About 150 mill employees are out of work at Aspen Planers as the company has shut down production at its two Merritt sites for the immediate future.
The mill ceased sawmill and planer operations May 4 and the company intends to have it remain that way for two weeks, reopening May 18.
However, the closure could extend past that, said Aspen Planers vice president Bruce Rose.
“We’re monitoring what the situation [is] in terms of both log supply and [what] the lumber markets are on a weekly basis,” Rose said.
How many of the 150 workers will see their jobs again when the mill does reopen depends on whether or not operations restart at the same levels they were before the closure.
“If we go back to operation at the same scale, we would need the same employees back at work. I guess it depends on what the operational plan is when we come back,” Rose said.
Aspen Planers hasn’t determined that yet as it will depend on what the market looks like and their log supply.
The closure was brought on by constrained timber supply in the region and a poor lumber market, Rose said.
“Lumber pricing is down about 25, 26 per cent from what it was at the beginning of the year,” Rose said.
He said that as of May 5, the benchmark price was $252 U.S. per thousand board-feet.
Rose said there’s a variety of perspectives as to why prices are down, such as increased supply in North America and bad weather in the U.S. during the first quarter of 2015 that restricted demand.
“Those are some of the issues that have really weakened the price and the returns from the market on our products,” Rose said.
Another hindrance Rose pointed out is a likely increase in export taxes from five to 10 per cent in June, a consequence of lumber prices falling below a certain number as stated in the Softwood Lumber Agreement with the U.S.
Rose said the Chinese market for lumber has been down as well.
The 150 people out of work isn’t inclusive of logging contractors, whose operations have also been affected by the closure, but not completely halted.
“We can’t keep bringing in [logs] at the pace we were bringing it in, obviously, so it’s curtailed significantly, but there is still some movement of logs,” Rose said.
Some employees remain at Aspen Planers in Merritt doing miscellaneous work, Rose said.
The Tolko mill in town is still operational for now, but a representative said they’re also watching the market closely..
“We don’t expect this to be the crash we saw in 2008/2009,” said Tolko plant manager Clayton Storey.
“If things do continue to slide, lumber markets may not support the continued operation at some locations at current capacity levels.”
He added that Tolko has curtailed operations at one of their mills in Quesnel. “We do our best to try to keep the future of our business in mind,” he said.