Chris Kalesnikoff (right) and his sister, company chief financial officer Krystle Seed, stand at the site of the new mass-timber facility, which will be ready in late fall. Photo: Betsy Kline

West Kootenay mills weathering perfect storm in industry

Most say they’re set to persevere through tough economic times

West Kootenay’s lumber mills seem to be weathering the economic downturn in the industry a little better than their peers in other parts of the province.

While no one’s exactly booming, company officials say they are managing to survive at a time of mill closures, cutbacks, and loss of markets elsewhere.

“We are just plugging along, one day at a time,” says Dan Wiebe of Box Lake Lumber, a mill near Nakusp. “You can’t do a whole lot about it.”

Wiebe, who employs about 35 people, had to reduce from two shifts to one earlier this year, but is holding on to that level of employment for as long as he can.

For smaller operations, the drop in price for raw logs has really hurt the company.

“If you have timber sales and you were selling them to Interfor for $90 to $100 per metre, and that’s what you bid for them, now you are getting $70 a metre, that’s how it affects us,” he says.

Wiebe says his big beef right now is over changes to the provincial medical plan, where businesses had an extra tax levy placed on them to cover the end of premiums to the public.

Castlegar investments pay off

At two larger companies in the West Kootenay, investment in the future is helping them weather the present tough times.

“We have spent $98 million since acquiring the Castlegar operations from Pope and Talbot,” says Andrew Horahan, the vice-president of western operations for Interfor. “Castlegar is not your typical commodity mill. It is high-value and has a product focus on niche markets.

“Fifty-seven per cent of our product mix is not standard dimensional products, so all of those things are very helpful.”

Interfor did implement some reduced operating hours — called curtailments — in July, but Horahan couldn’t say if that was going to continue.

“It’s not something we can predict at this point. The market is very difficult to predict,” he says. “We are hoping the ball will be in a better position than it is today, but we really don’t know.”

But Horahan was confident, if not in the market, at least in the Castlegar mill’s ability to ride out the storm.

SEE: Premier Horgan talks jobs and opportunity at Castlegar mill

“Castlegar is a well-capitalized mill that has been invested heavily in the last 10 years,” he says. “Its product mix is the right product mix for both big markets and difficult markets.

“We are very optimistic on our Castlegar operation long-term. We are just in very difficult short-term conditions.”

Kalesnikoff grows in tough times

The most aggressive company pushing its way through these tough times is Tarrys-based Kalesnikoff Lumber.

“Times are tough, but you never want to strike fear into anything,” says Chris Kalesnikoff, chief operating officer. “We have not only survived 80 years, but we have been successful for 80 years.”

He says his company has done that by producing lines of non-traditional lumber for foreign markets as well as domestic. He says Kalesnikoff will succeed by adding value to its existing lumber supply.

“That’s why we have invested so much downstream into our operation,” he says. “With the $35-million expansion, we are planning for the next 80 years, to enhance the value of our wood basket without having to cut more timber down, or harvest more. Adding more value to what we already mill is what we see as the future.

“It’s the reason we continue to be succesful and survive for futures to come.”

SEE: Kalesnikoff announces $35-million South Slocan facility

Kalesnikoff says rather than preparing to lay off crew, it is planning to hire about 50 people as it starts its new operation this winter, and ramps up through 2020.

“We are persevering through those markets and building employment without cutting any addtional timber,” he says. “So I think that’s pretty exciting.”

Atco perseveres

Near Fruitvale, family-owned Atco Wood Products mill is a producer of softwood veneer for the plywood industry, supplying a small, niche product to a market that is also presently in an economic downswing.

Much of the company’s timber comes from Crown land harvesting operations. So the increased log cost cited by other B.C. mills as a reason for their cutbacks has affected Atco’s bottom line as well.

That means the business has been forced to run fewer days a week, on occasion.

“Prices and demand for our product are down,” CEO Scott Weatherford told the Trail Times recently.

“And we have been forced to curtail operations intermittently, depending on market conditions each week [such as] running three or four days per week instead of the normal five, some weeks.”

But Weatherford is still confident in the future.

SEE: Fruitvale mill affected by downturn in lumber market

“Wood products markets are cyclical, and at over 60 years old, our company has weathered many of these cycles,” he says.

“While we are working through challenging times, we’re also using the opportunity to innovate, learn, and reinvest to make us stronger to weather future cycles.”

He says with no foreseeable end to the impact of beetle infestations and wildfire, the immediate solution lies in stringent industry practices.

By implementing forest management and harvesting plans, Atco’s forestry team is now focused on managing beetle outbreaks in Douglas fir, as they did with mountain pine beetle in years past.

“We’ve also had some luck in our region during the last two years, as the forest fire season has not affected our company to the same degree than many other forest companies in central and northern B.C have been affected,” said Weatherford.

“However, we have a very resourceful team, a very high quality product, and have been reinvesting in our Fruitvale operations for many years to improve our operating efficiency,” he added.

“Together, this has helped us mitigate a small portion, but not all, of the challenging market conditions, and helped us avoid full curtailments.”

Other areas of the province haven’t been so lucky, with mills in Kelowna, Vavenby, Quesnel, Clinton, and 100 Mile House shutting down temporarily or permanently.

A perfect storm of adverse conditions has hit the forestry sector.

The housing market is soft, thus reducing the demand for lumber for construction. It’s hard for forestry companies to get good logs at a good cost and process them effectively into lumber. Trees killed by the mountain pine beetle and wildfires have reduced log availability, and the shortage has driven up the price of logs.

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