Future for Forestry Looking Bright
Thursday, January 12, 2012 @ 3:47 AM
l-r Chris McIver, Wayne Guthrie and Hardy Wentzel
Prince George, B.C. – It is the growth of the economy in China that will drive the resource economy in B.C..
In a speech to the Natural Resource Forum, B.C. Business Council chief Policy Officer Jock Finlayson, says while China’s GDP is expected to ease in 2012, it will still surpass all other nations with a growth of about 8.5%.
While much of the focus at the forum seems to be on mining and natural gas, the future for the forest industry is very bright.
Wayne Guthrie, Senior Vice President of Sale3s and Marketing for Canfor says if it was not for opening up the trade with China, many forestry companies would not be operating today. In the wake of the collapse of the housing market in the U.S., Guthrie says the “demand from China has made the difference between operating and not.” He says the demand for housing and for “green” building will drive the use of wood frame technology in building those homes in Asia.
“Wood frame technology has yet to take off in a significant way,” says Guthrie “ but when it does it will have a significant positive impact on the forest industry.” He says his company will focus on dealing with major players in China. “We think there is a market for hybrid construction where interior walls are made of wood in a concrete building. If we can get even 10% of that market it would be huge.”
Guthrie says B.C. is “on the map” with China because it has become a trusted trading partner “It is, quite frankly, a tremendous achievement.”
Guthrie says India won’t be another China, but the Government and industry has a proven model for establishing and creating markets. As wood use continues to grow there, what it will do is drive up prices for fibre around the world globally. Increased use of wood anywhere in the world is good news for B.C.”
Tolko’s Hardy Wentzel, who is the VP of Sales Marketing and logistics for that company, echoes Guthrie’s comments. Tolko’s offshore exports have more than quadrupled since 2007, now representing about 47% of its production. Wentzel says part of that growth can be linked to the fact it can take just 5-7 weeks to move product from sawmill to China.
Chris McIver of West Fraser says the success in exports to China, could not have happened if forestry companies didn’t work together “We are fierce competitors, but we really came together on making this happen”. West Fraser now has just over 30% of its product exported off shore.
Guthrie says he is confident the U.S. will rebound and will have to turn to Canada for lumber as it moves to meet the demand for housing, "The next ten years look very good for the lumber industry."
The Natural Resource Forum continues today with Premier Christy Clark the keynote speaker at lunch.
Comments
Ho Hum. No mention that the beetle killed timber and the stumpage rate of .025 per square metre, allowed these companies to sell low grade lumber to china at cost, or just a little above cost.
On the one hand they talk about losing money because of the low price of lumber, but on the other hand they wax philosphically about the great inroads to China.
Approx 90% of the lumber sent to China is rough lumber used for concrete forming. I suspect that its the sawdust, and chips, that are a byproduct of milling this lumber, that kept the mills running. The pulp mills need the chips, and the pellet plants need the sawdust, and the co-generation plants need the hog fuel. If you were to shut down any more mills in this area, you would have to close down the pellet plants, and go to whole long chipping to keep the pulp mills running.
Funny they fail to mention that they have been selling some lumber into China for over 20 years. They also fail to mention that the Russian embargo of 25% on exporting logs to China had a huge effect, on the Canadian market. Once the Chinese lost this source of fibre they turned to the Pacific coast for fibre.
If the Russians lift the Embargo (and they probably will) then there will be another shift. In addition as the price of lumber increases in the USA the amount of **cheap** lumber shipped to China will decline.
Guthrie states **Wood frame housing has yet to take off in a significant way** This should tell us that without a doubt the lumber to China is mainly for concrete forming. So unless the Chinese change the way they build housing units (and they probably wont) I dont see any significant change in how we do business. The USA and Japan, will continue to be our best customers for high grade lumber.
The CEO’s are giving credit to the Liberal Government for the increase sales to China because they are great supporters of the Liberals, and are fully aware that the libs need all the help they can get.
China has 100 million brand new empty housing units, they are on the cusp of the biggest housing bubble burst in history.
http://www.youtube.com/watch?v=pbDeS_mXMnM
More details here, not corporate spin designed to prop up the most economically stunned Government in BC history.
http://powellriverpersuader.blogspot.com/2011/10/christy-clucking-clark-falls-into-asian.html
A the rate logs are being shipped out of forestry towns like Fort St.James,the future does NOT look that bright at all!
Log exported through Port of Prince Rupert.
2010 342265 Tonnes
2011 510654 Tonnes
67% increase.
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