Pipe Dream?

As year-end projections and valuations come into focus, strong views from the the Pulp, Paper and Woodworkers of Canada and the Wilderness Committee, published over the weekend in the Times Colonist:

“What B.C. needs is legislation that supports an innovative and adaptable forest industry that creates local jobs and moves products up the value chain. Raw-log exports must be banned. Strong laws should also be enacted to protect the ecological values of our working forests for future generations.

Instead of addressing our shortfall in sustainable forestry jobs, the B.C. government is narrow-mindedly fixated on the extraction and export of liquefied fracked gas. It is an unavoidable fact that B.C.’s proposed LNG industry would have to be fed by gas extracted using hydraulic fracturing, or ‘fracking.’

The impact of this industry is already visible all over the province’s former wilderness: In certain parts of B.C., the oil and gas industry clears more trees than the forest industry.”

Trees are the solution that LNG never will be – Times Colonist
(21 Dec.)

Railroading

An annual RBC Capital Markets survey of railway customers reveals little in the way of surprises for lumber traders. Freight service on North American railways has deteriorated significantly in the past year, according to the report. “Widespread dissatisfaction” with rail service is attributed to the impact of congestion and severe weather on deliveries last winter. About 80% of shippers surveyed expect trucking prices to increase by up to six per cent next year. Last year’s survey results forecasting “flat or modest” trucking price increases in 2014 turned out to be wishful thinking.

Of greater interest, a number of mills reporting that anticipated railcar shortages this winter are already upon us. On my recent customer trip, it’s clear a number of lumber buyers are wary of CN Rail’s new ‘priority destination’ initiative. The initiative, whereby centrebeam cars are allocated as High Velocity Lane (HVL) or Low Velocity Lane (LVL), went into effect mid-November. Under this scheme, railways and shortlines have been designated as either CN “friendly” or CN “unfriendly”. According to CN instructions, “If a mill is shorted cars, expectation is the customer would load all HVL ahead of the LVL” and “any shortages are applied to the LVL orders”. LVL lines reportedly include BN, UP, CP, NS, and CSXT.

Meanwhile, we’ve learned that the timing of a less than flattering report on railway delivery service has nothing to do with news that once again, Santa’s delivery transport of choice is expected to be a reindeer-drawn sled.

Mount Cheam, Chilliwack, B.C. – photo credit ejh

Efficiencies

There was a time (not that long ago I’m told) when lumber used to be loose-loaded, hand-bombed, into single-door box cars. It’s suggested that sometimes there were even claims borne out of dimension loads arriving at destination in a state of intolerable jumble of random lengths, adding exorbitant unloading costs. No doubt these were forerunners in the call for efficiencies such as unitized packages, paper or poly under top tier, or paper-wrapped shipments that are still the flatcar standard for most rail shipments today.

Technological advances have also shaped new efficiencies in lumber production that have revolutionized the industry – resulting, in most cases, in significantly reduced labour costs. The implementation of efficiencies represents creative energies that have shaped progression of development in the woods industry. Not surprisingly, the question of how many lumber traders it takes to change a light bulb is largely obsolete these days, when light bulbs themselves are more efficient.  From the following YouTube video, it’s evident that even the answer of how many guys it takes to load a bobcat onto a truck without a ramp might surprise. (HT: Ernie Harder)

Retiring Friend

Through relationships built over time in the B.C. Wholesale Lumber Association as well as the North American Wholesale Lumber Association, I’ve come to recognize that competitors in our industry can develop valued friendships – even before retirement. When Tom Carlson, longtime respected industry associate and friend announced his retirement this year I was pleased that he accepted my invitation to submit a guest blogpost this week. Tom’s understanding of lumber types was shaped early on in the woods of Vancouver Island. A good guy retires from a successful career in lumber wholesale distribution when he leaves his present post as credit manager at Taiga in December. But before he goes, he tells us:

1950 – With a crash and a shudder as a youngster I was introduced to the forestry business as the spar tree fell onto the general store a few short steps from our shack at the Leechtown lumber mill. Sitting on my mother’s hip I surveyed the damage and dreamed of the chocolate bars inside. My father captured the moment in the rare photo of the day below. It was a life of rides on steam locomotives, fresh venison, coal oil lamps, and visits to the Chinese bunkhouse for lichee fruit amid the smell of opium smoke. It was a simple time on Vancouver Island.

1966 – University of Victoria and smoke of a different kind.

1975 – Ralph S. Plant Ltd. and Widman Industries had joined forces with a new credit manager for Jack Hetherington, Paul Plant, and Charlie Widman.

1986 – Taiga Forest Products Ltd. was spreading its wings and needed a new credit manager for Pat Hamill and Doug Butterworth.

2014 – After 28 years with Taiga (and it may be true I was unable to find any other employment) it is now time for retirement and to let the younger and less experienced have some fun. When I began in business we used carbon paper and dreamed of the promised paperless office; now we have computers and can make bigger and faster mistakes. We sold full carloads of lumber and never dreamed of dealing in truckloads; those cars averaged far less than $8,000 – some as little as $3500 – with the prepaid freight being more than the lumber.

As I enter the next phase of my life I embrace two facts of life:
1. It’s not about what you do, it’s about your right to do it
2. If it’s not fun, go do something else.

leechtownlarge

Forest Industry Stereotype?

Some may contend that the latest YouTube portrayal unveiled by Canfor to dispel what they claim to be stereotypical view of forest industry people misses the mark. Feedback we’re hearing with respect to the message is a perceived focus that “there’s a common stereotype that people in the forest industry are just lumberjacks with big beards and flannel shirts” is barking up the wrong tree. It’s suggested the glossy presentation’s emphasis on outdated stereotypical characterization does little to dispel the so-called stereotype.
What do you make of Jacked About Lumber?

Visit to UBC

The Industry Insights panel sessions are described at UBC’s Sauder School of Business website as “a chance to provide students with insight into the variety of roles, opportunities, and areas for growth within your sector.”

Forest products marketing, sales and distribution was the focus of Friday’s session. I joined presenters Marc Saracco, Executive Director of the North American Wholesale Lumber Association (NAWLA), Ian McLean, Marketing Coordinator at Spruceland Millworks, Gerry Pankratz, President of Olympic Industries, Chris Gatson, Senior Scientist at FP Innovations, and Tracey Arnish, Senior VP of People and Culture at Canfor. BCom students with wide-ranging career aspirations ranging from organizational behavior and human resources to accounting and finance attended.

It’s evident that a sensitivity to resource sustainability – stewardship of the forest – factor heavily into general interests and potential forest industry careers. I especially enjoyed a brief time of networking with students after the presentations. Many had insightful questions about a career in lumber trading. I was able to share a little bit about my own experience with trading floor pressures, while being reminded that university classrooms still hold plenty of pressures of their own.

~2014 NAWLA Traders Market~

As the Organizing Committee Chair for next year’s NAWLA Regional Meeting in Vancouver April 2nd, I had the pleasure of meeting Executive Director of NAWLA Marc Saracco for dinner Thursday evening. Ian McLean, Organizing Committee Chair of the NAWLA Leadership Summit, also attended. Marc confirmed the show floor for the upcoming NAWLA Traders Market November 12-14 in Chicago is sold out – 235 exhibitors are registered. A Traders Market attendee list is available here.

Panelists 10-10-14

Chris Gatson, Ian McLean, Paul Harder, Marc Saracco, Tracey Arnish, Gerry Pankratz

Industry Insights

Clear Cutting Encore

The tree shredder on full display at Harderblog earlier this month attracted record views for a single post (see Clear Cutting, 12 Aug. 2014). A comment received today suggests the dramatic images of whole trees being reduced to pixie dust demand more information. “Why are they chipping instead of logging, which is the highest and best use?” the reader asked, pointing to environmental concerns. Good question. I decided to phone Denis Cimaf, the industrial brushcutting company profiled in the video, to find out.

Owner Laurent Denis answered the phone. His YouTube video in question has gone viral – over 1.5 million hits. “We’ve made lots of videos,” explained Denis, “but that one blew up on the internet.” He explained it was a land-clearing job for a new housing development in the middle of Sherbrooke, Quebec. He acknowledged this particular operation was extreme, an opportunity no doubt to record the excavator mulcher’s full capabilities. With little merchantable value for lumber, a number of trees (“half a dozen”) were chipped. Denis was well-versed in forest stewardship, noting in the past that wood waste was piled up and burned, releasing stored carbon. Chipping, on the other hand, preserves the stored carbon benefit while amending the soil. As to biomass, it was interesting to learn that transporting the wood fibre “over 30-35 miles” makes it difficult to recover value at the mill, according to Denis.

We’re told at their website that Denis Cimaf is “a family-run company that adheres to the core values of respect for the environment, innovation, and customer service. Well established in Canada, the United States, Brazil, Chile, and Japan as a leading manufacturer of vegetation control equipment.”

Timber Skyscrapers

As a lumber trader, stories involving wood, the renewable resource, always catch the eye. Local media do a great job of covering innovations in the forestry industry… so we’re aware that referencing a story in today’s Vancouver Sun, in which local architect Michael Green’s visions for construction of 40 or 45 storey wood-frame buildings, is offering additional insight to local readers. However, we note that Harderblog’s vast international readership tells us visitors to this site have appreciated our referrals that usually have direct or general connection to forestry – not necessarily restricted to the price of studs.

Back in 2011, Oscar Faoro of the Canadian Wood Council told us of a growing national campaign to increase the use of wood in commercial, industrial and institutional construction (see post here). Today, technological developments involving wood structures are making news on all fronts (HT: R. Falletta). Bethany Lindsay of the Vancouver Sun reports here that architect Michael Green’s firm designed the Wood Innovation and Design Centre in Prince George, a seven-storey mass timber building at the University of Northern B.C. that was recently completed and should be cleared for occupancy in a few days. We’re told that Green will submit his proposal for a ground-breaking, new 16-18 storey wood building at UBC that will house the university’s school of architecture and landscape architecture. At the same time it’s reported that Green’s firm is working on “a very large timber project” in Minneapolis with a large developer that has traditionally built skyscrapers.
These are heady days in wood structure construction.

#COFI2014

The theme of this year’s COFI Conference, held Wednesday and Thursday in Kelowna, BC was Rooted Locally, Growing Globally: The New Forest Industry. Billed as Western Canada’s premier forest products convention, it attracted close to 450 delegates representing senior industry, government and customer representatives as well as elected officials from local, provincial and federal governments. The opportunity to represent Dakeryn Industries at this informative convention reaffirmed the importance of staying connected to industry developments critical to interpreting market dynamics. On Monday, I’ll post a “Top 25 Takeaways” from the past jam-packed two days.

COFI Convention 2014

Next week’s COFI Annual Convention, in Kelowna this year, is coming up fast (April 2-3). The convention is described at the Council of Forest Industries website as “the largest gathering of the forest sector in Western Canada.” It will be a tall order indeed to match the star-studded lineup last year in Prince George, which I reviewed in three parts: Part 1, Part 2, Part 3.

While scrolling through the program for Kelowna, I booked my ticket upon seeing this group of panelists in Session #8:

  • Ron Gorman, President & CEO, Gorman Bros. Lumber Ltd.
  • Ted Seraphim, President & CEO, West Fraser Timber Co. Ltd.
  • Anne Giardini – President, Weyerhaeuser Company Ltd.

We’re told the group will engage in an open forum discussion tackling questions presented by the moderator and from the audience. Each will be asked to present their vision on where the industry is going and how they are positioning their companies to meet changing consumer demands and markets. One panelist is to discuss the issue in context of the Asian market, one to discuss it in light of American market considerations, and one to broach the topic from a B.C. viewpoint. It’s suggested that the discussion would include such things as “potential partnerships”. Stakeholders in all levels of the industry including sawmills and wholesale distributors will anticipate hearing what the panelists have to say with respect to “potential partnerships”. No doubt interested participants will be asking questions aimed at discerning their own role, adding value in the industry’s future.

 ~Bulldozers and Bullwhips~

“Bulldozers work because they are incredibly heavy. It’s fine that they’re slow, they’re powerful indeed.
Bullwhips work because they are incredibly fast. The superlight bit of leather at the end of the whip travels faster than the speed of sound, hence the crack.
Organizations often thrive because they have huge mass, they are irresistible forces, going where they are pointed. But they don’t get there quickly. On the other hand, it’s quite possible to make an impact by being fast, light and quite focused.
Important to not confuse which you’re using, though. Trying to make your bulldozer go faster might not work out so well. And you can’t build a road with a bullwhip.”

– Seth Godin, 3-22-14 (HT: @lumbertribe)

Auditorium, Prince George Civic Centre

Auditorium, Prince George Civic Centre