Forest industry poised for an upturn

Tyler
Tyler Clarke
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A spot of new forest industry layoffs isn’t indicative of an economic downturn, Carrier Lumber Inc. president Bill Kordyban said -- quite the opposite. 

Forestry

“There is less supply and more demand, which translates into higher prices,” he summarized. 

About a dozen people will be left out of work after the company’s Prince Albert saw mill closes on Jan. 24 -- a temporary measure that Kordyban said is a result of a combination of factors, of which none are related to the marketplace. 

At the same time, Carrier Lumber Inc. is doubling their efforts in Big River, about 90 minutes northwest of Prince Albert.

The Big River saw and planer mills currently operate at one shift apiece, employing between 35 and 40 people.

“Our plan is to go to full capacity, which is two shifts in the saw mill and two in the planer,” he said, adding that this will double the number of employees to at least 80.

“Probably mid-February we’d have a second shift in the saw mill and by mid-March a second shift in the planer mill,” he said.

This economic upswing is being felt across the province, Saskatchewan Ministry of the Economy executive director of development Shane Vermette said.

“The forest industry is currently recovering, really from an unprecedented downturn in global forest products markets that’s effectively lasted from 2007 to 2012,” he said.

“Prices for most forest products … have increased dramatically in 2013, and the good news is, they’re expected to remain strong for several years, and that’s largely due to the emergence of several Asian economies -- most notably China, as well as the recent surge in U.S. housing starts.”

The current state of the forest industry is drastically different than it was during the height of the forest industry’s downturn in 2009, Vermette explained, during which only three of the province’s 10 major forest product mills were operating.

“Currently seven of the 10 major forest product mills are operating, and we anticipate that all could be operating as early as 2015,” he said, noting that this includes the Prince Albert Pulp Mill.

Paper Excellence, which currently owns the Prince Albert Pulp Mill, appears to be making good on its promise to re-open the mill to full capacity by 2015 or 2016, at which time the province anticipates the pulp market will have regained its pre-recession steam.

“Paper Excellence is one of the few international pulp companies that continue to invest in purchasing mills that are either for sale or previously been closed,” he said, later noting that Paper Excellence purchased the Meadow Lake operation in the midst of the economic downturn’s onset in 2007 -- “One of few mills that was operating during the downturn in the sector.”

The province wants to see the forest industry meet its full potential in Saskatchewan, Vermette said, noting that there is $1.5 billion worth of forest products ready to be sustainably harvested, employing about 7,000 people and creating 14,000 indirect additional jobs.

“Forestry, if it’s managed sustainably and appropriately, is a renewable resource, so those numbers would be sustained in effect in perpetuity,” he explained.

In 2012, the forest sector was at 40 per cent, selling more than $650 million of forest products and employing about 2,500 people while creating an additional 5,000 indirect jobs.

We are very confident that the dark days are behind us, and we’re very optimistic that over the next couple years we’ll have substantial gains in terms of forest product markets and related prices, and of course that will directly impact mills increasing production and re-starting in Saskatchewan. Shane Vermette

The first stepping stone will be getting to pre-economic downturn levels, Vermette said -- something the province hopes to see happen within the next couple years.

This translates into $1 billion in forest sector sales and about 5,000 people directly employed.

But, he cautions that the province is still bearing the burden of the 2007-2012 economic downturn, in that the labour force has yet to be replenished -- something Kordyban said that Carrier Lumber Ltd. is currently feeling.

“There’s actually a logging contractor shortage out there, and truck drivers as well,” he said. “There’s lots of opportunity for people to get involved in that industry right now.”

Although he said that the labour shortage isn’t hurting his company just yet, “It’s very tight.”

Others might not be so fortunate, Vermette said, noting that it can be tough for the forestry sector to compete with the oil and gas industry.

“If we had enough skilled labour in the province, then we would certainly see more mills running and operating at higher levels of production, sooner,” he concluded.

“The reality is, it will take some time to develop that labour force.”

With more jobs projected to open up within the forestry sector in the near future, Vermette said that it’s a good skill set to have right now.

“We are very confident that the dark days are behind us, and we’re very optimistic that over the next couple years we’ll have substantial gains in terms of forest product markets and related prices, and of course that will directly impact mills increasing production and re-starting in Saskatchewan.”

At the latest update in mid-December, Paper Excellence vice president of operations Dale Paterson said that the Prince Albert Pulp Mill was expected to be up and running within 18 months.

Due to a pricey trade agreement shift with China, the mill is shifting away from dissolving pulp product and toward fluff pulp -- a product most notably used in incontinence products.

The mill currently employs about 45 people under its power generation component, and is expected to employ about 250 people once its in full operation.

With plenty of land surrounding the Prince Albert Pulp Mill site prime for forest industry operations, the city’s elected officials have surmised in recent weeks that the city is well poised for should forest industry optimism grow.

“We have to really push economic development so economic development needs to be my priority in 2014,” Mayor Greg Dionne said during Thursday’s State of the City address. “We have to work on jobs. We’re getting a few, but at the same time we’re losing a few.

“We continue to grow in the retail market and some in the service, but we have to get more into manufacturing.”

Organizations: Prince Albert, Saskatchewan Ministry of the Economy

Geographic location: Big River, China, Saskatchewan U.S. Meadow Lake

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