Optimism in grows in BC’s forest industry

Finding new customers will help the BC woods companies get through the slow times in the US while leaving BC and Canada in a much stronger bargaining position when the US market turns up.

January 14, 2011   by Roslyn Kunin

It used to be so easy. All you had to do was look at housing start numbers for the US and that determined the health of the forest industry in BC and, to a large extent, the state of the whole provincial economy. This was when the woods sector had one dominant market, US homebuilders, and one prominent product, dimension lumber.

Now the only thing that seems to be working for the forest industry is Murphy’s famous law, if anything can go wrong, it will. The US housing market is down and shows no signs of getting up. The Canadian dollar is strong versus the US buck. The mountain pine beetle has devastated huge swathes of forests and summer fires laid waste to even more timber land. Nonetheless, wood sector leaders from the interior of Northern BC are optimistic – even enthusiastic – because of the many positive changes taking place.

One big change is customers. They’re not just the US any more. When I tried to contact, Ken Shields, CEO of Conifex, he could not get right back to me because he was out courting new customers – in Russia and China. And David Lehane, vice-president at West Fraser Mills, notes that his firm has long relied on the US market and, to a lesser extent, Japan. Now he sees strong growth in China.

Customer diversification
Finding new customers will help the BC woods companies get through the slow times in the US while leaving BC and Canada in a much stronger bargaining position when the US market turns up.

But even bigger than the diversification of customers is the changing mix of products. Older companies such as West Fraser Mills are still concentrating on dimension lumber and other building products, but up and comers like Conifex are finding newer and greener ways to get value out of the forest.

Janine North, CEO of the Northern Development Initiative Trust, sees the forests moving away from producing building products for export to producing energy and sources of energy, much of which can be put to good use in BC.

This goes beyond the use of hog fuel to generate heat in traditional wood processing operations. She sees pellets, hog fuel and other forms of biomass becoming the feedstock to generate both heat and power at a community level using new simple, efficient and green technology. Easy-to-operate is important because North foresees many small, isolated towns and villages short of highly skilled labour moving away from diesel generated power to local forest-based biomass to provide the community with heat and electricity.

Organizations from BC Hydro to First Nation start-ups and many companies in between are looking at how to use technology to get much more value than just logs or lumber out of BC’s forests and advance both economically and environmentally at the same time.

To continue moving ahead, the forest industry in BC needs capital and labour. Many firms are investing in today’s technology to be efficient and competitive in old and new and markets, but upgrading is pricey. The latest technology update at West Fraser Mills cost $125 million.

On the labour side, employers wonder whether growth in the sector will be limited by a lack of suitable workers. They note the downward trend in the numbers of young workers entering training programs and how close many current employees are to retirement age. Instead of talking about layoffs and downsizing, they list recalls and upgrades that will need workers with up-to-date skills.

Government plays an ongoing role in BC’s forest industry where so much of the resource is on Crown land. Lehane says a major change of attitude is needed. Forests should not be seen as a source of limitless resources there for the gathering, but rather as a garden that we must cultivate. Government’s role will be to support this new approach.

Roslyn Kunin is the director of the Canada West Foundation’s BC office. E-mail

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