Tembec CEO expects high lumber prices will prevent layoffs for now

But situation could change in Quebec if prices fall during the end to the home construction season.

May 3, 2017   by Ross Marowits

MONTREAL — The CEO of one of Quebec’s chief forestry companies says he doesn’t think job losses are in the offing for his company, at least in the short term, despite the imposition of US softwood lumber duties.

James Lopez, head of Tembec, says he believes higher lumber prices will offset the 19.88% preliminary duty that took effect May 1 against the Montreal-based firm on its softwood shipments to the US.

“My forecast right now has no layoffs in it,” Lopez said in an interview from New York City.

He said the situation could change, however, especially in Quebec, if prices fall during the seasonal end to the home construction season. The province has the highest wood costs in the country.

“If you did it purely by the numbers, you would say that mills in Quebec are at higher risk than anywhere else in Canada,” he said.

Unifor, which represents represents 24,000 forestry workers at 134 companies, fears duties will hurt 25,000 Canadian jobs, punishing small communities dependent on the forest industry.

With the sale of its BC lumber assets, Tembec said it’s less exposed to lumber and in a better financial position than it was during the last softwood lumber dispute in 2001.

“I don’t like it but it’s going to be much less onerous on the company’s cash flows and balance sheet now versus the last time around,” Lopez said.

Tembec anticipates anti-dumping charges to be announced June 23 will be lower than the preliminary duties.

The company plans to pay $9 million in retroactive duties, which Lopez said he expects to recover early next year. Another $2.5 million per month will be paid in countervailing duties, Tembec said. It added that it expects about half of the costs of the duties will be passed on to customers.

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