Forestry slump not over yet

The current wave of sawmill closures and curtailments rippling through B.C. had been expected for at least a decade. But few expected that wave to hit so fast and furious.

In recent weeks, B.C. forestry companies have announced the closure of four sawmills, and several have eliminated, or plan to eliminate, shifts at mills that are still operating. They include:

  • Canfor permanently shutting down its sawmill in Vavenby
  • Tolko Industries permanently shutting down its Quest Wood sawmill in Quesnel and eliminating one shift at its mill in Kelowna
  • West Fraser Timber permanently shuttering its Chasm lumber mill near Clinton and 100 Mile House and eliminating the third shift from its 100 Mile House mill
  • Norbord Inc. indefinitely curtailing production at its oriented strand board mill in 100 Mile House

Jim Girvan, a forestry consultant who estimated in 2010 that 16 Interior lumber, veneer and plywood mills would shut down in B.C. by 2019 (which is exactly how many did) more recently predicted in May that another 13 mills will have to go.

Because B.C.’s forestry sector is so highly integrated, the next wave of plant closures could be pulp mills and other processors that use wood waste from nearby sawmills.

“That’s our next concern, is the next shoe has to drop,” said Bob Simpson, former BC NDP forestry critic and current mayor of Quesnel, which will suffer roughly 210 job losses as a result of mill closures. “As sawmills go down, then all the residual dependent businesses become much more vulnerable.”

B.C.’s Interior forestry sector is being hit hardest, largely because of the mountain pine beetle epidemic that peaked in 2005, wiping out roughly half the merchantable timber in the region.

With a population of just 1,800, 100 Mile House is being hit particularly hard with the announced closure of the Norbord OSB mill, West Fraser’s Chasm mill and the elimination of one shift at the West Fraser mill.

Because the West Fraser mill in 100 Mile House is so big, the elimination of one shift is tantamount to the shutdown of a regular-sized sawmill. In total, the direct job losses for 100 Mile House tally more than 400.

“That’s direct jobs,” said 100 Mile House Mayor Mitch Campsall. “Those aren’t indirect, which is the logging industry and what have you. It could be close to 1,000.”

Quesnel still has operating sawmills and two nearby pulp mills. But Simpson expects his community may not have seen the end yet of mill rationalization.

“This has been a long, slow burn, knowing that at some point around 2019, 2020, we were going to have a massive rationalization in the industry,” he said. “And there’s more. We’re not done.”

The current wave of mill rationalization would likely have started earlier, but a strong U.S. economy drove the demand, and prices, for lumber so high that it made it economic to continue processing wood products from a shrinking timber supply, despite rising log costs and American softwood lumber tariffs.

For right or wrong, the Gordon Campbell government decided to make lemonade from the lemon that climate change handed B.C.’s forest industry, by increasing the annual allowable cut to let companies salvage what they could from the fresh beetle kill while the wood was still usable. It provided forestry companies with a decade-long bonanza of timber.

Simpson said he believes it ultimately amplified the crash. Quesnel’s annual allowable cut before the pine beetle epidemic was 2.3 million cubic metres.

“We went up well above four million of actual cut during the height of the salvage operations,” he said. “So their log demand for the mills far exceeded even the previous long-term sustainable cut, so that’s what’s creating the double whammy."

More Business News

Data from CryptoCompare
Recent Trending
Soft 103.9
Castanet Proud Member of RTNDA Canada
Press Room