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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - January 11, 1975, Lethbridge, Alberta Second Section The Lethkidge Herald Lethbridge, Alberta, Saturday, January 11, 1975 Rapes 17-32 UNPLANED LUMBER STACKED IN DRY PILES AT SENTINEL'S COLEMAN SAWMILL RICK ERVIN photos Mills cut back production hundreds of men out of jobs Sap drains from'Pass wood industry By RUSSELL OUGHTRED Herald Staff Writer COLEMAN Geoff Peter has worked in the lumber industry more than 30 years, but he ad- mits: "I always get a funny feel- ing when I walk into an empty sawmill." Over the years, the manager of Revelstoke Companies' saw- mill, four miles west of Coleman, has seen the lumber industry prosper and suffer. But the current glut of lumber on a depressed market worries the veteran mill manager. This time last year. Sentinel Mill, like other sawmills in southern Alberta and southeastern British Columbia was riding the crest of a buoyant economy in Canada and the United States. In January, 1974, Sentinel's 'Pass operation employed 70 mill and of- fice workers. Today, the work force totals a meagre 29. This time last year, Sentinel's logging contractors had 29 men cutting timber in the Crowsnest Forest Reserve. But today, a skeleton crew of six is cutting just enough sawlogs for contractors to meet payments on equipment and supply Sentinel's mill with sawlogs for limited production until June. UNEMPLOYMENT Elsewhere in the 'Pass and East Kootenay, sawmills and logging contractors are cutting back produc- tion. With no sign of lumber prices improving, hundreds of unemployed loggers and millworkers continue to collect pogey and look for other work. At the family owned Johnson Bros, mill at Cowley, eight miles west of Pincher Creek, the usual complement of 90 mill and office workers has been pared to 67. Manager George Johnson says the mill, established by his family in 1924, will operate "as long as it's financially possible." With operating costs up 15 to 20 per cent and the cost of borrowing money at an all time high, wholesale lumber prices are half what they were only a year ago. "There has to be some relief in says Mr. Johnson. Prices "can't go any lower." "To get over what we've already been through, it will take 10 or 12 months of goof business to recoup what we've lost." The story is much the same at Elko, where Crows Nest Industries operates one of the largest straight GEORGE JOHNSON dimension lumber mills in B.C. A year ago, CNI'had 200 employees logging timber for its Elko mill. All 200 were laid off two months 'ago, because CNI had a "heavy inventory of says cor- porate development manager George Barnes. Another 100 people, one complete shift of workers at Elko, were laid off last summer when the forest company, which exports 80 per cent of its lumber to the U.S., saw its market across the line go sour. The future? CNI's Barnes doesn't foresee "any significant upsurge un- til the end of 1975." SELLING AT LOSS Ironically, the one thing giving sawmills in Cowley, Elko and Coleman cash to continue milling was once a waste product which mills burned. The "waste" materials are saw- dust and wood chips. Both CNI and Revelstoke self wood chips to a pulp mill operated by Crestbrook Forest Industries. Johnson Bros, mill sells sawdust and chips to Southern Alberta. farmers for livestock bedding. Some is sold directly to area farmers; the balance goes to Southern Livestock Bedding, which supplies feedlots and farmers. Unlike bigger forest products out- fits, Johnson Bros, cannot afford to sell lumber at a loss. Big companies like Crestbrook can afford to dump cheap lumber on the Canadian market, complains George Johnson. Lumber prices won't go up, he predicts, until the supply of lumber drops con- siderably. Johnson Bros, he adds, has survived mainly from retail sales to Southern Alberta farmers. "Farmers were buying lumber before the New Year The farm trade has helped hold us together." Although CNI, once a major coal mining concern in the 'Pass, sells enough lumber on the Prairies to keep one shift working at Elko, the company is selling lumber at and below cost. MARKET COLLAPSE CNI spokesman Barnes says although his company enjoys some investment revenue from mineral holdings, lumber remains CNI's bread and butter. The Elko plant continues milling wood, he adds, only because housing starts in Western Canada haven't fallen too far behind last yean He says lumber will command higher prices only if interest rates are lowered and more mortgage money made available to builders Sentinel's mill manager Geoff Peter describes the lumber industry as a bellweather of the Canadian and U.S. economies. In 1973, Sen- tinel milled 22 million board feet of lumber, exporting 70 per cent to the U.S. Production in 1974 slumped to 10 million board feet. And 1975 won't be much better, predicts Mr. Peter. "Housing has always been the first industry to feel the effects of a says the veteran mill manager. He cites high land costs and tight mortgage money for the sudden drop in housing starts in the U.S. Canada. The U.S. economy, he says bluntly, is in "a hell of a mess." Before the lumber market collapsed, Sentinel was shipping two boxcars of lumber a day into the U.S. Today, Sentinel refuses to mill lumber except for orders from customers, which include 110 retail lumber yards operated by Revelstoke Companies. If Sentinel shipped its usual two Cars across the border, the company would lose 000 daily. Rather than "dress" or plane rough lumber, Sentinel is rough cutting most of its wood and dry pil- ing it to be planed when the market revives. The mill expects to have 12 million feet of rough lumber ready for finishing by June. Revelstoke's mill has the advan- tage, Mr. Peter says, to belong to a diversified firm, which can make up for lost lumber sales with sales in other areas, like ready mixed concrete. But Sentinel's manager refuses to sell wood at a loss. "The reason we shut down (part of the sawmill operation) is because we won't sell lumber cheap." The mill has million board feet of wood in sawlogs waiting to be cut. Logging contractors are bringing in board feet of sawlogs each month. By June the mill will have no wood to cut. And what will happen in June? If lumber prices and demand have risen, Sentinel will start finishing its unplaned wood. If the market hasn't improved, the mill will shut down, says Mr. Peter. The mill manager says the market will get worse before it gets better. A lengthy strike by shop craft unions against the B.C. Railway, which ships wood from interior B.C. mills, has recently ended. Now mills with lumber to sell and bills to pay will be eager to move their product at a loss, adding to the glut of wood and lowering of prices. SENTINEL MILLWORKERS SORT LUMBER IN PLANER MILL Crestbrook 'forced' to dump wood on market Crestbrook Forest Industries in British Columbia's East Kootenay is one of the large forest products companies currently dumping cheap lumber on a depressed market. But the company has no choice, explains administration manager John Hegeman. losing money on every board foot we sell, "It's a question of moving lumber, and moving it at the best price you can says Mr. Hegeman. Crestbrook, which operates a pulp mill-at Skookumchuck, 40 miles north of Cranbrook, owns saw- mills in Cranbrqpk, Canal Flats and Creston. Crestbrook is running all its mills at full production, says Mr. Hegeman, in order to supply the Skookumchuek pulp mill with wood chips, the raw material for the pulp mill's bleached Kraft, Sixty per cent of Crestbrook's kraft production goes to fine paper mills in the United States. Because the Skookumchuek pulp mill does not have its own "wood room" for producing chips, Crestbrook depends on its sawmills for chips. About sixty per cent of the company's chips are supplied by Crestbrook sawmills. The pulp market is good, Mr. Hegeman adds, though it is showing signs of becom- ing a buyer's market: He describes the current situation, with Crestbrook's pulp operation subsidizing its sawmills, as the reverse of what happened in the late '60s. "Five years ago it was the other way round. Our lumber was supporting the pulp operation." Mr. Hegeman says no one in Crestbrook's normal work force of people will be laid off. But if sawmills don't produce feedstock for the pulp mill, "we will be in serious trouble." Layoffs, he adds, "cause local stress in the community" and inevitably cost the company good employees, who leave to work elsewhere. He says 65 per cent of Crestbrook's lumber is still going into the U.S. Much of the balance goes-to Eastern Canada, with Crestbrook losing money because of high shipping costs. Crestbrook is moving its lumber, he says, "but we're selling it at a loss." GEOFF PETER ;