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07/29/2022

Canfor has plans for Alabama state-of-the-art mill

A significant decline in U.S.-dollar lumber benchmark pricing impacts sales and earnings for the second quarter.
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Canfor Alabama
The new Alabama sawmill will have an annual production capacity of 250 million board feet on a two-shift basis.

Canfor Corporation announced that it plans to invest approximately $210 million to build a new, state-of-the-art sawmill complex in southern Alabama.

According to the lumber producer, by using leading technology, the new sawmill will have an annual production capacity of 250 million board feet on a two-shift basis.

The Vancouver, British Columbia-based company also said that the a new, modern work environment will provide jobs for about 130 people who will be employed directly, in addition to supporting significant indirect jobs.

In alignment with the company’s sustainability goals and decarbonization targets, the facility design includes investment in a biomass-fueled lumber drying system. 

The startup of the facility is anticipated in the third quarter of 2024. The new facility will replace the existing operation in Mobile. 

“Building on Canfor’s proud operating history in Alabama, we are excited to invest in a new world-class facility that will ensure our long-term ability to operate competitively,” said Don Kayne, Canfor president and CEO. “In addition, the facility’s versatility and flexibility will enhance our ability to more closely align our production of high-quality products with market demand.”

Following the construction and startup of the new facility, an orderly wind-down of the Mobile operation will be undertaken. All current employees will have the opportunity to remain with Canfor, the company said.

“We greatly value our employees and are committed to providing family-supporting jobs and generating economic activity in the region. We are pleased to be transforming the workplace for our employees by providing a new, modern facility that will continue to operate for generations,” said Tony Sheffield, President, Canfor Southern Pine. “The expansion of Canfor is a strategic investment in the community, sawmill industry and economy of South Alabama.”

The lumber and forest products producer also reported today that sales second quarter 2022 declined  to 2.17 billion Canadian dollars (US $1.69 billion) from sales of C$2.50 billion (US$1.95 billion) in the second quarter of 2021.

Canfor said sales were impacted by downward pressure on the North American lumber market along with a significant decline in U.S.-dollar lumber benchmark pricing.

“Despite the pressures on North American lumber market fundamentals this was a strong quarter for our lumber business, as our results continue to far exceed pre-pandemic levels and we continue to capitalize on our global diversification strategy,” Kayne said. 

The CEO noted that ongoing global supply chain constraints in North America resulted in the decision to reduce operating schedules at Canfor’s Western Canadian sawmills during the second quarter and into the summer months. 

Earnings were also impacted as the company reported a net income of C$374 million (US$291.4 million) for the quarter compared to a second quarter 2021 net income of C$723 (US$563.4 million).

Looking ahead, Canfor said global lumber market fundamentals are anticipated to be relatively solid through the third quarter of 2022.  New home construction activity in North America is projected to weaken in the wake of high mortgage rates and decreasing housing affordability, particularly for first-time homebuyers, while activity in the repair and remodeling sector is estimated to be steady.