Tolko lays off 100; Gorman holds on

By Steve MacNaull September 22, 2007 Daily courier

The high Canadian dollar, low international lumber prices and drop off in American housing starts means layoffs in the Okanagan. “It‘s rough out there,” says Jim Baskerville, the manager of Okanagan operations for Tolko Industries. “About 100 of our Okanagan workers are affected by the Kelowna sawmill shutdown for two weeks and Armstrong and Lavington going from three shifts a day to two.” In total, Tolko has 960 workers in the Valley. “Over the summer, we tried to minimize the impact by rotating shorter layoffs,” said Baskerville, “but the market fundamentals dictate that we have to do more now.”

The deepest cut is at the Armstrong saw and planer mill, where the third daily shift is being laid off indefinitely. That means 30 employees received layoff notices that go into effect Monday. In Kelowna, the sawmill will be shut down for two weeks, Oct. 9-19, affecting 50 workers. “Those workers have the option of using holiday time to cover the two weeks so they won‘t lose any money,” says Baskerville. “We‘ll also use that time to install the last of the new equipment that will help us get more out of beetle-killed wood, so some workers will get work doing that.” In Lavington, the shift count will go to two from three for two weeks, Oct. 1-12, affecting 20 workers. They too will be given the option of using holiday time to cover the layoff so they don‘t lose money. This situation has been months in the making.

Tolko and most other B.C. lumber producers export their studs and plywood for use in U.S. house building. However, the American market started to slow last year, and was further pummeled recently when the sub-prime rate mortgage market collapsed. The price of lumber per thousand board feet as a result has slid to US$305 from $395. Add to the mix that the Canadian dollar has risen to near parity with the American greenback and there‘s less demand and less profit in B.C. lumber. Meanwhile, there‘s pain but no layoffs at Gorman Brothers Lumber in Westbank, where 350 work. “We‘ve assured our employees that their jobs are not at risk,” said Bill Reedy of Gorman Brothers. “We make and sell only high-end niche boards used for moldings, casings and finishings, so the price and demand for our product is actually going up.” However, the company is in a loss position because the higher Canadian dollar has eaten away the profit in exporting to the U.S. “We‘re doing all we can to control the costs we can, and hope to put ourselves back in the black soon,” says Reedy.