Less than three months after a Canadian wood products company acquired a Tacoma Tideflats sawmill, the company has shut down the mill temporarily to take steps to return it to profitability.
Interfor Corporation said that it curtailed production Friday at the former Simpson mill because of weak lumber prices and high production costs.
About 125 workers are affected by the shutdown.
“The mill is affected by high log costs and productivity-related issues which we knew when it was acquired,” said Steven Hofer, Interfor’s Senior Vice President, U.S. Northwest operations. “While good progress has been made over the past two months, the financial performance of the mill has been negatively affected by the drop in product prices that has occurred over the same period. The curtailment will provide additional time to identify the steps required to achieve long-term success at the mill.”
The price Interfor will ultimately will pay Simpson Investment Co. for the mill will be determined by its financial performance over the next three years.
Wholesale lumber prices in recent months have taken a dip, but in the last weeks they’ve begun rebounding as builders ramp up production to complete homes whose construction was affected by winter weather and as low interest rates bolster housing demand in both the United States and China.
The Tacoma Tideflats mill is one that Interfor said has great potential under the right conditions. The mill is relatively new, having been built in 2000, and it has the capacity to produce some 400 million board feet of lumber yearly, a level considerably above the production it has reached in recent years as the housing industry stagnated with the recession.
The Tacoma mill isn’t alone among Interfor mills seeing production cutbacks. The company recently has reduced hours at mills in Port Angeles, Molalla and Gilchrist, Oregon, and in Adams Lake and Grand Forks, British Columbia. The wood products company has also halted production at its Castlegar, British Columbia mill for two weeks to allow upgrades to equipment.
The Tacoma mill is one of four Interfor bought from Simpson in March. The others were in Longview and in Meldrim, Georgia and Georgetown, South Carolina.
Interfor did not buy Simpson’s Shelton sawmill, which was also on the market. Sierra Pacific Industries of California subsequently bought the Shelton mill. Simpson will close down operations there by June 30, prior to the purchase closing. Some 270 workers in Shelton will lose their jobs.
Sierra Pacific says it intends to demolish the existing mill there and build a new facility which will open in 2017. Up to 200 workers will be employed at the new mill.