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Roadblocks in B.C. to moving up forestry’s value chain

High-value mass timber manufacturing in the province needs a healthy primary sector
Kalesnikoff Lumber’s CLT and glulam plant in Castlegar.|Submitted

As B.C.’s forestry sector faces the next half century with a much smaller timber basket than has been historically available, the BC NDP government has been telling the forest industry and forestry-dependent communities that they will need to learn to do more with less: Less timber, more higher value-added wood-based products.

At the upper end of the wood value chain is mass timber engineered wood products like glue-laminated timber (glulam), cross-laminated timber (CLT) and dowel-laminated timber (DLT). It’s an evolving market with good growth prospects, in no small part because engineered wood products are a renewable resource that can dramatically lower carbon intensities in buildings when it displaces more emissions-intensive concrete and steel.

The question for Canada, and B.C. in particular, is whether it can compete with the U.S., which could end up dominating the market share of a growing, but niche, market.

The use of and demand for engineered wood products like glulam, CLT and DLT for mass timber construction is growing.

According to Statistics Canada, the value of structural engineered wood products manufacturing sales in Canada grew from $161 million in 2013 to $632 million in 2020. There were more than 500 mid-rise wooden buildings at various stages of completion across Canada in 2020. 

Glulam is made from structural lumber glued together to form larger beams and columns and can be used for structural components in place of steel and concrete.

At the top end of the value chain is CLT, which is used for large structural components that do the job of concrete and steel for making floors and walls in highrise buildings. It is custom-made for specific projects.

“It’s almost all project-based,” said Chris Kalesnikoff, chief operating officer for Kalesnikoff Lumber, a family-owned business that invested $35 million in a new CLT and glulam fabrication plant at its lumber mill in Castlegar in 2019.

“So you have to have design teams that are going to help engineer and design these buildings, and then every piece you make is very customized.”

Kalesnikoff Lumber and Structurlam are B.C.’s only two CLT manufacturers. Abbotsford’s Structurecraft makes DLT. The company, which grew out of structural engineering firm Fast + Epp, employs roughly 100 people in its design and DLT fabrication plant in Abbotsford.

It also sources CLT and other products from other manufacturers for its design-build projects, one of which was Brock Commons – an 18-storey mass timber student residence at the University of British Columbia.

The BC NDP government has been promoting mass timber construction to increase engineered wood product manufacturing in the province. Earlier this year it launched its Mass Timber Action Plan and is using government procurement powers to have public buildings made from mass timber. The plan’s goal is to have 10 new mass-timber manufacturers in B.C. by 2035.

“Right now, we have more [mass timber] buildings in B.C. built or underway per capita than the entire United States of America,” said Ravi Kahlon, minister of jobs, economic recovery and innovation. “That being said, we are coming to a point now where two things are happening. We are now seeing demand surpass the supply we have. We’re now looking at how we can support our local manufacturers to expand their operations, but also at how we can support potentially new players that want to enter the market.” 

However, engineered wood producers in B.C. face the same challenge sawmills do: A dwindling supply of timber and declining primary sawmilling sector. Engineered wood products use high-end structural lumber, and that sector is declining in B.C.

The total available harvest to supply sawmills shrank from 66 million cubic metres in 2016 to 52 million cubic metres in 2020, according the Ministry of Forests’ annual Major Timber Processing Facilities reports. As a result, between 2016 and 2020, B.C. lost 28 sawmills.

Meanwhile, over that same period, B.C.’s forestry majors have invested billions in either buying or building new sawmills in the U.S. The reason is simple: Apart from being the biggest market for lumber, the U.S. offers a more secure supply of timber and a lower cost of doing business.

Last year, Structurlam, B.C.’s first and biggest CLT producer, followed conventional lumber producers to the U.S. south, when it invested $120 million in a new CLT plant in Arkansas that will employ 130 people.

Kahlon pointed out that that investment decision had a lot to do with the fact that Walmart Inc. (NYSE:WMT), which is building a new 2.4 million-square-foot headquarters in Bentonville, Arkansas, from wood, struck a partnership with Structurlam to provide the project with mass timber.

Arkansas also has an ample and reliable supply of southern pine to feed the lumber mills that CLT and glulam manufacturing requires. The new Walmart headquarters alone will consume 1.1 million cubic feet of timber.

Kalesnikoff said B.C.’s declining primary forest industry is a serious concern for his company. His CLT and glulam plant is integrated with a lumber mill, which provides all the lumber for the engineered wood fabrication plant. The company now employs 100 people in its lumber mill and 150 in its CLT plant.

“Our sawmill, like everybody else, is being impacted by timber availability,” he said, “and we’re forecasting log shortages on our sawmill side, which could lead to impacts in our mass timber side as we continue to grow.”

Kalesnikoff gets about one-third of its logs from 89,000 cubic metres of tenure that it holds. The lumber mill and CLT plant uses about 300,000 cubic metres annually, which means the company needs to source about two-thirds of its logs from other suppliers. 

While he thinks the growth of mass timber construction and engineered wood products provides good opportunities to grow higher value wood-based manufacturing jobs, he said policymakers should not pin all their hopes on it, because the engineered wood products sector is a niche market that relies on a viable logging and sawmilling industry.

“The market [is] growing,” Kalesnikoff said. “It’s an exciting market, and we’re happy to be part of it, but that’s a super niche market. We’re a mid- to small-sized sawmill, and we’re at a point where we’re not sure if we’re going to have the timber availability to produce the growth we’re trying to achieve. The forest industry here, it’s a very difficult business right now, and it doesn’t seem to have a clear plan on how it’s going to rebound and succeed in British Columbia.”

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