Market downturn means layoffs at mill

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Poor market conditions for Canadian produced wood products will mean a two-month layoff for about 50 workers employed by Wapawekka Lumber.

The Wapawekka sawmill is a joint venture, with the Lac La Ronge, Peter Ballantyne and Montreal Lake First Nations combining to own almost half of the company, with Weyerhaeuser Canada owning a slight majority, and operating the business.

The mill, located north of Prince Albert Pulp & Paper, has about 44 full-time and 16 casual employees. Many of the employees are First Nations people.

"This decision is not a reflection on Wapawekka employees and contractors, who have worked very hard at operating the mill in a safe, efficient and cost effective manner in the face of difficult conditions," said Steve Smith, president of Wapawekka.

In fact, the company had announced a one-month layoff back in January, but postponed it at the last minute, and then cancelled it altogether, because the market was improving slightly and the employees were trying to find ways to save money.

At the time, Wapawekka was worried that if it laid employees off, even for one month, some might seek jobs elsewhere, leaving Wapawekka short of staff when it did start up again.

However, the market has not improved enough to avoid the layoff, which began on April 17. Employees stopped production on March 24, and filled in the remaining time doing maintenance at the mill and taking training.

Smith said the current plan is to resume production around June 16.

The downturn in the market is due in part to the extra tariffs the United States levied on Canadian lumber products last spring. Those tariffs were created to put American lumber producers on what the U.S. government calls an even footing with Canadian producers. Canadian lumber producers, the U.S. argues, are subsidized because the Canadian governments don't charge them enough for the trees in the forest.

The dispute is in front of international trade boards for review, but in the meantime, Canadian companies face an average tariff of 27 per cent when selling lumber into the U.S. Sales have decreased.

"We can survive, but if we get it (the trade dispute) resolved, we'll have a very good business there," said Ray McKay, CEO of Kitsaki Management Limited Partnership, the development company of the Lac La Ronge Indian Band.

Wapawekka, which opened in May 1999, is relatively new, and that helped it stave off layoffs this long.

"It's a state-of-the-art sawmill. It's very efficient," McKay said, adding that the company is seeking other efficiencies as well.

Less than a year ago, the operation added a kiln to dry the logs before they were shipped to Weyerhaeuser's mill in Big River for further finishing. Drier wood is lighter, and so the freighting costs are lower, he noted.

Trees for the Wapawekka operation come from Weyerhaeuser's Forest Management Agreement areas in Saskatchewan. All lumber produced by Wapawekka is sold to Weyerhaeuser and marketed under the Weyerhaeuser label.