Canadians have manufactured a centuries-old reputation as hewers of wood and drawers of water, exporting rail-car loads and ship loads of raw material for someone else to process into consumer goods.
But the ongoing Canada-U.S. softwood lumber dispute and the accompanying 27-per cent duties on Canadian lumber exports may pose some silver lining opportunities for forest products producers in northwestern Ontario.
Kenora Mayor Dave Canfield and the Lake of the Woods Business Incentive Corp. are on a mission to promote a new awareness in value-added processing in the forest industry.
They staged a May 8 forestry seminar at the Lakeside Inn in Kenora to explore ideas for value-added wood products in the region.
After seeing skid after skid of raw lumber stockpiled in the yards of some area sawmills because of the lumber dispute, Canfield says it is high time area wood producers convert their primary production of dimensional lumber into finished consumer products.
“When I look at those skids I see gazebos or picnic tables or lawn furniture as opposed to piles and stacks of two by fours and two by six’s ,” says Canfield.
Canfield hopes the seminar provided the spark for area producers to pool their expertise and resources into joint-venture partnerships and into remanufactured goods.
“The old way of doing business of trying to protect your niche in the market doesn’t work,” says Canfield. “If a consortium of companies began remanufacturing in a joint venture you will find success.
Canfield says some local companies appeared “very keen” on doing just that. Since there are no virgin stands of timber left to be sourced, value-added product manufacturing is the only alternative left to grow a business.
“All the raw wood fibre in Northern Ontario is already allocated,” he says. “There isn’t any more wood to be had.
The only way to build their business is to get into remanufacturing. Adding value means more profit and more jobs.”
The seminar, attended by 30 area sawmill operators and wood producers including Weyerhaeuser, as well as politicians and educators, featured a brainstorming session that produced 112 ideas for value-added opportunities.
Some of those ideas included community cogeneration plants, modular housing, cedar and pine furniture, caskets, all-weather decking, I-joints, cedar shakes, prefabricated docks and boathouses, kitchen cabinets, portable saunas and hot tubs.
But there are hurdles and risks identified with change, attendees noted. Some of the hurdles identified were a lack of human and financial resources, a limited entrepreneurial drive, dealing with an old mindset, lack of awareness in exploring new markets and opportunities, government bureaucracy and securing research funding.
“No doubt venture capital did come up,” says Canfield. “Among the concerns for small companies is that there is not much capital in lumber, they’re just breaking even. Cash is kind of tight right now.”
One source of inspiration delegates can draw from is Nor-Fab Building Components Ltd., a Fort Frances-based manufacturer of prefabricated gazebos, sheds, picnic tables, flooring material and stair stringers.
General manager Brian Hagarty, who delivered the seminar’s keynote address, laughs at the suggestion his 176-employee company has become northwestern Ontario’s poster boy for value-added wood.
“We’re not a company that spent millions in research and development or hired marketing agencies...we’re just a company that started on a small budget and decided to go bang on some doors.
“Value-added products fall under the Free Trade rules and outside the softwood lumber countervailing duties.”
Hagarty wanted to spin Nor-Fab’s experience in the U.S. market as one that is easy to access providing one is willing to make some cold calls and service one’s customers properly.
“It’s a lot easier than people think. It’s not a foreign country, they speak the same language and use the same banking rules.”
Nor-Fab started out as a small-scale operation with a handful of employees in 1984, financing their expansion in-house as product demand increased before eventually tapping into some federal dollars through the now-cancelled Transitional Jobs Fund from Human Resources Development Canada.
“We’re very busy and we’re experiencing growth every year,” says Hagarty, who expects to employ 200 by year’s end and ship out about 50,000 units in six product lines.
He credits Wayne Robinson, an international trade specialist from Thunder Bay and the seminar’s facilitator who once ran the Canadian consulate in Minneapolis, for his help in accessing the American market.
“Many people don’t know that Canadian consulates are an excellent source of information,” who can provide lists of buyers of hardware and lumber products in every major U.S. market, says Hagarty.
With the excitement from the seminar still in the air, Canfield plans on following it up with another event this fall and inviting additional expertise in foreign trade.