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West Fraser and Canfor closed mills in BC- Pine Beatle effects supplies

Forestry giants Canfor and West Fraser announced Thursday they will close two Interior sawmills next year because the pine beetle epidemic has gutted their timber supply.

The closures, which also involve a swap of timber harvesting rights between the two companies, will result in 434 job losses in the communities of Quesnel and Houston.

“Closing a profitable sawmill is very difficult, but there is simply not enough fibre remaining in the Quesnel area to support all of the mills in the community,” Canfor president Don Kayne said in an open letter.

The closure of Canfor’s Quesnel sawmill is expected to take place in March 2014. West Fraser and Tolko both operate sawmills in Quesnel.

The beetle epidemic peaked in B.C. in 2005, and has affected timber in an area five times the size of Vancouver Island.

Initially there was a rush to harvest lodgepole pine killed by the mountain pine beetle, in part an attempt to halt the beetles’ advance and also to capitalize on the damaged wood before it rotted. The effort was also fuelled by a booming U.S. housing market before the 2008 crash.

Both companies have had earlier mill closures to consolidate production while they tapped into a new Chinese market following the U.S. housing crash. However, this is the first example of profitable sawmills being closed because of the drop in timber supply caused by the pine beetle.

“While we considered every option — including harvesting areas currently constrained for environmental reasons or bringing in wood from longer distances — these would only have delayed the inevitable,” said Kayne.

West Fraser is closing its Houston sawmill some time between April and June of 2014. Canfor also has a sawmill in Houston.

The two companies are swapping timber harvesting rights in the respective communities; West Fraser gets Canfor’s timber rights in Quesnel, and Canfor gets West Fraser’s timber rights in Houston.

The deal allows the two companies to each shore up a sawmill operation in the Interior. The Houston mill closure and timber swap are part of what West Fraser terms its mountain pine beetle plan. The plan also includes large mill upgrades in Smithers and 100 Mile House.

Ted Seraphim, the president of West Fraser, said in a written statement that the pine beetle devastation continued to cut the availability of salable timber in the Interior.

“The shutdown of our Houston mill has been a difficult decision,” he said, adding that the company would help affected Houston workers find new employment.

But those jobs might be located in other towns in B.C. or Alberta, according to a company news release.

Employees at the mill, who work as equipment operators, millwrights, electricians, welders and other trades, were told Thursday afternoon they would lose their jobs, said Frank Everitt, a union president with United Steelworkers local 1-424. He estimated the pay of an average employee to be around $30 per hour.

“As a community they are certainly going to be reeling from this,” he said.

Sawmill closures due to the beetle epidemic were not unexpected, said Everitt, but workers had believed those closures were still years down the road.

“It wasn’t expected today,” he said.

While it may make sense from a business point of view to swap timber rights so companies have enough wood fibre, according to Everitt, it doesn’t offer much consolation to the workers losing their jobs.

Houston Mayor Bill Holmberg said there had been lots of rumours pointing toward a closure of the West Fraser mill, but nothing was definite until Thursday. He said the impact on the town would be huge.

“There’s 225 direct employees of the mill and then you take the spinoff of that — do the math,” he said. “It’s not gonna be good.”

There will also likely be some fallout for logging contractors and truckers in Quesnel and Houston.

Canfor spokeswoman Christine Kennedy said managers will be talking to contractors in Quesnel today (Friday).

In Quesnel, the closure is a disappointing end for a sawmill that had been closed once before, then resurrected in 2010 to ship all of its lumber to the emerging Chinese market.

In 2012, B.C. companies shipped more than $1 billion in lumber to China, up an astounding 1,500 per cent since 2003.

However, even that new market could not overcome the inevitability of a declining timber supply due to the beetle epidemic that had killed large swaths of pine in the Interior Plateau.

“We are extremely proud of what was achieved here, and are saddened to see it come to an end,” Kayne said of the Quesnel sawmill’s success in the Chinese market.

According to the B.C. Ministry of Forests, about 710 million cubic metres of timber have been killed since the epidemic began in the late 1990s, equivalent to the amount of timber that’s normally logged in a 10-year period in B.C.

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