Aspen Planers has closed the doors on their Interior operations, at least for the time being.
It has been a difficult few years for the forest industry in B.C., and Aspen Planers has not been exempt from the issues that have affected other operations. In addition to the regular ebb and flow cycle of particularly bad fire seasons and breakup, there have also been rising costs for logs, an increase in stumpage rates and a shrinking of the Timber Supply Area (TSA).
This, coupled with the fallout of the COVID-19 pandemic, has forced the company to take a step back and shutter operations until a solution can be determined.
However, Bruce Rose, Executive Vice President of the AP Group, stresses that while this is an indefinite closure, it is not a permanent one, and that milling operations will resume at some point, the question is when.
“At the current time, we’ve informed everybody it’s an indefinite closure,” said Rose.
“The best way to describe the Merritt situation is it’s an indefinite closure, and we’re assessing it on a weekly and daily basis for what’s around the corner, what do we think, where we think the prices are, what do the demand issues look like, etc. Just to be very clear, we haven’t permanently closed and it’s not that whatsoever. We just don’t know; this is an indefinite closure. We want to get back to work.”
Merritt is not the only operation to be affected, as the company has also temporarily closed its Savona and Lillooet locations.
“As of this past weekend, we have actually shut down not only Merritt which is the lumber production, but our Lillooet veneer plant and our Savona specialty plywood plant is also closed,” said Rose.
Rose acknowledges that Aspen Planers is the largest employer in all three towns, and that there are a significant number of people out of work as a result of the closures. Over 400 USW employees have been laid off or somehow affected, and for each of those jobs there is likely another direct job impact in terms of logging contractors, truck drivers and non-union and management positions.
Rose explained that Aspen Planers is looking at the relief programs being floated by the government, but that the company is having a difficult time ascertaining just what can be provided, as the shutdown has not come as a direct result of the coronavirus pandemic and social distancing measures taken to flatten the curve of virus spread, although that has been a part of the drop in demand and market prices, as infrastructure and construction projects have been put on hold.
“We’ve had a significant collapse in demand, and thus a significant collapse in price,” said Rose.
“And while all this has gone on, the driving force behind it is that log costs in BC don’t change at all, and that is the single largest cost. And because the log costs have not changed, but the product prices have collapsed it’s just not sustainable. Where BC log costs are at the current time, we’re just no longer a competitive jurisdiction in supplying the market. In any period when demand drops and prices drop, the high cost supplier closes first. BC is the high cost supplier now in North America, that’s the case. We’ve had a drop in price, we’ve had a drop in demand and between the log costs and market conditions, and the cumulative policy that we have in trying to operate in British Columbia, all of those factors make the fact that we cannot operate without suffering very significant financial losses.”
Rose explained that there is no real way to determine when operations will begin again in Merritt, Lillooet or Savona, and that it depends on prices and demand and the international market.
“We may get back as soon as the end of the month, but we may not. It’s driven by what the demand and prices are,” said Rose.
“We have to make these difficult decisions so that we can ensure we have some future sustainability or future ability to operate beyond this crisis. We do expect a significant decline in market demand for several months, this is not a short-term thing, we don’t expect it to just bounce back.”
