With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1296256
volume of B.C. forest products had dropped 20 percent year-over-year, from $14.9 billion to $11.9 billion, FEA-Canada reports. After the recent WTO ruling on softwood lumber, Taylor expects other relief: a rejig- ging of stumpage fee calculations in the fall and eventually a bounce-back in demand. But many B.C. companies won't feel the shift until at least spring 2021, he warns. "If you're the high-cost supplier, you're the first one out when the market dies and the last one back in when it recovers.'' Until then, Taylor explains, the only sunlight filtering through the gloomy can- opy comes from independent companies. "I have noticed that all the curtailments and closures are coming from the big cor- porations," he says. "The private compa- nies are more nimble and flexible. They're good at finding creative solutions." Indeed, says Kamal Sanghera, it's busi- ness as usual for San Group. "Everything for us starts with the tree," says the CEO. "How do we get the max value out of every log?" Over 30 years, family-owned San has evolved from making furniture to run- ning a diversified log-to-finished-product operation. More and more, the Langley- based company is focusing its business in Port Alberni, where it bought a mill from a former supplier in 2017 and invested $100 million. First, San improved efficiency at the existing mill, adjusting production so it could quickly shift from only working with one species of tree to milling anything cut in the forest. Then it added remanufac- turing, developing an innovative tongue-and-groove wood product that uses what was waste wood as a backing and a thin veneer of high-quality red cedar as the face. To feed the remanufacturing plant, San recently added a small- diameter primary mill and sev- eral kilns. From one daily shift of 25 people, over the past three years it has ramped up produc- tion to three shifts and more than 100 employees. Then in April it bought and restarted another shuttered Port Alberni mill to add specialty cutting and chipping to its portfolio. The company hasn't laid off a single per- son during COVID-19, Sanghera says. The key, as it was before, is a team of salespeople who know their customers. They're selling what San is going to log before a faller revs up their machine. "We're not just making two-by-fours and hoping someone will buy them," Sanghera stresses. "When there is lots of yellow cedar in a stand, we are selling yel- low cedar before we harvest it. And then we are cutting the wood for what the cus- tomer wants. We don't end up with waste fibre or a product that's not saleable." The agility is mandatory. "As a small company, we don't have a choice," Sanghera says. "If we don't adapt, the big companies will take us out. If we don't change, in no time we'll be left behind." Money for value Kalesnikoff Lumber is another entrepre- neurial, family-owned operation. For 81 years, it has cut trees in the Kootenays and milled them in Castlegar. The company mostly focuses on specialty products, turn- ing high-value trees into high-value prod- ucts for sale overseas. Seeing that it would be hard to add more value with milling alone, a decade ago the Kalesnikoff family started looking at diversifying into making engineered products used for structure and aesthetics in commercial buildings. "We recognized we needed to do more with our timber supply, and value-added is in our blood," says COO Chris Kalesnikoff. Last summer, the company opened a $35-million mass timber plant in Castle- gar, creating more than 55 jobs. The plant started with glulam—chunks, or lams, of wood glued together into beams—and added cross-laminated timber this summer. Kale- snikoff, who says the large projects that his outfit supplies are continuing despite the pandemic, hopes government stimulus proj- ects will include wood buildings. For Brian Hawrysh, what stands out from Kalesnikoff's move is that every cent for the expansion came from the fam- ily. "It's really exciting," says the CEO of BC Wood, a joint venture between the provin- cial government and companies to promote and market value-added wood products. "When someone puts their own money in the game, it means more." Kalesnikoff joins a growing value-added sector. While log home builders struggle to find trees and some products are hampered by the softwood lumber dispute, companies that build cabinets, prefabricated homes, engineered wood products and mass tim- ber are all expanding, Hawrysh says. The value-added sector has rebounded beyond its pre-2008 high, according to a study by the Canadian Forest Service. With about 700 companies and 17,200 employees, it now accounts for more than 25 percent of the B.C. forest industry. Forecasts suggest that by 2030, there will be some 800 com- panies employing 21,500 people. "The employment and sales growth ADAM BLASBERG SEPTEMBER/OCTOBER 2020 BCBUSINESS 29 A CUT ABOVE Despite all the turmoil in the forest industry, it's been business as usual for Kamal Sanghera and San Group On the Chopping Block By 2023, the B.C. forestry sector will have closed more than 50 Coast and Interior mills in less than two decades, industry analyst FEA Canada projects. Sawmills account for nearly all closures O P E R AT I N G M I L L S YEAR COAST INTERIOR 2005 62 99 2009 56 72 2019 49 63 2023 49 60 SOURCE: RUSS TAYLOR, FEA CANADA. BASED ON MILLS WITH MINIMUM OUTPUT OF 40 MILLION BOARD FEET A YEAR