Less than a year after its first U.S. acquisition, Western Forest Products has acquired a lumber mill in Vancouver, Washington.
Western has agreed to purchase the assets of Columbia Vista for $30.5 million US, which gives the Island-based company another facility that will manufacture products for the Japanese and U.S. markets.
Western chief executive Don Demens said the deal provides Western the opportunity to expand its Douglas fir specialty product offerings, particularly in Japan where customers have been asking for Douglas fir to complement Western’s B.C. hemlock.
Columbia Vista has 90 workers and produced about 60 million board feet of lumber in 2017.
In December, Western acquired a Washington mill to serve its large U.S. customer base and offset the added costs of crippling U.S. softwood lumber duties. Western spent $9 million US to acquire Hampton Lumber Mills’ processing and distribution centre in Arlington, Washington, in order to increase the production of finished products and offer a centralized warehousing and distribution centre to service the U.S.
Western senior director of communications Babita Khunkhun said a second investment in the U.S. doesn’t mean a change in the company’s focus.
“Western is committed to growing our business. Like a lot of B.C. forest companies whose fibre basket is constrained, we have made a decision to buy assets where and when it makes sense,” she said. “Columbia Vista is a complementary business to Western, which means that the purchase is a good opportunity to grow our business, which in turn increases our competitiveness and supports our B.C. business.”
Khunkhun said the company still intends to invest in B.C. with as much as $90 million expected to have been invested in 2018.
Western specializes in timber harvesting and has timberlands all over Vancouver island. It also operates seven saw mills, including in Port Alberni and Nanaimo, as well as manufacturing plants. It has a lumber capacity of about 1.1 billion board feet per year.
There is an advantage to having U.S. production facilities as the lumber produced there is not subject to softwood lumber duties if intended for the U.S. market.
The acquisition of the Columbia Vista operation will not immediately pay off in terms of avoiding tariffs as most of the lumber produced at the mill is for the Japanese market. “However, it is true that should we produce products for the U.S., Western would be protected from the damaging effects of duties on those products,” said Khunkhun. “But our focus is on utilizing Columbia Vista to grow our business in Japan.”
She said all logs for the Columbia Vista operation would be sourced in the U.S.
Khunkhun said Western’s B.C. mills are currently running below capacity due to a lack of logs — a result of raw-log exports, increased demand from pulp mills and the recent fire season.
