Western Forest Products will invest $200 million to modernize its sawmill and timberland operations over the next two or three years.
But there’s no word yet on whether the company’s Duke Point and downtown Nanaimo sawmills will benefit from this cash infusion.
Lee Doney, vice-chairman of Western’s board of directors, made the announcement Tuesday at the Vancouver Island Economic Alliance’s State of the Island Economic Summit.
Western survived the industry downturn starting in 2008 by managing costs and streamlining business, he said. The company has now had seven straight profitable quarters and reopened four of its sawmills in the last 18 months.
“We will ship three times more lumber from the Nanaimo Port Authority’s Duke Point operation this year than in 2010,” he said, while standing in front of a stack of lumber produced in the company’s Nanaimo and Ladysmith sawmills and destined for China and Japan.
China and Japan have played a large role in Western’s recovery, Doney added.
Western now ships about 25 per cent of its lumber to China, compared with about three per cent six years ago, and the resurgence of demand from Japan supported Western’s decision to re-start its downtown Nanaimo sawmill last year, he said.
Doney said the company will make mill-by-mill decisions in the coming months on how to invest the money. He predicts Western operations will be running at full capacity next year.
The $200 million, which Doney estimates would build three new sawmills, will ensure the mills run faster, more efficiently and make better quality products, while logging operations will get much needed equipment.
Premier Christy Clark, who was in Nanaimo for the announcement prior to speaking at the Vancouver Island Economic Alliance Summit, said Western clearly sees a future for what was called a “sunset industry.”
“You don’t make investments if you don’t have confidence,” she said. “This is all, of course, thanks to China.”
Levi Sampson, president of Harmac Pacific, said any investment in local mills is good for Harmac because it helps ensure the company has access to affordable fibre.
He said Island sawmills are not producing enough fibre to meet Harmac’s needs and the company has had to buy from the Lower Mainland, Interior and even sometimes Washington.
Brian Butler, first vice-president of United Steelworkers local 1-1937, said the union welcomes the investment, but has doubts the money will materialize.
“The only thing that’s materialized is log exports,” he said.
The union believes Western is avoiding paying out millions of dollars in severance pay by starting up the downtown Nanaimo and Duke Point sawmills just weeks before severance pay would have been due to workers.
And both mills are running with “skeleton crews”, added Butler. At Duke Point, he said about 25 workers run the planer two weeks of the month, and starting last month, the sawmill runs the other two weeks with a similar number of staff.
Nanaimo NDP MLA Leonard Krog said while he’s pleased by any investment in the community, it depends on how the money is used.
“Are we putting a new roof on an old house or actually doing something to increase production?” he said.
Western by the #’s
u 25 — per cent of the lumber Western manufactures goes to China
u $260 million — has been invested in Western to enhance competitiveness and productivity since 2004
u 60–per cent of Western’s lumber production is shipped off-shore
u 20–per cent increase in lumber production over last year
u 25 –per cent increase in harvest volumes
u $750 million — estimated sales for 2011
u in 2012, Western expects to increase production and harvest volumes by more than 10 per cent from 2011