BN12-53: L-P VENEER PLANT PUT ON HOLD

Oct. 25, 2001

By Mark Nielsen, Daily News Staff

It will be at least two-and-a-half more years before Louisiana-Pacific can finally start up its still-to-be completed veneer plant -- and it will be operating without a laminated veneer lumber line.

Poor markets and technical problems with the type of veneer that the plant was going to be produced are the causes of the delay according to L-P’s B.C. provincial director Len Pettman.

"There’s not a whole lot of desire to proceed with a facility at this point," Pettman said Wednesday.

The complex was originally going to produce flanges for low-cost I-joists, used to support floors. But the plan was predicated on continued growth in the engineered wood business, which has expanded at about 20 per cent a year for about five years.

As well, Pettman said that the flanges that would have been produced by the mill would not have met a new industry standard for strength, set when the leading producer increased the threshold for its low-end product.

It was also learned that the aspen that grows here lacks the fastening strength necessary to meet the seismic requirements for the California market.

L-P has already poured $24 million into the plant, which was supposed to have opened this spring, and it will cost another $16 million before it can start operating. Adding a single-press laminated veneer lumber mill would have cost a further $20 million.

The veneer plant would have provided about 125 jobs once it becomes a three-shift operation. The LVL plant is expected to provide 50 to 75 more jobs.

"We’re certainly not anxious to walk away from what we’ve developed but we also don’t want to put additional capital into a facility that we don’t know will be commercially viable," Pettman said.

"And it’s certainly much worse to hire a bunch of employees, and get it all started and then find it’s not going to be viable and create a bigger mess."

Even if the plant was going to be viable, it was doubtful that L-P would have been able to get enough fibre thanks to the shutdown of the Chetwynd pulp mill and the delay in finding a location in Fort St. John for the oriented strandboard plant.

The fibre for the plant would have come from peelable logs harvested on the tenures for those two mills. But with the shutdown and the delay, it would be 2003 at the earliest before enough logs to operate the plant could be harvested.

Other options are being investigated for the veneer plant, such as veneer that would be used to make industrial grade plywood for furniture, but it’s a time-consuming process.

"It’s going to be at least four or five months before we know whether it’s something that would work commercially and beyond that it’s at least two years before we’re really in a position to get into production mode, design the equipment, etcetera to make this product," Pettman said.

Meanwhile, L-P reported Wednesday a third quarter net loss of $2 million. Company chair Mark Suwyn warned that L-P will be bracing for some tough times.

"While the economic impact of last month’s tragic events on the building market is still unclear, aggressive efforts are underway at L-P to further reduce overhead expenses, cut operating costs and improve productivity," he said.

Pettman said that the oriented strand board plant in Dawson Creek should survive the downturn, although there will be some week-long shutdowns along the way.

This article is taken from the Peace River Block Daily News, Dawson Creek, with the permission of the publisher. The Daily News retains all rights relating to this material. The information in this article is intended solely for research or general interest purposes.

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