69TH Annual Olympic Logging Conference... Industry Capacity Meeting Market Demand

by Mike Crouse

A crowd of over 200 logging contractors, timberland owners, mill operators and machinery sales and support crew assembled in Victoria, BC Canada at the Victoria Convention Center within The Fairmount Empress Hotel for the 69th Olympic Logging Conference, whose official opening was on Thursday, May 1st.

This year first general session opened at 8 a.m., a first in recent memory, whereas in previous years the opening session was at 1 p.m., (to allow 8 a.m. morning ferry passengers arriving from Port Angeles to make the program) this year opening allowed a full day of programs, a move, which based on participation, was well accepted by all, and if anything the numbers in attendance seemed to have increased.

Those arriving on Wednesday had a few options beyond sightseeing, including a using a ‘zipline’ (Adrenalin Zipline), or golfing, in addition to annual dinner sponsored by NC Machinery/Caterpillar at the Grand Pacific Hotel, and a meet and greet in the Ivy Ballroom at the Empress that evening.

Thursday and Friday mornings open with a 7 a.m. breakfast in the Empress’ Palm Court, with early risers option to attend “Jack’s Spot” where Jack Zaccardo (retired forester and former OLC President) presented a different logging history photography program each day, showing a sampling of the literally thousands of historic photos in his collection, set to a theme, and giving a rich description not only of the subject in that photo but drawing attention to “what’s behind” the scene.

Thursday’s session was opened by this year’s OLC President Jeff Adams.

The opening program, What’s new in logging, led off with Russ Smith (Modern Machinery) outlining their yarder rebuilding program, which runs out of their extensively extended facility in Rochester, Washington, where as the title notes they rebuild and renew existing yarders. “We bring them in, strip them completely down, and start rebuilding them back up,” said Smith. “Doesn’t matter which brand you bring in, we can work on any of it.”

The second presenter was Peter Pearson (Clearwater Services) on log-yard storm water treatment systems, out lining systems they’ve designed and installed that are presently running, and how those systems operate, specifically addressing the system in place at the Hermann Bros. log yard outside Port Angeles (See Loggers World, September 2013).

Matthew Greenwood (Cenegea Solutions) presented the integrated electronic load tracking hardware and software developed by the company he represents and efficiencies available using those system options.

Industry reports session led off with WCLA’s Jerry Bonagofsky reviewing the progress of the Logger’s Safety Initiative, and steps being taken to address the L&I (Washington Labor & Industries) ground classification base (insurance rate). “Currently 80 companies have signed up with an additional 13 singing up in the first quarter to bring that number to 93 total presently.”

Bonagofsky added, “We’re seeing a positive trend, (claims are) going the other direction, and fewer serious claims...(in addition to) reported hours are increasing. Accident prevention is simply the goal of the LSI: To go home safe at the end of the day.”

Duane Evans (Port Blakley), and president of the Pacific Logging Congress (PLC) outlined this falls PLC Live-In-The-Woods show Sept. 25-27th at the Port Blakely Tree Farm near Mollala, Oregon, which coincides with the 150th Anniversary of Port Blakely Tree Farms.
(See www.pacificloggingcongress.com for details.)

The Healthy Forests, Healthy Communities, formed in March 2013, spokesman Nick Smith outlined the goals and programs of their organization. For more information see http://www.healthyforests.org/.

The afternoon session featured four unquestionably qualified experts on “Industry Capacity - Meeting Market Demand?” Each presentation was based on the individuals perspective and the economic realities of industry capacity. We’d define industry capacity as, can industry respond to new market demands?

Leading off was Michael Phillips (Hampton Affiliates), outlining his company’s view of emerging markets following the past six years. “Production peaked in 2005 and bottomed in 2009, with a 50% drop in the North American market.” And while markets are improving, “... it’s still about 40% of what (production) was when things were going well.”

On the positive side, “...everything that relates to wood consumption is going up,” said Phillips.

However the past six years, and times, have changed. “Today’s not like it was yesterday,” Phillips said. “The mill and work force is gone,,” and today’s mill is far more efficient, and you spend a good deal more to rebuild or start a mill.”

“The cost to reinstall capacity is almost ludicrous given the availability of timber, and personnel,” Phillips stated, then noted relating to the logging industry, “... today still doesn’t have a lot of certainty to it,” then added of logging contractors, “... how can you pay yourself back? How do you make that investment if you aren’t going to be working full time?” He then stated, “...we think there aren’t enough loggers to put on the ground to supply the trees.”

When asked of industry’s reaction should the predicted logger shortage materialize, Phillips felt “...the next step will be to form collaborative partnerships, and help with the financing of it. Other companies are saying take an appropriate approach; keep a cash flow going for their main loggers so they can survive.”

While the market outlook overall is very good, he noted, “... lumber prices could be very unstable and experience very volatile swings over the next three years.” And the long term outlook Phillips was pretty clear in saying in the near future, “...it will be a very good to be in the lumber and in the logging business.”

Tom Leeds (Pacific Lumber and Shipping) spoke on export markets, and noted the success of New Zealand’s approach to at least one phase of log efficiencies, which includes: covered buildings for unloading, computerized scanning while scaling, and tracking trucks and who owns the load, and where the load goes. “I think for us to exist (in exports) we have to adopt the New Zealand model of exporting.”

Rick LaMont (Timberland Appraisal, Inc.) repeated some of the earlier speakers historic observations on the downtown and slow recovery noting that the sluggish recovery is connected to housing not rebounding as quickly as all had hoped. He noted

In particular that, “...it’s much harder for this generation to get into the housing market,” due to this lagging economy, slow job growth, etc.
Don Taylor (Sustainable Resource Systems) outlined key points of a supply chain analysis he presented on industry capacity.
He outlined issues surfacing during the recession: Relationship Damage between the mills and the logging contractors; the resulting logging capacity disinvestment; and productivity leakage (avoidable losses). And the resulting “convergence of vectors” including: equipment replacement delays; supplier “low stumpage inventory;” lack of firm commitments, explaining, “...it could have been handled better;” financing restrictions; and “...a weakening logging-trucking infrastructure.”

“It takes a billion dollars a year to maintain the logging capacity we have now,” said Taylor adding that, “the prices of equipment continued to increase during the recession.”

The bottom line, said Taylor, “The US Forest Industry needs to take full advantage of our economic recovery. Both suppliers and consumer mills need to work intentionally and cooperatively together to make sure that no market share is lost outside the US borders, and senior levels of the U.S. forest industry need to be fully aware of the supply chain challenge that is unprecedented.”

Friday morning’s first Roundtable included West Romberg (Campbell Global), Mike Janicki (Janicki Logging) and Gordy Iverson (TimberTech) talking about the long term results of forest thinnings from reviewing yields from treated forests to individual loggers and forester’s experience on lands they’d thinned years ago. The hard data and experience of those presenting demonstrated the success of the treatments in yielding more wood and fiber than would have been brought out without thinning.

Bill Hermann (Hermann Bros.) summarized the roundtable well in his comments, in saying that the thinning option is about, “the best return for our investment over time. If you let the bean counters determine how you grow your forest you’re going to always get what you’ve always gotten. When we’d thinned for so many years, a lot of that wood was chip ‘n saw, not just pulp. You can almost get double the fiber off your tree farm (by thinning). By the end of the day, it’s about the board feet and how many boards, or tons of paper, you can get off that acre.”

The final presentation was on the Loggers Safety Initiative (LSI) given by co-chair Norm Schaff (Merrill Ring). He outlined the programs progress to date, and two 10% reductions available to participants, the first upon joining and committing to the program, the second 10% on the successful completion of a “third party audit” to “...help us know we’re doing the right job.”

Most within the open discussion were supportive of the program, and are enrolled in it. While there is support, many voiced that part of the solution must be Washington State’s L&I needing to clean their house as well.

The meeting ended promptly at 9:30, a very beneficial and well run conference. Compliments to the board, the programs chairman Kevin Worley, this year’s president Jeff Adams, and the conference executive director. Diane Oster-Courtney.­­­­