Western Forest Products had told about 650 employees and contract workers across Vancouver Island their seasonal layoffs will continue “indefinitely.”
Forest workers in the North Island will continue because of the continued market for hemlock in Asia.
Last month, Western Forest Products shut down its downtown Nanaimo and Duke Point sawmills for a month. The mills were expected to reopen Jan. 19, but Duncan Kerr, WFP’s chief operating officer, announced the extended shutdown due to a waning market.
“We’ve come to the conclusion we’re going to have to do that for a while,” Kerr says. “The lumber markets continue to be poor. If you don’t have customers for your products, then it doesn’t make sense to keep producing.”
Western’s Ladysmith mill was shut down last year.The two Nanaimo mills will remain idle indefinitely and WFP’s five remaining Island mills will run at reduced shifts.
Kerr said the shutdown will affect about 250 Nanaimo workers at both mills, which had already been running reduced shifts for several months. He said the Mid-Island remanufacturing operation at Duke Point will remain open for now, employing about 40 workers.
Kerr said the move is due to a slump in demand for the cedar and fir the Nanaimo mills focused on. The downtown mill produces products for the Japanese market and Duke Point’s products relied on a strong U.S. housing market.
“That market has deteriorated along with the drop in U.S. housing starts. We’re obviously only curtailing as a last resort,” he said, adding that through the first three quarters, WFP’s losses were around $60 million.
Western is also indefinitely closing logging operations on the mainland coast, Port Alberni and the Queen Charlotte Islands, affecting about 450 contract employees.
“Those operations tend to produce more of the logs we’re having trouble selling right now,” says Kerr.
Bill Routley, president of United Steelworkers local 1-80, says Nanaimo workers will have to apply for Employment Insurance and look for other work.
“It’s an extremely difficult time for the workers and their families,” Routley says. “Everyone was counting on going back to work.”
Rick Jeffrey, president and CEO of the Coast Forest Products Association, says the association expects the situation to get worse before it gets better.
“Our view is that 2009 is probably going to be worse than 2008,” he says. “And 2008 was our worst year on record.”
Jeffrey says the coastal industry is hoping for a turnaround at the end of 2010.
He adds that B.C. has closed fewer facilities than other places in the world and as the demand for sustainable, energy-efficient products increases as the world struggles with global warming, demand for wood products will rise. Kerr says the forest industry relies on consumer confidence and the availability of credit.
He adds that, due to market instability, it is impossible to predict when the mills will go up again. “That requires a crystal ball that I just don’t have at the moment.”
But Kerr says North Island logging operations were not on the chopping block because Asia and China want what North Island loggers cut down: hemlock.
And hemlock is also sold to the Neucel speciality cellulose mill in Port Alice. Moreover, cedar is less plentiful in North Island forests than it is to the south.
“Those three areas [that were shutdown] produce a higher percentage of cedar and the market for cedar has become really soft,” says Kerr, noting some areas cut 30 to 50 per cent cedar.
“On a relative scale there is much less cedar coming from Northern Vancouver Island.”
As well, says Kerr, “Northern Vancouver Island logging operations are very efficient. “They run well, they run safely...they are cost- effective. In a competitive market they run a competitive operation.”
But Kerr warns that no one should feel confident about the future their job in the current market.
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