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Canfor cuts more mill shifts |
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Written by GORDON HOEKSTRA
Citizen staff
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Tuesday, 08 April 2008 |
Canfor Corp. announced more sawmill shift reductions on Tuesday as well as a move to four-day work weeks at some of its northern B.C. mills.
The company said it was responding to continued falling lumber demand with no indication of a near-term market recovery.
Canfor's P.G. sawmill will be moving to two shifts from three, and Clear Lake's finger-joint lumber plant will be moving to one shift from two, cutbacks that will impact about 100 workers. Both mills are in Prince George.
The move to a four-day work week from the normal five will take place across six of Canfor's B.C. mills: Rustad Bros., Clear Lake, Mackenzie, Fort St. John, Quesnel and Houston. Its Grand Prairie, Alta., operation will also be impacted.
The reductions take out 600 million board feet of production, the equivalent of two major sawmills.
"It's very difficult times and very difficult decisions, but they are being made to sustain the business and provide us with the opportunity to come out the back side of this in a strong position," said Mark Feldinger, Canfor vice-president of manufacturing.
Canfor, like other forest companies, has been bleeding red ink, losing $360.6 million in 2007.
Feldinger said the measures are meant to be temporary.
"We will obviously be watching markets in terms of both volume takeaway as well as price, and reassessing on a periodic basis," he said. "This does position us to be quite responsive to the marketplace."
The latest cuts come on the heels of shift reductions at Mackenzie, Rustad Bros., Bear Lake, Vanderhoof and Houston. The only Canfor mills that remain on three shifts -- once a widespread model for the company -- are Quesnel and Isle Pierre. Canfor has also closed sawmills in Mackenzie and Chetwynd and has announced the closure of an oriented strand board plant in Fort Nelson for this summer.
In total, the shift reductions, mill closures and reduced work week have cut jobs by more than 1,200 at Canfor's northern B.C. operations.
"It's a big kick," said United Steelworkers local 1-424 president Frank Everitt.
However, he said short of shutting down mills, the company's approach was as best as could be expected. "Until the marketplace really picks up and we get rid of the number of houses on the market in the United States and we start building new houses, there are not many things that Canadians can change very much," said Everitt.
The softwood lumber agreement with the U.S. also ties the province's hands in tinkering with timber pricing or directly assisting mills, he noted.
Workers at sawmills moving to the reduced work week will have their wages topped up through the federal government's Employment Insurance program. That program lasts 26 weeks, with the potential to extend it, something Everitt said the union will be advocating.
Lumber prices have plummeted in the face of a collapse in the U.S. housing market. While starts peaked in 2005 at more than two million, they are forecast to come in below one million this year.
Other hits to the forest industry include a rise in the Canadian dollar to the U.S. currency, which erodes the bottom line of northern B.C. producers, and a 15-per-cent export tax on softwood lumber shipments to the U.S.
Other companies in the North have also reacted with shift reductions, mill shutdowns and reduce work weeks. Those included West Fraser, AbitibiConsolidated, Winton Global, Lakeland Mills and Dunkley Lumber.
More than 3,000 jobs have been impacted in northern B.C., according to a tabulation put together by The Citizen last month.
Forest industry analyst Paul Quinn said he was not surprised to see the latest move by Canfor. He said, however, with no market recovery predicted any time soon --- the consensus among analysts is that 2008 will be a writeoff -- there is still too much lumber being produced.
"We need more cuts," said Quinn, an analyst with Salman Partners in Vancouver.
While lumber production was cut in 2007, he said it has not kept pace with the drop in demand for lumber directly linked to the collapse in the U.S. housing market.
Quinn noted that housing starts in the U.S. this year are expected to drop lower than in 2007.
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Last Updated ( Wednesday, 08 October 2008 )
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