Mackenzie sawmill reopens

Jul 27, 2009. /Lesprom Network/. It cost everybody something to get Canfor Corp.'s Mackenzie sawmill open again this week after it had been idled for more than a year, as reported by The Vancouver Sun paper. It's still not clear if the mill will start off making money, but for the long term, Canfor sees it as having the potential "to be one of our big, strategic mills," says company CEO Jim Shepard. Mackenzie is located north of Prince George. About 70 employees began powering the mill back up Monday, gearing up for its first full day of production Thursday. Although there is now only one shift, the company hopes to have operations ramped up to two shifts by the fall. Shepard said the mill's fibre supply has a good mix of high-quality timber, which will serve it well as the company tries to play in markets for higher-value lumber. It hopes to cater to big-box retailers such as Home Depot and Lowe's rather than trying to supply the decimated United States housing market. Shepard credited the mill's unionized employees, the district of Mackenzie and the province for coming up with a list of concessions that cut its costs, though he wouldn't say by how much. "Enough for us to start back up again, let's put it that way," Shepard said in an interview. "And this is not just a temporary start." He said Canfor constantly evaluates the operation of all its mills, assessing whether they are capable of breaking even, let alone turning profits. In June, Canfor announced the indefinite closure of three mills in Vavenby, Radium and Prince George. That put 570 employees out of work and left the company running at about half its production capacity of 4.9 billion board feet of lumber. In Mackenzie, however, he credited the "spirit of cooperation" of employees and Mackenzie's council in trying to get timber to the mill more cost effectively, that got it back up and running. "It was not just the [concession on] wage levels that makes this attractive," Shepard added. "It is the whole approach, so positive and upbeat, looking for ways to make the mill hum." But he wouldn't say whether the concessions are enough to get the mill breaking even. Canfor spokesman Dave Lefebvre said it costs companies money to keep mills sitting idle, and "sometimes you can lose money on a mill when you re-start it." Industry analyst Kevin Mason, with the firm Equity Research, said that with lumber prices at $172 per thousand board feet and the Canadian dollar at a disadvantageously high 92 cents to the U.S. dollar, it is unlikely the Mackenzie mill is breaking even. "At this point, the market doesn't need any more lumber," Mason said. "[The decision to restart] is not market-driven at this point." The decision seems more strategic, Mason added, for Canfor to tap the high-quality timber supply that the Mackenzie mill has and generate higher volumes of good timber while other mills are struggling with lower-quality pine-beetle-killed timber. "You don't want to risk losing access to that [quality timber around Mackenzie] as the pine beetle causes more issues at other mills down the road," Mason said. "You want to diversify some production out there." Mason said the U.S. housing market will eventually recover, sparking renewed demand for the lumber the Mackenzie mill is turning out. In the meantime, in a town where the forest industry has been virtually shut down, Mason said it is good to see a sliver of positive news. "Mackenzie, as a town, has been devastated with all the closures," he said. "For the workers and families, it's kind of nice to have some sign of life."