These are uncertain times for many Okanagan residents who work in the forestry industry.
Dozens of mill workers are receiving layoff notices after Tolko announced it’s cutting a shift at its Kelowna operation.
Meanwhile, its Armstrong mill is also facing a temporary closure.
With more B.C. sawmills expected to close in the years ahead, Tolko’s Okanagan slowdowns are a symptom of larger challenges facing the province’s forestry sector.
After record highs last year, lumber prices have crashed and there are problems on the supply side as well.
“We are seeing lumber prices at levels that are probably anywhere between 15 and 25 per cent below costs, and at those kind of levels, mills either curtail or in some cases close,” Russell Taylor, the managing director of Forest Economic Advisers Canada, explained.
In the Okanagan, Tolko’s announcement earlier this month that it is cutting a shift at its Kelowna sawmill was followed by another sign of trouble.
Less than two weeks later, the company announced its Armstrong mill is taking two weeks of downtime.
The local president of the workers union said the temporary shutdown in Armstrong surprised workers because things seemed to be going well.
“This one really caught them off guard with a day-and-a-half’s notice that you are going to be out of work for two weeks,” said Pat McGregor, the United Steelworkers’ local’s president.
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As it announced the Armstrong downtime, the company said it does not make these decisions lightly.
“We know we have great people working at these operations and this is in no way a reflection on them or their commitment. However, industry conditions in B.C. are challenging,” said Troy Connolly, Tolko’s vice-president of solid wood, in a media statement.
Around 90 people are getting layoff notices in Kelowna, but some are expected to be able to move to other Tolko facilities.
“A lot of ’em got caught by surprise,” said McGregor.
While lumber prices are expected to bounce back, there will continue to be lack of wood to supply the mills.
“We expect there is going to be further closures in the B.C. Interior because of the fiber shortage from the mountain pine beetle. There is also a spruce bark beetle, there is also forest fires that have caused reductions in the future harvest levels and we also have caribou to protect,” said Taylor.
Taylor is predicting up to 12 more B.C. sawmills will close in the next decade and business strategy will determine which ones will shut their doors.
“A company may want to shut down one mill in the Okanagan to feed logs to other areas nearby. It becomes a corporate strategy to some degree as to which mills survive and which mills may not survive which is making it difficult for communities,” Taylor said.
One factor that may help Okanagan mills stay open is that the region is not at the epicentre of the mountain pine beetle problem.
For its part, Tolko says its Okanagan mills are well-positioned and no further closures are expected.
The company said it is not currently planning any more downtime “but if weak markets and high log costs continue, we may have to re-evaluate.”