B.C. lumber producers are turning their attention to international markets and secondary products as the softwood dispute with the U.S. continues.

BC Wood's recent Global Buyers Mission conference and tradeshow in Whistler generated an estimated $12 million in sales, up from $4 million last year, says Bill Downing, the group's president and CEO.

"It outstripped expectations and that was quite an accomplishment, because we had pretty high expectations," says Downing, whose group serves as a trade association for 600 softwood and hardwood producers across the province.

The $12-million sales estimate is based on an exit survey that BC Wood conducted with all participants.

Bayne Stanley, Business Edge
CarlWood Lumber GM Doug Carl says the hardwood sector is an emerging market and he hopes to expand his business to India.

Results are described as preliminary because actual sales are not yet finalized and future orders may arise from contracts made during the tradeshow.

The Whistler event was the second global session for buyers, following up on one last year. To offset the effects of the softwood lumber dispute on its primary market - construction lumber - and to reduce travel costs, BC Wood now plans to hold global buyer events annually, says Downing.

"Clearly, we're onto something here," he says.

A total of 170 buyers from 20 countries attended the three-day event, which included a conference and tradeshow featuring 85 booths operated by companies of all sizes.

Approximately 500 people attended with half coming from Asia, including China, while newcomers arrived from Mexico and European countries. The event was only open to buyers and exhibitors.

Products sold included log homes, pre-fabricated homes, engineered wood products, treated lumber, windows, doors, mouldings, flooring and other wood-based building products.

The strong activity was a positive sign for a B.C. industry that is grappling with the softwood lumber issue and the mountain pine beetle infestation, which threatens to deplete the province's forestry reserves.

The spike in sales at the Global Buyers Mission came after BC Wood expanded the event from the 50 buyers and 50 sellers who attended last year's event in Kamloops.

"The fact that we were able to attract the kind of buyers that we did says to me B.C. still has an excellent reputation in the markets," says Downing.

American lumber duties are as high as 28 per cent for some products, while most other countries' tariffs are in the four- to five-per-cent range, he says.

Bayne Stanley, Business Edge
A CarlWood Lumber Ltd. forklift moves a load of lumber across the Maple Ridge mill lot.

The U.S. has withheld $5 billion in countervailing duties even though a NAFTA extraordinary committee has ruled that lumber imported from Canada does not pose a threat to American producers.

A more recent World Trade Organization ruling has sided with the U.S.

During a recent visit to Vancouver, U.S. ambassador to Canada David Wilkins told reporters he would attempt to help find a solution to the dispute. He called for a resumption in negotiations after Ottawa cut off talks and hinted at retaliation in the form of tariffs on U.S. goods imported into Canada.

"We wanted to do something that was proactive and positive rather than wait for a resolution to the dispute," says Downing. "I don't think a solution is imminent."

He says B.C. has to develop the Chinese market as an alternative to the U.S. because the province is Canada's gateway to Asia and the lumber industry is highly specialized.

B.C. producers and manufacturers focus on six sectoral categories: Engineered building products; millwork (including doors, windows and flooring),;pre-fabricated homes; structural wood products (such as laminated beams and trusses); cabinets; and remanufactured utility lumber (essentially processed lumber cut in different sizes for such uses as decking and veneer.)

"From our standpoint, most of what we sell into the U.S. is construction lumber and construction lumber is subject to a tariff," says Downing.

While the U.S. duties are as high as 28 per cent, duties in other countries such as China, Japan and Europe range from zero to 10 per cent, depending on the product.

BC Wood is also emphasizing hardwood products, which include flooring and most furniture, because they are not subject to the same duties as softwood. As a result, some B.C. producers are still enjoying strong sales to the U.S.

"There are no duties on hardwood, so we're in a very happy group that don't have that (softwood dispute) problem," says Doug Carl, general manager of Maple Ridge-based CarlWood Lumber Ltd.

Carl says his company has increased U.S. sales by five per cent annually in recent years, and he expects that trend to continue. However, the high Canadian dollar and its constantly changing exchange rate are limiting revenues.

"Generally, you can say (U.S. sales) are going up every year," says Carl. "They're pretty healthy."

But Carl expects the Whistler event to have more of an impact on his firm's international sales than those to the U.S. He calls the hardwood sector an emerging market and believes his company can capitalize on growth of sales to China, while B.C. softwood producers face more international competition.

CarlWood gets 40 per cent of its revenues from China and expects the country to account for 50 per cent within 12 months, after contacts developed in Whistler are followed up. He also anticipates the buyers mission will help him sell to India for the first time and boost sales to Mexico.

"I think there's tremendous potential for growth (in the hardwood market) in B.C., and I think our company is well positioned to take advantage of that," says Carl. "I think we'll overcome our supply problems - I hope we will."

Carl says the Global Buyers Mission helped his company reach markets that it would not have otherwise, simply because it would be impossible to travel to all of them. Architects and designers also added a new flavour to the event.

Hardwood producers have also avoided pine beetle attacks, but the depletion of softwood supply is still a concern, says Carl, because hardwood companies rely on foresters who log both types of timber at the same time. If foresters can't harvest softwood because of the pine beetle, currency rates or market conditions, it may not be economically feasible to gather hardwood.

But Carl is confident that, with help from the province, First Nations and independent loggers, there will still be an adequate supply of hardwood, which has a "shelf life" of 40 to 50 years in the forest before it must be harvested.

Because of the strong turnout, says Downing, next year's Global Buyers Mission has already been scheduled for Whistler again next Sept. 8-9, after being relocated from Victoria.

(Monte Stewart can be reached at monte@businessedge.ca)