An Editorial Opinion – Right From The Stump, December 4, 2024
The list of British Columbia forest product companies in financial trouble grows. San Industries Ltd. and associated companies have sought financial restructuring under CCAA, according to a court filing on November 29, 2024.
This development follows in the wake of Teal Jones (financial restructuring - April 2024) and Skeena Sawmills (bankruptcy proceedings - September 2023).
San Industries Ltd. et al, otherwise known as the San Group, have a reputation for pushing the envelope on the value-added manufacturing file, attempting to change the conventional approach to forest products manufacturing in coastal BC. The San Group has two sawmills in Port Alberni along with a relatively new value-added manufacturing plant. Also, the San Group had purchased Interfor’s Acorn sawmill in Delta in 2022. A fire in April this year has left the Acorn sawmill inoperable, while San’s large log line sawmill in Port Alberni has been curtailed since October due to lack of log supply. The San Group has no forest tenure of its own and relies on BCTS timber sales and commercial agreements to source its logs.
Regardless of the management decisions of this company and others that have contributed to their financial troubles, the trend is nonetheless alarming. When combined with the knowledge that companies like Interfor have made the strategic decision to exit the BC coastal forest sector, while Canfor and others are closing sawmills in the interior – there is an undeniable reality that what is occurring is unique to British Columbia – there is a common thread underlying all of this.
To be clear – this is not for lack of trees to harvest. Where San Industries, Teal Jones and Skeena Sawmills have operated, there was (is) an over-abundance of trees.
Is it best to let sawmills and other manufacturing plants fall to the wayside, and let our forests go unharvested? Should British Columbians including those in rural communities continue to tolerate deteriorating investment conditions for BC’s forest products manufacturing sector, or for that matter, the natural resources sector, in general? Absolutely no!
The trick is to find the balanced solutions needed to generate prosperity while achieving other values. Unfortunately, efforts by the provincial government of the last few years have failed as this dismal trend continues. Immediate and meaningful action is needed. More troubles are coming.
For proposed solutions, more analysis and commentary on the BC forest industry please check out the next View From The Stump newsletter to be published within the next few days. If you have an investment or stake in the forest sector you should be a newsletter subscriber.
And if you are trying to decide what the next move should be for your forest products business, either exiting BC or investing here, the Spar Tree Group provides independent, direct strategic advice and analysis to help you make that critical decision.
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Written By David Elstone, RPF
Publisher, View From The Stump newsletter
Managing Director, Spar Tree Group Inc.
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