Volatile lumber prices have forced Fort St. James sawmill to curtail its operations.
Conifex Timber Inc. announced Feb. 4 that it is temporarily curtailing sawmill operations at its Fort St. James sawmill for three weeks.
“Market conditions continue to be challenging due to a combination of high structural log costs and volatile lumber prices. So we have made the difficult decision to temporarily curtail our Fort St. James operations for three weeks starting Feb. 4 and we will continue to monitor conditions on a weekly basis,” said Sandy Ferguson, vice-president of corporate affairs and business development for Conifex Timber Inc.
A total of 150 production employees have been impacted by the curtailment, she said, adding that 70 of them were part of the six month temporary reduction that was announced at the end of November.
In Dec. 2018, Conifex announced that on a temporary reduction basis they would be moving to a single line. “So it’s a combination of single line reduction that would probably be in effect for six months as well as this three week curtailment which brings us up to a 28 percent reduction,” Ferguson said.
This is not the first time in recent months that Conifex has announced curtailment. They announced one on Nov. 12, 2018 for a two-week period for the same reason — log costs and current lumber market conditions. In the press release sent out on Nov. 9, 2018 the company announced that they would have an additional two-week curtailment around Christmas which resulted in a total reduction of approximately 15 per cent of Conifex’s B.C. lumber production for the quarter.
Then, at the end of November, they announced temporarily reducing operating capacity at Conifex’s Fort St. James sawmill starting Jan. 1, 2019. The release sent Nov. 30 said the company expected this to continue until mid-2019 resulting in an estimated 25 per cent reduction in Conifex’s B.C. lumber production. And during this period there would be a temporary workforce reduction of approximately 70 employees.
“Conifex expects that a majority of it’s lumber production will be sourced from the lower cost U.S. South supply region in the first half of 2019,” read the Nov. 30 release.
Meanwhile, in terms of additional evaluation work, Ferguson said, the management team and employees have been looking at different options available to make the sawmill more sustainable.
Apart from high structural log costs and volatile lumber prices, she said “we are still in a duty environment where we pay 20 percent tariffs when we export to the US and that represents 55 percent of our overall Canadian production. So we have all those three factors that are pushing together in the wrong direction right now.”
Bev Playfair, mayor of Fort St. James said Conifex’s curtailment decision has a instant impact on the District.
“One of my biggest concerns is that I am not sure how long people can weather the storm. Most people need a pay cheque these days and my biggest concern is that people start leaving our community and I have already heard that there are two or three families that have left to find employment elsewhere. So if people start moving out of town that’s even going to have a bigger impact,” Playfair said.
The curtailment has an impact on logging contractors, Conifex’s employees, their families and local businesses, she said.
“We’ve seen this years ago with Canfor when they were in the community. The day after Canfor curtailed — I owned a business [at the time] and for my business the bottom line dropped 40 per cent.”
Conifex isn’t isolated in terms of curtailment of operations. The forest industry in British Columbia is uncertain, Playfair said, noting West Fraser Timber Co., and Canfor announced similar curtailments in sawmill operations [in November and December respectively].
“I don’t know whether we as the mayor or council have a solution for this. We are feeling for the employees that are out of work right now and local businesses and the scary thing right now is that there isn’t a day they are going to start up again. It comes down to how long people can weather the storm of being out of work which will determine whether they stay in the community,” she said.
Ferguson said, for employees out of work the process of Employment Insurance (E.I.) is a smooth process. Last summer after the wildfire alert Conifex had employees file E.I. claims, “so most of our employees would have already filed a claim and when you have done your initial claims it’s relatively easy to open it.”
Whereas new employees out of work will have to open up an E.I. claim and it is a “relatively smooth process. I think most of the people who work in this sector would be aware of that and we have HR resource people available to help our workforce with that.”