A low loonie isn’t something about which you’ll likely hear anyone at Arauco lament.
In fact, the Sault Ste. Marie medium density fibreboard producer banks, in part, on the Canadian dollar remaining worth relatively less than the greenback for a continued competitive edge.
“It’s been a positive thing,” says Anthony DiGasparro, Arauco’s northern business development manager.
That’s an understatement; two-thirds of the outfit’s order file goes into the U.S.
“We’re in good shape in that regard,” DiGasparro said. “We still have a strong Canadian market, but (the low Canadian dollar) is great for us right now.”
And into the future.
On Tuesday, however, the Base Line business was saluting the past. It was 20 years ago Arauco North America — formerly Flakeboard Co. — pressed what is known in the industry as its first board from a 38-metre-long continuous MDF press. Although many staff had been recruited and hired up to a year earlier, it was on April 12, 1996 that MDF panels rolled from the out feed of the plant’s German-made Dieffenbacher press. There were 87 on the payroll then, and, two decades later, many employees from that original start-up group continue to work at the mill, subsequently joined by others. There are currently 119 on staff.
Arauco is a bit of an anomaly right now on the Sault’s large-scale manufacturing front. Big employers, such as Essar Steel Algoma and Tenaris Algoma Tubes, have been saddled by specific negative market forces — steel dumping and the slumping price of oil have been branded — prompting all the wrong kinds of headlines, as waves of layoffs have been announced over the last so many months.
Both DiGasparro and Arauco plant manager Lloyd Hotchkiss concede the operation has faced tough economic climates more than once.
However, the mill continues to be a leader in the engineered wood business, said Hotchkiss, crediting both favourable market conditions and hard work by all on board, which has allowed the outfit to blossom into “MDF manufacturing professionals, exceptionally adept” at customer service.
DiGasparro echoes that sentiment.
“We run an efficient, lean operation,” he said in an interview with The Sault Star.
“We go through cycles like everybody else. We’re riding a pretty good wave right now. The best thing you can do and, I think, one of the reasons we’ve been successful as an MDF manufacturer, is we focus on, obviously, top-quality board and superior customer service.”
Medium-density fibreboard is an engineered wood product made by breaking down hardwood or softwood residuals into wood fibres, often in a defibrator.
“I mean, if you can service the heck out of your customers, you’re in great shape,” DiGasparro said. “You’re going to put yourself above and beyond some of your competitors. And that’s what’s kept our order file pretty full.”
The story, actually, goes father back than 1996, when the Sault Ste. Marie Economic Development Corp., began working with government officials to help attract GP Flakeboard to the city.
Working with the EDC, the company received the nod from three funding partners — the Northern Ontario Heritage Fund Corp., Fed-Nor and the Community Development Corp. — along with support from the City of Sault Ste. Marie, to get the money it needed to construct a new facility at the west-end location.
Costs, early on, were high but, over the years, mill production blossomed and outperformed its original design capacity. Production levels helped ease the cost pressures and resulted in the confidence to move forward with a lamination plant in 2004.
“Everything combines to make it a challenge to be successful in industry,” DiGasparro said. “But, if you’re known in your particular sector as a top producer of product, they’re going to come to you to buy that product. If there’s anybody selling board, they’re going to come to you.”
In 2012, Flakeboard Co. Ltd. and Arauco announced an agreement for the sale of outstanding Flakeboard shares to Arauco.
The latter, a major forestry company with branches in Chile, Argentina, Brazil, Uruguay and the U.S., purchased the agreement that combined Flakeboard’s eight North American operating facilities. Flakeboard officials said at the time headquarters in Sault Ste. Marie would not be affected directly.
Arauco employs more than 13,500 at 30 international production facilities, with sales staff in more than 80 countries. Products, sold on five continents to 3,500 customers via 220 ports worldwide, include engineered panels, such as MDF made in the Sault, as well as lumber and pulp. Arauco is also heavily invested in power co-generation.
Arauco’s “heavy slant” toward capital re-investment and staff development also bodes well for the continued long-term viability of the Sault Ste. Marie facility, DiGasparro said.
“There are many MDF manufacturers who are not here today, who have either not set up their cost structure to be successful, or have not generated the requisite quality or service to stay in the game,” he added. “We have. So that’s why we’re here.”
For the long haul, the operation hopes.
Given that current market conditions — including the low Canadian dollar — maintain, the outfit is on firm footing to face the future, DiGasparro said.
“We have a solid raw material supply, solid customer base, many of which have been here since the first board, and they haven’t gone anywhere,” he added. “So, things are looking bright.”
Some challenges are not the products of market fluctuations.
The outfit appears to have recovered from a 2015 blaze that caused extensive damage. A long section of MDF product apparently got jammed as it exited the out feed of the press process, fire officials said at the time. That jam caused the wood product to reach its ignition temperature, which created a spark causing a dust fire and explosion. No employees were hurt, but one firefighter received minor injuries.
Had someone from the plant been injured, it’s likely everyone would have known the person — and cared. One of the advantages of a relatively compact outfit, DiGasparro would insist.
Management tries to make everyone feel they are important components of the overall operation, he said. Business details are shared “as much as we can” and employees seeking new challenges are not discouraged from stepping outside specific roles or comfort zones.
“If someone steps up and says, ‘I’d like to try doing something,’ we don’t say, ‘No,’ very often, because there’s so much work to go around,” DiGasparro said.
It wasn’t all work Tuesday, as staff were treated to cake, coffee and kudos; more celebrations are planned to accommodate shift workers.
“It’s kind of nice just to pause and, you know, you don’t want to pat yourself on the back too much, but you certainly want to thank the people that got you here,” said DiGasparro, who can count himself as one of those who helped get the wheels turning.
A native of Sault Ste. Marie, he was working elsewhere when he was lured back to the city 21 years ago to join the fledging operation, where he’s held a number of senior positions.
“I haven’t gone anywhere because it’s a good place to be … It’s a good company to work for, I feel comfortable,” DiGasparro said.
“It’s been good for me, good for my family and I’ve been happy and certainly very busy and content.”