Winton Global Lumber permanently closed by Sinclar Group

PRINCE GEORGE—Sinclar Group Forest Products today announced it will not resume operations at its Winton Global Lumber plant sites.

“As a long-standing, family-run company that has been operating in Prince George for 50 years, we profoundly regret the decision we have had to make today,” said Sinclar Group President Greg Stewart. “Our biggest hope was that we could find some way to re-start operations and get people back to work. Unfortunately, prevailing market conditions prevent us from doing so.”

The failure of the U.S. economy in 2008 saw housing starts south of the border drop by more than half. Consequently, lumber prices fell dramatically, eliminating the primary market for Winton Global products.

These market forces, combined with future fibre uncertainty and the projected capital investment required to regain competitiveness, led to the decision to permanently close Winton Global Lumber operations.

“We apologize for the length of time it has taken to resolve the issue and the associated uncertainty this has caused for our employees and their families,” said Stewart. “We hope that by finally making this difficult choice, it will give them the certainty they need to move forward.”

All former Winton Global Lumber employees will immediately receive the full severance to which they are entitled.

Winton Global Lumber is an independently owned and managed operation of Sinclar Group Forest Products. It produced dimension lumber for the U.S., Canadian and Japanese markets. It is the only company within Sinclar Group Forest Products that made this product.

“As a company, Sinclar Group remains committed to the communities of Prince George, Vanderhoof and Fort St. James,” said Stewart. “We are confident this decision will better position our company to compete globally, preserve the long-term viability of our operations, and ensure job security for our 600 employees.”

Fact Sheet on Winton Global Lumber

Winton Global Lumber is an independently owned and managed operation of Sinclar Group Forest Products. Winton Global Lumber produces dimension lumber – lumber in all dimensions and lengths, used in a number of building applications, including, for example, large-scale trusses, construction and finishing. It is the only company within Sinclar Group Forest Products that makes this product.

Due primarily to prevailing market conditions, Winton Global Lumber was put on indefinite shutdown in June 2008. A decision has now been made to permanently close Winton Global Lumber’s operations.

Questions and Answers

Q: How much lumber did Winton Global Lumber produce on an annual basis when it was operating? A: Approximately 300,000 MFBM (300 million board feet)

Q: What were Winton Global Lumber’s primary markets? A: The primary markets of Winton Global Lumber were the United States, Canada and Japan.

Q: How many people did Winton Global Lumber employ when it was operating? A: Until it was put on indefinite shutdown in June 2008, Winton Global Lumber employed approximately 75 hourly employees at its Bear Lake Sawmill site and 59 hourly employees at its Prince George Planer location. There are currently eight employees providing security or overseeing the operations to ensure safety systems, the equipment and land are protected.

Q: How many people does Sinclar Group employ at its mill operations today? A: Approximately 600.

Q: When did Winton Global Lumber stop operating? A: Winton Global Lumber notified employees in March 2008 that it would be going on indefinite shutdown effective June 2008.

Q: Why did Winton Global Lumber stop operating? A: The U.S. economy was failing significantly in the spring of 2008, with housing starts plummeting, and consequently lumber prices globally were falling precipitously. The U.S. house construction industry was the primary market for Winton Global products. It did not make economic sense to continue running the Winton Global Lumber mill sites.

Q: Other mills around BC are restarting. Why not Winton Global Lumber? A: Most of the other mills that have restarted in the last few months are doing so because of the increased demand from the Chinese market. They are generally companies that have significant economies of scale, with backup inventory, to ensure they are able to meet the demand in spite of ongoing market volatility. Winton Global Lumber is simply not big enough to absorb the risk and volatility associated with selling into the Chinese market at this time. Winton Global Lumber is the only dimension lumber-producing mill in Sinclar Group. The mill requires a significant capital infusion to be competitive in the lumber industry. The required investment in the midst of a protracted economic downturn, the uncertainty of the future fibre supply in north-central B.C., and the prevailing market conditions have all conspired against any attempt to re-start the Winton Global Lumber operations. However, this decision will allow us to focus on our core business – stud lumber – and on ensuring a strong future for the 600 jobs at our other operations.

Q: You’ve recently added a third shift at Lakeland Mills. Why does it make economic sense there but not at Winton Global Lumber? A: Lakeland is a stud lumber producer – lumber produced in a single-dimension (2x4) to be used for building construction. It’s an entirely different product with different markets.

Q: Why did it take so long to make the decision to close permanently? A: The last thing we wanted to do was close Winton Global Lumber. We knew that once the decision was made, it would be permanent, so we investigated all possibilities to try to resume operations. Unfortunately, we’ve exhausted our options, and the conditions we would need – primarily a significantly improved U.S. housing market – look like they are still at least three to four years away.

Q: What does this mean for former Winton Global Lumber employees? A: Winton Global Lumber employees will receive immediate and full payment of all severance to which they are entitled.

Q: Are any of Sinclar Group’s other operations impacted by this decision? A: No. All of our other operations will continue to run as normal, including the Winton Global Homes division, which is distinct and independent from the Winton Global Lumber division.

Q: What will happen to Winton Global Lumber’s assets? A: We will be looking to sell the physical plants and land. At this time, Winton Global Lumber will maintain its forest license and manage accordingly.

Q: Would this decision have been made if the appurtenancy rules (i.e. forest licenses being tied to the plant and not the company) had not been changed? A: Given prevailing conditions, and for all the reasons stated above, Winton Global Lumber is not a sustainable operation. The change in appurtenancy rules would not have impacted this decision. This decision has been made to enable Sinclar Group to focus on its core business – stud lumber.

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