More than a dozen sawmills shut down across the province in June amid industry difficulties but the two locals mills of Hampton Lumber are still running.
To the east and west of Burns Lake mills experienced shutdowns this month, with mills in Houston, Fraser Lake and Vanderhoof announcing temporary curtailments. Canfor’s Vavenby mill was shutdown permanently.
“Certainly Babine and Decker Lake are not immune to the challenges resulting from a weak lumber market and extremely high log costs. I would assume almost all mills in British Columbia will lose money with the industry economics that have existed through the first half of 2019,” as Steve Zika, Chief Executive Officer of Hampton Affiliates, which owns the two mills, told Lakes District News.
The CEO pointed to a few factors that have helped the company avoid curtailments at its mills in B.C.
“We believe the synergy between Babine and Decker, our strong sales group which is focused on market diversity, a focus on cost reduction and a commitment to continual improvement from everyone at the mill sites all adds up to help us better protect the mills from curtailments. It does not make us immune to curtailments but it all adds up to potentially limiting our downtime. As a private company with family and First Nations ownership when we experience market weaknesses we try not to react too quickly with curtailments.”
Another possible factor in the success thus far of the Babine mill is the way it planned out its timber supply, as Phil Burton, Professor of Ecosystem Science and Management University of Northern British Columbia explained.
“Babine had its wood supply identified for the rebuild after the pine beetle outbreak, so there perhaps was a better picture of a sustainable wood supply for it than for mills that ramped up production to take advantage of the beetle salvage uplift.”
However, Zika added that curtailments are still possible, “We are a business and if sales prices and log costs are not aligned for long periods of time, or our inventories grow too large, we will have to take down time to ensure the viability of the operations.”
While the Hampton mills in Burns Lake are doing satisfactorily for now, Zika hopes the recent improvement in spruce, pine and fir (SPF) lumber prices will lift up the prospects for other mills in the province.
There are still many unknown factors beyond the short-term, he said.
“Lumber prices are volatile and we can’t assume they will stay at current levels. The real challenge remains short and mid-term timber supply for most of the mills in B.C.. Babine, Decker and community stakeholders are focused on working with government to ensure the Annual Allowable Cut reduction in the Lakes District is as flexible as possible to balance the timber management and economic effects of any decision.”