A New Day
By Bill Tice editor
With the holiday season and the New Year just around the corner, another four quarters have gone by and Canada’s forest industry has continued to struggle. The battle scars can be seen from coast to coast as some logging equipment sits idle and the balance sheets of forest products companies, big and small, are heavily covered in red ink. But is the tide turning? That’s the question I get asked in some form or another almost every day. And you know what? For the first time in months, I can say, “It just might be.”
By Bill Tice editor
It may still be too early to tell, but the economic indicators are pointing towards stronger days ahead. Russell Taylor of International Wood Markets Group recently released a five-year outlook that shows promising times could be coming, and he says lumber prices could jump by $200 per thousand board feet over the next few years. But there’s more. In mid November, the Fraser Papers sawmill in Plaster Rock, N.B., started up after a nine-month hiatus, putting 175 people back to work. And at the other end of the country in Fort St. James, B.C., a new company called Conifex bought an idled mill from the now defunct Pope and Talbot, starting it up again in March and putting about 140 people back on the payroll. They are still going strong today, employing not only sawmill workers, but loggers as well. Also, this summer in Timmins, Ont., a small independent company called Little John Enterprises rebuilt its mill to be ready for the upturn. These may all be small steps, but they are steps in the right direction. And they are steps that are trickling down to the logging side of the business as well.
For the Canadian forest industry to survive and succeed, there is no question – we also need the U.S. economy to strengthen. The United States is by far our biggest customer for forest products. The economic rebound in that country has been slower than some anticipated, but it is coming, pushed along by stimulus money from the Obama administration and programs such as the First Time Home Buyer Tax Credit that came into play earlier this year. Just as the popular tax credit program was reaching its conclusion, the U.S. Congress extended it by five months and expanded it to include all homebuyers. That alone is expected to keep driving the existing inventory of used homes down and the number of new housing starts up. The bottom line for Canada’s forest industry is that if new home starts in the U.S. continue to rise, so will the demand for lumber and panel products, much of which comes from Canada.
Don’t get me wrong here. I’m not just trying to paint a rosy picture. 2009 has been a tough year and despite some of the good news above, 2010 will not be easy either. In addition to the few success stories and some positive economic news in 2009, there were many disappointments and much heartbreak. Companies failed, shifts were curtailed, jobs were lost, and the loans of many loggers were called in. With no contracts to fulfill, some of these loggers were forced to put their equipment on the auction block and call it quits. So no, we are not out of the woods on this one yet, but maybe we are starting to see the light at the end of the tunnel. A year ago, when I took over at the Editor’s desk of this magazine, the end of the tunnel was still pitch black.
As we enter 2010, on behalf of everyone at Canadian Forest Industries magazine, I want to wish you the very best for the holidays and for the coming year. But most of all, I hope by this time next year, I am writing a very different story. One that reflects back on 2010 as the transition year when many companies in Canada’s forest industry started the long climb back to profitability, and has an outlook for 2011 that promises new opportunities, expanded growth and rising employment numbers.
Bill Tice, Editor