Updated: Oct 10
An Editorial Opinion – Right From The Stump, October 4, 2023
A more detailed version of this blog post was included in the recently published September 2023 View From The Stump newsletter
Written By David Elstone, GDBA, RPF and Jim Girvan, MBA, RPF
To say that the BC forest industry has seen change over the past 20 years would be an understatement. There have been several editorials and analyses done quantifying how many mills have or will close; how many trees have been killed; and how many jobs have been lost. We certainly have contributed to that discussion. Interestingly, few have looked at where we are today and where the BC forest industry might end up as timber supply continues to decline.
THE PAST: In 2005, the forest industry was running on all cylinders with a Crown allowable annual cut (AAC) of just under 86 million m3. The mountain pine beetle epidemic was at a peak with an estimated annual killed pine volume of 140 million m3. And a softwood lumber trade deal between the US and Canada was in the midst of being negotiated.
While there are pulp and paper mills, veneer mills, shake and shingle mills, along with pellet and biomass power businesses to consider, for illustrative purposes this blog post will focus on changes to sawmills.
In 2005, there were 111 sawmills spread across the province in the Interior and on the coast, ranging in size from specialty cutting mills to large production facilities. In general, sawmills were running full out, on a two or three-shift basis, particularly in the Interior.
PRESENT DAY: Skip ahead to 2023 with the mountain pine beetle era now past, the decline of the Crown AAC to approximately 62 million m3 and falling, a growing preponderance of wildfires, extreme volatility in markets and stumpage, implementation of the Declaration on the Rights of Indigenous Peoples Act (DRIPA) and the rolling out of new policies on old growth forest management, wildlife, etc. What we see today is a very different and much smaller industry.
Only 64 or 58% of the sawmills operating in 2005 remain in operation today. Furthermore, several sawmills have been permanently reducing output to a one-shift basis.
THE FUTURE: When we look out to 2035, a full 30 years after the industry peak, the picture is sobering…
Using a forecast for a province-wide Crown AAC of 38 million m3, only 47 or 42% of sawmills operating in the BC in 2005 will remain.
Just how small will be the BC industry become? While not listed in this blog post, in addition to a smaller number of sawmills, most certainly there will be less pulp and paper mills as well. If these trends continue, BC may fall from its long-held position as the top lumber producing province, to be replaced by Quebec as the largest producer in Canada!
A smaller industry than today brings into question aspirations for a future value-added manufacturing sector if there will be less primary product being manufactured.
Despite the ever-present prognostications of doom and gloom there are those still willing to invest in this province. Most recently, Canfor has announced finalized plans to invest $200 million to build a new state-of-the-art 350 million board feet sawmill in Houston, to replace the old mill that was operating on the same site. Mass timber manufacturing was not part of Canfor’s plan.
A recommendation to Premier Eby would be to ask Canfor what specifically brought them to a decision to move forward on their investment to better understand how his government can improve hosting conditions to attract more investment from the broader industry. Was this a unique one-off circumstance or are there some elements that helped Canfor come to its decision that could be replicated?
The BC government wants more investment to transition the industry, and specifically to add more mass timber manufacturing. Yet it clearly still does not have a viable plan to make that happen. In fact, the government has only just recently put out a request for proposals to investigate the potential supply needs for mass timber manufacturing in this province, (a little late to the game).
Unless a plan can be developed to cut short the current trends, a much smaller industry is forecast by 2035. Is this the future that today’s politicians have envisioned? It would seem so as the likelihood of realizing this forecast is high!
The forecasts provided are based on editorialized opinion. A more detailed version of this article, revealing changes in capacity for the Coast and Interior, including for pulp and paper mills and veneer mills in addition to sawmills was recently published in the View From The Stump newsletter. Should you have an interest in a more detailed forecast, including on a regional basis, please contact us for your specific project needs.
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Posted by David Elstone, GDBA, RPF
Publisher, View From The Stump newsletter
Managing Director, Spar Tree Group Inc.