In The Pacific Rim
years ahead" of Alberta competitors in developing Asian markets, Sundance Forest
Industries expands with a new $10-million reman plant.
By Tony Kryzanowski
Copyright 1997. Contact publisher for permission to use.
A Chinese-owned sawmill with a Swedish design, located in Edson,
Alberta, originally intended to produce metric lumber for the UK market, now selling reman
products to the Pacific Rim - now that's something you don't run across every day.
Sundance Forest Industries' brief six-year history may read like
a traveller's passport, and its seems the journey was worthwhile. They are now able to
invest another $10 million for their own reman plant, eliminating the middle man and thus
realizing better financial return on their investment. They say locating in Alberta over
BC will fatten their wallets even more.
study of the Sundance sawmill shows immediately that there is nothing run-of-the-mill
about it. Sundance is owned two-thirds by CITEC Canada Ltd, which is a Chinese investment
company located in Beijing, and one-third by Winstyle Forest Resources located in Hong
The sawmill concept started with a small Edson land holder who
held a considerable timber quota. In 1990, he and a group of partners that included CITEC
and Winstyle built the sawmill with the intent of selling metric lumber to the UK. That
market collapsed shortly after the sawmill began production, so the company changed its
focus to the Pacific Rim and North America. Also during that time, most of partners
dropped out, except for CITEC and Winstyle.
The road to their current success has not been easy, according to
Sundance Forest Industries general manager Wayne Hemsley, who joined the company in 1991.
"It's been quite a challenge going from rags to riches almost literally," says
How times change. In the early 1990s, dimensional lumber sawmills
hauled in huge profits selling to the US market, while Sundance Forest Industries
struggled. Now Sundance has a more secure future, while many other sawmills are trying to
change focus, due to new softwood export quotas to the United States.
Sundance has also earned a more secure wood supply, as the
government of Alberta recently entered into a Forest Management Agreement (FMA) with the
company. This represents a conversion from the company's volume-based timber quotas,
although it will not mean more quota. The company takes on forest management duties and in
exchange receives a long-term timber supply commitment.
"We're easily five years ahead of anybody else trying to do
the same thing," says Hemsley, referring to their success in the Pacific Rim market.
"We have a very good customer base in Japan, and we've done the research and the
development in our products."
The sawmill's annual production is about 160,000 m3,
manufacturing metric size lumber from exclusively lodgepole pine. Their timber quotas
consist of about 90 per cent lodgepole pine, and they trade the remaining 10 per cent
As a further demonstration of its unique qualities, the mill's
breakdown equipment was supplied and installed by Sweden's Soderhamn, featuring a number
of Vislanda edger and chipping disk components.
"We're probably the only true sweep sawing sawmill in
Western Canada," says Hemsley. He adds that it should come as no surprise as the
sweep sawing technique was perfected in Sweden, with a main contributor being Vislanda.
The lumber they produce comes in four different thicknesses:
25mm, 30mm, 40mm and 63mm, and in 10 different widths, ranging from 75mm to 150mm.
lumber is dried differently from standard dimensional lumber to prepare it for
remanufacture. Prior to the construction of their own remanufacturing facility, Sundance's
lumber was sent either to reman plants in the US or to the BC Coast. About 60 per cent of
their product went to the Pacific Rim, with 40 per cent to North America. Although they
have a decided advantage over other lumber producers looking to the Pacific Rim, the US
softwood lumber dispute has had a double-edged impact on Sundance.
Now with new softwood import quotas to the US and by operating
their own reman plant, they will change their market thrust to the US. They will now send
remanufactured wood products directly to the US market. That could have an impact on the
company's marketing strategy to the Pacific Rim, as Hemsley explains.
"One of the things we have found over the years is the fact
that we have to have a good North American market in order to make our offshore marketing
work," he says. However, it now makes no sense to send plain lumber to American reman
"There is no sense sending down product to American
competitors of ours to Japan, and using our quota to do it," says Hemsley. Sundance
Forest Industries has received a very small US softwood lumber quota, and Hemsley says
they feel unduly penalized.
"It's ironic that we're one of the companies that really
didn't have anything to do with creating the problem," he says, "and yet we are
being heavily penalized because of it. The softwood situation kind of verifies our
original idea of trying to develop other markets."
Sundance Forest Industries operates its reman operation under the
separate name SunPlus. Hemsley says it was their plan all along to build a reman plant,
once they put the sawmill on the right track. Construction began in June, 1996, and
production started in October. They have installed a Gracon optimizing chopsaw line and a
Western Pneumatic finger-jointing line. They will have two Weinig moulder lines. Both will
be operational by late spring. They also have plans to install a new resaw line this
Their products find all sorts of uses in traditional post and
beam homes or in pre-fabricated homes. Because they produce specialty products, they fill
customer orders rather than stockpile. A high percentage of their finger-jointed wood will
find uses in window frames and door frames, according to SunPlus Specialty Products
Manager Ian Tarves. Home manufacturers appreciate the superior quality offered by
remanufactured wood, such as strength and a tendency not to warp.
Hemsley says their philosophy of meeting customers' demands
begins right at the logging stage.
"Our philosophy is that specialized production starts in the
bush," he says, "and we follow that through our entire manufacturing process.
Getting into the export market requires a whole revamping of your dimensional mentality.
We don't run as fast as a dimension sawmill. Our emphasis is not on high-volume
production, but on high-quality production. It takes a totally different mindset to do
that, and it has worked out very well for us."
SunPlus purchases finger-joint blocks and low-grade lumber that
Sundance has stockpiled for the past year. In future, they expect to have to purchase
fibre on the open market to keep SunPlus adequately supplied.
At first glance, it seems it would have made more economic sense
to locate the reman plant on the BC Coast to save on transportation costs. But Hemsley
says the more they investigated that option, the more it made sense to build near their
fibre supply in Edson.
Transportation costs were an initial consideration, he says. The
Coast also offered a skilled work force familiar with reman plants.
"We also thought there might be some opportunity with some
of the Category Two timber in BC," Hemsley adds. But in the final analysis, it was no
"We looked at the political climate in British Columbia, and
the labour climate in British Columbia, and the fact that our sawmill was operating very
well here," says Hemsley. "We decided that staying in Alberta was by far a
In fact, Sundance controller Mike Dion estimates that even with
increased shipping costs to the Coast, the company will keep at least 25 per cent more
after-tax dollars from their SunPlus operations by locating in Edson.
"Certainly, we have a much higher transportation situation
here and it's a little more difficult for us to get containers than probably on the
Coast," says Hemsley. "But I have no doubt that it will pay off. Right now the
way the forest industry is operating in BC, I can't imagine risking $10 million in that
province to build a facility. To me it just doesn't make any sense."
He has plenty of experience with BC forestry woes, having worked
in that province for 20 years.
BC's loss has certainly been Edson's gain, as total Sundance
Forest Industries operations provide 195 direct jobs and 90 jobs for contract loggers.
"We have what I consider to be the best work force that I
have ever worked with," says Hemsley. "The last five years have been quite a bit
different, and very enjoyable in many ways."