Forest Industry Crystal Ball Reveals Different Visions To Different People:One Man's Opinion

By Ben Meisner

In the opinion of several lumber producers, the shoe is about to drop in the industry.

Pope and Talbot is just the beginning says one insider. That comment came on the heels of an announcement by Pope and Talbot  (who are seeking credit protection from their creditors) that they will take a two week down time at the Ft St James mill and two other facilities in B.C.

Canfor has already announced that over the next few months they will be taking down time at several of their mills.

That means that those mills that are operating close to the line will see down time.

Is it enough?  

No, says one lumber executive.  "When you see that we are cutting about 55 million cubic meters a year in this province and that figure has to be reduced to 25 because of the Mountain Pine Beetle you don’t have to be too savvy to know what’s in the works. Add that to the problem south of the border (declining  home building market) and the prospect that things are not going to turn around in the immediate future and you have another nail in the coffin." For the final blow he says, "Think about it, a Canadian dollar that is worth $1.02 compared to the Yankee Buck and ,Ottawa, we have a problem." 

That  perspective is shared by at least one other expert.  It has just been reported  out of Charlotte North Carolina, that  industry expert  Scott Twillmann (a  senior analyst  for  Forest2Market ) is predicting  a downturn so  severe that "We expect to see mills with high production costs begin to shut down for extended periods and some in the U.S. South will close permanently."

Another insider takes a different view. "Those mills that have made the changes and have deeper pockets will be around."  He adds " I think that most of the cuts that are to be made have already occurred and while there may be mills in the eastern part of Canada who may take a heavy hit , it shouldn’t happen here."

One  financial analyst says "We began to bring our portfolio into place some months ago in anticipation of a slow down and at present, especially in BC, we think we look pretty good. Those people who are operating, are very solid players."

Who’s right and who’s wrong,?  It won’t take long to find out .  If the dollar remains high , the inventory of US houses remains high, and the beetle killed wood dries up,  the fuse is short for the answer to the question.

I’m Meisner and that’s one man’s opinion

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