Canfor Plan to Operate at Break Even

By 250 News

In discussing the second quarter results, Canfor’s new President and  CEO , James Shepard says the attitude within the company is changing.

Canfor suffered a second quarter loss of just under $39 million dollars, bringing its half year losses to nearly $81 million dollars.

When he took over as interim CEO,  the price of lumber was $235 dollars and the Canadian Dollar was at 90 cents U.S.   He says that was where Canfor drew the line in the sand and considered that the lowest point.  Since then, the company has been working at developing a plan that will have Canfor operate under those conditions but be able to break even.

Shepard says the 235/90 plan started with a 25% payroll reduction “That doesn’t mean a loss in heads, it was a payroll reduction, covering all levels of the company.  The Board of Directors took a 33% reduction in fees, all vendors have been working on our challenge to reduce their prices by 15%”

One of the first moves made by Shepard was to take the Corporate Jet out of service. “It was a million dollars a year service , but frankly I didn’t think it was appropriate to be taking a corporate jet into a town where you were going to talk about cutbacks.”

He says there were positive and negative surprises when he first took the job as interim CEO “I believe the right people are the most important asset any company has, and in my travels to all the mills and operations, I am very impressed with the calibre of people within Canfor.”   On the downside though, Shepard says there seemed to be a lack of direction.  “What concerns me most is how this company got off track over the last three years,  I sensed a lack of direction so my first priority was to get everyone moving in the same direction.”

Shepard says he wants his operations managers to forget about what is happening on the markets “Operations people shouldn’t be concerned with the markets, it is distracting, and they should be focusing on operations.  So I have come up with the 5 “m” strategy which has been met with some amusement, and that is; to mitigate the marketing mindset of our mill managers.”

Shepard says  the initial  decision to close the Mackenzie mill was  based on the fact that mill was losing $3 million dollars a month “It was like having a  patient come into  emergency on life support, the first thing you have to do is stop the bleeding, and  the most bleeding was coming from Mackenzie.”   He says he is very impressed by the spirit shown by the District of Mackenzie, all the employees at the mill and the government in working together to keep the mill open.

There will still be some curtailments at Canfor operations, the PolarBoard  osb mill and Tackama plywood  operations will  see downtime  for holidays.

Shepard noted that while the US home construction market has slipped, there is stability in the renovation market.  The sales to that part of the market remain at 20% of Canfor’s overall sales “It reminds me of my days at Finning, when there was a downturn, our new equipment sales slipped, but our parts and service held its own.”

Shepard is optimistic his 235/90 plan will produce positive results “I see the attitudes of this company are changing and I am very enthusiastic about the kind of numbers this company will be able to deliver in the days and months ahead. …….What we are doing is going through a transition, treating all mills as one mill with one goal and that is, getting product to market on time and on tally.”

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