Sharpening the Saw

Its been said that there is power in staying connected to other people in your industry. My fifth consecutive B.C. Council of Forest Industries (COFI) Convention, held in Prince George last week, provided again opportunity to return with ideas to sharpen skills and stay abreast of a rapidly-changing lumbering landscape. The listed takeaways include a surprise at how few marketing and sales types were among more than 550 delegates who packed the Prince George Civic Centre for agenda presentations:

-The prevailing politically-charged environment these days seemed to shape tempered viewpoints from panelists on several fronts. Folks looking for Interfor President & CEO Duncan Davies to deliver pertinent softwood lumber dispute insights were disappointed. His confirmation lauding the work the Softwood Lumber Board is doing to grow softwood lumber demand did not excite. Fortunately a pointed question from the audience, asking why Canadian producers would support the SLB when a number of U.S. members are working to constrain market access, elicited topical response: “The tariffs are wrong. Whether or not the economy is helping to soften the blow, the tariffs should not be there. Inspite of trade matters, we need to continue to invest in our biggest market.” From West Fraser President & CEO Ted Seraphim: “Today, we’re not worried about the softwood lumber dispute. But if the market were weaker, we’d all be worrying about it. So we need to grow demand.”

-While there wasn’t a panel discussion dedicated to timely transportation concerns, Federal Minister of Transport Marc Garneau addressed the situation. He said CN and CP need to do better. He pointed to Bill C-49 (Transportation Modernization Act) but his reporting an improvement in railcar capacity for grain fell flat among an audience concerned with lumber shipments. From Beth MacNeil, Assistant Deputy Minister, Canadian Forest Service: “Without infrastructure, there is no trade.”

Jock Finlayson, Business Council of B.C., talked about the uncertain, shifting economic landscape in this province. He referenced the impact of uncertainty on investor confidence and how Canada is lagging in healthy capital formation. He sees little upside in residential construction in Canada, while pointing to “fundamental organic demand for housing growth” in the U.S. 30-39 age group. He suggested recent fiscal stimulus in the U.S. is unnecessary and poorly timed. Presently 300,000-400,000 manufacturing jobs in the U.S. are unfilled.

-According to Paul Jannke, Forest Economic Advisors (FEA), the U.S. labour force is the single biggest constraining factor in U.S. sawmill production.

-It was refreshing to hear from B.C.’s new Minister of Forests, Doug Donaldson, but otherwise nothing noteworthy recorded.

-An excellent presentation by Kevin Pankratz, Senior VP, Sales & Marketing, Canfor addressed export markets and the global outlook. Interesting to learn that the R&R market is bigger than new home construction. Expansive growth in hybrid construction, off-site construction, and building automation in all markets reported. “Governments everywhere will increase focus on green building initiatives to meet emission targets.”

-Most edgy presentation (“Fibre Supply – It Is What We Make It”) goes to Diane Nicholls, now two years into her job as B.C.’s Chief Forester. In the aftermath of the Mountain Pine Beetle, she seemingly referees the constant fight for access to quality fibre, further complicated by the Spruce Beetle presently eating into the midterm timber supply.

-The Forestry Jobs for Today and Tomorrow panel might have been one of the highlights. Best moderator of the convention goes to Sandy Ferguson, VP Corporate Development, Conifex. It was interesting to hear industry (Canfor/Interfor/Tolko/West Fraser) is working to rejuvenate parts of the BCIT Wood Products Manufacturing Program I graduated from, which has been dormant since 2003. From Kara Biles, Manager Learning & Talent, Canfor: “Aggressively advocate for diversity and inclusion in your company; diversity is a competitive differentiator shifting market share toward more diverse companies.” Derek Orr, Business Development Manager, Carrier provided update on planning underway for a Ranger Program aimed at development/training of Aboriginal youth. Lots of sponsor traction for the program including Carrier, Dunkley, Conifex, West Fraser, and Canfor.

Premier John Horgan seemed pleasantly surprised with the warm welcome before delivering his keynote speech Friday morning: “Thank you for clapping.” He deftly navigated the politically-charged minefield.

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At first glance, the 2018 COFI Convention struck me as perhaps being lighter on content in comparison with past years. However, on second glance, it was rich in both content and opportunity, with plenty to digest. As one among four delegates from Dakeryn Industries, I again return from this convention with new and enlightening ideas. For us all, it was a worthwhile time to ‘sharpen our saws’.

Premier John Horgan with COFI President & CEO Susan Yurkovich (6 Apr 2018)

11 Questions for 2018

Here are 11 questions that Harderblog will be watching in 2018, in search of answers:

1. Will rhetoric of military strike pass the ‘tipping point’ into war with North Korea?
2. Will the Bitcoin excitement be fading, or prove to be a bubble?
3. Will the extreme weather patterns evidenced in 2017 be as pronounced in 2018?
4. Will Trump take steps to call a halt to the special prosecutor’s investigation into Russia’s interference in the 2016 U.S. presidential election?
5. Has integrity lost some of its lustre as a perceived prerequisite for leadership success?
6. As higher lumber prices effectively offset impact of duties, will Canadian major producers’ newly-hedged investments in U.S. production assuage any further concerns companies such as West Fraser and Canfor might have about the ongoing Softwood Lumber dispute?
7. Will Germany repeat as FIFA World Cup champions?
8. Will the powers that be acknowledge that the remanufacturing (value-added) segment of the Canadian forest sector is being unfairly penalized in the application of the AD/CVD?
9. Will softwood lumber be incorporated into NAFTA?
10. In view of the fractured supply chain, will lumber buyers abandon the “just-in-time” model in favour of securing coverage that satisfies longer-term projected needs?
11. Will broccoli, the least-trusted vegetable of 2017 among lumber traders and the general population, retain that notoriety in 2018, at the same time as the world watches broccoli’s favorability surge to number one in Scotland?

COFI Countdown

The sold out COFI 2017 Convention kicks off at 6:30pm this evening with an ice breaker in the stunning wood-infused architecture of the Vancouver Convention Centre. The largest gathering of the forest sector in Canada, we’re told over 600 delegates are registered this year, making this the biggest COFI Convention in ten years. The annual meeting brings attention and awareness to the significance of forestry to the economic well-being of the province. This year’s theme is Forestry for the Planet. Forest Products for the World.

The convention’s jam-packed itinerary ensures plenty to capture our attention through Friday. Tomorrow’s keynote speaker is renowned architect Michael Green who will present Increments of Change: from early tall wood buildings to a global movement. I’m also looking forward to the International Markets Review in the morning, and an afternoon CEO panel featuring Nick Arkle (Gorman Group), Duncan Davies (Interfor), Don Kayne (Canfor), and Ted Seraphim (West Fraser). On Friday, David Emerson, BC Trade Envoy to the United States, will discuss Canada’s Trade Negotiations Agenda with Kirsten Hillman, Assistant Deputy Minister, Trade Policy & Negotiation, Global Affairs Canada.

There’s a ton of other interesting panel discussions before we hear from BC Premier Christy Clark, keynote speaker at Friday’s closing luncheon. Speaking of politics, it’s interesting today to look back in the blog archives at Premier Clark’s keynote at the COFI 2013 Convention, a fiery speech which seemingly sparked her campaign’s comeback, leading to a surprise victory in the provincial election the following month.

A good preview of the COFI 2017 Convention is available in the podcast below. It includes a number of hard-hitting caller questions for Susan Yurkovich, COFI President & CEO. My 23 takeaways from last year’s excellent COFI Convention in Kelowna are available here.

Autumn Winds

Elizabeth Browning’s poem The Autumn refers to this time of year “Where waving woods and waters wild  Do hymn an autumn sound.” For many of us, this year’s first sounds of fall bring an unusual mix of seasonal notes:

Amid Maritime vacation memories not yet fully unpacked come reviews of first day of kindergarten for my four-year-old, a tumble and fall off the bus on day one of Grade One for my six-year-old, and newspaper reports suggesting the provincial government could seek exemptions from export duties for B.C. re-manufacturers that might come in a new Softwood Lumber Agreement with the U.S.
Ensuring access to timber for the value-added sector poses ongoing challenge. It is hoped the proposed exemption would provide incentive for big timber licensees to make more wood available to the value-added segment of the forest industry. Meanwhile, a report today from CIBC Capital Markets cites a source via Inside U.S. Trade who suggested SLA negotiations were closer at the 100-day period than they are now. 

It seems the “chilling autumn winds” that Browning talked about could deliver more than a bloody lip that highlighted my daughter’s Grade One debut. Amid election-fueled talk of softwood negotiations, lumber traders are bracing for the October 12th standstill expiry to deliver more tears than exemptions.

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Lunchtime! with Grandad – Mahone Bay, Nova Scotia (30 Aug 2016)

 

COFI Convention in full bloom

There’s always a chance that brilliance of cherry trees in blossom could upstage a Council of Forest Industries Convention scheduled for mid April in the Okanagan. However, the program itinerary ensures there’s plenty to capture our attention at the Kelowna meetings this weekend. COFI’s Convention website boasts that the largest gathering of the forest sector in Western Canada will attract 400-500 delegates “including industry CEOs, vice presidents and senior managers from continental North America and offshore, senior representatives from customers, suppliers, financial institutions, law firms, local government and chambers of commerce, Federal and Provincial Ministers, MPs, MLAs and senior civil servants, along with Premier Christy Clark… and me.

The Convention though, will see and hear the Premier, featured as closing keynote speaker. The annual gathering brings attention and awareness to the significance of forestry to the economic well-being of the province. My 25 takeaways from last year’s convention are available here.

COFI points out that “with 140 B.C. communities dependent on forestry, the 300 wood products manufacturing facilities in B.C. provide one out of every four manufacturing jobs in the province and account for 35 per cent of all commodity exports from B.C. COFI CEO and President, Susan Yurkovich, featured speaker at the upcoming NAWLA Regional Meeting in Vancouver April 21st, reminded us that “the industry directly and indirectly employs about 145,000 across the province, from Fort St. John to Vancouver, with one in 16 jobs in B.C. associated with forestry.”  All of this surely representative of an industry in full bloom.

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Lake Okanagan, Kelowna (April 9, 2016)

Tourists and Woodsmen

Aims of finding a fair balance between the tourism industry and forest industry is important to all. During the week, we make our living by marketing quality wood products produced from the forest. We facilitate shipment of those products around the world. On the weekends, we also enjoy being tourists in our own province with getaways into B.C.’s coastal and Interior woods. The unmatched natural beauty of our forest attracts visitors from around the globe. They’re expected to visit in record numbers this season. Of course, value of the loonie helps. Billions of dollars are at stake in both tourism and forest-related industries in B.C.

I was reminded of the challenges involved in balancing the interests of both industries by this article in The Vancouver Sun describing concerns over a clearcut visible from the Hope Slide Viewpoint. A Council of Tourism Association (COTA) report in 2007 entitled A Tourism industry strategy for forests provided recommendations for improving the identification, management, and safeguarding of scenic areas significant to tourism – particularly in the face of salvage logging beetle-killed wood. This 2011 report by the Association of B.C. Forest Professionals included recommendations that Visual Quality Objectives (VQO) should be a focus for nature-based tourism. Professional Foresters agree that “difficult trade-offs exist when considering the right balance following Mountain Pine Beetle damage. Increasing or reducing one value at the expense of other values requires informed discussion and debate… Public consultation in areas of high sensitivity is required to prevent undesirable outcomes.”

2015 COFI Convention – 25 Takeaways

  1. Most oft-used word at the convention: Certainty. Canfor CEO Don Kayne said China wants supply “certainty”. A member of the audience questioned how we provide that “certainty” to China in view of the Tsilhqot’in Supreme Court of Canada ruling. In another session, B.C.’s Chief Forester Dave Peterson said there’s been considerable “uncertainty” since 2000 regarding impact of the mountain pine beetle. “All these pieces of uncertainty are gone.. we’re past the point of doing math.. we know what it has done” (730 million cubic metres of timber killed). In his Forest Minister’s Address, Steve Thomson suggested working toward “certainty” on the provincial land base is a government priority.
  2. Second most oft-used word at the convention: Integrated. Integrated harvest regime, integrated forest bioeconomy etc. etc. “Bioproducts have the highest likelihood of success when integrated with existing primary timber conversion,” said Rod Albers, Manager Energy & Bio-Product Development at West Fraser. Lignin can be “re-integrated” into engineered wood products.
  3. You can make anything with lignin except money.
  4. Third most oft-used word at the convention: Partnerships. A key theme across all panelists.
  5. There’s a looming shortage of biomass in B.C. “We run out in 2023/2024/2025.” (Murray Hall Consulting)
  6. Dr. Trevor Stuthridge, Executive Vice-President FP Innovations confirmed the bioeconomy is the fastest growing economic sector in the world. The title of his presentation “Will Canada and B.C. play a role in the bioeconomy?” remains an open question.
  7. Torrefaction – the process of roasting and toasting – is not unique to Starbucks. Roasting wood into biocoal is now the 2nd generation of wood pellets (Jerry Ericsson, President of Diacarbon Energy Inc.)
  8. Dwindling fibre supply projections/forecasts/assumptions in the B.C. Interior are based on current management/conventional thinking. Are there ways that we can re-define current management?
  9. “More contraction” is a nice way of saying mills shutting down.
  10. “Biomass is everything that’s left over after everybody’s used everything they want” – Murray Hall Consulting. “There is no sawmill waste left – lets stop talking about it as an untapped source of bioeconomy growth.”
  11. Sandy Ferguson, VP Corporate Development at Conifex confirmed substantial work has been completed to resolve the equipment failure at the Conifex bioenergy plant in Mackenzie. Start-up date TBD.
  12. “Look out for China,” warned Brendan Lowney, Forest Economic Advisors. “I’m more nervous about China than I’ve been in many years,” added Russ Taylor, Wood Markets Group.
  13. “I can guarantee you 1.5 million U.S. housing starts but I can’t guarantee when” – Brendan Lowney
  14. “It’s impossible to forecast housing starts” – Russ Taylor
  15. Cost structure is changing in B.C. = rising log costs.
  16. Four shiploads of European lumber set sail for the East Coast in January. Changes in exporting countries FX resulted in 15% drop in SPF #2&Btr prices in China (Nov 2014-Feb 2015). There is reportedly now “little room for lower prices on Russian and European lumber,” according to Russ Taylor.
  17. Ecosystem-based management = balancing economic, environmental, and human well-being.
  18. Dallas Smith, President and CEO Nanwakolas Business Corp, and Nanwakolas Council, is one compelling speaker.
  19. The future of high-rise construction is wood. The proposed 18-storey wood-frame tower at UBC would be the tallest wooden building of its kind in the world.
  20. Oliver Lang, Partner at Lang Wilson Practice in Architecture, was the only speaker who addressed “urban culture” and the trend toward multi-family home construction in this urban context. While the moderator likened Lang’s presentation to “trying to drink water from a fire hose”, it was riveting. While wood is the sustainable, green building material, traditional single-family home construction is not the sustainable model of the future.
  21. “Minimizing waste created by our activity is a primary global environmental and social objective.” – Chief Forester Dave Peterson. “Given future sawlog supply reductions, it’s a very tricky balance point between the interests of existing and potential fibre users.”
  22. “There is no question we have fibre supply challenges.” – Mark Feldinger, Canfor
  23. China used more cement in the last three years than the U.S. did in the 20th century (FEA)
  24. Truck driver shortages are worsening. Only 12% of for-hire drivers are under the age of 30. Canada could experience a shortage of 25,000-33,000 for-hire drivers by 2020. (Matthew May, BST Transportation Group)
  25. This year’s CEO panel discussion featured Ted Seraphim, West Fraser and Don Kayne, Canfor. In a convention packed with punch, count this blogger among many who left that hurried luncheon session disappointed. The seated ‘fireside chat’ was void of any meaningful content beyond vague, shared “optimism” about the future.