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Seeing the Light

Well, here we are with 2009 coming to a close. Another year has gone by and the forest industry has continued to struggle. The battle scars are seen in the empty log and mill yards across the country and on the balance sheets of forest products companies big and small. 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.”


December 1, 2011
By Bill Tice editor
Well

It may still be too early to tell, but the economic indicators are pointing towards stronger days ahead. Just in this issue of Canadian Wood Products we have bold projections from markets expert Russell Taylor. Starting on page 15, he talks about a five-year outlook that shows promise, and lumber prices that could jump by $200 per thousand board feet. And in an interview on page 17 with Doug Routledge, a vice president of B.C.’s Council of Forest Industries, he doesn’t sugar coat where we have been and what kind of shape the industry is now in, but he does share his optimistic outlook for the future, including his thoughts on additional revenue streams that can be generated from the existing fibre basket, opportunities for specialty products, and growing markets for Canadian wood and technology.

But in addition to what industry insiders are saying, there are other telltale signs as well. 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. They also invested almost $18 million in the facility, installing a new biomass fuelled boiler, a new lumber drying kiln and upgraded sawline equipment. 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. And in Timmins, Ont., a small independent company called Little John Enterprises rebuilt its mill in August to be ready for the upturn. These may all be small steps, but they are steps in the right direction.

For the Canadian 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 yet on this one, 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 Wood Products 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
btice@annexweb.com