June 5, 2019 3:52 pm

Union expresses disappointment, sadness as Tolko extends shutdown at Armstrong mill

Tolko announced Wednesday that it will be extending the downtime at its Armstrong mill for another two weeks.

Megan Turcato / Global News

More than 150 employees at Tolko’s Armstrong sawmill thought they would be going back to work on Monday.

However, on Wednesday, the company informed workers that the sawmill would be taking another two weeks of downtime.

This comes on top of the two weeks the mill has already taken, extending the total closure time to four weeks.

READ MORE: Tolko’s Okanagan cuts a sign of bigger problems for B.C.’s forestry sector

Tolko blamed the extended shutdown on economic conditions.

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The Vernon-based company has announced a series of temporary and permanent cutbacks in B.C. since early May, as the industry deals with both supply and demand challenges.

Businesses have been seeing both extremely low prices for lumber and high prices to purchase logs to supply their mills.

READ MORE: Tolko Industries announces downtime for two of its B.C. lumber mills

“As the recent rash of curtailments and closure announcements indicates, current market and cost conditions are making it difficult to operate in B.C.,” Troy Connolly, Tolko’s vice president of solid wood, said in a media release.

Tolko said extending the downtime was a difficult decision to make, as it prefers to keep mills in operation.

The president of the local worker’s union said news that the downtime would be extended was very sad and disappointing.

“It doesn’t go over well. People need to work and earn an income,” said Pat McGregor, president of United Steelworkers Local 1-423.

WATCH BELOW (Aired May 28, 2019): Tolko cuts shift in Kelowna as forestry sector struggles

McGregor said the mill’s staff fluctuates between around 180 and 200 workers.

While they are out of work for four weeks, McGregor said they are expected to be eligible for some employment insurance coverage, but, he said, that won’t completely replace the lost wages.

“I’m sure people are starting to prepare for whether [there] is going to be more or not, McGregor said.

READ MORE: Tolko announces sawmill closure in Quesnel, shift reduction at Kelowna

While workers may be starting to wonder if the shutdown will be extended further, McGregor said the company had indicated to him it is sure there will be no further extension of downtime at the Armstrong mill.

McGregor said that the mill is currently in the midst of a multi-million dollar upgrade that the company will want to get its money’s worth.

“I would be surprised even more than I am now if [the downtime] extends any further,” McGregor said.

Industry expert Russell Taylor, the managing director of Forest Economic Advisors Canada, said it is currently a “very, very ugly market” for B.C. lumber producers selling to the United States.

For example, Taylor said the price of 2×4 lumber is currently less than half of what it was a year ago, and below the break-even point of what it costs to produce it.

To make matters worse for sawmills, the B.C. government stumpage fees are going up in July, meaning the price of lumber will need to rise even higher before companies can resume making money.

WATCH BELOW (Aired April 27, 2019): WorksafeBC issues report on Tolko worker death in 2017

Tayor said one problem is that the U.S., Chinese and Japanese markets are all currently oversupplied.

“There is simply too much supply chasing a drenched U.S. house building sector, but it is starting to finally dry and out and prices will move higher steadily over the next few months,” Taylor said.

“The more the production is curtailed, the faster it will bounce back. However, the short term will continue to be tough with mills losing huge money.”

At the same time as it announced it was extending the downtime at the Armstrong mill, Tolko also announced to more weeks of downtime at its Soda Creek mill in the Williams Lake area.

© 2019 Global News, a division of Corus Entertainment Inc.

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