Canfor won’t be making its crucial decision on whether or not it will replace its closed sawmill here until the end of July, says a senior company official.
In an extended interview with Houston Today, Kevin Horsnell, the company’s senior vice president for its Canadian operations, said efforts are being focused on presenting a package to the company’s board for consideration at that time.
“We’re on schedule to get the information put together by the end of June. But the actual approval by the board will be at the July board meeting in late July,” he said.
A new mill is projected to take two years to build, a time Canfor calls a “transition period” from the current mill to the new one.
Horsnell also commented on a number of other factors connected with the decision to close its sawmill here.
High value products sought
The mill Canfor wants to build in Houston, depending upon the approval of its board of directors, would have the equipment to get the highest value possible from each log that’s processed.
That’s similar to the company’s sawmill in Prince George which counts Home Depot, Lowe’s and clients in Japan as some of the customers.
“When you walk into a Home Depot, the quality of lumber on the shelves is much higher that if you walk into a building store and look at a load of Number Two,” said Horsnell.
“So we’re focused on providing that higher value product to those customers, based on the specific specifications that they require.”
Benefits to continue
In an agreement separate from the current collective agreement with the United Steelworkers, Canfor will continue to cover its portion of employee benefits for the transition period from the current mill to the new one if the company does make the decision to rebuild.
“We will pay extended health,” said Horsnell. “So people that are off and have prescriptions … that was important to our employees to maintain that benefit through the transition.”
“The transition or the adjustment plan that we put in place with the United Steelworkers was contingent upon us getting to a positive outcome in our decision there to rebuild. If we don’t, then we’ll have to re-engage the union,” he added.
And based on the rebuild decision, the company will extend seniority indefinitely to allow laid off workers to be recalled when the new mill is ready. It will also assist apprentices who continue to attend trades school during that lay off period.
Pellet plant future
Canfor owns a majority interest in the pellet plant adjacent to its sawmill and supplies a majority of the raw material so that a closed sawmill presents a problem for the plant.
“We’re looking and working hard to find solutions to keep some capacity running at the pellet plant in Houston,” said Horsnell.
That involves UK-based Drax, a world-wide producer of bio-fuels it primarily uses in power plants. Drax owns a minority interest in the Houston plant and has a contract with Canfor to operate the plant. The Witset First Nation also owns a minority interest.
Drax also operates the pellet plants in Smithers and Burns Lake and that presents an opportunity to ship and share raw material, said Horsnell.
“It’s a matter of moving some fibre around on the short term basis that would help keep that [Houston] plant viable,” he added.
Horsnell did caution that decisions surrounding shipping raw material will ultimately depend upon distance, cost and efficiency.
Municipal property tax
Canfor is the largest municipal property taxpayer within the District of Houston, paying $1.67 million for its mill property and $220,000 for its pellet plant in 2022.
A permanent closure of the mill means Canfor can apply to reduce its municipal property tax bill to 10 per cent of what it was previously because of the drop in value of the property.
The potential for that to happen has the District of Houston asking fellow northern local governments to back its call to limit the impact to its tax revenues from major industry closures.
Should Canfor decide to build a new mill, it has agreed to continue paying municipal property taxes as if its closed mill was still operating.
“I’m fully supporting the district through the transition,” Horsnell said.
Government aid for a new mill?
A new sawmill would be expensive but Horsnell has ruled out against governments for financial assistance.
That’s because of the long-standing contention by American lumber producers that the price of Canadian lumber shipped to the United States is subsidized by the provincial government, presenting an unfair market advantage.
And that’s based on the provincial government setting the price for what it charges lumber companies to cut trees on Crown lands. American producers believe that results in a subsidy.
So far, American producers have been successful in having an import tax placed on Canadian lumber entering the United States to eliminate what they view as a subsidy-assisted price.
“Support from the government would be seen as subsidizing our industry our industry and our business,” said Horsnell.
“I would say it’s highly unlikely that we’ll actually would be even looking for any kind of support from the provincial government.”
Instead, and should Canfor decide to build a new mill, it will work to secure a fibre supply for the mill.
And that will happen by first backing bids by First Nations to acquire their own timber.
“We see opportunities, and are actively looking to expand, the mutually beneficial partnerships we have with Indigenous communities that complement and enhance our business. In some cases, Canfor’s economic partnerships include the procurement of goods, services and fibre from Indigenous nations,” said Horsnell.
“We would advocate for government support of Indigenous Nations who want to increase their participation in the local forest economy.”