Canfor Corp. announced Wednesday (September 9) that is is permanently closing its Canal Flats sawmill, laying off 65 workers and nine staff members.
The mill’s last day is to be November 9.
It’s the second time in less than a year that the small village of Canal Flats has been hit with layoffs. Canfor cut back production at the mill last May, going from two shifts to one. Wednesday’s announcement came “out of the blue,” said Doug Singer, president of United Steelworkers Local 1-405 at nearby Cranbrook. He said after May’s layoffs, workers believed that the mill would survive.
“Up until this point, we thought things were going well,” he said.
Canfor spokesperson Corinne Stavness said poor markets are the reason for the closure.
“While we understand how difficult this will be for our employees and the community of Canal Flats, recent downturns in the oil and gas and lumber markets that the mill served, combined with a lack of economically available fibre for the mill, have brought operating losses we can no longer sustain,” she said in an email.
Lumber markets have been weak in the wake of China’s economic slowdown, with lumber that was serving the Chinese market now being redirected into the North American market. Further, North American production is up. Statistics released this week by the Western Wood Products Association show lumber production to the end of June is up 8% year-over-year, while prices have dropped 29% during the first eight months of 2015.
Canfor is not the only Canadian company to announce production cutbacks in the face of increased supply and declining prices. On September 3, Interfor announced it is reducing production by 20% at all of its sawmills in the U.S. South in response to weak market demand.
The Canal Flats closure was announced to workers at the mill Wednesday morning by Canfor president Don Kayne. He said the company will do what it can to ease the transition. All employees are to be offered the chance to transfer to other divisions in the company, he said.
Singer said despite the offer of jobs, workers will likely face going north to places like Fort St. John. For those with families and established roots in the community, “that’s a long way away.”
The Canal Flats mill is one of three mills that Canfor purchased from Tembec three years ago. Only the other two, at Radium and Elko, have been upgraded since the purchase.
Canal Flats chief administrative officer Brian Woodward said the mill was old but after the May curtailment, he believed it would survive despite being overlooked in the upgrades. Wednesday’s announcement was a surprise to the whole village, he said.
About a third of the affected workers live in Canal Flats, a residential village of 750 people.
“I have a lot of friends who work there. They are saying, ‘Now, what do I do?’” said Woodward.
The closure is not expected to have a drastic effect on the village taxes, he said, as Canal Flats recently restructured its tax system.