A $1.5-million contribution from Natural Resources Canada’s Investments in Forest Industry Transformation (IFIT) program and another $1.5 million from Ontario’s Forest Sector Investment and Innovation Program will support the installation of robotic equipment at the value-added plant.

The project will see the installation and production of two MDF moulding lines with custom-made robotized stacking, packaging and labelling stations. The new technology will increase the plant’s capacity, improve safety and “upskill” 18 jobs into specialized positions, such as robot operators, Natural Resources Canada said in a news release.

Alexandre Ouellette, Pembroke MDF plant manager for Roseburg Forest Products, said in the release they are deeply grateful for the support to modernize dated equipment and improve workflow and funcitionality. “Automating our stacking and packing processes with robotics has allowed us to expand from three shifts to four while creating a safer, more efficient and more modern work environment for our team members,” Ouellette said.

“Canada’s forest sector has provided economic opportunity and secure livelihoods for Canadians in communities right across the country,” Natural Resources Minister Jonathan Wilkinson said. “The federal government is committed to supporting this sector to implement innovative technologies and processes to increase efficiency and capacity, lower emissions and create good, sustainable jobs. By investing in the Roseburg Forest Products facility in Pembroke, we are ensuring that local communities continue to reap the benefits of the sustainable use of Canada’s forest resources.”

The camera analyzer maximizes green veneer recovery and the strong taped veneer joints don’t break during the drying process.

This green veneer composing solution was the right fit for Tolko to modify their manufacturing process.

The line will be installed and running in the summer of 2022.

After many years of dependable operation at this location, the existing equipment is due for a complete replacement. The updated design will feature heavy-duty cross tubes to maximize stability and accuracy.

The Model 765 Veneer Lathe Charger is an industry workhorse that provides decades of reliable performance for veneer production. This proven design stands up to hard-wearing use and is a durable solution for veneer lathe charger applications.

This project is scheduled for installation in Q3 of 2022.

With this new development, the Superles series is now also a very good fit for smaller to medium-sized CLT, Glulam and finger jointed solid wood lines as well as for hybrid production lines of such products. Combined with the optional chamfering, square rabbet, groove and sanding units, these machines can adapt to all customers’ requirements. In addition, vertical units with 630 millimetre tooling length and tooling spindle height positioning of 330 millimetre are available. Switching between planing (glulam) and moulding (CLT elements, profiled logs or beams) is possible at the push of a button and 600-millimetre-thick block glued beams can also be processed. The first machine of its kind will soon be installed as part of a completely new Ledinek CLT plant concept in the EU area.

The ARGUS-FMS fines measurement system, developed in collaboration with FPInnovations, continuously scans the strander outfeed conveyor to provide real-time fines percentages for every cutting pass. According to Lorne Fardy, product development manager for Kadant Carmanah, “By constantly scanning all strands produced, the FMS greatly reduces the error rates inherent with manual strand sampling. The steady flow of data allows OSB manufacturers to make better production decisions both in the wood room and in downstream processes.”

The ARGUS-LDO log deck optimizer and ARGUS-LPO load pocket optimizer provide data on the volume of logs staged on the log deck and in the load pocket of the batch. Together, these devices help operators increase strander fill-rates and wood room production. Additionally, the data produced by the systems provide new performance metrics for benchmarking wood room operations.

“The development of the ARGUS vision systems addresses the need for smart connected technology in OSB wood rooms,” said Michael Colwell, president of Kadant Carmanah Design. “OSB producers are seeking data they can use to optimize and stay competitive. Kadant Carmanah Design is committed to leading innovation in this area.”

Kadant Carmanah Design, located in Surrey, B.C. Canada, designs and manufactures equipment for the panel and engineered wood products, pulp and paper, and sawmill industries. Providing leading edge technology and equipment to optimize fiber use for the production of wood-based panels, Kadant Carmanah’s products include SmartDISC stranders, SmartRING stranders, rotary debarkers, chippers, and conveying/feeding equipment.

Treatment and processing of wood gives rise to different emissions. The main pollutants are wood dust, volatile organic compounds (VOCs) and hydrocarbons. For many years Megtec’s core expertise has been the effective control of VOCs and hazardous air pollutants (HAPs) from dryers and press vents in the engineered wood products industry. With the newly expanded range of environmental solutions, Dürr now provides an even stronger global platform for serving customers. At LIGNA, Dürr will present its expanded suite of environmental control technologies and services needed for this industry.

99% hazardous exhaust control

Regenerative thermal and catalytic oxidizers control VOCs and HAPs. Dürr’s CleanSwitch regenerative thermal oxidizer (RTO) (see picture 1) is a highly efficient solution for VOC destruction. It has an annihilation efficiency of 99 per cent or more and a thermal efficiency of 95 to 97 per cent. The successful deployment of CleanSwitch in a yellow pine OSB dryer application in Southern U.S. has delivered a VOC destruction efficiency up to 99 per cent. The product properties are the very latest, well matched to the highest standards and guarantee durability. Alkali-resistant heat exchange media and corrosion-resistant materials of construction match the specific application and help maximize uptime and equipment life. The engineered ceramic heat recovery beds offer a low-pressure drop and excellent bed-washing characteristics. The electric motor valve drive provides quiet operation and is reliable in virtually all climate conditions. In addition, the modular construction minimizes installation time.

High reliability and performance

The venturi and cyclonic pre-scrubber designs from Dürr ensure water saturation of exhaust stream, as well as achieving considerable removal of coarse filterable particulates. This step is important in many applications to reduce particulate build-up on the connecting ductwork and downstream wet ESP. The wet ESP can, therefore, operate at a higher corona power for improved collection efficiency. Pre-cleaning of coarse particulates allows for a longer period between washdowns.

A dry ESP is used in the control of particulates on biomass-based heat generators. Additional particulate control is provided by pulse jet fabric filters (baghouses) and cyclonic dust collectors. This ESP of Dürr has high reliability and performance, a design utilizing proven collector-plate designs, rigid discharge electrodes, and top-mounted electrically driven, externally maintainable collector and discharge electrode rappers.

Integrated solution

Together with Megtec, Dürr’s environmental control solutions include turnkey installations as well as equipment rebuilds, upgrades, preventive maintenance programs and energy optimization services. The company has installed thousands of easy to use and clean oxidizer systems in many process industries across the globe. It is also experienced in engineering and service for exhaust air-purification systems, including those from other manufacturers. Dürr leverages its process knowledge and technology capabilities to deliver an integrated solution for dryers with a complete system including scrubber, wet ESP and RTO (see picture 2).

Photo 2: A total integrated solution, featuring scrubber, wet ESP and RTO by Dürr ensures system optimization.

“With our broader geographic reach, expanded product portfolio, and increased base of skilled field technicians, the joining together of Dürr and Megtec makes it possible for us to be even closer to our customers in the engineered wood products industry,” said Rodney Schwartz, vice-president sales and business development of Dürr’s environmental technology division in the Americas. “Delivering responsive service is critical for our customers. With short response times and fast solutions, we make a decisive contribution to ensuring that our customers’ equipment is up and running all day, every day.”

Dürr will present its air-pollution control technologies at LIGNA in Hanover, Germany, from May 27-31 in hall 26, booth D08/2. As a further part of the company’s products, Dürr will also present its application technology for painting in the wood industry. It will be exhibited in hall 14 at the booth of HOMAG, the world market leader for machinery and equipment for the woodworking industry, which is part of the Dürr Group.

The Dürr Group is one of the world’s leading mechanical and plant engineering firms with extensive expertise in automation and digitization/Industry 4.0. Its products, systems and services enable highly efficient manufacturing processes in different industries. The Dürr Group supplies sectors like the automotive industry, mechanical engineering, chemical, pharmaceutical and woodworking industries. It generated sales of €3.87 billion in 2018. In October 2018, the Dürr Group acquired the industrial environmental technology business of U.S.-based company Babcock & Wilcox, comprising the Megtec and Universal brands. Since then, it has over 16,400 employees and 108 business locations in 32 countries. The Group operates in the market with five divisions:

• Paint and Final Assembly Systems: paint shops and final assembly systems for the automotive industry
• Application Technology: robot technologies for the automated application of paint, sealants and adhesives
• Clean Technology Systems: air pollution control, noise abatement systems and battery coating lines
• Measuring and Process Systems: balancing equipment as well as assembly, testing and filling technology
• Woodworking Machinery and Systems: machinery and equipment for the woodworking industry

In 2017 to 2018, Metsä Group made its largest investments in wood products. In addition to the Punkaharju mill, there was an investment in Kerto LVL in Lohja, where a new line was introduced a year and a half ago. Since then, the Äänekoski birch veneer mill and the Pärnu birch plywood mill have also started operations.

“In Metsä Group, Kerto LVL is seen as a product of the future worth investing in. The product has a global market where we can operate competitively,” said Metsä Group’s President and CEO Ilkka Hämälä.

From the point of view of increasingly challenging climate targets, mechanically processed wood products play a very important role. In wood products, the most valuable parts of the wood – logs – are utilized in the best possible way, and they also store carbon for a long time.

“Metsä Group’s product portfolio must include products that are processed from high-quality logs. The Punkaharju mill is one of the key processing plants in this respect. We also see that in industrial construction, Kerto LVL is a winning product that can gain market share from traditional steel and concrete. Using wood products in construction is an example of climate action,” Hämälä added.

The production capacity of the new Punkaharju line is 65,000 cubic metres, and the value of the investment is 52 million euros. At the moment, there are some 500 people working at the Punkaharju Kerto and birch plywood mills, including all operations within the mill area. In January, 43 new employees were recruited to the mill, of which 35 were recruited through apprenticeship training. Most of the new employees come from the surrounding area, Savonlinna and Parikkala.

The investment will increase the use of logs by 160,000 cubic metres per year, which adds about 40 person-years to the subcontracting chain.
For the new line, an extension was built to the Kerto mill. The construction was carried out by Rakennusliike U. Lipsanen Oy. The main equipment suppliers are Raute and Pinomatic.

“We have seen a strong start to 2019 in our industry and are optimistic for continued growth in the coming years,” said HEW president Brian Carlson. “We are making arrangements to augment capacity as part of our ongoing commitment to keep pace with the growing needs of our customers for ZIP System products. Roseburg Forest Products is a highly regarded manufacturer with an outstanding reputation in the market, and we are delighted to have this opportunity to work together.”

All specialty products manufactured under the agreement between HEW and Roseburg will be sold under the HEW brand.

“The partnership between Huber and Roseburg leverages the strengths of both companies to expand the availability of this innovative building system,” Roseburg’s SVP-COO Ashlee Cribb said. “Roseburg’s strong manufacturing capability and commitment to quality will help meet the growing demand for this revolutionary product. Roseburg is excited about this partnership and the opportunities it creates for both companies and their customers.”

“ZIP System sheathing produced through Roseburg will provide an even broader range of options to builders,” added Carlson. “In addition to our current offerings in varying thicknesses and lengths, this agreement will enable us to provide ZIP System sheathing on a high quality plywood substrate.”

Since its introduction in 2006, ZIP System sheathing and tape has been widely adopted by many builders and remodellers as a replacement for traditional sheathing combined with housewrap or felt. The innovative, structural wall and roof system integrates a bulk water resistant, vapor permeable barrier into an enhanced engineered wood panel. Completed with taped panel seams using high-performance ZIP System acrylic flashing tape, the system helps achieve quicker dry-in and reduces the risk of rework, while providing advanced moisture protection and reduced air leakage.

Columbia’s new sourcing arrangement involves the acquisition of a veneer processing facility in Ecuador and an agreement with 3A Composites, who will supply the mill with FSC-Certified wood.

The plantation-grown hardwood core veneer produced at the facility has been tested for over two years at various Columbia Forest Products mills, and has been incorporated into thousands of panels of PureBond hardwood plywood in the marketplace today.

As an ongoing aspect of this transaction, Columbia will continue to increase its presence in high-yield/fast-growing plantation forests.

Chris Blomquist, USNR’s Senior Vice President for Sales and Engineering, commented, “Our customers on the lumber side of our business have long recognized the value of tightly integrated mechanical and optimization technology. With the addition of Ventek’s veneer scanning, grading, and handling solutions to USNR’s lathe, dryer, and downstream product portfolio, we now have an opportunity to bring this integration benefit to our customers on the plywood side of our business as well.”

Rodger Van Voorhis, formerly President of Ventek and one of its founders, added, “I am thrilled to join the USNR team, and I am excited to see what we can do with our veneer scanning, grading, and handling products as part of a larger organization. I think there are going to be a lot of great opportunities to learn from each other – such as taking our plywood technology and applying it to lumber grading, and vice versa.” Rodger has joined USNR as Director of Sales for Veneer Systems.

“I am tremendously pleased that Rodger and the rest of the Ventek team have decided to join USNR to help us build the next generation of products for the plywood industry,” commented Alan Knokey, Vice President responsible for USNR’s plywood and panel business. “The people – the engineers, the service technicians, the guys who actually build the systems, and everyone who supports them – they are the most important part of this transaction.”

USNR / Söderhamn Eriksson operates five large manufacturing plants in the United States, Canada, and Sweden, in addition to more than a dozen regional engineering, service, and sales offices in North America and across Europe. USNR / Söderhamn Eriksson is best known around the world for providing end-to-end solutions for sawmills and planermills, including log lines, curve sawing gangs, edger lines, trim-sort-stack systems, dry kilns, and the optimization and control technologies that maximize the output and performance of that equipment. USNR is also known around the world for its Coe brand products used in the manufacture of plywood and other panel products. You can learn more about USNR and its product line at www.usnr.com

Industrial facilities dedicated to pressboard production or the processing of steel/iron need instrumentation that provides maximum safety and reliability, regardless of difficult working conditions. The new ET product offering significantly extends the supported temperature range of the MTS E-Series, with the ability to precisely determine exact positions even at 105°C temperature levels. This small rod sensor can be integrated directly into a cylinder, with rod length options covering 50mm to 3000mm. It exhibits linearity deviation of less than 0.02 per cent (full scale).

ET sensors have liquid ingress protection in accordance with IP68. Furthermore, ATEX certification for hazardous areas is available. These devices are equipped with a start/stop interface. They also have the capacity for sensor parameters to be automatically uploaded. A 316L stainless steel variant can be specified if needed.

"The ET sensor is designed to be reliable and operationally effective in industry sectors where elevated temperatures are a major concern,” said Robert Luong, MTS Sensors’ industrial technical marketing manager. “The magnetostrictive technology it utilizes provides a wear-free sensing mechanism that has significant value in heavy industrial settings.”

The proprietary Temposonics magnetostrictive sensing technology developed by MTS Sensors is designed to offer a non-contact method for accurately measuring position, which permits its implementation into the most demanding of application environments. Sensors based on this technology are highly resilient to shock, vibrations and extreme temperatures.

With the completion of the merger, it is expected that the common shares of Ainsworth will be de-listed from the Toronto Stock Exchange on or about April 2, 2015.

“This transaction is a significant milestone, and the addition of the Ainsworth OSB mills and strong team of people create a tremendous platform for the future,” said Peter Wijnbergen, president and CEO. “Norbord will be a leading global wood products company, active on three continents and with more than US$1.6 billion in sales in 2014. With a larger mill network, we will be in a better position to serve customers’ evolving needs and meet increasing demand as the recovery in the U.S. housing market continues. 
“This transaction will also allow us to bring our customers a more diverse range of products. We are pleased to welcome our new colleagues to Norbord, and look forward to pursuing the significant opportunities we see ahead.”

About Norbord
Norbord Inc. is a global manufacturer of wood-based panels and the world’s largest producer of oriented strand board (“OSB”). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products.  Norbord has assets of approximately US$1.8 billion and employs approximately 2,600 people at 17 plant locations in the United States, Canada and Europe.  Norbord is a publicly traded company listed on the Toronto Stock Exchange under the symbol NBD.

The Index, which is based on prices for hardwood chips traded overseas to markets in Asia and Europe, reached a four-year low in November 2014 when it was 16.6-per-cent below the all-time-high in November of 2011. 

The PIX-HCG reached US$180.58/odmt (CIF) in January 2015, with the biggest price increases being those of hardwood chips shipped from Latin America and Vietnam to Japan and China.

The softwood chip price index, PIX-SCG, fell sharply during the fall of 2014, from US$185.73/odmt in August 2014 to US$170.67/odmt in January 2015. This 8.1% decline over just five months was partly the result of a stronger U.S. dollar, as well as because of reduced costs for the ocean freight.

About Wood Resources International LLC
Wood Resources International LLC, an internationally recognized forest industry consulting firm established in 1987, publishes two quarterly timber and pulpwood price reports and has subscribers in over 30 countries. The Wood Resource Quarterly, established in 1988, is a 50-page quarterly market report which includes global prices for sawlogs, pulpwood, wood chips, lumber and pellets, as well as market commentary about developments in global timber, biomass and forest industry. If you have any questions, contact Hakan Ekstrom (hekstrom@wri-ltd.com).

Sales of $102.5 million in the fourth quarter of 2014 were $1.9 million lower than sales of $104.4 million for the same period in 2013. The decrease in sales was mainly due to a 4% decrease in realized pricing. Sales volumes increased by 2% due to the ongoing ramp up of High Level notwithstanding downtime taken during the fourth quarter. The impact of the U.S. benchmark declines on realized pricing was moderated by factors including the effect of a weaker Canadian dollar relative to the fourth quarter of 2013 combined with stable export pricing in Japan.

Sales were $444.0 million in 2014 compared to $488.0 million in 2013. The $44.0 million decrease was primarily related to a 17% decrease in realized pricing, partially offset by a 9% increase in sales volumes. The impact of the U.S. benchmark declines on realized pricing was again moderated by factors including the effect of a weaker Canadian dollar relative to 2013 combined with stable export pricing in Japan. The increase in volume from High Level was partially offset by the downtime taken at the various mills to complete maintenance and other projects during the year.

Ainsworth President and Chief Executive Officer, Jim Lake said, "North American OSB market conditions continued to drift throughout the year as the pace of demand growth did not materialize as expected. However, we remain optimistic that U.S. housing starts will return to more historical levels within the next several years, with various indicators pointing towards strong growth in 2015 versus 2014.

"We maintained the strong performance we saw in 2013 in our key export market in Japan and also made progress in China as we began commercial shipments of our industrial core stock products. Additionally, we progressed in the ongoing ramp up of our High Level mill, including the completion of a number of strategic capital projects that will further position the mill to efficiently manufacture an enhanced range of products for North American and Asian customers."

While the pace of improvement in U.S. housing starts in 2014 was more gradual than anticipated, Ainsworth expects that the U.S. housing recovery will gain further traction in 2015. The company remains optimistic that U.S. housing starts will return to more historical levels within the next several years. The restart of the High Level mill will allow them to meet the growing requirements of its existing customer base in North America and Asia as well as service new market segments. Ainsworth expects the merger with Norbord will allow the combined company to capitalize on the ongoing recovery in the U.S. housing market and growth opportunities in our traditional and emerging markets in Asia.

It was expected that the hardwood consumed at the Nova Scotia Power biomass boiler would be low-value hardwood, leaving the higher value stems to companies like Groupe Savoie. However, to this point, that has yet to materialize.

For more on this story, CLICK HERE

The transaction remains subject to customary conditions to closing, including approval of the plan of arrangement by the Supreme Court of British Columbia. Subject to receipt of court approval and the satisfaction or waiver of all closing conditions, the transaction is expected to close by the end of the first quarter of 2015.

Norbord and Ainsworth also provided the following general update in connection with the transaction. While the transaction is not reportable under the U.S. Hart-Scott-Rodino Antitrust Improvement Act of 1976 or the Canadian Competition Act because Norbord and Ainsworth share a common controlling shareholder, the U.S. Department of Justice has requested information about the transaction and the companies, as it is entitled to do. Norbord and Ainsworth are providing the DOJ with the information it has requested and are working proactively with the DOJ to ensure an expedited review process. Norbord and Ainsworth are confident this review will have a satisfactory outcome and that it will not impact the companies' ability to close the transaction by the end of the first quarter of 2015.

“This transaction unites two complementary businesses behind a common vision of enhanced service to our customers and growth in North America, Europe and Asia,” said Peter Wijnbergen, Norbord’s President and Chief Executive Officer. “Norbord and Ainsworth are each low-cost producers in their respective regions, and with our complementary operations and a more diverse range of specialty products, we will be better able to serve our customers across the globe. Ainsworth has excellent mills, a proven track record of innovation in value-added product development, and we look forward to working together. The growth potential we see in the combined company also offers significant value to our shareholders.”

Under the terms of the arrangement agreement announced today, Norbord has agreed to acquire all of the outstanding common shares of Ainsworth in an all-share transaction in which Ainsworth shareholders will receive 0.1321 of a Norbord share for each Ainsworth share pursuant to a plan of arrangement under the British Columbia Business Corporations Act.

Brookfield Asset Management Inc. and its affiliated entities, which control approximately 55% and 52% of the outstanding common shares of Ainsworth and Norbord respectively, have entered into a binding agreement in which they have committed to vote in favour of the transaction. Upon closing, the Brookfield entities will control approximately 53% of the outstanding common shares of the combined company.

Said Jim Lake, Ainsworth’s President and Chief Executive Officer: “The combination of the two companies will mean tremendous opportunities for our people and our customers. By joining with Norbord we will be able to leverage its commitment to low-cost operational excellence to expand and improve our existing range of products and enhance our customer relationships. For our shareholders, this transaction offers significant potential for continued value creation as investors in a larger and better-capitalized company with ongoing participation in the current U.S. housing recovery. This is an exciting transaction for Ainsworth and its stakeholders.”

On a pro forma basis, the combined company generated USD $1.63 billion in sales and USD $143 million in Adjusted EBITDA for the 12 months ended September 27, 2014. The transaction is expected to be accretive to earnings and cash flow in the first year.

Ainsworth President and Chief Executive Officer, Jim Lake said, "Ainsworth had a challenging quarter as transportation issues and extreme weather impacted OSB shipments and demand. North American OSB prices were nearly 50% or U.S.$200/msf lower than the first quarter of 2013. Despite the recent weaker pricing, we believe that the outlook remains positive with further anticipated recovery of the U.S. housing market in 2014 as we move past the worst of the weather issues. We continue to see steady growth in our well-established export market of Japan as well as other markets such as China. From an operational perspective, I am pleased to report a significant improvement in our safety performance this quarter."

LP Acquisition of Ainsworth

On September 4, 2013, the company entered into an agreement with Louisiana-Pacific Corporation (LP) under which LP will acquire all of the outstanding common shares of Ainsworth for $1.94 in cash plus 0.114 LP common shares per each Ainsworth common share, on a fully pro-rated basis. The transaction remains subject to obtaining regulatory approvals and the satisfaction or waiver of other conditions pursuant to the Arrangement Agreement. On April 18, 2014, the outside date for completion of the transaction was extended to June 2, 2014. The Arrangement Agreement permits either party to further extend the outside date for an additional 45-day period if required to obtain certain regulatory approvals. Both Ainsworth and LP continue to work with the Canadian Competition Bureau and the U.S. Department of Justice as they conduct their regulatory reviews of the transaction.

Further information about the Arrangement Agreement is set out in Ainsworth's management proxy circular dated September 24, 2013, which is available under Ainsworth's profile on www.sedar.com.

Financial Results

Sales of $107.8 million in the first quarter of 2014 were $34.0 million lower than sales of $141.8 million for the same period in 2013. The decrease in sales was mainly due to a 25.3% decrease in realized pricing. The impact of the U.S. benchmark declines on our realized pricing was moderated by the effect of a weaker Canadian dollar relative to the first quarter of 2013 and stable export pricing, combined with a 1.8% increase in sales volumes due to additional production from High Level. The increase in volume from High Level was partially offset by transportation issues during the first quarter of 2014.

Adjusted EBITDA was $10.2 million in the first quarter of 2014 compared to $62.5 million in the same period of 2013, largely as a result of lower realized pricing. Net loss from continuing operations in the first quarter of 2014 was $14.5 million compared to net income of $36.5 million in the first quarter of 2013. The $51.0 million decrease was due to a reduction in gross profit and increased selling and administration expense, combined with fluctuations in non-cash accounting gains and losses and income tax expense.

Margins

Adjusted EBITDA margin on sales was 9.5% compared to 44.1% in the same period of 2013. The decrease was largely related to the decrease in gross profit.

Benchmark OSB pricing was down significantly from the same period last year, with North Central and Western Canadian pricing for 7/16" OSB both averaging U.S.$219 per msf (a decrease of 47% and 48%, respectively). Sequentially, the North Central benchmark price decreased 11% versus the prior quarter, while the Western Canadian benchmark price was flat.

Liquidity

At March 31, 2014, Ainsworth's available liquidity, consisting of cash and cash equivalents, was $115.5 million, a reduction of $21.9 million since December 31, 2013 resulting from our seasonal log inventory build and capital expenditures.

Outlook

"Despite a weaker quarter for OSB pricing, we are optimistic about the outlook as U.S. housing indicators continue to show overall improvement. Additionally, we continue to experience growth and stable pricing in our traditional export market of Japan. We are also continuing to advance our opportunities in export markets such as China for industrial applications of OSB. The restart of our High Level mill will allow us to meet the growing requirements of our existing North American and export customers as well as service new market segments over the longer term."

Greater efficiency, easier installation

ZipLink belts are designed to solve a major issue with traditional continuous belts in panel board industry. Normally constructed from PVC or PU, and installed on site with the aid of a welding press, traditional belts withstand only 110ºC, are difficult to splice, and have a short lifetime. The available alternative, an endless woven belt, takes around eight hours to change when necessary, and a team of four to five people. Ammeraal Beltech's ZipLink belts feature a specially designed spiral link made of high quality polyester monofilament with a Silam silicone impregnation. They are continuous and seamless, and the innovative quick splicing method allows the installation of a seamless belt without the need to disassemble the processing machine. They can be installed from start to finish by just two people within two hours. The belt can handle high temp applications above 200ºC. The belt itself remains often cooler and is resistant to 180ºC; and it is designed to handle an 8mm nosebar. If an accident happens on the processing line, ZipLink belts can also be repaired. In all, ZipLink belts' construction delivers real benefits, particularly in terms of increased production time and saved costs.

Contact Richard Duijn for further details on Ammeraal Beltech's products for the wood industry at rduijn@ammeraalbeltech.com, or visit the website at www.ammeraalbeltech.com.

"A recovering global economy and stronger prices for our products have led to an excellent year for AFPA members," said AFPA Chairman Craig Armstrong. "We have invested these revenues back into our communities in the form of wages, facility improvements, and locally sourced purchases." Armstrong also noted that between 2011 and 2015, the forest industry will have invested well over $1.5 billion in capital into facilities throughout Alberta.

Alberta's forest industry has operated on the landscape for several generations. Strategic investments in reforestation and forest management have ensured the industry's sustainability. Predictable access to the forest resource stimulates economic activity in 50 communities and allows Alberta's forest sector to compete internationally.

LUMBER
AFPA-member companies produced 3.2 billion board feet of lumber in 2013 with a value of $1.2 billion. Part of this production came from the secondary manufacturing sector. Total production volumes increased 227 million board feet or 7.6% from 2012, while values increased $264 million or 29%.

For the 4th quarter of 2013, production totaled 771 million board feet with a value of $298 million. Compared to the 4th quarter of 2012, lumber production was up 25 million board feet or 3.4% and values increased $56 million or 23.3%. Compared to the 3rd quarter of 2013, production volume dropped by 84 million board feet, but stronger prices caused values to increase by $8 million or 2.7%.

PANELBOARD
AFPA-member panelboard operators produced 1.1 billion square feet of 7/16 inch equivalent product in 2013 valued at $362 million. Production increased from 2012 by 18 million square feet (1.6%), and values were up $21 million or 6.3%.

For the 4th quarter of 2013, panelboard production was 283 million square feet with a value of $85 million. Compared to the 4th quarter of 2012, production was up 5.6 million square feet (5.6%), but values declined by $5 million (5.9%). In comparison to the 3rd quarter of 2013, production increased by 6 million square feet or 2% and values were up by $2 million or 1.8%.

More information can be found at albertaforestproducts.ca.

The Alberta Forest Products Association is a private, non-profit industry organization, representing lumber, panelboard, pulp and paper, and secondary manufacturing wood products companies operating in Alberta. AFPA member companies are active participants in sustainability advancements that contribute economic, environmental, and social benefits for Albertans.

"We recognized an industry need for more concise, complete information regarding structural panel products, and this app was created to meet that need," said Jeff Key, senior manager of marketing communications for Georgia-Pacific. "This app is perfect for answering customer questions and helping with product selection in the store aisles, on the job site, in the dealer yard, or at home."

The simple, colorful GP Panel Guide app is divided into two sections: Applications and Products. The Applications section introduces colorful dots indicating where each product should be used on a home, while the Products section allows users to navigate by brand.

Within each product information area, users will find a short product summary followed by links to product specifications, installation tips, warranty information, product sustainability facts, and third-party certification information. Finally, there is a section on how to read an APA grade stamp, which is the stamp put on nearly all Georgia-Pacific structural panel products and is the manufacturer's assurance that the product is manufactured to industry standards.

"We believe the installation instructions we've included can help cut down on common mistakes that may lead to call backs. We've also enhanced the offering with short, easy-to-understand videos," continued Key. "We want our customers to have the information they need, when they need it, and in a format that is easy to navigate and understand. We feel like this app delivers."

The mill had been shut down since September 2012. Approximately 80 employees are included in the transaction. Tembec acquired the pulp mill in 2002 from Louisiana-Pacific Canada Pulp Co. and Louisiana-Pacific Ltd.

Demand trends

Since the majority of MDF and particleboard is purchased by manufacturers of products used in home and office interiors (e.g., furniture, cabinetry, flooring), the steady recovery in U.S. housing and R&R (repair and remodelling) markets has led to greater panel demand.

On average, North American consumption of both MDF and particle- board increased in 2013: and
• Total U.S. and Canadian MDF consumption is estimated to have risen by 5% in 2013 — from 2.5 billion sf (3/4" basis) in 2012 to 2.6 billion sf in 2013; and
• Total U.S. and Canadian particleboard consumption is estimated to have risen by 7% in 2013 — from 3.0 billion sf in 2012 to 3.3 billion sf in 2013.

While U.S. housing construction increased in 2013, Canadian housing slowed. This resulted in approximately a 6% decrease in Canadian particleboard consumption, offset by a 4% increase in MDF consumption, for an overall non-structural panel decrease in Canada of 2% from 2012 to 2013.

Outlook

The forecast for non-structural panel producers contains a mixture of sun and cloud for 2014 and 2015. Consumption is forecast to expand slowly as the housing and renovation markets strengthen. With operating rates generally well below 80%, there is substantial room for production increases before the potential for supply shortages begins to put substantial pressure on prices. WOOD MARKETS' forecast calls for a continued slow rise in prices of 3%–4% per year; rising fibre and resin costs are expected to keep a lid on margin increases. Capacity reopenings (if any) will likely be limited to niche products, such as thin MDF.

For more details on Wood Market's outlook for 2014-2015, go to www.woodmarkets.com.

Etchart has many good things to say about his fleet of Hitachi, John Deere and other brand equipment. The latest addition is a harvesting head designed specifically for small-diameter timber – the Quadstar QS500 processor, a 22-inch four-roller multi-stemming head from Southstar.

Earlier this year, he purchased three units and mounted each on Hitachi 210 carriers. The increase in efficiency has been significant, the logger explains.

“It’s a rare case of everything on the heads making sense, from the welding of the frames to the routing of the hoses and the placement of the valve,” he says. “Prior to making my purchase, I saw a larger Southstar head in action in Vernon and was impressed by the work it did. In the six months I’ve been using the Southstars, it has been nothing but a steady series of surprises – all of them good.”

Etchart’s enthusiasm for the heads is especially gratifying to Marcel Payeur, a longtime equipment and service provider who, along with four other Canadian partners, purchased New Zealand-based Southstar in October 2011. “Southstar had earned a reputation for reliability amongst loggers in New Zealand, Australia and Indonesia, and we bought the company with the intention of expanding that reputation across North America,” he says. “Owners such as Frank are going a long way in establishing our presence in Canada.”

Etchart, 65, is hardly the classic B.C. logger. He was born in Spain and raised in France, and shortly after emigrating to the province in 1969, enrolled at the British Columbia Institute of Technology to study mining engineering. This eventually led him to work for an oil company that, ironically, obliged him to spend a year overseas, in 1985.

When Etchart returned to B.C. in 1986, the oil and gas sector was in decline, so he decided to work for his three uncles who had launched Nadina Logging Ltd. near Burns Lake in the 1950s. “Over the decades, my uncles had migrated to Merritt, where there was plenty of work – and near enough my home in Kamloops to commute daily,” he recalls.

By 1989, one uncle had retired and another was approaching retirement age, so Etchart decided to purchase the company. “I did it partly because I loved the outdoors, for the sake of family continuance, and because Nadina was a well-respected small player in the region,” he says. “Then as now, we worked with a local mill, Aspen Planers Ltd., and even though I didn’t have much dirt under my fingernails, my initial function was mainly to sign the cheques, so I got by OK. I learned the language of logging over time as well as how to operate the different machines – starting with the smallest chainsaw – since back then I couldn’t handle anything larger.”

In 1989, Nadina consisted of a six-man crew, several skidders, a buncher, one truck, and the capacity to harvest about 40,000 cubic metres annually. Today, the company retains about 25 people and cuts 250,000 cubic metres yearly, in the forests surrounding Merritt. Inventory consists of two Tigercat bunchers (with a third contracted), three skidders (Tigercat and John Deere), two Deere loaders (one for loading and the other for decking) and six processors – the latter an even split between Hitachi and John Deere.

While Etchart was honing his skills and growing Nadina, Marcel Payeur was presiding over a Hyundai dealership in the Okanagan, having already worked as a field mechanic and manager for Timberjack and developed another company as a parts and service provider. “Subsequent to Hyundai I took on a Volvo dealership, and by the close of 2010 I was looking for other opportunities,” he says. “Southstar, which was formed by Waratah inventor Dave Cochrane in 2008, proved to be it.”

With Waratah, Cochrane had revolutionized bucking and delimbing. As the mastermind behind Southstar, he had developed and was selling six different types of heads to clients in New Zealand, Australia and Indonesia, with some of the first units having logged over 20,000 hours and still working today.

When Payeur (who had sold one of the first Waratah 620s in North America), four other Canadian partners and a New Zealand partner purchased Southstar, they immediately set about modifying five of the processors to suit the North American market. “We introduced our first head at the Interior Logging Association’s show in Vernon in May of 2012, and Vernon logger Randy Spence purchased two 23-inch heads soon after,” says Payeur.

Meanwhile, Etchart and his crew were looking for a durable solution for their processing fleet. “We heard through the grapevine that Southstar heads were being unveiled in B.C. and we certainly knew Marcel’s reputation for taking good care of his clients, so I met with him and then I checked out the 23-inch head in action in Vernon,” he says.

Etchart initially ordered one head from Payeur, but several days after it was delivered in March of this year, he was so impressed with the machine that he ordered another. “A few days after that I ordered a third,” he says. “The machines are beautifully designed. To give just one example, in other processors the hoses running from the boom to the head usually get broken, but the hoses on the Southstars are routed right through the centre.”

Multi-stem production

Etchart is also impressed by the four QS500 rollers. “We deal with three- to five-inch log diameters, and in order to make this kind of operation viable you have to feed as much as possible through the processor – five stems at a time. With our previous three-roller processors, the stems would routinely get stuck. The addition of a fourth roller on the QS500 creates less of a gap, and the rollers encircle the stems nicely.”

The QS500 has a 20 to 22 feet/second feed speed at 280 litres/minute flow. These S series heads have a four-roller design and side shift feature that enables operators to pick up two, three or four logs at a time and accurately process them.

Other features include a wide frame; high-pressure
cylinders; oversized pins and bushings; and large fabricated delimb arms. Including the rotator, the entire unit weighs 2,450
kilograms.

Etchart notes, “Previously we would take two or three trees out of a deck but could only process them one at a time and had to separate by species, meaning we could easily have a dozen sorts in the same area. This put enormous pressure on our operators.” With the Southstar computer system, the operator can process different species of trees without switching, and with a priority bucking feature the computer makes
all the decisions on lengths by reading the diameter
extremely accurately.

Equally important from Etchart’s point of view is ease of maintenance: on one QS500 that has logged over 900 hours, his crews have yet to change the harvester bar. All they do is grease the tip daily, and then weekly turn the bar from top to bottom and sharpen it. “The head, combined with the Hitachi carrier, is so rigid that the bar makes the cut and never gets stuck,” he says, adding that the Hitachi 210 is his unit of choice because it consumes only 21 litres of fuel per hour compared to other brands that burn over 30 litres hourly. “Again, for a smaller operator like Nadina, these benefits amount to something substantial.”

Excluding total special items of $617 million, net income in the quarter was $29 million, or $0.31 per share. This compares to net income of $13 million, or $0.13 per diluted share, excluding $24 million of special items, in the third quarter ended September 30, 2012. Before adjusting for special items, net income in that quarter was $37 million, or $0.38 per diluted share, on sales of $1.2 billion. Adjusted EBITDA was $104 million in the quarter, compared to $96 million in the year-ago period.

"Again this quarter, our continued asset optimization efforts helped to maximize our earnings power despite challenging market conditions," said Richard Garneau, president and chief executive officer. "Improvements in volume, transaction price and costs led to the best quarter our pulp segment has seen in two years, which helped to offset the effects of weaker pricing for lumber and excess supply in paper grades."

Non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are reconciled below.

Consolidated Quarterly Operating Income Variance Against Year-Ago Period

Compared to the year-ago period, sales in the quarter declined 2%, or $23 million, to $1.1 billion, primarily as a result of lower pricing ($33 million), mainly in newsprint, and currency fluctuations, offset in part by an increase in volume ($17 million).

The Company recorded operating income of $36 million this quarter, a $5 million improvement over the third quarter of 2012. This reflects a $26 million improvement to pulp and paper manufacturing costs - the benefit of asset optimization initiatives and external power sales from new cogeneration facilities - and a weaker Canadian dollar, offset in part by the lower pricing, largely in newsprint, and higher wood products costs.

Downtime was 90,000 metric tons lower in the pulp and paper segments this quarter, mainly as a result of the extensive downtime taken in 2012 to improve the operational and environmental performance of the newly acquired Saint-Félicien, Québec, pulp mill.

Segment Operating Income Variance Against Prior Quarter

Newsprint
Operating income in the newsprint segment was $13 million in the third quarter, a $3 million improvement over the second quarter. Newsprint sales rose 3% in the quarter as a result of a 20,000 metric ton increase in shipments, with export sales representing 45% of total newsprint sales, consistent with the first half of the year. After falling $40 since the end of last year, average transaction price has now been stable for two straight quarters. The Company maintained its lower cost advantage in the quarter, reporting operating cost per unit (the "delivered cost") down 1%, to $589 per metric ton, in line with the new low reported in the previous quarter. The Company generated EBITDA of $50 per metric ton of newsprint shipped, compared to an average of $52 in the four previous quarters, despite the falling prices.

Specialty Papers
Operating income was $17 million in the quarter, compared to breakeven in the previous quarter. Sales rose 2% this quarter due mainly to a 5,000 short ton increase in shipments. Average transaction price was also up $4. Delivered cost fell 7% compared to the second quarter, which included costs and inefficiencies associated with the annual maintenance at our Calhoun, Tennessee, mill. EBITDA was $79 per short ton shipped in the quarter, compared to an average of $61 in the four previous quarters.

Market Pulp
The market pulp segment generated operating income of $21 million in the quarter, $11 million higher than in the second quarter. Sales grew by 2%, to $269 million, on a 2% increase in shipments and a $5 per metric ton increase in average transaction price. This follows increases of 5% in shipments and $27 per metric ton, respectively, in the second quarter. Delivered cost was down 4%, due mainly to better efficiency at mills in the U.S. southeast, in part from the second quarter annual maintenance at Calhoun. EBITDA in the segment was $85 per metric ton shipped in the quarter, compared to an average of $23 in the four previous quarters.

Wood Products
Operating income in the wood products segment fell to breakeven in the quarter, down $16 million sequentially. The 3% increase in sales over the second quarter reflects a 21% increase in shipments offset by a $62 per thousand board feet reduction in lumber prices. Finished goods inventory fell 28% due to the company's efforts to reduce the buildup caused by lower than expected demand in May and June, which included scheduled downtime at most sawmills during peak vacation periods. The drop in pricing reduced EBITDA to $22 per thousand board feet shipped, compared to an average of $63 in the four previous quarters.

Coated Papers
The coated paper segment generated an operating loss of $3 million in the quarter, down from operating income of $2 million in the second quarter. Sales slipped 4% on a 6% reduction in shipments, as seasonal demand improvement did not materialize to the degree expected. Delivered cost rose 7% in the quarter, mostly because of the absorption of fixed costs over lower volume and seasonally higher power and wood costs, reducing EBITDA to $51 per short ton shipped, compared to an average of $83 in the four previous quarters.

Corporate & Finance

Based on the application of accounting standards, including a review of historical earnings, the company reduced the carrying value of deferred income tax assets on the balance sheet by $619 million, representing the portion related to its U.S. operations. The reduction is a non-recurring, non-cash adjustment, recorded as an income tax charge.

"This reduction in no way affects our underlying tax attributes nor hinders our ability to use them," said Jo-Ann Longworth, senior vice president and chief financial officer. "We have over $1.6 billion of U.S. net operating loss carryforwards available to use against future earnings."

The carrying value of the total net deferred income tax asset recorded on the Company's balance sheet as of the end of the third quarter was therefore reduced to $1,346 million, from $1,961 million in the previous quarter.

Outlook

Mr. Garneau added: "Building on the encouraging developments this quarter, we see the pulp segment maintaining its positive momentum into the fourth quarter, but the timing of worldwide capacity increases makes 2014 somewhat more uncertain. Wood products should experience better overall pricing in the fourth quarter, based on the gradual increase in lumber prices from the lows late in June. Costs will remain under pressure, however, given lower wood allocation and the additional burdens imposed on producers with the province of Québec's newly-implemented forest tenure system. As recent history demonstrates, our leaner and efficient operating platform is a key competitive advantage to face challenging market conditions. While the seasonal demand surge for coated and specialty papers failed to materialize as expected, and while conditions could change in newsprint, we nonetheless expect to see sequential volume growth in newsprint and supercalender grades in the fourth quarter before we enter seasonal lows. But we see continued pressure for coated paper as the market struggles to adjust to lower operating rates due to lower demand, grade switching and higher imports."