Canfor Corp. will close its sawmill in Vavenby, eliminating about 170 jobs, and sell its timber rights to Interfor Corp. for $60 million, the companies announced late Monday.
It’s the second major shutdown announced in the past month from an industry facing shrinking timber supplies due to the mountain pine beetle infestation, forest fires and poor market conditions that are compounding losses.
“Due to the current and long-term log supply constraints we face in the Vavenby region, along with the high cost of fibre, we have made the very difficult decision to permanently close the sawmill and sell the associated forest tenure,” Canfor CEO Don Kayne said in a news release.
“Today’s decision is not a reflection on our employees, our contractors or the local communities of Vavenby and Clearwater.”
The closure will deliver an economic blow to the entire North Thompson region, according to Clearwater’s mayor.
Vavenby is about a 20-minute drive east of Clearwater and Wells Gray Park in the Interior, but Clearwater Mayor Merlin Blackwell said it’s in his district’s tax base, so his community will take a tax hit in addition to the loss of jobs and spinoff industries.
Tourism has become a bigger part of the region’s livelihood, Blackwell said, but forestry is still 40 per cent of the region’s economy and “the major industry that runs year-round.”
“Forestry is the meat and potatoes and gravy for the economy,” he said.
The decision, which came just after 6 p.m. on Monday, follows from Tolko Industries’ announcement May 10 that it would close a sawmill in Quesnel and cut a shift from its Kelowna sawmill operation, eliminating some 240 jobs.
They’re closures that aren’t unexpected, according to industry analysts that estimate as many as a dozen Interior mills will need to close over the next decade to cope with shrinking timber harvests as forests recover from the mountain pine beetle infestation.
Interfor, however, said it will direct the timber from cutting rights it’s buying from Canfor to support its state-of-the-art Adams Lake sawmill, which employs 235 workers and supports an additional 250 jobs in logging.
“This transaction materially enhances Adams Lake’s log supply and sets the stage for its future success in much the same way the investments made (in the mill) 10 years ago set the stage for its success over the last decade,” said Interfor CEO Duncan Davies in a news release.
In 2009, Interfor spent $140 million modernizing the Adams Lake mill, which is close to a two-hour drive northeast of Kamloops, and an additional $40 million since then.
Canfor, in the news release, said the Vavenby mill, which will close in July after “an orderly wind down,” produced 250 million board feet of lumber per year.
After the closure, the company will have 12 sawmills in Canada with a capacity to mill approximately 3.55 billion board feet of lumber.