The 150 workers at NorFab in Fort Frances might well be poster children for the explosive growth potential in the value-added wood-products sector.
The 18-year-old manufacturer of roof trusses, garden sheds, gazebos and stair stringers has plans to expand their production space yet again this fall, feeding off the white hot North American residential housing and home improvement market.
The problem is they cannot find enough workers to keep up with the pace.
"Our expansion capacity in the last year has been hampered by our inability to find people, and we're going to be faced with that situation again this year," says NorFab general manager Brian Hagarty, outlining a relentless search for people to fill unskilled entry-level positions.
"There's just not enough people out there," Hagarty says.
After starting out in the early 1980s with five employees, the company has added roughly 30 to 40 people to the payroll in the last four years and has increased their production space from 3,200 square feet to more than 45,000 square feet.
NorFab was a trendsetter from the start before anyone ever conjured up buzzwords like value-added, making roof and floor trusses for the Fort Frances market and northwestern Ontario.
At that time they did not know it was a value-added product, says Hagarty; they were just filling a niche in the Fort Frances and northwestern Ontario market.
By the 1990s they had expanded into the Thunder Bay market, then into the northern states. Now they ship to distribution points for wholesalers in New York, Chicago, and Eau Claire, Wis. and are planning a move westward this year by entering into what Hagarty describes as "strong negotiations" with the second-largest big-box chain in the world.
Despite the slowing economy, the North American residential housing and home improvement market still looks "very strong" in the forseeable future he says, providing interest rates remain very favourable and home ownership is still regarded as a good safe investment.
"Since Sept. 11, the worse predictions we've heard is that people may stay home and renovate their house, which is not a bad thing,” says Hagarty, since about 70 per cent of their sales of prefabricated products fit nicely into the lawn and garden products market.
Hagarty criticizes the north's continued reliance on primary wood production in lumber and pulp and paper. It has a short-sighted, limited vision and keeps on doing what has always been the region's traditional and historical bread and butter.
"There's been kind of a stupid mindset that we should sell our resources," says Hagarty, "and it's not really the smartest way to go, but it's what people feel comfortable doing."
With about 85 per cent of everything NorFab produces being shipped to the U.S., their constantly expanding finished-products line enters the U.S. duty-free, since prefabricated goods are protected under NAFTA.
The whole story with the softwood lumber agreement in the last 12 to 18 months and the countervailing duties, it's all been good for Canadian manufacturers," says Hagarty.
"I don't want to say we like the duties, but when it was 31 per cent I'll tell you our sales were up. All of a sudden our competitors would rather buy products from us than buy two by fours from a Canadian mill and pay the 31 per cent duty to make the same product we were going to make anyway.
"For that kind of money they can buy the finished product from us and sell it to their customers."
The consumption of value-added wood products remains so white-hot, NorFab has plans to build a 16,000-square-foot addition this fall, dedicated to a new specialty product line under development.
"We have probably a dozen opportunities...there's such a market for value-added products. The Americans can't compete with the strength of their dollar, the countervailing duties and they don't have the raw materials locally. There are so many new items we could do and have about 300 people working here this year."
