Tolko announces province-wide holiday shutdown for all B.C. mills

There’s more bad news for Vernon-based forestry company Tolko Industries.

Blaming low market prices for their lumber and the high cost of raw materials, among other factors, the business announced Thursday it will be halting production thoughout British Columbia for two weeks over the holiday season.

Tolko said the downtime will last from Dec. 21 to Jan. 6 and mean the company will produce 21 million fewer board feet of lumber.

The company said around 1,000 staff members will be impacted by the downtime.

2:13 Indefinite shutdown at Kelowna lumber mill to become permanent: Tolko Industries

The announcement comes less than a week after the business announced it would be shutting its Kelowna lumber mill down permanently in January.

Industry analyst Russell Taylor with Forest Economic Advisors is not surprised by the shutdown, given that demand for lumber in the U.S. has been relatively low and B.C. has become a high-cost region in which to operate.

Taylor said the company appears to be betting that things will get worse before they get better and is reducing production while it waits for the market to recover.

“They must sense that the prices are probably going to slip a little bit now the rest of the year because by mid-November dealers have stopped buying, house buildings has slowed down, there is not as much demand for lumber so prices typically fall this time of year,” Taylor said.

2:22 “The future doesn’t look good,” no signs of the Tolko mill in Kelowna getting up and running anytime soon

Meanwhile, Taylor calls the Kelowa mill closure “completely predictable” given the market conditions the industry is facing.

“Every company has to make decisions about which of their mills they are going to keep and which ones they are not going to keep,” Taylor said.

“We thought that mill would close earlier, actually.”

Taylor said he is mildly optimistic that next year will be a better year for the industry with lumber prices picking up.

He said the backlog of unsold product that built up earlier this year when wet weather in the U.S. put a damper on home construction has been cleared.

So with relatively low inventories, Taylor is expecting a normal winter buying period to put up prices early in the year before there is a correction.