Heavy equipment at work in Sundre Forest Products harvesting area west of Rocky Mountain House.

Heavy equipment at work in Sundre Forest Products harvesting area west of Rocky Mountain House.

Central Alberta lumber industry riding volatile markets

High lumber prices boost profits but supply chain issues pose challenges

Central Alberta’s lumber industry has had an interesting ride lately.

Soaring lumber prices boosted profits but the industry also faced a range of challenges — from B.C.’s floods and the pandemic to supply chain and transportation issues.

Area representatives for lumber giant West Fraser provided Rocky Mountain House town council an update on the company’s operations Tuesday. West Fraser operates a laminated veneer lumber plant (LVL) near Rocky Mountain House and a sawmill and treated wood plant through subsidiary Sundre Forest Products near that town.

“Lumber has been quite a volatile ride here pricing-wise,” said Sundre Forest Products general manager Bruce Alexander. Softwood lumber prices soared in spring 2021 then tumbled in the fall only to spike again this year.

While the high prices were positive — and also meant more money for the province through stumpage fees — the lumber industry has faced some headwinds.

This year, transportation issues have been a significant challenge for the industry, he said.

The B.C. floods, which shut down key routes, backlogs at Vancouver’s ports and a shortage of truck drivers have all contributed. Operations were pinched so much in B.C., many plants had to go to three-day work weeks so inventory did not build too high.

“Fortunately, in Alberta, we were able to tough our way through it and everybody stayed working at full capacity.”

While the market for treated lumber unexpectedly surged when COVID hit, the market has since dropped off and the company must now look for ways to reduce inventories so it can buy more wood to turn into treated products.

“So, it’s a very interesting business reality right for our treated divisions.”

One of the benefits of having the sawmill and LVL plant is the 240 workers between the two plants can be shifted around as needed. “That’s a huge win for us at the moment that we’re definitely capitalizing on.”

LVL plant general manager Bob Jackle said the plant southwest of Rocky Mountain House employs about 140 and they are looking to hire more.

“We’re slowly trying to increase the number of people we’re hiring right now, just to increase our output slightly and try to capitalize on the good market we’re seeing right now,” he said, adding the company has hired about 25 people in the last 14 months.

“The LVL business continues to be very busy and really don’t see any changing in the foreseeable future, much like lumber and plywood and everything else in the industry…”

Severe flooding in B.C., closed bridges and stopped wood veneer imports from B.C. necessary for production entirely for six weeks.

“We did take some down time on different parts of the plant because we didn’t have enough material to run,” he said.

This year, the company has also been affected by the supply chain issues that have caused headaches for a huge range of businesses from home builders to auto dealers.

“Overnight, some of the people who supply chain and strap and stuff like that they said you’re waiting time is now six months — and they did that overnight. That provides some significant challenges where you have to carry extra inventory, cost-wise etc.”

Higher fuel and heating costs are also expected to have an impact.

The woodlands part of West Fraser’s operation, which supplies the trees turned into lumber and veneer, will spend about $95 million employing 260 full-time contractors and about 240 temporary contractors, which includes about 120 tree planters, who will plant 6.4 million seedlings this year.

As well, about $7 million will be spent building about 100 km of permanent road will be built in the West Country this year.

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