The face of B.C.'s forestry salvation showed itself in Prince George this week.
While many people are credited with stickhandling forestry through the last tumultuous decade, there is one man who saw the industry through its tumultuous decade but not many people have heard of Mayco Lou.
The president of Canfor Asia, Lou's position, indeed the entire division within the forestry giant, didn't exist until a handful of years ago. China's place within the Canfor business plan has changed dramatically since then.
Last week, Canfor made him the first recipient of the Canfor Legacy Award. Company president and CEO Don Kayne made the presentation during the company's annual general meeting in Prince George this week, recalling his first encounter with the upstart wood products broker from Shanghai.
"I first met Mayco back in 1999 on a visit to China to explore potential markets in a country that basically used wood to fuel steel factories," said Kayne. "We had $70,000 of lumber for sale in Beijing for one year with no progress being made, when I met Mayco through a mutual acquaintance. Mayco had a small lumber importing business in Shanghai, and I told him he could be our agent if he could sell this lumber. A week later, it was sold - and at a good price."
Lou considered the small hill of Canfor wood a challenge to sell but he knew there was a mountain more of it waiting in Canada.
"They had three containers just sitting there, for a year," he said. "I said yes. I arranged for trucks to move it to Shanghai. My sales team, in those days, was running on bicycles talking to customers, trying to convince them to take the wood. Whenever someone said yes, we would move the lumber by tricycle to get it to them."
Kayne was impressed. Lou was inspired. They shared high expectations, but neither could have imagined what was to come and what it would mean for B.C. communities.
"That nation has become the largest offshore destination for our lumber," said Kayne. "Last year, Canfor surpassed a billion board feet in shipments to China - an extraordinary achievement and one few would have imagined possible only five years ago."
Lou said he "never believed it would get this big" but this huge intake of B.C. wood has been discovered by him to be only a fraction of what is possible now. Most of that wood is low-grade stuff. Mostly it is for pour-forms used to construct buildings with China's favourite building material: concrete.
The first inroad Lou made on behalf of Canfor was to demonstrate convincingly that instead of throwing away the forms after one use - the typical practice of Chinese construction companies - the B.C. stuff was different. Yes, it was more expensive, but it could be used as many as eight times before it lost its abilities.
He then turned his efforts to the housing market. He demonstrated convincingly that wood was quick and strong for roof trusses and interior walls. There were even some demonstration timber-frame houses built. But in order to do this, every level of the Chinese construction industry had to be taught how to use wood. Carpentry had been lost as a trade as the forests of China were decimated in the mid-20th century.
Canfor paid for a school to be built in China. It housed China's next generation of construction woodworkers. Students slept there, ate there and learned there. It is still in operation and thriving today, because the central government bodies of China also learned the benefits of wood and have been slowly integrating it into the official building codes and green-building incentive programs they are offering to housing and commercial developers.
"It is win-win," said Lou. "We don't just want the money of the construction industry. Wood is helping China build for the future." It is even expected to save lives. It was not lost on Chinese officials that many earthquake deaths there in recent years are directly attributable to the concrete and steel construction materials.
In the next 10 years, said Lou, he envisions China's official construction protocols to favour softwood. Residential highrises are the most needed kind of building, he said, and those will always be built of concrete and steel. But all the materials within the building could conceivably be wood and if that happens, the volumes are such that it will make the U.S. housing market look like a cottage industry.
"It is not Canfor fighting with Tolko, fighting with West Fraser for that market share," he said. "All B.C. lumber companies are working together in China to fight against the companies in Siberia and New Zealand."
Kayne said the commodity fight is clearly working. Despite Russia sharing a long border with China, B.C. now sells more wood to China than their closest neighbour.
"In just five years, B.C. exports to China have increased 1,100 per cent - from less than $100 million dollars to $1.1 billion dollars in both 2011 and 2012," Kayne said. "It is likely to be higher this year. Five years ago, 10 per cent of BC's export volumes were destined for China - last year it was 32 per cent."
Ten years ago, it was zero.
Last year, China imported more softwood lumber than any other country on earth, but the overall numbers declined. Despite the downsizing in wood imports, "Canfor and B.C. saw our share increase," Kayne said.
These numbers were all factored into the British Columbia bottom line when the only major wood customer B.C. has ever had - the United States - stopped buying.
The construction market in the U.S. is now starting to reemerge from the catastrophic crash in 2008 and 2009. This new double-barreled market reality has driven today's lumber prices to new heights.
Lou said this is causing some customers in China to balk at buying much more wood, but should the interior wall market come to pass, that won't matter, even if prices for common lumber reached $500 per thousand board-feet (/kbf). It is just under $400/kbf today - a very healthy price by historic standards.
"If the prices hit $500/kbf then it becomes viable for Siberian companies to overcome their transportation and logistics problems and compete head-on with B.C. wood companies," he said. "But that will be OK because that price would mean the infill walls and those other major wood applications were accepted [and triggered] a big demand. It won't matter then if Siberia and New Zealand and the United States and Canada are all in the market together, because there will be room for everybody. The pie will be so big. But still, you want to be the one holding the pie, and right now that is Canada."
If anyone needs an example of what the market in China has meant to B.C. already, Kayne said they need only look to Quesnel. Canfor was able to restart their dormant mill there and put more than 100 people directly back to work exclusively because of China. Other mills were made healthier as well - all during challenging economic conditions and shrinking American markets.
"Thanks to Mayco's knowledge and hard work, we built strong markets in China just when we needed them most," Kayne said. "He has been the backbone of market development that has been nothing short of astonishing...Of course, Mayco would be first to say that there were many others that helped in establishing the China market, not the least of which was his own team based in China."
