Kenora Forest Products is one of several wood products manufacturers agonizing over how to marry the operation with a value-added component.
Kenora Forest Products produces 80 million board feet annually of spruce, pine and fir studs, railway ties and squares. A portion of the company’s waste is turned into fence pickets for fencing and lath, which is made into lattice panels, Rod McKay, manager of the plant says.
As a member of Kenora’s local value added committee, McKay is continually searching for ways to capitalize on secondary products. He has been approached by Kenora Mayor David Canfield to manufacture prefabricated houses - a concept that has piqued his interest, particularly since homes are constructed largely from building studs, McKay says.
As of yet, he has no plans to approach the government with funding requests to kick-start prefabricated house manufacturing. Instead, company officials are exploring opportunities, and examining how to best fit into the value-added market. Both McKay and Canfield understand the need to bring in people who will move such initiatives forward.
Canfield is committed to getting value-added wood opportunities off the ground. Last year he invited forestry company officials and town representatives to a brainstorming session where up to 112 different possible value-added wood products were considered. Now that the group has shortlisted some items, small- and medium- sized sawmill operators and entrepreneurs are getting a push from the town leader to move ahead with the ideas.
“We are slowly getting there,” Canfield says with a slight laugh.
Businesses like Devlin Timber, Laclu Industries, Kenora Forest Products and carpenters eager to cut out a niche, want to know how they can optimize their forestry waste or begin new initiatives, Canfield says.
Ontario’s Living Legacy Trust stated in a recent announcement an over supply of lumber exists in the marketplace, and more innovative ways of selling lumber could improve the health of the forestry sector by $2 billion between 2003 and 2010. But the window is narrowing, and more skilled workers will be required to ensure a secondary industry reaches its fullest potential.
“We’ve been told there is a huge market out there for re-manufacturing and value-added products,” Canfield adds. “We know that it will help us offset some of the softwood lumber problems,”
He holds faith in Minister of Natural Resources David Ramsay, who hails value-added projects as the new winds of change for the forest industry.
“The governments have to take a leading role with value added,” Canfield explains, since venture capitalists are hard to come by for small- and medium-sized companies.
Ramsay says all he can do is point the forestry operators in the right direction. The largest opportunity the government can give the industry is wood allocation, but ultimately it will have to be the company’s decision to take up the call for value added.
Ramsay cites the Kenora Weyerhaeuser Trus Joist plant in the northwest as a value-added success story, and is looking to entice the northeast into developing a similar manufacturing facility since non-traditional timber types can also be found in the northeastern region.
Because of the way timber allocation is structured, the “quickest way to compile this efficient fibre for such an operation would be through business-to-business relationships, and the companies know that,” Ramsay says.
Other initiatives are on the burner. The whole idea of premanufactured housing has caught the interest of Ramsay and Peter Woodbridge, author of a value-added report for Living Legacy Trust.
“I met with Woodbridge a couple of times and talked about this, and he has identified an opportunity for Northern Ontario to be a world leader in this modular housing business,” Ramsay adds.
In fact, private business leaders and academics have also jumped on the prefabricated house idea.
Gordon Hobbs, president of Tryllium Industries Inc., former vice-president of Black and Decker Ron McKitrick, and president and CEO Pat St. John of Shad International, along with a consortium of people are looking to develop a Web system with tools for users to view, alter, preview and buy a new house online.
Included on the site would be the exact house price, building codes for all of United States and Canada, as well as materials and labour costs. Once a prospective homeowner purchased the house, the lumber would be sent to a milling operation where it is cut, then moved to a manufacturing site.
Workers would assemble the product in modular sections, then ship it to the location; all in seven days, and all at half the Canadian price of a conventional house, Hobbs explains.
“The whole idea is to have entrepreneurs, government and existing mill operators setting up a relatively simple manufacturing facility, a couple of thousand feet, nothing fancy, at least just to get started,” Hobbs says.
McKitrick has written letters to approximately 40 federal ministers in hopes of eliciting support for funding.
“We have had positive responses from the people in Kenora and they have spent some time trying to make things happen, but as far as the federal government’s concerned, it’s been a lot of talk and no action,” McKitrick adds.
In the meantime Hobbs is looking to secure an appointment with officials from Living Legacy Trust to discuss the concept further.
Hobbs met with FedNor officials last August, and also with officials from the Industrial Research Assistance Program’s National Research Council to stir the economic juices. Although the excitement was palpable, it waned, he says.
“We need a champion to direct this (value-added sector),” Hobbs explains.
Natural Resources Canada funded a national value-added wood research program worth $4 million between 1998 and 2002, which was delivered by Forintek Canada Corp. Forintek is a national government
corporation with a mandate to support the forest products industry. Their goal is to optimize manufacturing processes and help in the production of high value products for customers. The same institute won another federal program, Value to Wood, this time worth $15 million over five years beginning in 2002 and ending 2007. The program is set to explore research and development around second-hand manufacturing. The second stage would include funds for technology transfer between Forintek Canada and small- and medium-sized manufacturing businesses.
Jim Farrell, director general of the industry economics and program branch of the Canadian Forestry Service, says ideas like pre-manufactured housing are not new, but questions why a firm attempting to develop a marketing tool for a secondary industry would want government nosing around in their business.
“Why would they share (a competitive edge) with anybody else?” Farrell asks. “It is an advantage to their firm, it gives them an advantage in the market place. The (private sector) generally doesn’t welcome government plowing around with big feet.”
That is why the government is cautious on where it stands in terms of free competitive research for all, he explains. Farrell says, as research and development funds become available, there is a general view across the industry to “stay out of it and let the competitive forces play. Let the winners win and losers lose.”
But who may be the losers? As Canfield sees it, industry players and government who are slow at the start may be the losers in the end.
“Canadians in general exercise a lot of caution when we shouldn’t,” Canfield says.
Based on conversations with company officials in Kenora, McKitrick says forestry onlookers south of the border may be interested in this pre-fabricated house idea as it would be a nice fit into their portfolio. He knows competitors south of the border are pursuing ways and means of pre-manufacturing housing.
To keep the initiative in Northern Ontario, Canfield is looking to Forintek Canada to become involved in a three-year value-added program aimed at identifying and marketing secondary products from existing forestry waste. He has approached Ramsay on the topic in hopes of drumming up some government support. Now, he says, the ball is in the government’s court.
“If we are still talking about this two years from now, then there is a serious problem,” Canfield says.
