Forest industry takes turn for the better
by Phil Ambroziak
Just like the tallest of trees, things are looking up for northern Saskatchewan’s forest industry.
In recent months, the forest and logging industries have seen a rise in the market – the first time since the global economic downturn close to five years ago.
“For us, it had a lot to do with the downturn in the U.S. economy and the collapse of the U.S. housing market around 2006,” explained NorSask Forest Products CEO and general manager Dave Neufeld. “Sixty-six to 75 per cent of our product is bound for the U.S., but in the last six months or so there’s been a rapid improvement in the U.S. housing market and analysts suggest this should be the case for at least the next three to five years. Things have been rapidly improving to the level where we’re profitable.”
The Meadow Lake Tribal Council-owned facility, located east of Meadow Lake, has been capitalizing on this projected growth. NorSask recently completed a $3.5 million capital improvement project and, as of the beginning of May, has been running more than one shift per day at the mill.
“We started an afternoon shift last month and now operate on a one-and-a-half-shift model,” Neufeld said. “We plan to continue to recruit workers and our goal is to have two full shifts in place come Labour Day.”
This is the first time there’s been more than one shift per day at NorSask since 2005. Meanwhile, excluding contracted drivers, the mill employs more than 100 people with plans to hire about 25 more in the next few months.
Neufeld said the recent upturn is in response to increased housing starts in the U.S. opposed to the apparent need for lumber in such places as recent tornado-stricken areas in Oklahoma.
“Events such as tornadoes do drive an increase in demand, but the main thing right now is new housing starts,” he said. “We’re not a particularly large mill compared to some of the ones in British Columbia. A couple of these super mills could easily supply the amount of lumber needed to help repair and replace homes affected by the tornado. It’s a significant event, but not enough to drive market change.”
Currently, market prices are holding steady around $350 per board feet of lumber. That number even rose to $450 a few weeks ago – almost double the $250 average during the downturn. Meanwhile, Neufeld said a surge in lumber shipments from B.C. and Alberta to Japan and other Asian countries does have a positive impact on companies like NorSask.
“When one third of the lumber from other provinces is going to Asia, it improves demand in the U.S. for our product,” he added.
Neufeld also expressed how pleased he is to see NorSask back in a growth mode instead of just “treading water.”
“We’re proud we were able to remain open during that time,” he said.
Across the highway from NorSask is Meadow Lake Mechanical Pulp. According to pulp mill general manager Simon Imray, however, the lumber market has had little impact on operations at his facility, which currently employs 160 workers.
“NorSask has put on an extra shift because the market is hot, but at our mill we have to operate at full-speed all the time,” Imray said. “On the marketing side of things for us, it’s pretty much a break even situation.”
A little further east, at Meadow Lake OSB, plant manager Parker Snyder agreed with Neufeld about things looking better now.
“Market conditions over the past several years have been very challenging,” Snyder said. “We have worked diligently throughout the downturn to keep the mill operational and to maintain a strong presence in the OSB marketplace. Early market trends for this year are positive and, if sustained over the long term, would be cause for optimism for the mill and the industry as a whole. At this point, we are cautiously optimistic about the future.”
Snyder also said a solid, stable market would certainly be beneficial for Meadow Lake.
“Stronger earnings will allow us to re-invest in our business in the form of continued capital improvement projects, recruitment and retention initiatives and enhancements to our customer value proposition,” he said. “A strong market is good for everyone.”
Meadow Lake OSB currently employs 155 people.