Features Research & Innovation
What’s New… (January 01, 2007)

MILLS

CANFOR CUTS BACK

VANCOUVER, BC — As part of its holiday downtime, Canfor curtailed production at several of its BC-based wood product facilities, cutting 47 million board feet of lumber, six million square feet of plywood and 19 million square feet of oriented strand board from the market.

In addition to these curtailments, the company further announced plans to scale back at its Tackama plywood operation in Fort Nelson, BC, for an indefinite amount of time. As of January 2, 2007, the facility reduced its annual operating capacity by roughly 45 million square feet. Approximately 80 jobs were lost as a result.

MILLS

WEST FRASER BUYS 13 SAWMILLS FROM IP

VANCOUVER, BC — West Fraser has made a major purchase. For U.S. $325 million, the company bought 13 sawmills from International Paper, positioning the Vancouver-based company as the second largest lumber producer in North America.

The facilities, located in North and South Carolina, Georgia, Florida, Alabama, Arkansas and Texas, provide jobs for roughly 2,200 people and have a combined annual production capacity of approximately 1.8 billion board feet of lumber. West Fraser already owns two sawmills in the region.

“This is a long-term strategic move that strengthens our core lumber business, gives us significant new geographic, fibre and product diversification, and established West Fraser as a major presence in the U.S. South,” Hank Ketcham, president, chairman and CEO said of the purchase.

According to a report by CBC, International Paper entered the deal as part of its plan to focus on uncoated papers and global industrial and consumer packaging, as well as its North American distribution division.

MILLS

TEMBEC SMOOTH ROCK PERMANENTLY CLOSES

TEMISCAMING, QC — Tembec is permanently closing its Smooth Rock Falls market pulp mill. The facility had been indefinitely idled at the end of July, and now, after an analysis of the situation, the company decided that a future restarting of the mill is not feasible.

“The vintage and scale of this mill and its manufacturing costs relative to global competition, including the availability of affordable fibre, were all key factors in this decision,” said Yvon Pelletier, executive vice president and president of the company’s pulp group. “After thoroughly reviewing current and future economic conditions, we have made the difficult decision to permanently close the mill.”

The mill employed a total of 229 people. According to Pelletier, the company intends to provide both financial and services support to its workers.

“The company intends to act in a manner that will ensure that employees receive their severance pay in the next few weeks. The company will also take appropriate measures, including the provision of counseling and support services for affected employees.”

FINANCIAL

CASCADES BUYS DOMTAR’S STAKE IN NORAMPAC

MONTREAL, QC — Domtar is selling its 50% stake in Norampac to Cascades. The company feels the move will help it to focus on its fine papers division. The $560 million deal will position Domtar to reduce its financing requirements for its transaction with Weyerhaeuser.

“The combination of our packaging assets with Cascades’ has been a success for both partners,” Raymond Royer, president and CEO said of the deal. “While we considered our participation in Norampac as a good investment and always supported its growth throughout the years, this interest in Norampac had long been identified as non-core to Domtar. This transaction represents another step Domtar is taking to deliver on its strategic plan aimed at becoming a preferred supplier of fine paper products…and at monetizing non-core assets in an effort to strengthen its overall financial position.”

AWARD

FERIC, KRUGER PROJECT RECOGNIZED

POINTE CLAIRE, QC — FERIC and Kruger’s barge transport project has won top honours. The collaborative project on the transport of wood chips by barge rather than by road from Kruger’s North Shore sawmills to its Wayagamack mill in Trois-Rivires was awarded the top prize in technical achievement in the transport category and the jury’s award at the nergie Gala, organized by the Association qubecoise pour la matrise de l’nergie (AQME).

Kruger and FERIC first embarked on the undertaking in response to Kruger’s ongoing need to lower its transport costs. An economic and environmental impact study was undertaken on the feasibility of supplying Kruger’s two Trois-Rivires mills and its Wayagamack facility with chips transported by barge rather than by chip van, between Baie-Comeau and Trois-Rivires.

“Because of this project, 18,000-one-way trips by chip vans per year were eliminated between the North Shore and Trois-Rivires, representing annual savings of roughly 3.3 million litres of fuel and a reduction of some 9,000 tonnes in greenhouse gas emissions,” said Daniel Guimier, FERIC’s eastern region vice president.

ENVIRONMENT

IRVING RESPONDS TO POLLUTION PROBLEM

SAINT JOHN, NB — Irving Pulp and Paper’s mill at Reversing Falls in Saint John has exceeded its sulphur dioxide emission limits for the past four years, CBC reported.

Information from New Brunswick’s Environment Department confirmed the plant superceded its 3,000 tonne emission limit by approximately 500 tonnes every year since 2002.

Irving, in response to the problem, is in the process of building a new scrubber and lime kiln at the facility, which are expected to be operational by December 2007.

“It’s underway, there’s a significant portion of it that has been completed, but it is going to take time to complete the remainder,” the CBC reported company spokeswoman Mary Keith as saying. “It is a significant investment between eight and roughly $10 million.”

INDUSTRY

FORMER SKEENA CEO CALLS TO ARMS

VANCOUVER, BC — There exists an opportunity for the forestry industry in BC to drastically reinvent itself. So says Daniel D. Veniez, former CEO of Skeena Cellulose, and now president of DDV Enterprises.

In an article recently published in the Vancouver Sun, Veniez appealed to industry to revitalize and capitalize on current opportunities.

“It’s now time to leap ahead. Investing $1.2 billion to build a million-tonne super pulp mill (the size of Canfor’s three Prince George mills combined) in BC would catapult the industry back from the abyss,” he said. “A key pillar of the forest industry is the pulp sector. Yet it’s declining competitiveness continues to undermine the forest economy as a whole. Pulp businesses must radically strengthen their productivity. For that to happen, they must modernize.

“The pulp sector is at the wrong end of the global cost curve because there hasn’t been any investment in more than 25 years, and pulp operations are 40 years old or older. New technologies and our attractive chip prices can move us to the bottom of the cost curve. To do that, the province will have to reform our tenure system. Our current short-term tenure (timber licensing) system makes fibre costs uncertain. Stability around chip volumes and pricing is central to attracting investment dollars.”

Veniez contends the government should make a clean break from the industry. “The government should sell its Crown lands and get out of that business completely. Short of that, a long-term lease tenure system would be a hugely positive signal to capital markets, as it has elsewhere in the world. Moreover, investors will not have the confidence to step back in as long as there is a possibility that U.S. protectionists will renew the softwood fight. Real tenure reform is the only thing that will disarm U.S. protectionists once and for all.

The Liberal government has made great strides by gutting the Forest Practices Code and re
placing it with a simplified framework. It has allowed firms to consolidate and unproductive operations to shut down. The Canfor-Slocan and West Fraser-Weldwood mergers are examples. It is the reason why the BC industry is in far better shape today relative to others in Canada. But we must go further.

“Better partnerships with First Nations must be forged. Municipalities must put an end to their regressive property tax structure — a major disincentive to investment in their communities. Unions must throw out their sacred cows to become part of the solution, and management must stop seeing unions as the problem.”

AWARD

WEYERHAEUSER AWARDED FOR DISASTER RELIEF EFFORTS

WASHINGTON, DC — Weyerhaeuser’s disaster relief efforts in the aftermath of Hurricane Katrina earned it the Ron Brown Award for Corporate Leadership.

The recognition, awarded at a recent White House ceremony, is based on employee and community relations. The company, in large part, won the award for its guide entitled ‘Rebuilding a Community: An Employer’s Guide to Assisting Employees in a Disaster.’

In the days following the storm, Weyerhaeuser established a senior management committee, authorized donations of cash and building materials and appointed a disaster coordinator. The company is still at work helping Gulf Coast communities with disaster relief and support, to date totaling more than $2.8 million.

PAPERCLIPS

CLEANING UP DIRTY LITTLE SECRETS…

In a tireless campaign to transform the catalogue industry, ForestEthics made huge headway when it signed a policy with Victoria Secret. Parent company Limited Brands has pledged to no longer work with suppliers who source from the Rocky Mountain Foothills near Hinton, AB, nor from any caribou habitat range in Canada unless it has been certified by the Forest Stewardship Council.

“There is no question this announcement has serious ramifications for Alberta and the Canadian forestry industry as a whole,” said Tzeporah Berman, program director for ForestEthics. “The ecological damage from the impacts of logging, oil and gas development and mining on Canada’s Boreal Forest is becoming extreme and North American business leaders are watching. Canada’s Boreal Forest is one of our greatest defenses against global warming and it’s absurd it should be destroyed for catalogues.”

ForestEthics is hopeful the agreement and others like it will set new standards for the catalogue industry, in order to protect critical regions.

Not everyone is happy with the agreement, however. The Forest Products Association of Canada (FPAC) said the agreement adopts a very limited view of a vital issue.

“There is a complex mixture of influences on the Canadian landscape that are affecting forest management and biodiversity in the boreal and around woodland caribou specifically,” said Avrim Lazar, president and CEO. “It is unfortunate that ForestEthics has decided to present a very biased version of the issue. It has pressured Limited Brands into adopting a policy that discriminates against over 300 forestry dependant communities across Canada. These communities are committed to sustainable forest management and continual improvement.”