Canfor to permanently close Vavenby sawmill

Canforhas announced plans to permanently close its sawmill in Vavenby, B.C., this July.

The company is shutting down operations and it's selling the forest tenure associated with the sawmill to Interfor for $60 million, according to a written statementfrom Canfor releasedMonday night.

Don Kayne, president and CEO ofCanfor, wrote thatthe decision was made because of long-term log supply constraints, the high cost of fibre and ongoing depressed lumber markets.

"Today's decision is not a reflection on our employees, our contractors or the local communities of Vavenby and Clearwater who have all contributed significantly to the operation of our mill," Kayne wrote.

"We deeply regret the significant impact to our employees, contractors and the communities, and will be working to support them through this difficult time."

The Vavenby sawmill has an annual production capacity of approximately 250 million board feet a unit of measurement used to quantify lumber in the U.S. and Canada.

Following the closure of the Vavenby operation, Canfor will have 12 sawmills in Canada, with total annual capacity of approximately 3.55 billion board feet.

Vavenby is a community of around 700 people, located about twohours north of Kamloopsand 20 minutes east of Clearwater.

172 jobs directly affected

Clearwater Mayor Merlin Blackwell said the closure will hit the local economy hard.

"This is 172 jobs that will be affected directly and probably double that to triple that in contractors and other people within the Clearwater, Vavenby, North Thompson valley that depend on this mill and their operation for their employment," Blackwell said.

"We've been through shutdowns before, multi-year shutdowns with Canfor, sowe had a feeling something was coming," he continued. "So some plans and some ideas have been going around as to how we would deal with the situation if this should come to happen, and it's rather unfortunate that it has happened."

Doug Donaldson, B.C.'s Minister of Forests, Lands and Natural Resource Operations, said he was "saddened" to hear about the Vavenby closure but not entirely surprised.

"The challenges facing the industry have been building for years and analysts have predicted a reduction in milling capacity for some time, especially in the Interior," the minister wrote in a statement released Tuesday.

"Declining timber supply the result of the end of the pine beetle-killed wood, exacerbated by record-setting fire seasons the past two years has left the industry scrambling to keep log yards full and keep people working."

Donaldson said ministry staff will work with Canfor and the community "to co-ordinate the delivery of provincial support programs" for workers.

As for what the employees will do next, Blackwell said it will be a "tough battle" in a packed hiring pool.

"The last time we had a long-term shutdown, we had a very vibrant oil patch in northern Alberta and northern British Columbiaand a lot of people actually went to work in that ... but this time, we don't really have that opportunity because a lot of mills are struggling already," he said.

Interfor said taking over Canfor's forestry tenure ensures Interfor's mill at Adams Lake will be able to stay open long term.

In 2009, the company says itcompleted a four-year $140 million modernization of the Adams Lake sawmill and has since invested more than $40 million inthe operation.

"While business conditions in the Interior are currently challenging, we're in the business for the long-term, said Duncan Davies, Interfor'spresident andCEO.

"This transaction materially enhances Adams Lake's log supply and sets the stage for its future success in much the same way the investments made 10 years ago set the stage for its success over the last decade."

The Adams Lake mill is at least two hours south of Vavenby.