each of the outlying years.

According to the Western Wood Products Association’s latest Lumber Track, out Thursday, US softwood lumber consumption and exports for the first seven months of 2013 are:


Labour Negotiations Move to Southern Interior

The United Steelworkers’ Wood Council has put its ongoing mediation with Canfor “on hold” a rep told Madison’s Thursday, although the union has not yet asked the mediator to “book out”.

In the meantime, USW and Interior Forest Labour Relations Association (IFLRA) are scheduled to talk October 23 and 24. IFLRA negotiates for employers in the Southern Interior region of British Columbia. Member companies include Tolko, West Fraser, and Weyerhaeuser.

Canada Housing Starts

The Canadian housing market continues its optimistic trend, with housing starts rising 5.3 per cent in September to 194,000 units on an annualized basis, according to the Canada Mortgage and Housing Corp Tuesday. That’s an improvement on the 183,964 starts in August, with most regions of Canada seeing an increase in construction activity.

Starts for single family homes were up 1.4 per cent to 63,535 units across the county.

Statistics Canada’s figures for building permits, released Monday, show the value of residential building permits was down 5.4 per cent to to $3.9 billion in August with the number of multi-family dwelling permits down substantially.

Housing Starts, Canada

Only Ontario saw a decline of 18 per cent in housing starts because of a steep drop in building in the Toronto area. There were 25,000 starts in Toronto in September, down from over 40,000 the previous month and 39,800 a year earlier.

In most urban areas, multi-unit projects such as condominiums and townhouses experienced growth, with starts rising 4.3 per cent across the country in September to 177,240 units. Multi-dwelling starts had fallen steeply in August, in response to a softening in condo prices.

Housing Starts, Japan

Japan’s total housing starts for August was 84,343 units, an 8.8 per cent increase over one year ago and the 12th consecutive month of improvements, according to the Japan Lumber Reports.
Seasonally adjusted, new home building was 960,000 units.

Japan Housing Starts

Observers were surprised that August housing starts in were up, given “torrential downpours in the Western part of Japan”, says Japan Lumber Reports. The looming consumption tax increase was credited for current buyer enthusiasm.

New starts of owners units were 31,379, an 11.2 per cent improvement over August 2012. Detached units built-for-sale increased by 11.3 per cent to 11,983.

Starts of wood-based units similarly increased by 11.4 per cent, to 47,901 units.

2013 US Foreclosures Drop Compared to 2012

RealtyTrac Thursday released its US Foreclosure Market Report for September and for 3Q 2013. It shows foreclosure filings – default notices, scheduled auctions and bank repossessions – were reported on 131,232 US properties in September, a 2 per cent increase from the previous month but a 27 per cent decrease from a year ago.

September was the 36th consecutive month with an annual decrease in US foreclosure activity.

September numbers helped drop 3Q foreclosure activity to the lowest quarterly level since 2Q 2007. There were a total of 376,931 US properties with foreclosure filings in 3Q 2013, down 7 per cent from the previous quarter and down 29 per cent from 3Q 2012 – the biggest annual decrease since 2Q 2011.
One in every 348 housing units in the US had a foreclosure filing during the quarter, said RealtyTrac.

US Foreclosure Rates

“The September and 3Q foreclosure numbers show a housing market that is haltingly returning to health,” said Daren Blomquist, vice president at RealtyTrac. “In a healthy housing market foreclosures are rare but streamlined while still protecting the rights of the homeowner. While foreclosures are clearly becoming fewer and farther between in most markets, the increasing time it takes to foreclose is holding back a more robust and sustainable recovery.”

Canadian Trade : August

Canada’s merchandise imports grew 2.1 per cent in August, while exports were up 1.8 per cent, Statistics Canada said Tuesday. As a result, Canada’s trade deficit with the world went from $1.2 billion in July to $1.3 billion in August.

Imports grew to $41.1 billion, led by energy products, aircraft, and other transportation equipment and parts. Overall, volumes rose 1.2 per cent and prices were up 0.9 per cent.

Exports increased to $39.8 billion, as volumes grew 1.4 per cent and prices edged up 0.4 per cent.

Exports to the United States increased 1.9 per cent to $30.1 billion, their highest value since December 2011. .

Ear Falls to Restart

A new long-term labour deal between EACOM Timber and Unifor has resulted in EACOM formally announcing this week that it will re-start the Ear Falls, ON, sawmill in the spring.

The sawmill has been idled since December 2009, the height of the US housing crash.

The Ear Falls sawmill will produce more than 150 million board feet of stud lumber annually, with up to 125 Unifor members at the sawmill site and up to 175 more Unifor members in log harvesting and hauling operations in the Trout Forest.

The new contract, in place from the 2014 spring start-up until May 1, 2022, features wage increases of 20 per cent over the eight years, according to the Fort Frances Times Thursday.

It also includes a new DC Pension plan, a $750 annual tool allowance for trades, a $200 boot allowance, $275 for prescription eye glasses, and one additional stat holiday.

There is strong language related to seniority, layoffs, postings, bumping, and contracting out.

Universal Acquires . . .

Universal Forest Products announced Wednesday an agreement, through one of its subsidiaries, to acquire some assets of SE Panel and Lumber Supply. Financial terms of the transaction have not been disclosed.

SE Panel and Lumber Supply is a South Daytona, FL-based distributor of Olympic Panel overlay concrete forming panels and commodity lumber products. Key end markets served include concrete forming and construction industries.

The transaction is anticipated to be complete by mid-Nov 2013. Universal Forest Products will gain from easy accessibility of the acquired assets to end markets served, especially the southeastern region of the United States.

Stella Jones Buying . . .

Stella-Jones is further expanding its North American network for supplying utility poles and railway ties with the purchase of wood treatment facilities in Oregon, Nevada, and Arizona for US$57 million, including US$24 million in working capital, the company announced Tuesday.
The acquisition of the Pacific Wood Preserving Companies is expected to close in November and be funded primarily from existing credit facilities and a US$7-million vendor note.

The transaction includes a wood concentration yard in Texas but excludes operations in Bakersfield, CA.
The acquired companies had US$52.4 million of sales in the past fiscal year, about five per cent of Stella-Jones’ projected fiscal 2013 revenues.

October 15, 2013

North American Trade

Just as large parts of the US government structure have gone into shutdown due to a stalemate in Congress over budget and health care legislation, officials from the US, Canada, and several Asian countries are embarking on delicate trade discussions.

The Conservative government of Canada said this summer “trade is the new stimulus” and is the best way to spur the economy, create jobs, and improve lagging productivity and competitiveness — without sinking public finances deeper into deficit.

Prime Minister Stephen Harper and some of his senior ministers left Thursday for the APEC Leaders’ Meeting in Bali, Indonesia next week, before travelling to Singapore where he will participate in the first Canada-Association of Southeast Asian Nations (ASEAN) Business Council Forum, then to China for a bilateral visit. Minister of International Trade, Ed Fast, Thursday announced that he is headed to the 21st APEC ministerial, Trans-Pacific Partnership (TPP), and CEO summit meetings being held in Indonesia from October 3 to 6. He will then join the Prime Minister at the APEC meetings.

APEC’s 21 member economies account for almost 2.8 billion people, over half of the world’s GDP. In a speech two days ago, Tiff Macklem, the Bank of Canada’s senior deputy governor, said emerging markets now account for 80 per cent of global growth, but only 12 per cent of Canadian exports go directly to these nations.

Canada represents 0.9 per cent of total imports to Asia, according to figures published by the Asia Pacific Foundation.

With Asia

China is now Canada’s second-largest trading partner and second-largest export market, with two-way trade valued at over $70 billion in 2012. This is Minister Fast’s fourth visit to China and 13th visit to Asia since being named trade minister.

Twelve countries are currently participating in the TPP negotiations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The TPP countries represent a market of more than 792 million people and a combined GDP of US$27.5 trillion, or nearly 40 per cent of the global economy, and one third of world trade. Some political leaders in the TPP, including US President Barack Obama, hope to conclude negotiations this year, although many trade specialists believe that may be too ambitious.

President Obama planned this week to embark on a multi-stop trip to Asia with the goal of concluding talks on a TPP trade pact, which is well on its way to becoming the largest Free Trade Agreement (FTA) in the world. But due to the government shutdown, two of those stops have been cancelled and the others are in question.

Still, the twelve countries involved will go on despite the President’s absence, and the potential economic impacts of the agreement are tremendous: the United States accounts for approximately US$15.5 trillion, or almost 60 per cent, of TPP GDP.

With the wealth that China has amassed in becoming the world’s second largest economy, that country is now encouraging its companies to go global. Chinese cumulative investment in the US soared to US$28 billion in 2012. This year it is on track to top US$11 billion. By 2020, it is expected to rise to be between US$1 trillion and US$2 trillion.

Negotiations over the TPP have been held out of public view, making it the first-ever classification of a trade agreement, according to the Montreal-based Centre for Research on Globalization. The United States currently has 20 active free trade agreements in place, including major ones like NAFTA.

According to Public Citizen, while TPP information has been kept from the public, more than 600 corporate advisers have access to the treaty’s text — including companies such as Halliburton, Monsanto, the American Petroleum Institute, and Chevron.

To implement the TPP, the Obama administration seeks to gain “fast-track authority,” a provision under the Trade Promotion Authority that requires Congress to review an FTA under limited debate, in an accelerated time frame subject to a yes-or-no vote by a simple majority vote rather than a two-thirds vote, as required for the ratification of a formal treaty.

It is a cruel irony that one of the reasons that Canada makes a fairly big deal out of the annual APEC summit is that it is the only Asian organization of which Canada is part. While the prime ministers of Australia and New Zealand will leave Bali for nearby Brunei, where they will join Barack Obama and Vladimir Putin for the arguably more significant Far East Summit, Harper will fly directly home.

Elsewhere, BC Premier Christy Clark is planning a November trade mission to Japan, South Korea, and China. Steve Thomson, BC Minister of Forests, Lands and Natural Resource Operations, will be leading forestry-specific trade mission October 16 to 26, in partnership with the industry, with a focus on China, Japan, Korea, and India.

Doug Routledge, VP of Northern Operations at the Council of Forest Industries said to Opinion 250 September 27, “The BC [forest] industry has been active in Korea, Taiwan, Japan, and China for a number of years. Those are the core Asia-Pacific markets for us. We’re diverting some of our resources from Korea to China at the moment, and it’s the just the nature of the Korean market right now.”

The Business Council of BC notes more than 40 per cent of the province’s merchandise exports last year were Asia-bound — up from 23 per cent just a decade ago. And, within the next five years, the tally could grow to 50 per cent.

BC ranks eighth out of the 10 provinces in the value of its exports — $15,534 per capita, compared with Alberta’s $29,066 per capita.

One reason BC should learn to cozy up to China more is that, as the so-called Pacific Gateway province, we badly need to expand export activities, said Barbara Yaffe in the Vancouver Sun September 11.

As business council president Jock Finlayson argues, small, open economies like BC, lacking big internal markets, must rely on export-oriented companies to drive their economic and income growth.

“Our (export) record is mediocre at best,” asserts Finlayson. “BC is far from being a standout performer.”

British Columbia Wildfire Tally

BC’s Wildfire Management Branch said Thursday the province endured record dry spells with the potential for massive fires, but the season has ended on a positive note.

Spokesperson Kevin Skrepnek explained that while 1,800 fires were recorded in 2013, compared with 1,500 in 2012, a total of 170 square kilometres of woodland burned this year, compared with 900 square kilometres one year ago.

China’s Wood Demand Expectations : 2015

Official statistics from Chinese customs show a 11.34 per cent increase in log imports in the first six months of 2013 over the same period of 2012, reported Thursday. Overall, China imported 25 million cubic metres of logs, in the period mentioned above, at a value of US$5 billion.

Moreover, European countries made a breach on the Chinese market: according to Eurostat figures, Chinese imports of softwood timber from the European Union almost tripled in January-June 2013, reaching a value €107 million.

In the following years, Chinese demand of logs and softwood timber is expected to further rise and by 2015, the Chinese State Bureau of Forestry estimates a 50 per cent increase of wood supply deficit.

Newfoundland Mill Closes Due to Log Shortage

Despite repeated warnings by local industry players over the past year about extreme difficulties sourcing logs in Canada’s atlantic region, Sexton Lumber Co announced Tuesday its Bloomfield mill in northern Newfoundland will shut down for lack of logs.
That sawmill employs 79 workers.

The owner of the company says it has exhausted the existing log supply due to increased demand. Since Sexton supplies framing lumber to the province, building supply companies will soon have to import lumber from the Maritimes.

Sexton Lumber to Close for Six Weeks

Kevin Sexton said to the Times Colonist Tuesday that the provincial government is sitting on timber land at the former AbitibiBowater site in Grand Falls-Windsor, NL, that can be accessed.

The company asked the provincial government for a greater allocation of timber. According to the company, an extra 40,000 cubic metres would have been enough to keep the mill open.

“This request was denied as the timber resource is being held pending a final decision on the proposals submitted under the expressions of interest (EOI) process for the development of the timber resource formerly held by Abitibi–Bowater. There is annual volume of 280,000 cubic metres being held by the government for the EOI.

“This annual allocation has not been harvested since the closure of (the paper mill) in 2009,” states a government press release.

The shutdown affects more than the mill’s workers, the company notes. It will also mean the loss of the largest feed of pulp chips to Corner Brook Pulp and Paper, there will be less animal bedding for farmers, and less wood for pallet manufacturers.

Sexton says it will be at least four to six weeks before the mill can resume business.

Canada Wood Group Updates

China Economic Update:

China’s economy is showing clear signs of stabilization, helped by policy support and some improvement in global demand, said the Canada Wood Group Tuesday. And it is on track to meet the government’s 2013 growth target of 7.5 per cent, the state statistics bureau said on Monday.

The issue of local government debt also remained under control, the National Bureau of Statistics said at a briefing organized by the foreign ministry.
A private factory survey last week reinforced signs of stabilizing in the economy in 3Q after the government took supportive measures, including scrapping taxes for small firms and accelerating investment in urban infrastructure.

July data saw China’s factory output grow at its fastest pace since the start of the year, and surprisingly strong trade data. China’s annual economic growth slowed to 7.5 per cent in 2Q, down from 7.7 per cent in the three months ending March 31 – the ninth such deceleration in the past 10 quarters.

Property/Construction Market

China’s property market faces regional imbalance between supply and demand in the realty market has created rising housing prices and rentals in China’s first- and second-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen.

New home prices in first-tier cities rose by 18 to 20 per cent year on year, while those in 35 third-tier cities rose by around 6 per cent on average.

Korea Economic Update:

South Korea’s nominal GDP grew 2 per cent in 2012 to US$1.13 trillion, up from US$1.11 trillion in the previous year, said the Canada Wood Group Wednesday. This was the slowest growth in three years as exports and domestic demand remained weak amid the global slowdown, but is widely expected to grow around 2.7 ~ 2.8 per cent in 2013.

Housing Construction

Korea’s housing starts in the first seven months of 2013 decreased 9 per cent to 49,803 buildings, from a year earlier’s 54,742 buildings.
The number of wood building permits and wood building starts for the first seven months in 2013 also decreased, by 7.9 per cent to 6,782, and 5.7 per cent to 6,073 respectively, compared with the same period in 2012.

Lumber Shipments

BC softwood lumber export volume to South Korea for the first seven months of 2013 significantly decreased, by 22 per cent to 160,397 cubic metres, as compared to 206,262 cubic metres over the same period in 2012. Demand was widely affected by overall domestic housing market slump and treated wood issue in Korea, and losing price competiveness due to increased Canadian lumber prices. However, increased Canadian lumber prices compensated the decreased export volume gap, showing a 0.94 per cent increase in export value to $40.63 million, as compared to $40.25 million over the same period in 2012.

Although shipment volumes to Korea from European countries are still relatively small, European lumber volumes shipped to Korean wood market were more than three times higher this year than in the same period in 2012. January-August accumulative shipment from Austria was increased 357 per cent, from Germany 274% per cent, and from Finland 45 per cent compared with the same period in 2012. And the demand for wood products from these European countries is expected to go up in the coming years.

G-P to Upgrade Dudley

Georgia-Pacific Thursday announced that it will invest approximately an initial US$9 million at its Dudley, NC, lumber operations as part of a multi-phase increase in the mill’s lumber production capacity and supporting infrastructure.

October 10, 2013

Timber and Wood Fibre Sectors

Last week Madison’s summarized speeches on macroeconomic and forest products market conditions given at the ninth annual Who Will Own the Forest? timberland investment summit in Portland, OR.

Some extremely interesting presentations and thoughts came at the following session, a panel discussion, “Manufacturing Perspectives on the Timber and Wood Fibre Sectors“. Moderated by Joe Patton, Vice President of Lumber at the Westervelt Company, the panel included: Marc Brinkmeyer, Founder and Chair of Idaho Forest Group; Alan Sherrington, Weyerhaeuser’s North West and Canadian region lumber manager; and, Allan Trinkwald, President of Simpson Lumber Company. Patton and Sherrington are former Chairs of the American Wood Council (AMC), an initiative sponsored by the Softwood Lumber Board (SLB) and counterpart to the Canada Wood Council (CWC).

Manufacturing Perspectives

A 42-storey wooden residential tower construction project funded by the Softwood Lumber Board was featured in the New York Times this week.

Please see this week’s issue of your Madison’s Timber Preview for details on the latest movements in cross-laminated timber (CLT) and multi-storey wood-framed building.

Brinkmeyer gave a frightening overview of concrete and steel’s potential future market share in US residential construction.

“It is not about the US west vs the south, or the US vs Canada,” Brinkmeyer correctly pointed out. “It is not about ‘state-of-the-art’ modern mills vs older family-run operations. The concrete and steel manufacturers lobby is much more established, stronger, and better organized than the lumber lobby is. For example, OSB has lost ground to foam sheathing in US residential construction projects.”

In 2012, foam sheathing was approved in US housing construction standards, to be used by itself or along with conventional wood sheathing — OSB or exterior grade plywood.

“Half of the growth of population globally will be in urban centres,” Brinkmeyer explained. “These are not single-family houses.”

“In 2013, 3.5 billion of the total 7 billion people on this planet live in cities. By 2020, 7 billion of a total 11 billion will be living in cities,” said Brinkmeyer. “Traditionally wood products make up 95 per cent of market share in North American residential construction.”

Brinkmeyer went on to say that while solid wood manufacturers are making inroads into multi-family construction, with products like CLT, engineered wood, and LVL and other veneers, the concrete and steel industry could be poised to take market share away from lumber in the residential construction sector.

Given this, the new AWC mission is to increase the use of wood by assuring the broad regulatory acceptance of wood products, developing design tools and guidelines for wood construction, and influencing the development of public policies affecting the use and manufacture of wood products. The AWC works closely with the CWC, which has a similar mandate.

AWC data shows that the value of wood currently going into US non-residential construction is US$881 million annually, and that the potential for market increase under the old building code was US$2.5 million. The opportunity for wood in non-residential US construction under the new building code is US$3.8 million, says the AWC. Specifically, a five to 15 per cent penetration of the non-residential North American building market [using CLT] potential will consume 1.5 to 2 billion board feet of lumber annually.

However, the concrete and steel lobby in the US has moved quickly in response to progress made by the SLB and AWC, following the success of the “reThink Wood” campaign.

“Four key trade associations representing the steel stud industry have joined together to promote the use of cold-formed steel framing in construction”, warned the AWC last week. [They] met in Chicago September 11 to establish a coalition to address market threats initiated by the lumber and masonry industries in recent years, particularly in the mid-rise construction market.”

“The concrete, steel, and foam lobbies are better organized than the wood lobby,” concluded Brinkmeyer.

One big issue for builders is that concrete and steel producers give building contractors price quotes as far as one year out, explained Brinkmeyer.

In his presentation, Trinkwald gave some pointers on how the lumber industry can work together to combat the aggressive efforts of competing building products manufacturers.

“Timberland owners have to be aware that theirs is a product,” detailed Trinkwald. “Sawmills need to work together due to the intensive capital investment requirements. We need to work together on public opinion in terms of supply constraints and lumber prices. One good avenue toward this is to talk about employment opportunities.

“The manufacturing side needs stability to plan. Whether it be sawlogs or chip & saw, it all comes back to the stump eventually [in terms of mill costs]”, said Trinkwald.

When his turn came to speak, Patton launched into a scathing critique of the quality of southern pine timber running through Westervelt’s sawmills recently.

“Changes to the way southern pine timberlands are managed under prescribed silviculture practices has affected: cutting rotations, planting — species and density, fertilization, thinning, and herbicide application,” said Patton. “There has been an increase in the #3/Utility grade and #4/Economy grade recovery for lumber production. There are more knots, distorted grain, and compression wood. There is less density, strength, and fibre length. These together have also brought about drying difficulties. In the US south, the resource is changing so mills can pay less for it.”

“I cannot cut #3 and #4 grade lumber and make money,” Patton declared.

Madison’s can’t help but wonder if some of these issues being brought up by southern US mills in recent months stem from changes to the design values for southern pine accepted by the American Lumber Standard Committee last year. More on this important topic to come in an upcoming issue.

Madison’s Timber Preview

This week’s issue of Madison’s Timber Preview examines the latest developments in using wood for multi-storey bulding projects. Exciting new designs and construction in the UK, US, Europe, and Australia are profiled.

Volumes of wood for cross-laminated timbers, engineered wood, and LVL and other veneers for these timber towers are also looked at.

As a special bonus this month, Madison’s is making this issue of the Timber Preview available to the public. Please go here to collect the document.

Contact us any time for a subscription to this worthwhile and timely information.

BC Sawmill Issued Stop-Work Order Due to Dust

During a safety inspection of Aspen Planers in Merritt, BC, WorkSafeBC safety officer Vince Strain found dust had collected on beams, duct work, and heat sources such as lights, said the Vancouver Sun September 20. According to Strain’s inspection report, the accumulations were in excess of 1/8 inch over more than five per cent of the enclosed area, the safety standard set by WorkSafeBC last year.

After a stop-worker order was issued September 11, Aspen Planers cleaned up the wood dust by the next day.
The rare stop-work order follows the revelation two months ago — outlined in WorkSafeBC inspection reports — that some BC sawmills were still struggling to properly clean up wood dust, said the Sun.

Al Johnson, WorkSafeBC’s vice-president of prevention, told the Sun he is a little surprised that nearly 18 months after the regulatory agency issued a directive to BC sawmills to keep wood dust clear of their facilities that it has had to issue a stop-work order.

Johnson said the industry needs to get to a point where they are managing combustible dust on an equal footing with other aspects of safety and with plant productivity. He stressed the agency will not relax its emphasis on combustible dust, and plans to revisit Aspen Planers and other sawmills this autumn.

North America Transportation Statistics

Roads and rails in the US were busier in August compared to July. The American Trucking Associations’ Truck Tonnage Index was up 1.4 per cent in August after a 0.6 per cent dip in July, the agency reported Wednesday. Year-to-date, the index is up 5 per cent compared to the same period in 2012.

The not-seasonally adjusted index equalled 131.3 in August, which was 1.5 per cent above the previous month’s 129.4.

Canada and US Freight Data

“The strength in tonnage continued again in August, with the index increasing in three of the last four months,” ATA Chief Economist Bob Costello said. “The improvement corresponds with a solid gain in manufacturing output during August reported by the Federal Reserve last week.”

Elsewhere, total US rail traffic rose 3.1 per cent the week ending September 14 compared to the same period last year, according to the most recent report by the Association of American Railroads.

Overall, North American freight traffic broke even year-over-year with carload traffic going up across the board for Canada, the US, and Mexico. This shows more companies are relying on freight sourcing to ship their products as consumer confidence bounces back after the recession and domestic manufacturing continues its recovery.

US freight carload traffic gained 1.5 per cent while intermodal volume increased even more at 4.9 per cent year-over-year.

Beating the US, Canadian freight carload traffic increased by 4.9 per cent for the week ending September 14 and up 5.1 per cent for intermodal volume, the AAR said.

Advancing 6.3 per cent, Mexican freight volume was also surpassed by a 7.5 per cent jump in intermodal volume.

Meanwhile, durable goods orders increased 0.1 per cent in August, the Commerce Department said Wednesday. The gain followed a revised 8.1 per cent drop in July that was larger than originally reported.

Orders excluding transportation equipment, which is often volatile, fell 0.1 per cent following a 0.5 per cent drop in July.

Demand for nondefense capital goods excluding aircraft, a proxy for future business investment in computers and electronics, rose 1.5 per cent following a 3.3 per cent decrease. It was the largest increase since May, Bloomberg News reported.

North of the border, the Canadian railway industry carried 27 million tonnes of freight in July, a 1.8 per cent decrease from the same month last year, Statistics Canada said also Wednesday. The drop occurred despite a rise in traffic from the United States.

Within Canada, combined loadings of non-intermodal freight and intermodal freight decreased 2.5 per cent to 23.3 million tonnes.

Non-intermodal loadings fell 3.2 per cent to 20.7 million tonnes as a number of key commodities saw decreased activity in July. These included iron ores and concentrates (down 293 000 tonnes), canola (down 192 000 tonnes), gasoline and aviation turbine fuel (down 114 000 tonnes), and coal (down 107 000 tonnes). Overall, 29 out of 64 commodities carried by Canadian railways declined during the month.

Despite the drop in loadings, a number of commodities reported strong growth in July. These included fuel oils and crude petroleum (up 164 000 tonnes), other chemical products and preparations (up 156 000 tonnes) and lumber (up 97 000 tonnes).

Intermodal loadings rose 4.1 per cent to 2.6 million tonnes. The gain was the result of increased containerized cargo shipments and trailers loaded onto flat cars.

From a geographic perspective, the Western and Eastern railway divisions in Canada had mixed results in July. The Western Division, which accounted for 60.5 per cent of domestic loadings, reported a 0.5 per cent rise in freight to 14.1 million tonnes. By contrast, the Eastern Division, which accounted for the remainder of the loadings, registered a 6.7 per cent decline in freight to 9.2 million tonnes.

Rail freight traffic received from the United States rose 2.9 per cent to 3.7 million tonnes. The increase marked the highest amount of traffic received for a month of July and occurred on the strength of intermodal loadings, particularly containerized cargo shipments.

Cedar Mill Fire

Fire tore through a sawmill early Wednesday in Maple Ridge, destroying a large section of a cedar operation located along the Fraser River, according to the Maple Ridge News Wednesday.

The blaze at Imperial Cedar Products on River Road started around 1 am. When firefighters arrived on scene, they were greeted by multiple explosions and found a building completely engulfed in flames.

BC Cedar Mill Fire

Overnight workers at a different mill on the same lot called 911 when they saw the first flames, and doused a giant pile of sawdust between the two buildings with water so the fire wouldn’t spread to their building.

Maple Ridge Fire Dept Assistant Chief Mark Smitton says about half a dozen propane tanks had exploded inside the cedar mill. The tanks are used to power the forklifts that move the pallets of wood.

The cause is still under investigation, and no injuries have been reported.

Eight people work at the destroyed mill, but there is no overnight shift. The shutdown is devastating for the workers, some of whom have worked at other mills that have closed down.

It is believed there’s a chance the machines used to make the shingles could be saved. They’re metal and could be okay provided they weren’t exposed to too much heat. Damage is estimated at at least $1-million.

GP Signs Deal

Georgia-Pacific and U.S. Lumber announced this week they are entering a distribution agreement for engineered wood products. The agreement, effective November 1, provides for U.S. Lumber to distribute G-P engineered wood to ten southern US states.

October 02, 2013

Timber and the Economy

This week was held the ninth annual Who Will Own the Forests? timberland investment summit at the World Forestry Center in Portland, OR. Host to a sold-out crowd of 425 attendees, the event was buzzing with the latest news, information, and asset class analyses by participants from around the world. Players from the US, Europe, Asia, Oceania, South America, and Canada enjoyed presentations on everything from macro-economic conditions to the latest lumber production and demand data, from US taxation policies to the carbon market and biomass fuels.

Log and Lumber Supply and Demand

Kicking off the sessions, George Hosfield of Ferguson Wellman Capital Management featured a presentation titled, “‘Taper Tantrum’ . . . a Tempest in a Teapot?” Given that much of the investing world was ostensibly waiting — that very morning — to see what the US Federal Reserve was going to do with Quantitative Easing (QE), that title seems especially apt.

“When measuring a recession in terms of its duration and employment,” started off Hosfield with a bang. “Historically it takes two years to get job losses back. The dot com crisis of the early 2000s did not create such a loss of jobs, but it took four years for employment to recover. The 2008 recession will probably take five years to get lost jobs back.

“The US needs more than 200,000 new jobs monthly to make a dent in the unemployment rate. Right now job growth is at approximately 170,000 a month. The US Fed target is for an unemployment rate of 6.5 per cent before there will be any change to monetary stimulus. This month the unemployment rate stands at 7.3 per cent, but this small improvement is only because the participation rate declined (people simply gave up looking for work).

“The Federal Reserve has said it wants to be finished with QE in May 2014, when unemployment is expected to be 7 per cent. It will not be until January 2015, when unemployment will probably be down to 6.5 per cent, that the Fed will start raising interest rates.”

“As for GDP,” Hosfield continued. “The US government has been negative for nine out of 11 quarters. Businesses have been deferring expenditures, but once business leaders know what the government policies will be they will formulate plans and carry on.

“When US industrial capacity utilization rates start flirting with 85 per cent there will start to be inflationary risk. Stock prices are up over 20 per cent in the past two years. Corporate America has been cost-cutting its way to earnings growth, but with diminishing returns. The stock market is overdue for a correction.

“Interest rates will trend higher,” Hosfield concluded. “But moderately. There will be a wealth effect: real estate will improve, and auger in favour of equities.”

Next up was Lynn Michaelis, formerly of RISI but now with Forest Economic Advisors (FEA), presenting his “Outlook for Forest Products Markets“.
Echoing the very message that Madison’s has been spreading, Michaelis started off by cautioning, “Be very careful using the last period of time to forecast the next period.”

“Historically, housing would have been a contributor to a growing US economy, but this time is missing-in-action,” Michaelis said. “We are still not above 1 million starts annualized six years into the financial crisis. Housing starts will remain below demand until the inventory is liquidated.

“A combination of housing and exports will push US lumber demand up to 70 or 73 billion board feet, possibly by 2017. In 2017 British Columbia will produce less lumber than it will in 2015.

“In 2012, 20 per cent of US log production went to China. The US west has not accrued much of a deferred harvest during this downturn, but the south has. We see the future ramp up of lumber production coming from the southern US, up to 22 billion board feet in 2017 — from 19 billion in 2012.

“Southern timber prices have not moved like Douglas fir has,” explained Michaelis. “This is due to excess inventory. Timberland ownership in that region is highly fragmented, with very many small owners. They thought the decline in housing starts and lumber prices went on for too long and quite a few sold their timber at a discount.”

The next session was a panel discussion, “Manufacturers Perspectives on the Timber and Wood Fibre Sectors“. Madison’s will report the extremely important information from this panel in next week’s issue.

Steelworkers Issue Strike Notice

The United Steelworkers’ Wood Council Thursday issued 72-hour strike notice against Canfor’s Chetwynd and Plateau, BC, operations. The Union has been negotiating with the employer to set a pattern agreement for bargaining in British Columbia’s northern interior and southern interior regions.

Upon receiving the strike notice, Canfor immediately asked for mediation, which effectively freezes job action. The USW told Madison’s late Thursday that the Union has requested mediation to begin Monday.

At issue is a sticking point regarding wages vs lump-sum payments. Both sides assured Madison’s at the end of the week that they believe a settlement is achievable with the help of an impartial third-party.

Legally, under the BC labour code, an agreement must be reached within ten days of the start of mediation, the negotiators explained.

Madison’s will be in contact with both sides next week to report developments.

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Housing Starts, US

The Commerce Department said Wednesday US housing starts increased 0.9 per cent to a seasonally adjusted annual rate of 891,000 units, while July’s starts were revised down to show a 883,000-unit pace instead of the previously reported 896,000 units.

Groundbreaking for US single-family homes rose in August and permits for futureconstruction hit a five-year high however, pointing to resilience in the housing market recovery in the face of higher mortgage rates.

Single-family starts surged 7 per cent to an annual rate of 628,000 units last month, the highest level in six months.

US Housing Starts

Starts for multi-family homes tumbled 11.1 per cent to a 263,000-unit rate.

Permits for multifamily homes, however, dropped 15.7 per cent last month, pushing down overall permits 3.8 per cent to a 918,000-unit pace.

Recent data from the Census and from the National Association of Realtors showed declines in housing sales in July, while the rapid run-up in prices has started to ease.

Home prices rose 12.1 per cent for the 12 months ended in June, according to the S&P/Case-Shiller index, down slightly from a gain of 12.2 per cent for the 12 months ended in May.

In a separate report, the Mortgage Bankers Association said this week applications for loans to buy homes rose last week as mortgage rates eased off recent highs. Since early May, rates on 30-year mortgages have risen about 1.2 percentage points.

Canada Factory Sales July; US Industrial Output August

Canadian factory sales rose at the fastest pace in five months in July on gains for makers of commodities from crude oil to lumber to fabricated metals.

Meanwhile, US industrial production rose in August as a bounce back in motor vehicle assembly lifted manufacturing output, a hopeful sign for the economy after growth got off to a slow start in 3Q.

Factory Output Canada; Industrial Production US

In Canada factory sales climbed 1.7 per cent to $49.5 billion (US$48 billion), Statistics Canada reported Tuesday, with the total boosted by upward revisions to the prior two months.

Petroleum and coal sales rose 2.4 per cent to $7.03 billion, the highest since February, as prices rose. Fabricated metal sales climbed 5.9 per cent to $2.81 billion, and wood products gained 6.3 per cent to $1.97 billion, bringing the gain over the past 12 months to 14.7 per cent.

Jewelry and silverware sales led a 23.9 per cent jump in the miscellaneous category to $1.13 billion, rebounding from a similar decline the month before.

In the US, industrial output increased 0.4 per cent last month after being flat in July, the Federal Reserve said Monday.

The industrial production report showed manufacturing production advanced 0.7 per cent, more than reversing the prior month’s 0.4 per cent drop, as automobile assembly rebounded 5.2 per cent after slumping 4.5 per cent in July.

But revisions to July’s manufacturing data to show a big drop in output took some of the shine from the August recovery.

In a separate report, the New York Federal Reserve said also Monday its Empire State general business conditions index slipped to 6.29 from 8.24 in August. A reading above zero indicates expansion.

Washington State Lumber Company Fined for Injury

State regulators have fined a south-central Washington lumber company more than US$244,000 for dozens of safety and health violations after a worker got caught in machinery and was seriously hurt. The SDS Lumber Co of Bingen, WA, has appealed the citations from the Washington Department of Labor and Industries, according to Claims Journal Tuesday.

Sawmill Worker Injury

The government agency said in a press release that a lack of training and proper safety procedures left a plywood plant worker with severe injuries last March when his arms became entangled in machinery while trying to clear a jam.

The investigation found that supervisors were aware that workers routinely bypassed machinery safety guards to try and clear jams while machinery was still in motion. SDS President Jason Spadaro says the company “strongly disagrees” with that conclusion.

SDS says it has cooperated fully with the investigation. Labor and Industries says many of the violations were corrected during the inspections.

OfficeMax to Pay for Cleanup

A California judge Wednesday rejected OfficeMax’s bid to shut down a suit seeking contributions to US$31 million in cleanup costs at a polluted lumber mill site, saying a sale contract with Georgia-Pacific did not clearly transfer future liability, according to Law360 Thursday.

In late summer 2012, the City of Fort Bragg , CA, received a Claim for Damages from OfficeMax, formerly Boise Cascade, alleging that the City’s current and historical stormwater system conveys significant quantities of toxic substances onto the G-P mill site.
Boise Cascade had sold that mill site to G-P in 1973.

Vaagen Brothers Awarded Contract . . .

The Colville National Forest in Oregon has awarded a 10-year stewardship contract to a Northeast Washington sawmill owner, allowing logging in return for restoration work, according to the Spokesman-Review Thursday.

Vaagen Brothers Lumber was the sole bidder on the contract, which is valued at up to US$30 million.

The goods-for-services contract will allow Vaagen to log up to 50 million board feet of timber throughout the next decade. In return, the lumber company will undertake stewardship of the land such as thinning dense stands of trees, maintaining roads, and conducting prescribed burns and watershed restoration projects.

The contract covers 54,000 acres in the Three Rivers Ranger District’s Mill Creek watershed.

The number of Colville National Forest employees has dropped by about 70 per cent during the past 20 years, with current budgets allowing the forest to harvest about 40 million board feet of timber per year.

Using a contractor shifts upfront planning costs onto private industry, so the agency doesn’t have to foot those bills, said the Spokesman-Review.