The latest mills to react are Lakeland Mills, which is moving to a four-day work week next week, and Dunkley Lumber, which is moving to a three-day work week.

They join other mills like T'loh Forest Products in Fort St. James, Hampton Affilliates' mills in Burns Lake and other Sinclar mills that are operating on reduced work weeks.

Canada's Employment Insurance program pays the wages of workers when they are not on shift.

Lakeland Mills president Keith Anderson said the company, which employs about 140 people at the mill, is trying to get its inventories down, an effort to conserve cash.

"I don't know what is the best way to describe it here -- everybody is in survival mode," he said. "That's why we're being careful. We want to make sure we will (survive), and help ourselves in this whole process."

Anderson, who has been in the industry for nearly 40 years, said he has never seen a downturn as bad as this.

Companies are reacting to a combination of forces, which one industry CEO has already described as a tsunami. Lumber and panel prices have plummeted because of a collapse in the U.S. housing market. On top of that, the Canadian dollar has risen in value compared to the U.S. currency, which erodes income on shipments to the U.S., the region's main market. Shipments to the U.S. are also subject to a 15-per-cent export duty, a stipulation of the seven-year softwood lumber agreement signed at the end of 2006.

The consensus among analysts is there will be little upside in 2008, with housing starts forecast to drop even further this year.

At Dunkley Lumber, planer shifts have reduced from four to two in the past two to three months, reducing the workforce to 200 from about 260.

Moving to a three-day work week at the sawmill is meant to allow the Dunkley to keep operating, keeping the workforce as employed as possible, and positioning the company to jump into the market if there's an uptick, said Dunkley manager Blair Mayes.

He also noted that if the mill -- like others -- doesn't back off production, the market will never recover.

Mayes said the production drop -- and the need for less logs this winter -- is tough on loggers and truckers. But he said they'll likely be back more quickly in the spring logging and hauling timber.

"We will stay focused, nose to grindstone, careful with the cash we expend," said Mayes.

Industry observer Laurie Cater said the economic news coming out of the U.S. is not good.

The situation is so bad that even if the price was to drop, B.C. lumber producers would likely not be able to sell any more product, said Cater, the publisher of Madison's Lumber Reporter. "It's a problem that is not going to go away," said Cater, who talks to industry officials on both sides of the border each week to produce his newsletter.

The benchmark random length spruce-pine-fir two-by-four has been selling just above the $200 mark, well down from highs of $400 reached in 2004 and 2005.

Comments (0)

Subscribe to this comment's feed