Declining Timber Industry II

Vancouver Sun (Vancouver, British Columbia, Canada)
Wednesday, April 30, 2008

Shutdowns, layoffs hit largest West Coast forest company
Western Forest Products closes most of its logging operations as demand drops

http://www.canada.com/vancouversun/news/business/story.html?id=1d0dc9b6-3c22-41d5-9e48-911c8fb29257
Gordon Hamilton
The West Coast’s largest forest company, Western
Forest Products, announced Tuesday it is shutting
down most of its logging operations and laying
off more than 800 loggers and contractors as
demand for wood products continues to tumble
world-wide.

Logging is to shut down at the end of next week
so the forest company can bring its log
inventories in line with its lumber orders,
Western’s chief operating officer Duncan Kerr
said Tuesday.

The reason is not just the U.S. housing collapse
any more, Kerr said. Lumber that once fed U.S.
homebuilders is now being diverted to other
markets around the world, leading to a global
erosion in demand.

“Even if you drop your price, you are still not
going to sell any more wood,” he said.

Only last week, Western announced it was shutting
down its Ladysmith sawmill due to falling demand
for commodity lumber.

Most of the new layoffs are to hit operations on
Vancouver Island and the Sunshine Coast. Logging
will continue only in operations that are
harvesting mostly high-valued species, like
cedar, where demand remains strong.

Kerr said the curtailments are entirely
market-related. Western can’t sell enough lumber
to justify its logging harvest.

“We have maintained sufficient logging to cover
the lumber orders we have at this time.”

Western is laying off 220 of its own logging
employees, as well as many of its logging
contractors. The exact number of people affected
was not clear Tuesday, but Dave Lewis, executive
director of the Truck Loggers Association, said a
quick tally put the number at more than 800.

Lewis termed the layoffs devastating for families
and coastal communities. Logging contractors are
just in the process of returning to work after a
winter of abnormally heavy snowfall. A shut-down
now, when they are desperate for revenue, is
likely to push some of them out of business, he
said.

“This is bad,” Lewis said. “When a company like
WFP, which controls 43 per cent of coastal Crown
forests, runs into trouble and is forced to
curtail operations to this degree, the number of
people who are affected is astounding.

“This will have an impact on the entire Vancouver Island economy.”

The layoffs are not permanent, Kerr said. Western
wants to return to the woods during June to
rebuild log inventories before fire season shuts
the wood down again in August.

Lewis said the on-and-off logging will push
contractors, who must finance their equipment and
carry high overhead costs, into dire financial
straits. They will not have enough time to recoup
their losses from this shutdown before the woods
are closed for fire season.

“But this is no time for the contracting
community to be taking shots at Western.
Obviously they are in trouble and it’s up to us
and the government to support them wherever
possible.”

He said loggers are concerned that Victoria could
make the situation worse by considering a plan to
take timber back from Western in the Queen
Charlotte Islands without compensating the
company under a seldom-used clause in the
company’s forest licences.

That would accelerate the Western’s plight and
harm the contractors who rely on it, Lewis said.
“No one wants to see Western go under. We need to
see the government demonstrate support.”

© The Vancouver Sun 2008

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