Wednesday, February 24, 2010

Podunk Below the Masthead (Tuesday, February 23, 2010)

Shipping logs from the Industrial park, changes come to the North coast offices of the Ministry of Forests and the SPCA faces financial challenges in 2010, some of the items of note from Tuesday's news developments.

Daily News, front page, headline story
A 'PEEL N' PACK' LOG OPERATION IS BUCKING THE ODDS IN RUPERT -- A local processing operation working out of the old North Coast Timber site, is going against the trend in British Columbia finding success out of forestry. Timber Baron has been working out of the NCT site since 2007, stuffing containers with raw logs for shipment to points world wide. Their success is indicative of the changing nature of BC's Forest industry which has seen a decline in the number of jobs dedicated to the finished products of BC's woodlands, still for the 35 employees working in Prince Rupert the changing nature of that industry is one which still keeps them employed.

Changes in the Ministry of Forests presence on the north coast is causing some concern for stakeholders in the forestry in northwest British Columbia. With a change in direction from the government department, all forestry decisions will be made out of Haida Gwaii as district management decisions shift away from Prince Rupert and across Hecate Strait into a newly named district, of Haida Gwaii Forest District. The Daily News outlines some of the concerns from local participants in the forestry over those decisions.

The Federal Budget is in its final planning stages and George T. Baker takes a sounding of local politicians as to what they expect to see when Finance Minister Jim Flaherty delivers his budget and what factors may be contributing to his decision making.

The Sports section featured one more look back at the All Native Basketball Tournament as well as a preview of the PRSS Rainmakers Senior squad as they make their final preparations for the provincials in Kamloops this week.

(Archive for Daily News Articles for February 23, 2010 )

The Northern View
Prince Rupert council providing 2009-level grant to SPCA, acknowledges shelter closure may occur -- City council grant reductions may mean changes if not closure for the local branch of the SPCA (see article here)

The Northern View
Fare increase concerns MLA-- Another round of fare increases are ahead for BC Ferries, a situation which has the local MLA Gary Coons concerned over the impact that those changes may have on coastal communities (see article here)

The Northern View
Ridley chair confident of record year in 2010 -- Bud Smith brought an optimistic forecast with him to a recent gathering of the Prince Rupert Chamber of Commerce, Smith the current Chairman at Ridley Terminals feels that 2010 will be a record year for the Ridley Island shipping terminal (see article here)

CFTK TV 7 News
Terrace Lobbys for New Hospital -- Terrace City council, taking time away from its quest to host a prison, turned its attention this week towards the development of a new hospital for that community (see article here)

CBC British Columbia, Daybreak North
Slow and steady -- A discussion with Tsimshian artist, Phil Gray, who talks about his helmet art featured in Jon Montgomery's gold medal win in the Olympic skeleton race. (listen to the interview here)

The full list of current Daybreak North Interviews can be found here.

Daily News, front page, headline story
A ‘peel n’ pack’ log operation is bucking the odds in Rupert
By Monica Lamb-Yorski
The Daily News

Tuesday, February 23, 2010

Since 2007 Timber Baron has been a tenant at the old sawmill site at Prince Rupert’s industrial park near Butze Rapids.

Manager Lee Thomson has been in business for over 25 years, mostly out of Stewart and Terrace, but when the container port opened in Prince Rupert, he saw the opportunity to tow logs from Stewart and ship out by container.
He first set up business across the road from the sawmill site. As the business grew, there wasn’t enough room so he rented a portion of the site from Tidal Coast Terminals, who in turn is leasing the land from Butze Bay, an American investor out of San Francisco that purchased the property.

“Our company probably handles 99.9 per cent of the containers that are shipping logs out of Prince Rupert,” Thomson said Friday. And, he added, they are stuffing 70 trucks per week.

A shipping container holds 30 cubic metres – the equivalent of two thirds of a logging truck - and Thomson confirmed that sixty trucks are arriving in Prince Rupert daily.

For the last year, the wood has been coming out of Terrace. “There are still a lot of logs in Stewart. I know for a fact there is still 80,000 metres in Stewart that has to come down.”

Thomson likened his business to a game between who has the best price for containers and the breakbulk (not in containers) shipping.

“We’re the consumer.,” he said. “It’s no different than going to WalMart. Where do you buy your soap? To rent a ship is $1.5 million dollars so now do you spend 1.45 million dollars to rent containers? It’s always changing. Cosco is so powerful and they always try to monitor who can make the most money off the consumer. We never know from day to day.”

In 2009, the container cost was $850 US each, a year later it is $1750, and Thomson has heard it will be going up another $200 in March. That translates into increasing to $30 a metre to ship logs. “In Canada you don’t even get $30 a metre half the time, so when you add the shipping costs, it’s just doubled.”

Right now, Timber Baron is doing ‘break bulk’ shipping and containers. Three months ago, break bulk went down so Thomson secured a rate on a ship and chartered it. Soon afterwards, containers went up, but he continues to use containers.

Prices fluctuate radically, which means Thomson is cautious. In April 2009, when the economic crash occurred, the cost of shipping was $2.5 million. Within six months, the cost had decreased to half of that total and even down to a low of $1 million dollars.

At its peak, Timber Baron employed around 60 people, and currently has 35 employees. Thomson said he’d rather be keeping 35 employees really busy than taking risks.

As president of the Northwest B.C. Forest Coalition - a consortium of 11 licensees looking at ways to make the forest industry viable - Thomson said it is a difficult time.

“The only people that have been coming around looking for fibre are cogen plants and pellet plants. But still, they cannot afford to pay what it costs to log for that product so we have to subsidize it. The only way that those things work, is beside sawmills. The lumber is still worth way more than the pellets.”

Mayor Jack Mussallem said Thomson made the analogy of a three-legged stool.

“When you take fibre, a saw log and your pulp log or decadent wood quality, one cannot operate without the other because when you go to log, you can’t take your saw logs without taking the rest of the wood. You have to find a use for it or the cost becomes prohibitive,” Mussallem commented.

Thomson has toyed with the idea of developing a small pellet plant, but hasn’t gone past that. He has however, purchased a portable log debarker from a sawmill that shut down in Kamloops. He bought components from different companies and had it rebuilt in Fort St. James. He purchased the machine because debarked logs are one of the requirements for shipping to China, and as far as he knows, it’s the only portable one on the mainland.
One of the drawbacks is the fact it can only handle a certain size of logs, which means the company ends up with larger logs that it can’t sell.

“China wants the logs either debarked or fumigated and fumigation will not work in winter time because it’s all about temperature. The logs have to be 23 degrees celcius and that gives us a window of May to September or else we would have to heat the logs - and you can imagine the cost,” Thomson explained.

Presently there is seventh month’s worth of bark piled high next to the debarker, and in the days of the pulp mill, the bark would have been used as hog fuel to heat the boilers.

Thomson knows there’s a market for the bark in places like Portland, but hasn’t been able to find an economical way of sending the bark away. “They really want hemlock bark in Portland. They ship it to California.”

According to Thomson, there are empty containers going down to Portland, but he is not allowed to touch that business.

Smilling he said, if an electric cogen were to come to Prince Rupert, then he’d have a place to send the bark. In the meantime, it’s too expensive to truck it so he’s making arrangements to throw it away.

Timber Baron has been selling saw logs to China for six years and is now beginning to sell pulp logs as well. The next ship going out will contain half and half.

So many things have changed since1985 when the company began shipping logs to Japan and Korea, the company’s biggest market in those days.

Thomson said when Japan’s cost of living began to go up, and it couldn’t afford to pay as much for logs because labour costs were increasing, log prices began to drop.

Eventually Thomson began considering the Chinese market and in 2003, hopped on a plane and headed there to find customers. He didn’t know anyone over there at the time, but decided he had nothing to lose.

“I had to go there six times before I nailed her,” he admitted. “It’s no different than the many Chinese people that are coming over here looking for markets. They come over here and investigate and do a bunch of research. I did that before I went over there. China has such a big coast. I tried to make sure I picked a neutral zone that didn’t have influences. New Zealand and Russia are our biggest competitors.”

Seven years later, his company is shipping to five different ports in China, continues to ship to Japan, and recently sold to Korea.

He believes China is willing to take the wood that nobody else wants, but some of the wood he sees going there he tells the Chinese should be saved for furniture stock and door jams. “It’s very nice and it’s old growth, but it’s becoming 2 x 4s because of the construction boom over there.”

It’s a construction boom he knows that Canadians would have a hard time comprehending.

“You know when you go to Vancouver and see building cranes, you might see six, maybe seven or eight in Richmond. I counted a complex with as high as 66 cranes. It’s nothing to go by 25 in one area. That place is growing so fast they are building cities in places where there were none before.”

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