VANCOUVER: The chief executive of Canfor Corp. says the industry is looking for more permanent mill closures to cut production and lift limp lumber prices, but believes his company has made deep enough cuts so far to respond to current market levels.
“There's no doubt about it that permanent closures is what the industry is going to be looking for down the road to get some stability into the pricing,” said Canfor president and CEO Jim Shepard.
Vancouver-based Canfor, Canada's biggest softwood lumber producer, has cut its production by about 25% to 2.9 billion board feet from 4 billion in 2006 by indefinitely closing mills and production lines and cutting shifts.
Canfor closed its panel and fibre mill in New Westminster, BC earlier this year and plans to indefinitely shut its Chetwynd, BC, sawmill and PolarBoard oriented-strand board mill in Fort Nelson, BC, once existing log inventories are used in a few weeks.
The company cancelled a plan to close its Tackama plywood mill in Fort Nelson after getting cost-cutting concessions in talks with its union, suppliers, contractors and provincial officials.
Canfor has also cut overhead and administration costs, including a 25% salary rollback for employees, including executives.
The Vancouver-based company has been hammered by the collapse in the US housing market, alongside other lumber producers. Troubles have been compounded by a 15% export tax on softwood going to the US and strength in the Canadian dollar that has eroded the value of exports.
Revenues were $648.5 million, down from $850.6 million a year ago.