Canfor responds to COVID-19, temporarily curtails lumber production by 40%
March 27, 2020 By Canfor
Canfor Corporation is undertaking a series of significant measures in response to the COVID-19 outbreak, focused on protecting the health and safety of employees and communities, and adjusting business operations in response to rapidly changing global market conditions.
“Our principal focus is ensuring the safety and well-being of our people through these unprecedented times, while taking the necessary actions to protect the long-term sustainability of our business,” said Canfor Corporation president and CEO Don Kayne.
Health and safety response
The health and well-being of Canfor employees and contractors, their families and our communities are our top priority. At our offices, facilities and work sites, we have implemented significant measures grounded in the recommendations of public health officials in each of our operating regions. These include restricting all travel, mandating self-isolation for returned travellers and any employees exhibiting symptoms or exposed to the virus, implementing physical distancing parameters between individuals, increasing cleaning and sanitization in workplaces, and, where possible, instructing employees to work remotely to reduce interpersonal contact.
In addition to steps focused on physical health, we recognize that many people are experiencing stress and anxiety related to the COVID-19 virus and public health response. We have expanded our outreach and communication regarding mental health support services available to employees and their families.
The COVID-19 outbreak has negatively impacted global demand for forest products and disrupted supply chain networks. As a result, Canfor has implemented the following changes to its operating schedule. These curtailments and variable operating rates will be assessed weekly and adjusted as needed in response to rapidly evolving market conditions, changes in customer demand and the state of the COVID-19 response globally.
Effective March 30, Canadian lumber production will be curtailed by approximately 70 million board feet, or approximately 40 per cent, over a three-week period. These reductions will be implemented across several British Columbia sawmills through a combination of temporary plant curtailments and reduced operating hours.
Canfor Southern Pine operations will be taking a series of actions to reduce operating capacity by approximately 40 per cent or 50 million board feet over a four-week period. The capacity reductions will be achieved through the implementation of variable shift schedules and reduced operating hours across the southern pine mills.
Commencing next week, Swedish lumber production will be curtailed at two sawmills by 50 per cent over a four-week period, representing a decrease in production of approximately 17 million board feet. This is primarily in response to the lockdown announced in Britain, which has resulted in a suspension of UK-bound shipments and a partial redirection of product to other global markets.
Reduction in capital expenditures
The company has immediately reduced capital expenditures by CAD$20 million for Canadian and U.S. operations which, when taken together with an already lower capital budget for 2020, results in a year-over-year reduction in capital spend of approximately $100 million across lumber operations compared to 2019. These reductions will be achieved through deferral of planned projects and suspension of in-progress initiatives that can be paused without significant impact. Remaining capital projects planned for 2020 and through 2021 are being reviewed with further adjustments possible based on economic conditions.
The COVID-19 crisis is rapidly evolving and the company is continually evaluating risks, impacts and necessary response actions. There is the potential that further adjustments to operating plans may be required as a result.
Print this page