Morice Land and Resource Management Plan

Location Analysis

There is a natural tendency to assess the feasibility of MDF first from a fibre input perspective and secondarily from other aspects of the operating and management environment. However, it is clear based on the development of capacity in North America that MDF is primarily based on technology and market factors and not just raw material inputs. As a relatively new technology, MDF facilities are modern and rely on innovative processes and environmental technologies.

• 
  Canadian producers are at a competitive disadvantage versus the US industry with location advantages in its home market. With no export market development in Asia, a Northwest producer would have to bear a transportation cost disadvantage when targeting key eastern US markets.
  
• 
  As with most other softwood sectors, cost performance is now absolutely critical to maintaining viability. MDF is still a commodity and only when it progresses into higher value markets where quality and product differentiation are important, will cost competitiveness ease. The Northwest region of the province is part coastal (the highest cost producer of lumber in the world) and part interior (among the lower cost producers in the world). Clearly, the interior TSAs (Lakes and Morice) rather than the coastal TSAs (Bulkley, Kispiox and Kalum) have cost advantages that may be transferred to a byproduct user.
  
• 
  Increased public awareness and environmental regulation are forcing the adoption of new technologies, and impose challenges on equipment designers and manufacturers. Major objectives are reliability and cost efficiency. Environmental concerns essentially scuttled a planned MDF facility in Prince George by Canfor in 1998.
  
• 
  MDF manufacture does require a secured and diverse raw material base. Most plants are able to handle a variety of raw materials, typically including chips (80-90%) combined with sawdust/shavings (10-20%). The use of sawdust, formerly an undesirable by-product but now a primary source for the industry, is increasing. A species mix is also tolerated, but does impact the adhesive process. Even though the Northwest region is awash in chips and sawdust, this has not led to any new production processes that utilize these materials over the last 15 years. The experience of Northern Engineering Wood Products (NEWPRO), a composite panel manufacturer based in Smithers, is a case in point. The company requires sawdust as its main feedstock but has historically found it difficult to secure adequate long-term supply commitments. One explanation of this may be that NEWPRO does not use balsam sawdust. A significant portion of the Bulkley and Morice TSA’s profile contains balsam
  
• 
  Beehive burners continue to be operated across the region, burning sawdust, shavings and other wood waste, despite a planned phase-out by the then Ministry of Environment in 1996. This anomaly also helps explain why multiple attempts at establishing a cogeneration facility in the region have never been successful.
  
• 
  As with most other industrial enterprises situation outside of the southwest region of the province, attracting and retaining skilled trades is a concern for MDF manufacture. There is a recognized shortage of available skills and finding good technicians, engineers and scientists is not an easy task.
  
• 
  It is interesting to note that the most recent investments in structural and non-structural panel production in Western Canada have been made in Alberta and not BC. Moreover BC-based companies, including Ainsworth and Slocan, are building these facilities. These investment decisions are undoubtedly due to a number of factors, which are instructive about BC’s competitive position. Among factors that are said to favor Alberta include lower cost raw materials, lower labor costs, less fractious labor environment, more favorable business climate and lower taxes.
  

Conclusion

The lack of MDF capacity in BC, despite this provinces wealth of raw material supplies, strongly suggests that investors are seeking site location factors that are not necessarily BC’s, or the Northwest regions, strong suit. There are adequate chips, shavings and sawdust in the Morice, but existing needs of NEWPRO’s particleboard plant in Smithers poses a dilemma, since that facility has historically had troubles meeting its feedstock needs. Although the overall business climate in BC has improved measurably in recent years, Alberta continues to attract more investor interest for these types of projects. A cheaper wood supply, lower cost and more flexible workforce and less stringent environmental controls are all factors. The failure of Canfor, despite years of effort, to establish an MDF plant in Prince George in 1998 was attributable mainly to environmental concerns. Similar plans in the Northwest could be expected to encounter similar obstacles.

Recommendations to the LRMP Table

Given the current business climate the development of a MDF plant is presently not seen as a viable opportunity in the Morice area. In order to make this opportunity viable once market conditions improve the following recommendations would have to be dealt with.