West Fraser Preparing for Economic Recovery

Wednesday, July 22, 2009 01:10 PM

Prince George, B.C.- The President and CEO of West Fraser Timber, Hank Ketcham, says his company is positioning itself to be ready when the economic recovery comes.

Ketcham described the current economic scenario in the lumber industry as “The worst lumber depression since the 30’s” he also said “The lengths and depths of this depression are unprecedented.,"

Ketcham says West Fraser will stay the course, "Our strategy to navigate through these very tough times is to reduce costs, control production and preserve cash".

Having said that, he also expresses some optimism that the market has bottomed out, and expects the market will rebound when the current surplus of housing in the United States is consumed.

Ketcham was making the comments during the conference call this morning to discuss his company’s 2^nd quarter results. Those results show a $39 million dollar loss in the second quarter.

West Fraser was operating it’s lumber divisions at 73% of capacity producing 528 million board feet, that’s down 20% from the normal production rates.

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Posted on Wednesday, July 22, 2009 01:10 PM in News by 250 News

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Comments

Posted by: DPJ on July 22 2009 3:03 PM

73% capacity is not bad considering the economic situation. I think Canfor is at about 50% if I remember correctly.

Posted by: Born in BC on July 22 2009 4:34 PM

Is producing a higher percentage of capacity really a good thing when manufacturers are loosing $100 per thousand?

Without having any inside info I would suggest the following:

Canfors Strategy: Manage cash to ensure survival until the market turns around.

West Fraser's Strategy: Keep making lumber and pretend nothing is wrong and pray the market turns around before the banks cut us off.

Some idependents have made out really well in the past using West Fraser's strategy, the difference this time is the length of the downturn. In the next year we will see who has set themselves up right and who will join GM, Chrysler and Abitibi in court protection from its creditors.

Stay tuned.