Indefinite shutdown at Kelowna lumber mill to become permanent: Tolko Industries

Kelowna’s lone lumber mill, which was indefinitely shutdown in September, will be permanently closed come January.

On Friday, Tolko Industries announced the decision on its website, stating the mill will close for good on Jan. 8.

The company said the news came after a thorough examination of all contributing factors, including log costs, market conditions and cumulative policy burden.

The news also comes just weeks before Christmas, and will affect approximately 125 employees.

“At this time, our thoughts are with impacted employees in Kelowna,” said Tolko president and CEO Brad Thorlakson. “This is a difficult decision.

“The Kelowna mill has been in operation since the 1930s and has contributed to the community through job creation and many other economic spinoffs for more than 80 years.”

“The mill has always had an excellent team that produced a highly regarded quality stud for North American and export markets. It will always stand as an example of what can be accomplished when ingenuity and know-how come together for a common purpose.”


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Thorlakson said employees were informed about the decision earlier Friday, and that they will soon be given detailed information on what they can expect next in terms of severance packages and benefits.

He said wherever possible, employees will be offered positions at other Tolko locations that currently have vacancies.

“Our HR team is on-site, providing information and support for accessing career transition services,” said Troy Connolly, vice-president of solid wood.

“And they will be available to help people as we move through this process.”

Connolly added “we want to thank everyone at Kelowna for their many years of dedication and support and assure them this decision was not easy for us to make and has nothing to do with the quality of work or the caliber of people at the mill.

“The industry is facing many challenges that are beyond our control, and tough decisions are necessary to ensure our future sustainability.”

On Sept. 12, Tolko announced that it was indefinitely curtailing work at its Kelowna mill because of continued high log costs and poor North American market conditions.

Prior to that announcement, the plant underwent a shift reduction in July, with 90 employees being affected. Then came six weeks of downtime that was supposed to run Aug. 6 to Sept. 15, which turned into the indefinite shutdown.

“This decision was not easy for us to make,” Connolly said on Sept. 12. “We are very disappointed to be in a position where we have to curtail the mill, particularly given the reasons for this extension are beyond our control.

“However, with lumber market prices at sustained low levels and high log costs in B.C., the mill cannot be cost-competitive.”

On Friday, the president of the workers’ union, United Steelworkers Local 1-423, spoke to Global News.

“We received a call earlier this morning from Tolko Industries letting us know that they’ve come to a decision on the Kelowna mill,” said Pat McGregor.

“Right now, it affects about 200 people who were actively employed at the mill. We’re meeting next week on the 15th to go over the list of the affected people and make sure we haven’t missed anyone.

McGregor added “some people have left to go onto other jobs, but the majority of the workers were in limbo until today. This gives them at least a little bit of closure on the situation.”

Asked about the crisis the industry is facing, McGregor said “until now, it really hasn’t affect us in the (Southern) Interior. But it is a microcosm of what’s going on.

“Mills are telling us they can’t afford to get logs in and it doesn’t seem anybody’s willing to move one way or another. So the effects are mills are shutting down all over the province, and that’s just unacceptable to us.”


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The MLA for Kelowna-West called Friday’s announcement terrible and laid blame at the provincial government’s feet.

“I’m extremely disappointed that the government and the minister and the premier have failed to react to this ongoing problem when the alarm bells started going off in June,” said Ben Stewart.

“Everybody that I’ve talked too – I’ve been in at least a half-dozen forestry roundtables around the province, including Kelowna – and the No. 1 issue that we’re facing is we’re that completely now uncompetitive to every other jurisdiction in North America.

“It’s bordering on negligence and incompetence, and that’s what bothers me the most. There are reasonable solutions.”

In his interview with Global News, Stewart cited carbon tax increases, stumpage fees that went up on July 1 and the employer health tax as contributing factors to B.C.’s lumber crisis.


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Asked he found Friday’s news surprising, even though the mill had been closed indefinitely, Stewart said yes, adding he had toured quite a few mills.

“The Tolko mill in Kelowna was considered to be one of the most efficient, modern pieces of infrastructure within their operations,” said Stewart.

“And I was told, probably less than a year ago, that it was likely one of the last places that would be shut down because of the fact that it had the ability and the efficiencies to sustain long periods of low pricing and things like that.”

“But these other factors are eventually making it completely unreasonable.”

Stewart added “and even talking to Tolko, they’re keeping things going at a couple of their mills, but, frankly, their mills in other parts of the country are far more profitable, and they’d supply product from there before dealing with the high cost production that they’re faced with here in British Columbia.”

 

© 2019 Global News, a division of Corus Entertainment Inc.

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