Lumber Sector Counts Its Rings

March 5, 2015

By: The Working Forest Staff

While the decline in oil prices have some holding their breath, other industries — like forestry — are exhaling just fine.

Thanks to a high demand for forestry exports, a weakened Canadian dollar and the climbing price of lumber, Canada’s forestry industry can count its rings as it’s expected to continue growing this year.

Despite plummeting crude oil prices, which may pose a serious challenge to the oil industry, Canada’s forestry sector’s confidence has boomed, said David Lindsay, president and CEO of Forest Products Association of Canada.

“The forestry sector saw 10 per cent growth in export sales last year … and employs about 200,000 employees across Canada,” Lindsay said, which is a trend he is optimistic will continue.

Canada’s forest industry is the world’s second largest exporter of forest products, primarily sending goods to the United States, China and other Asian markets.

“The Chinese economy has grown quickly, and we’ve promoted the use of wood, pulp and forest products in China for 10 years,” Lindsay said, adding that that promotion has really paid off. Currently, 20 per cent of all Canadian forestry products exported overseas are destined for Asian markets.

But still, the majority of Canada’s forest exports — 65 per cent — arrive in the United States, which can be largely credited to the country’s stabilizing economy, stronger dollar and increasing housing starts.

“Hiring has been a real challenge for us,”

According to the U.S. Census Bureau, new housing starts in the U.S. increased by roughly 500,000 units between 2009 and 2014, to 1.1 million units. At its highest, the census bureau reports new housing starts in the States reached roughly 2.3 million units in 2006.

“The (weakened) dollar is not always good for everybody, it is good for the export market,” Lindsay said. For Canada’s forestry industry, that’s obviously a good thing.

This, in combination with the Canadian loonie dropping to 77 cents on the U.S. dollar (on Jan. 27), forestry producers can sell a higher quantity of their in-demand products — which is sure to make lumber companies, like Golden Spike Lumber in Spruce Grove, ecstatic.

“In the States, they’re going to be looking for less expensive plywood, oriented strand board (OSB) and lumber,” said John Besler, owner of Golden Spike Lumber.

“So certainly, we are already seeing a lot of what’s made up here head south.”

According to the Natural Resources Canada weekly price monitor, the cost of spruce, pine and fir lumber is hovering around $477 per thousand-foot board, up from the 2014 average of $459. And OSB is sitting close to $210 US per thousand square feet, just dollars away from the 2014 average of $224.

And as the economic scales currently tip in the favour of companies like Golden Spike Lumber, the deal may get even sweeter.

Alberta business owners have struggled to attract and retain employees for yearsbecause of the extremely low unemployment rates that have challenged the province. But, as oilfield related companies are forced to make difficult staffing decisions, that same skilled work force may be available to work in the forestry sector.

“Hiring has been a real challenge for us,” Besler said.

“This will really allow us to build a smarter (crew). When we put out a ‘help wanted’ ad, we might get two resumés in a week. Now we get two every day.”

Admittedly, they may not all be more qualified applicants than what he sees now, but for Besler, selection is power when finding and mentoring a strong, knowledgeable team.

“It will be harder for people who need work to find it because companies realize they don’t have to take the first applicant who comes through the door. I can actually pick and choose, interview and make sure I have the right person.” Spruce Grove Examiner

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