Time for Forest Industry to Think Outside the Box

By 250 News

As the  lumber prices  drop,  and the  forest industy  dips into one of its cyclical "troughs" there is the reality that  had  most forest industry  players NOT received a healthy refund in  softwood lumber duties in the fourth quarter of 2006, they would have  recorded  deep losses.  For some it would  have been the second straight  year of losses.

The very survival of  the industry could  rely  on "thinking outside of the box"  at least that is the  scenario painted by one market analyst.

Don Roberts, the Managing Director of C IBC World Markets says there are realities to be faced.  “We’re going to have less fibre in the BC Interior, the issue is how we deal with it.  We will likely see fewer pulp mills in the interior.” 

The number of pulp mills could be decreased even more says Roberts if the demand for bio-energy mass grows to a point where pulp mills have to compete with a dwindling supply of fibre.  That isn’t necessarily a bad thing says Roberts “Maybe we’ll make more money in that.  Maybe that will be a more stable form of business over time than you know, some of the sort of alternative industry we’ve got."

  Roberts says one thing is clear, the status quo isn’t working.  He says while the forest industry worries about the labour shortage and the impact that shortage is having on housing starts (for example, too few carpenters) he says there is an opportunity.  “If there aren’t enough carpenters, then eliminate the need for them.   We can build pre-fab homes so the need for a carpenter is reduced.”

Roberts points to an American company as a prime example of how a company can make a positive turn.   “There is a U.S. company called Universal Forest Products, this engineered wood company now does the installed framing for builders and their profits are consistently higher than any Canadian forest products company and they are stable.”

Robert’s  view isn’t  bleak, “ We will always  have the U.S. Market, and we will continue to feed that giant, but  in my view it shouldn’t be just the  traditional U.S. market,  we should try  to go up scale and that is easier said than done”  He points to the renovation market as an option but he knows  the changes won’t be easy “It’s not going to  be a one size fits all solution, you know we’re going to have to be a little more nimbler,  everyone’s being nimbler in order to survive.”

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