Western Forest Products closes most of its logging operations as demand drops.
Gordon Hamilton, Vancouver Sun
Published: Wednesday, April 30, 2008
he 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.