VANCOUVER – Interfor Corp. plans to cut production by about 20 per cent across its sawmills in the B.C. Interior as it faces declining lumber prices and higher log costs.
The Vancouver-based company said Friday that the scale-back is a temporary measure planned for the fourth quarter.
The cuts will be achieved through reduced operating days and extended weekends and holiday breaks spread across its three mills in the Interior, said chief financial officer Martin Juravsky.
“We’re trying to do it as smooth as possible under the circumstances from an employee perspective.”
The pullback comes as lumber prices for Western softwood have plunged from over US$650 per thousand board feet in June to under US$400 as concerns mount about the U.S. housing market.
The higher lumber prices had insulated mill operators like Interfor from rising log costs brought on by higher stumpage fees and other pressures, said Juravsky.
“We obviously saw some very strong lumber markets in the first part of this year, and the higher log costs didn’t have as much of an impact when there were higher lumber prices.”
The drop in lumber prices has sent industry stock prices lower for a variety of Canadian players since the June high. Canfor Corp. is down 38 per cent, West Fraser Timber Co. Ltd. is down 34 per cent, and Interfor is down 39 per cent.
Interfor’s share price closed Friday down 54 cents or 3.16 per cent to $16.55 on the Toronto Stock Exchange for a 52-week low.
Companies in this story: (TSX:IFP, TSX:CFP, TSX:WFT)