The softwood lumber agreement is now in effect, and the reality is rolling through the industry. 

The question being asked, when will it hit B.C.?

On the eve of the implementation of the agreement, Domtar announced it would be closing 4 sawmills, three in Quebec, one in Ontario, impacting 900 workers.

Abitibi announced four mill closures, impacting 680 people. Similar announcements of shut downs have been made by Weyerhauser and Tembec.

So far, B.C.’s sawmills have been spared, but one forestry expert says “stay tuned”.

U.S. Housing starts fell 6% in August and are sitting at their lowest rate in more than three years. There is a glut of lumber on the market, and the price per thousand board feet is low. The supply has far outstripped the demand.

Lumber companies in Canada have been biting the bullet and actually losing money on their products that have been shipped to the U.S. for the past three months because they knew they would be getting their duties returned.

Today, all that changes.

Today, the low prices, combined with the new tax ( which will NOT be refunded) make the loss on product too much to carry.

For example: If the price per thousand board feet is $275, a smaller producer that ships about 350 million board feet a year will have to pay about $12.5 million a year in tax. When a company is already shipping product at prices that are below the production cost, that extra million a month cannot be absorbed.

Experts speculate that in B.C. it is the smaller, less efficient mills that will be the first to face downtime.

Canfor spokesperson Lee Coonfer won’t say if that company has any shutdown plans “Our company’s position has always been that we will watch the market conditions and make decisions accordingly” Coonfer adds “We have to do what is in the best interests of the employees and the company. The markets are down, and we are monitoring the situation.”