Port Hawkesbury Paper cutting wood deliveries due to declining markets, COVID-19

Nova Scotia's last major mill will curtail buying wood in April and scale back planned deliveries in May as it deals with ongoing market decline, compounded by the effects of the COVID-19 pandemic. The move is the latest blow to a forestry industry struggling to maintain a toehold following the loss of its major player.

A spokesperson for Port Hawkesbury Paper confirmed the decision in an email on Thursday.

"This situation is evolving, and we will continue to monitor and adjust as required," said Andrew Fedora.

"We are very cognizant of and regret the impact these actions will have on all those affected. This will not have an impact on deliveries of paper to our customers."

Fedora said deliveries are generally reduced during this time of year due to soft ground conditions and spring weight restrictions throughout the industry.

'Disastrous for the industry'

The move will have an immediate effect on sawmills in the province, most notably Ledwidge Lumber and Scotsburn Lumber, which had been sending wood and chips to Port Hawkesbury Paper since the closure of Northern Pulp at the end of January.

In an email, Ledwidge Lumber said the company laid off 40 per cent of its sawmill staff — 33 full-time employees — as of Friday with "more to follow in the coming days." It also said all roundwood deliveries are shut off for an indefinite period of time.

"Unfortunately, actions in the marketplace are further devaluing woodlots and therefore our home-grown businesses in rural Nova Scotia are suffering," said company president Douglas Ledwidge in the email.

The email said Northern Pulp's closure had left the forestry scrambling to find a home for sawmill leftovers.

"Losing another big customer of these products – even temporarily — in the province is disastrous for the industry as a whole," the email said.

Although there have been various slowdowns in the past at Port Hawkesbury Paper, members of the forestry industry said Thursday they've always been able to weather that because they had Northern Pulp to fall back on. That changed when the Pictou County pulp mill was forced to shut after it failed to secure approval to build a new effluent treatment site.

Stephen Cole, a forester and partner with woodlot management company H.C. Haynes, said their operation will lose yet another market for chips with the change at Port Hawkesbury Paper.

When Northern Pulp went down, Port Hawkesbury Paper started taking chips and pulpwood from the mainland to try to help people continue to operate. But company officials have always said it could only be a temporary arrangement because they could never buy as much wood as Northern Pulp, which had larger capacity.

"They're not using more wood, they're just buying more wood, meaning at some point their yard is going to get full and they're going to have to stop," said Cole.

"It bought us some time and I'm glad they did do that for us. They didn't have to."

With contractors unable to send wood to Port Hawkesbury, Cole said there would be more limitations on what woodlots can be worked, something that will trickle down to woodlot owners, who have already experienced big drops in the value of their investments. Nobody goes into the woods to just cut pulp, said Cole, but having that pulp to cut makes a harvest on a block of land more economical.

"It's about 20 to 30 per cent of the wood on an acre," he said. "There's pulp in almost every woodlot in Nova Scotia, if not every woodlot."

Robin Wilber, president of Elmsdale Lumber Company, said the lumber industry is cyclical and, in the past, they've been able to survive low prices because they got good prices from Northern Pulp for byproducts.

When rectangular pieces of wood are made from round pieces of wood, what's left over is the "absolute best quality wood fibre in the world," said Wilber.

"That sold for a good price to make good, high-quality paper products."

The effects of COVID-19 on the industry

The provincial government has been trying to help the industry transition to a future beyond Northern Pulp. However, much of that work entails consultation and meetings, many of which will likely have to change as COVID-19 turns almost everything upside down.

As most Nova Scotians have their eyes fixed on what's happening at home with the spread of the virus, Wilber said he's watching what's happening in the United States, and in particular what the pandemic will do to that country's economy and housing market.

"If lumber markets fall, I'm not sure how the industry survives because we don't have our backup that we used to have," he said.

'We're afraid of what's coming'

The market right now is reasonable, certainly benefiting from a favourable exchange rate, "but we're afraid of what's coming," said Wilber.

Cole isn't feeling much more optimistic.

"I've heard this a hundred times: 'Well, we should diversify, we shouldn't have all our eggs in one basket.' We didn't. Northern [Pulp] was a big one, but it wasn't our only basket. Now we have our eggs in one basket and you can see what's happening."

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