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THRIVING WITHOUT QUOTA

By L. Ward Johnson
Copyright 1996. Contact publisher for permission to use.

Summary: Milestone Wood Products, an integrated reman operation dependent on small-business sales and private wood, may well be the way of the future for the industry in western Canada.

With timber getting scarcer in British Columbia, wood processing operations are more aggressive in staking out their claims to the green gold that remains a primary source of the province’s wealth. With only so much to go around, fibre allocations these days are inevitably read by pundits as road signs indicating the direction the government wants the industry to move in.

Speculation abounds ... who will survive in this new industry, and who will not? At this point it’s pure conjecture, but if you want a look at wh at direction the industry in western Canada may be headed, visit Milestone Wood Products Inc. at Armstrong, BC. Located at the northern end of the Okanagan Valley, Milestone is an integrated remanufacturing operation that produces laminates for the Japanese market and laminated window and door stock for the European market.

No The bread and butter of this operation is three-piece scantlings in 30X98 millimeter, but the plant also turns out scantling in 30X65, 30X130 and 30X165 sizes. In combination this stock produces 72X88, 72X115 and 72X150 millimeter sizes. Not only does the company produce a special line of products, it also enjoys a unique competitive position because it is one of only two plants in North America with Rosenheim Certification. This German grading standard provides quality assurance in the European market and ensures ready acceptance for the compa-ny’s products there. Milestone was the first North American operation to be awarded Rosenheim certification, although there is now one other plant in the US that has also been certified.

Initially, people from the Rosenheim Institute came to Armstrong to initiate the grading standard, but now Milestone trains its graders in-house. Before Milestone, Europeans acquired hardwood stock from Asia to make their window and door products. But with intensifying environmental pressure to reduce logging in hardwood forests, Europeans are now turning to Canada, where they can get white spruce. This move is creating unique business and employment opportunities for British Columbia and one which Milestone hopes it can continue to fulfill in the future.

The Armstrong plant was started in 1991 by a group of eight shareholders who saw an opportunity when the BC Small Business Program got underway. They initially planned to go directly into remanufacturing, but since there was no ready source to provide the right cant sizes, the owners decided to build a sawmill, along with the remanufacturing facility, to cut the material they needed. The sawmill is still part of the Milestone operation, and is presently producing mainly for the reman-ufacturing plant. Milestone is dependent on small-busi-ness wood, private wood and the occasional short-term timber sale for its raw material supply.

Old-growth, tight-grain white spruce and Douglas fir are the preferred species, but the plant also saws lodgepole pine, larch and other minor species when they are available. Spruce, however, accounts for 80 per cent of the plant’s production. With its present breakdown capa-bility, the operation processes about 60,000 m 3 of roundwood a year. Without quota and a principal operating area, the company gets wood from wherever it can.

That often means trucking timber over long distances from around the province. On occasion, Milestone has purchased cants from Alberta and brought them in for processing. Loads coming into the plant are sorted in the mill yard for clears and old growth. Logs that don’t suit the plant’s needs are sold or traded to other operations, always with the objective of getting in return a consistent diet of over-size spruce and Douglas fir. Trading is a significant component of Milestone’s timber initial breakdown completed, boards are sent to a drop sorter where they are sorted by length, width and grades.

As much reprocessing and sorting as possible is done at this rough lumber stage. Next step in the process is drying and, according to the Rosenheim standard, the lumber must be dried down to a 10 to 12 per-cent moisture content. This moisture content level is important in the laminating process, since glue adheres best at this moisture content. In fact, steam is piped throughout the plant, and automatic Japanese markets. Long boards are appearance graded, put into pairs and stacked according to length and grain. After sizing, the long boards, which can be used for either center boards or face boards in the laminate sandwich, are conveyed to a grading station where they are further graded for flat and ve rtical grain and for natural and machine defects.

No The long lengths then pass through a glue spreader, where glue is applied to both faces. Short boards go to the finger-jointing station where they are graded and stacked according to product use. The finger-jointing blocks are fed into the Grecon fingerjointer, which profiles fingers at each end of the block. PVA glue is applied to the fingers and the blocks are pushed together to make up the appropriate length. Finger-jointed material is usually used for the center board of the three-piece, clear-length sandwich, but it can also be laminated into three or more layers and sold to the European or Japanese markets.

With all components of the sandwich prepared and ready, face boards and centre boards are then mated together and sent to a Maweg Hildebrand Rotary Press. The press applies pressure from the top and two sides to bond the glued joints and make up the three-piece laminate. There are four different products of three-piece laminates for Europe, including one grade which allows finger joints in the face board. There are five laminates for Japan, which includes a non-laminated, finger-jointed product. After pressing, one final inspection and grading checks for defects in lamination; then the three-piece laminate is packaged, loaded into containers and shipped to the Port of Vancouver for export.

Manager of Log Operations at the Milestone operation is Dave Karran, who says their biggest challenge is to get fibre. “We work off the Small Business Program and we buy on the open market . Occasionally we can get a short-term timber sale and of course, we buy private wood when we can get it. The bottom line, however, is that we spend a large percentage of our time running around trying to find wood. Having such an unsure timber supply puts the operation in real jeopardy when it comes to planning. Management and production decisions are much more complicated when you’re in that position.”

Talbot says the operation works on one shift a day, but to be efficient, the plant should be working two. “We need to run two shifts a day to keep our unit costs down. The sawmill is a major cost component and we are trying to come up with different ways to make it more cost effective.” Talbot says they are considering turning the sawmill into a custom cut plant to cut for other remanufacturers.

“Getting the sizes you need can be a major problem in the reman business so we think there might be an opportunity for us there. If you can’t get the sizes you need, and there can be some odd ball sizes in the reman business, it usually means more waste and less profit for the operation. We are also considering running North American sizes in the plant as well,” he says. “That way we could process some of the lower-quality fibre instead of trading it off.”

Walter Burian is the president of the operation. He says this plant is what the future could be for the value-added sector. “We produce a good product here and there is good demand for what we make. It’s a high-value product too, and it provides employment for the people in the area and good income to the province. We create 2.5 jobs for every 1,000 cubic metres we pro-cess at this operation. That compares to somewhere around .4 jobs per thousand cubic metres in the dimension lumber business. Jobs equal wealth, so there’s a direct benefit from this kind of processing.”

Addressing the problem of timber supply, Burian says, “We need a special kind of fibre and it’s hard to get that kind of fibre these days. Every government we’ve had in the last few years says they want a healthy value-added sector, but then there’s never enough suitable timber to support one. There has to be more support if there is ever to be a healthy value-added sector in BC. We simply cannot run efficiently and profitably without knowing where the next log is coming from and, for the most part, that’s our situation. The future of the reman business in this province is in the hands of the government.”

Burian is sympathetic to the situation; he says nobody has enough wood. “I think there will be some major changes in the industry over the next few years . Essentially there is too much cutting capacity for the timber that is now available and that’s going to result in some big changes pretty soon. The value-added sector is an important contributor to jobs and the economy, and there seems to be a ready market out there for all kinds of value-added prod-ucts. But before we can get down to busi-ness, there has to be some resource decisions made and it’s going to be very interesting to see how the timber will be allocated. There’s going to be winners and losers in this game, but for the good of all, let’s hope the value-added sector is still part of the industry of the future.”


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