Shepherd says the strong balance sheet does give the company some resources to weather the storm, but says every step is being calculated and measured against the backdrop of the mountain pine beetle epidemic. 

"We want to be very careful how we utilize that cash, we still have many opportunities in our current facilities to upgrade...(but) we're also trying to factor in what it means to the beetle fibre when we make these decisions," says the Canfor CEO, "So we do have the resources to continue improving our assets and we will continue to do so, but we'll do so in the balance of fibre-supply, fibre-quality, market conditions and reducing costs."

"Although we have seen a deterioration in (log) quality that impacts not only in mill performances, but also on grade out-turns, we are still very confident that the supply will in fact be very, very stable for many years into the future."  Shepherd says, "It's really understanding how to best handle the deteriorated log quality coming into the facility and getting the most value out of it."

Shepherd says Canfor is also in discussions with the federal government over the new market-based timber pricing system that was part of the softwood lumber agreement.  He says the intent is to have the stumpage rate reflect the true market value of the wood, but says that's not the reality.

"Right now, we've seen a deterioration of fibre quality, as well as very low lumber prices, so you infer the stumpage should come down because the market is saying it should come down."  Shepherd says, if market principles are meant to be driving the new formula, then there's still a lag in it.