By the end of 2019 Canadian company Kalesnikoff Lumber is starting the production of the glulam and the CLT – in 2020. Chris Kalesnikoff, Chief Operating Officer says that the opening of the new facility is going to bring the company on a new production level and minimize the risks of volatility of the US lumber market.
Lesprom Network: How did Kalesnikoff family come to Canada?
Chris Kalesnikoff: I am fourth generation Canadian. My great-grandparents were born in Canada, so my great-great-grandparents were the ones that traveled over. Our descendants chose not to bear arms in Russia, which led to their immigration to Canada. Most of my ancestors settled into the prairies of Canada. They come over to British Columbia for work opportunities on a railroad. They continued to migrate west into British Columbia until 1939, when during Depression my great grandfather and his two brothers saw an opportunity to harvest firewood for the boilers for the coal mining company. From there they took off and started their own sawmill.
My great-grandfather and his two brothers started out business in 1939. It has started in the same area we are in right now, the interior of British Columbia. My grandfather began in the business probably around 8 years old. He was the head saw cutter by the age of 18 and the general manager by the age 20. Mainly because he was the one who could speak English. As our ancestors are all Russian descendants, my great grandfather and his two brothers were not that great in English. When my grandfather came along, he was fairly fluent so he was able to speak with the banks, the local companies and really helped to grow the business. Since then, we moved on a couple of different sites. On the mountain site we harvested the timber and in early sixties there was really bad forest fire that came up and almost destroyed the entire mill. We were able to salvage portions of it and continue on. By 1970 we relocated to our current facility, which is probably just about 20 km away from the original site, and began production with a single circular saw headrig. We have been on this site ever since.
Lesprom Network: How your sawmill was expanding throughout the years?
Chris Kalesnikoff: In year 1999 we expanded into the reman facility which is located just 5 km up the street from the main sawmill. In reman facility we tried a bunch of different products. We were making tone wood for guitar tops and piano boards, we were making edge glued panels for a while and now our primary focus of that facility are products like softwood paneling, softwood flooring, softwood exterior wood siding and then molding and trims. We have done couple more expansions to our mill throughout years. We had big expansion in 1986, when we installed our first small log line, our first canter line. And then in 2012 we upgraded our mill again and we installed the new quad circular sawmill line, new optimized edger and trimmer. Just recently we announced our expansion into mass timber.
Lesprom Network: What is the managing structure of the company now?
Chris Kalesnikoff: Our business is still 100% family owned and operated. My grandpa passed away in 2006, and my dad has been the president and CEO since that day and currently myself and my sister are both executives in the business. We represent the fourth generation of our family.
Lesprom Network: What are the main products for the facilities that are already operational?
Chris Kalesnikoff: Our sawmill is focused on specialty products that we supply globally. We currently employ about 150 employees. We produce around 150,000 m3 of lumber products annually. We are not a large producer, so we compete against a lot of large corporate companies in Canada. That is why we are always trying to focus on specialty products.
One of our core products is structural lumber for Japan. Japanese marketplaces are probably one of the most important customer base right now for us. They account for about 30 to 40% of our business. Some of the other products that we are already making are structural lumber for engineer products. We make lamstock which goes into all laminated beam products. We supply all the large laminated beam companies in Canada, and some of the US based companies with the lumber they need.
We make some high quality 1 inch boards like highline boards that people would buy to build cabinetry products, shelfs and things like that. We cut a wide range of solid timber sizes made of Douglas fir. We cut up to 9 different species annually, so we need to stay diversified in our markets. We try to focus on cutting no standard/specialty products outside of standard dimensional lumber because we cannot compete against the large companies in these product ranges.
Lesprom Network: Tell us about the new CLT and glulam facility
Chris Kalesnikoff: This new facility is going to be focusing on new engineer products – cross laminated timbers and glulam beams. Basically, what we are doing is taking our fiber one step further. So rather than selling it to the companies that are making this products we will now be engineering and making it ourselves. It is a 110 thousand square foot building, basically the size of two football fields. We will be increasing our employment by an additional 50 people.
We have partner with several European equipment suppliers from Denmark, Germany, Slovenia and Italy. They are experts in what they do. We are going to be one of the only CLT companies in North America that is fully integrated meaning that we control our own log, we control our own timber, we harvest it, we control our own lumber and now we will be able to make our own engineered products. Most of the other companies in North America right now have to purchase their lumber from other sawmills. We will be able to control our costs but also control our quality and delivery. We will have the highest-quality product available.
Lesprom Network: Can you name the suppliers of the equipment for the new facility?
Chris Kalesnikoff: The main group that we partner with is Kallesoe from Denmark and they are providing the majority of the handling and press equipment. That is all the equipment for the glulam beams and CLT lines. Other groups involved in the project would be Ledinek, Slovenia, Uniteam, Italy, Microtec, Italy. There is also a Canadian company Conception RP - they are the finger joint supplier. So these are core groups that we are working with.
Lesprom Network: Why did you feel the need in the recent rebranding with a new logo and tagline 'Timber Inspires'?
Chris Kalesnikoff: This year is our 80th year in business, which is something we are very proud of. And we want to be known for more than just a sawmill. Sawmilling is our core business and it is what allowed us to survive 80 years but now we want to be known as a group that values timber, everything it can do and supply all world markets with it. So rather than being known globally just as a sawmill, we have decided to rebrand so that people understand who were are, understand all the different products we create. We are not promoting just the sawmill but what we do in out woodland and how we manage to harvest our log and timber supply, our wood engineered products, our value added products, as well as our structural products. We thought it would be very important to get out there and really rebrand so that everybody knew that we’re much more than just a small sawmill.
Lesprom Network: Will the change affect the old facilities?
Chris Kalesnikoff: No, it won’t. If anything, it will help to strengthen it. We will have better security in where our timber will be going. People have witnessed that the US marketplace has been very volatile over last two years. So it is important for us now to be able to use more of our own wood farther downstream rather than having to sell a portion of that or all of our wood to the open market. Now we will be able to consume the large portion of that ourselves, and we will have less wood that has to be sold on the open market. This way we will minimize the danger of the volatility of some of these marketplaces.
Lesprom Network: Where the new facility is located?
Chris Kalesnikoff: 5 km up the road from the main sawmill, on the same property our reman facility is already located on.We will now have two main operating facilities that are very close. One would be our sawmill and the other site would be our reman facility as well as new engineered wood products facility. There are different sites but our business is all under one umbrella.
Lesprom Network: Why CLT?
Chris Kalesnikoff: Like I said before, a large volume of our lumber was already going into those products. A lot of glulam beams that were made in Canada were out of our fiber, so we already have the specialty in sawing, kiln drying, finishing and creating this lumber. This was a natural next call for our company. We thought that if we didn’t grow, if we didn’t take risk we won’t be able to control future of our business. In British Columbia timber and log supply is shrinking. We have experienced very bad wildfire seasons in our area; we had issues such as mountain pine beetle that has destroyed a lot of timber. We knew that we had to do more with the timber we have. We knew that we were not going to be able to grow our sawmill. We were only going to mill so much timber every year. So we had to continue to grow down the line. I think the mass timber construction is an outstanding market. It is growing very rapidly in North America, and we have an expertise of a proper lumber that is needed to create panels.
Lesprom Network: How do you see the development of the demand on mass timber in the North America?
Chris Kalesnikoff: Both Canada and the United States are adapting the new building code variances so mass timber is growing very rapidly. If anything North America needs right now is more available supply so we anticipate helping join the marketplace and helping grow the market and there’s room for many other manufacturers as there are a lot of projects that are coming on board. A lot of States and Provinces are starting to mandate mass timber in some of their public jobs. A lot of the big, large tech organizations like Amazon, Google, Microsoft are very supportive of using mass timber. More and more of this large scale projects continue to come on line. What North America needs is more available supply. We think that the marketplace is just going to continue to grow very rapidly in the coming years.
Lesprom Network: What about the resistance from concrete and steel manufacturers?
Chris Kalesnikoff: It is something that will continue to be there, but because of so much government support it is not a battle that we have to fight. Many projects are being adapted and there are lots of builders, developers, architects who would prefer to use wood, so I think there is going to be a place for both. If mass timber was to take maybe 5 to 10% of the overall concrete and steel marketplace that is substantial for mass timber but it is not replacing concrete and steel. I am sure that concrete and steel companies would prefer to do some of the projects that are going to be mandated for mass timber but the world changes. I think that the use of the hybrid with mass timber and concrete working together is going to be the future of buildings.
Lesprom Network: What are the investments for the new facility?
Chris Kalesnikoff: We are under construction right now. In project we will have our initial glulam beam lines operational at the end of this year and our CLT will be operational by June 2020. In total we are investing $35 million into the new facility and the paybacks will be dependent on obviously how fast the market’s grow. We thought it was a natural risk to take for us to stay alive in the business, so we feel like it is a smart move and there is going to be a strong payback in it. However, it is yet to see until we actually start to get off the ground. We will not know exact time for the payback until we start to secure order file and see what we actually are able to secure for the plan.
Lesprom Network: How do you sustain forest?
Chris Kalesnikoff: Forest health is a huge focus for us. It’s something that we continue to try to evolve in British Columbia. That is something we want to be pioneers of and leading the way on so we need to go and manage our forest for continued sustainability. There are lots to balance in British Columbia so we are out there trying to do our part and helping manage healthy forests.
Lesprom Network: How much does it cost to get the log to the sawmill?
Chris Kalesnikoff: Getting the log to the mill is our largest cost at the sawmill operation. The raw log delivered to our mill site accounts for roughly 65% of our total operating cost. These cost include planning, harvesting, building infrastructure, reforestation and overall forest health management. In some cases we have to buy the log from other companies. So the log is our biggest cost.
Lesprom Network: How do you see the future of Kalesnikoff?
Chris Kalesnikoff: For us British Columbia is a unique place in the world. It has the most premium timber available but it’s short in supply so we want to be pioneers and continue to grow our business. I think our family is dedicated to continue to grow this business; we have entrepreneur roots. I know myself and my sister as fourth generation want to make sure that we help continue grow this business no different than three generations before. We are very proud of being part of this business, and we are very excited about the future. We think we will continue to be the one of the most diverse timber companies in the North America, and we hope to supply global markets.