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Start 'er up

New lumber player Conifex recently decided to re-start its Fort St. James, B.C. sawmill, a move that required some extensive prep work since the mill had been shut down for 16 months.

By Jim Stirling

The re-opening of a sawmill operation in central British Columbia is as welcome as spring sunshine after a long, cold winter.

In a refreshing reversal of prevailing wisdom, Conifex Inc. has opted to start up its dimensional lumber sawmill in Fort St. James, and prime it and its people for full production when markets improve, and the economic recovery gathers momentum.

Conifex's bold initiative is buoyed by the full and enthusiastic support of the extended Fort St. James community. And it comes during a time when the forest industry and the communities dependent upon the industry most need an injection of confidence.

Conifex is a private Canadian company and a new player on the sawmill ownership scene in B.C. That, again, bucks a trend that has led recently to unprecedented levels of corporate concentration in the industry.

Conifex was formed in 2007 by its three principal owners, Ken Shields, George Malpass and Dave Roberts. Between them, the trio has extensive forest industry experience including service on the boards of several prominent forest companies and a continuing involvement within the investment services community. Three First Nations groups in the Fort St. James area have a joint 10 per cent ownership stake in the Conifex mill: the Nak'azdli, the Tl'azten and the Takla Lake First Nations. Conifex's Ken Shields has indicated the company plans future growth.

The Fort St. James mill had most recently been owned and operated by Pope & Talbot. It became available when P&T was forced into bankruptcy and closed the mill in the fall of 2007. The performance of the Fort St. James mill was never a factor in the company's financial woes. It was a consistently good producer as reflected in mill production that was
averaging 1.24 million board feet a day based on two eight hour shifts.

Conifex paid $12.8 million for the mill in July 2008, a bargain price considering P&T had spent $39 million acquiring the operation from Canfor Corp. in 2005. Canfor's hand had been forced by Canada's Competition Bureau which required Canfor to divest itself of assets in the wake of the company's acquisition and merger with Slocan Forest Products.

The Fort St. James mill had been down more than 16 months when Conifex decided early in 2009 to re-energize it. Unfortunately, you can't just plug it in, turn a switch and have an instantly functioning sawmill. An investment in time and care must first be extended to both people and equipment.

When the decision was made to prep the Fort St. James mill for the one shift a day start-up, it was the signal to start checking all the mill's equipment, says Roy Helmkay, vice president, operations for Conifex.

"We were consistently looking to resume operations," recalls Lorraine Ducharme, vice-president human resources at the Fort St. James mill. "And we knew that when we did, it would be on a one shift basis to start with."

The timing was key. "We knew the longer the mill was idle, the more it would deteriorate. And the longer it was down, the more we would risk losing people," explains Ducharme. And that, too, was an important factor.

Conifex's acquisition of the plant was based on analysis of the mill itself, available wood fibre, cost, potential and the good local management group and strong hourly work force, she summarizes. Conifex didn't want to lose any more of those good and experienced people than it had to. It worked very well as it turned out.

Several factors helped. For example, a government sponsored not-for-profit program provided employment so laid off workers could re-qualify for Employment Insurance.

The Northern Development Initiatives Trust also provided invaluable assistance by offering an avenue for reimbursement of Conifex's training costs. That was typical of how learning institutions, groups and politicians at all levels came together to do what they could. "The community has been great. Everyone has really supported us," says Ducharme appreciatively.

A further and significant example of co-operation is the agreement reached between Conifex and the Steelworkers Local 1-424, the union which represents hourly workers at the mill. Essentially, it involves a wage cut of about $2.50 an hour, which is tied to lumber markets and can be recouped when markets rebound and the mill meets lumber target prices. "People were very open to it if it meant the mill could re-start," says Ducharme.

About 135 jobs are involved with running the sawmill on a single eight hour shift and two eight hour shifts daily in the planer. The concessions made by the hourly staff are extended to include salaried workers at the mill and the company's logging contractors. The operation has two major logging contractors, which were both still available to Conifex.

The company has an AAC of 640,000 cubic metres a year but the lion's share of recent harvesting has been directed to beetle killed pine in the region.

Re-training and safety procedures were the key issues for the returning mill workers. Critical details can be forgotten when a mill is down for a protracted period of time. Part of the challenge, therefore, was to reinforce core safety procedures including--but not confined to--lock-out procedures, working in confined spaces and dealing with hazardous materials, says Ducharme.

The re-orientation process then moved on to specific job safety procedures and practices.

About $1.3 million was invested in training and mill improvements, including things like fall protection and guarding upgrades in the mill.

Starting on a one shift basis also means more senior people are available to help with the start-up process.

Last fall, the mill was winterized to protect it through the coldest winter months.

When the decision was made to prep the mill for the one shift a day start-up early in 2009, it was the signal to start checking all the mill's equipment.

"Basically, it meant going through the mill from one end to the other testing and training," recalls Roy Helmkay, vice president, operations who worked at the mill during P&T's tenure.

A thorough machine lubricating program was initiated. Machines were pre-started and tested. PLCs and computers were tested to ensure all process control procedures were functioning. Arbors were rolled so lubrication would be equalized in equipment like bearings. "We tried to take precautions through vibration analysis testing on bearings and shafts," adds Helmkay.

It all came together remarkably well, thanks to the staff rallying to the cause. The work essentially began in February 2009 and the mill started producing lumber March 2. The mill was averaging about 560,000 board feet of lumber per eight hour shift by the end of March.

"We realize it will take us some time but we want to be in the game when things turn around," says Helmkay. "We can fine tune things operating with the one shift."

Conifex is selling its bark, sawdust and wood residues to Pinnacle Pellet Inc., generating an additional revenue stream, especially important with lumber prices so flat.

Helmkay says down the line there are plans for an energy system for the mill--to use wood shavings to replace natural gas for drying lumber--and upgrades to the planer mill. And, he adds, there's the continuing analysis of opportunities for the mill given its flexible flow layout to produce new wood products that deliver higher returns per log.

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