Ontario communities like Kenora, once reliant on the forestry industry, have been waiting a long time for good fortune to return.

 

No wonder the recent signs of life at Kenora Forest Products are attracting attention. The mill was “temporarily” shuttered in April 2008 due to market conditions and it meant the loss of over 100 well-paying jobs. After a handful of announcements of not only a restart, but expansion plans, over the past seven years, reality is now closer than ever.

And, while we’ve got politicians lining up for photo-ops, the union representing future works announcing amendments to wage agreements and others clamouring to get in the picture, the people who deserve just due are the Prendiville family, who own Manitoba-based Prendiville Industries, Kenora Forest Products’ parent company, and their management team. There has been a significant investment made by Prendiville Industries, both financially and in terms of time, effort and persistence.

During a tour of the Keewatin mill site two weeks ago, Prendiville Industries chief operating officer Albe Prendiville pointed out some of the construction underway on both existing and new buildings. There is a new “log line” for processing six-inch and smaller diameter timber, a new computerized planer mill building, which will include automated grading and 30-bin sorting for production of the company’s new line of Machine Stressed Timber, a structural wood product that will be manufactured on site for domestic construction and export to international markets.

The Prendiville family was commended by Mayor Dave Canfield during the July 8 tour for hanging in there when others would have walked away.

That is a bit of an understatement. Optimistic people like to think that everything will turn out fine, even when it is not always possible. But Kenora Forest Products is at this cusp of reopening because of so much more than optimism. They not only hung in there, but worked to come up with improvements to the mill to make it profitable when the time to reopen comes. There was a will to succeed despite a turndown in the U.S. housing market; despite prolonged, and no doubt at times frustrating negotiations to receive timber harvesting permits from the province; despite, according to the Ontario Forest Industries Association, Ontario being the highest cost jurisdiction in the world to do business in the forestry industry; and despite special interest lobbies that reach the offices of the premier and key cabinet ministers resulting in more rather than fewer barriers to harvesting timber.

Being cautiously optimistic myself, you might say I too often question what barriers might crop up and am only optimistic if there’s quite a big chance that everything will turn out fine.

Last December, when KFP hosted an open house on its proposed additions, mill manager Rod McKay acknowledged the expansion plan was contingent upon receiving timber harvesting permits from the province; a process which he said at the time was in the final stage. In fact, the management team was anticipating ministry approval of a wood supply either before the end of 2014 or early in 2015.

Two weeks ago, Prendiville Industries Ltd. president Maureen Prendiville confirmed the company’s application to secure provincial harvesting permits and forestry licences is complete and awaiting approval by Ontario Natural Resources and Forestry Minister Bill Mauro.

The company has taken a calculated risk, I suppose, in starting the construction ahead of having the permits in hand. Kenora Forest Product’s traditional markets are the U.S. Midwest and customers as far south as Texas, along with some Canadian sales. While market demand plummeted when the U.S. housing bubble burst in 2006, it has finally regained its strength in the last year. This makes now the time to start the mill, which will require 450,000 cubic metres of timber annually once it is in full production.

Mauro was in Kenora two weeks ago for the National Forest Innovation Summit, but he wasn’t as eager as his federal counterpart, Kenora MP Greg Rickford, who is Minister of Natural Resources and Minister for FedNor, to make a splash. Rickford announced a $3-million interest free loan for Kenora Forest Products, repayable over 10 years through FedNor’s Targeting Manufacturing Initiative.

There was, of course, Internet chatter about the timing with a federal election coming and Rickford being a johnny-come-lately to the party. I will give him that since becoming Minister of Natural Resources approximately 16 months ago, Rickford has been vocal about value-added being the means to survival for the forestry industry. He made a point of advancing the discussions about technology in the industry at the Forestry Innovation Summit earlier this month.

No one is talking though about the biggest issue lurking in the background through Kenora Forest Products’ ramp up to production and this fall’s federal election campaign. The 2006 Canada/U.S. Softwood Lumber Agreement is set to expire Oct. 12. After decades of dispute, the 2006 agreement bought a nine-year truce that could erode quickly. The U.S. housing market is heating up, which creates increased demand for Canadian lumber — which is good for companies like KFP, but something that has inevitably antagonized U.S. lumber producers and led to legal battles and penalties being applied against the Canadian industry because Americans believe it is unfairly subsidized by government.

No doubt the Kenora Forest Products team has analyzed the challenges that could arise. But new markets off-shore have developed to off-set the decrease in demand during the U.S. housing slump; Ontario has made building code changes which should improve domestic sales; and KFP will have an additional product in the Machine Stressed Timber to sell — all reasons to believe good fortunes are possible.