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(JOHN LEHMANN/GLOBE AND MAIL/JOHN LEHMANN)

Working together, B.C. town rescues its mill Add to ...

The town of Mackenzie was carved out of the northern British Columbia wilderness in the 1960s, built for one thing: the forestry business.

Stephanie Killam arrived in 1972 and, in the past several years as mayor, she has seen the once-prosperous town implode. Mill after mill has been shuttered. Last summer, Canfor Corp. closed its last operation in town, leaving it with not a single mill open.

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Now, at the epicentre of the disaster destroying the Canadian forestry industry, the first glimmer of a recovery has emerged. Canfor, starting in early July, is restarting a sawmill, running one shift a day with 60 workers.

It is the story of government, a determined town and union workers coming together to pull the mill out of the grave.

The operation is a fraction of what the town had just three years ago, but for the mayor and forestry investors, it may mark - quietly - a long-awaited turning point in the fortunes of a moribund business.

"I've always felt Mackenzie had a future," Ms. Killam said yesterday. "This makes it a little more certain that we've reached bottom and we're coming back up."

Announced late Friday, the reopening of the Canfor mill sparked interest among investors who have abandoned forestry, carrying shares of companies higher than the widespread market advance yesterday. Stock of Canfor, once Canada's No. 1 lumber producer and now one of the least valuable members of the Toronto Stock Exchange composite index, surged 16.8 per cent yesterday. Competitor West Fraser Timber Co. Ltd., the world's No. 1 lumber producer, also benefited and its stock rose 6.6 per cent.

Part of the excitement was another small sprout of good news in the important United States housing market, where pending home sales rose 3.2 per cent in March from February, according to the National Association of Realtors - though it warned that momentum will take some months to build. And there remains a large inventory of unsold homes on the market.

Another plus for foresters is that prices for lumber are improving, said Russell Taylor, president of consultancy International Wood Markets Group. He said he was a little bit surprised at the Canfor news and said it indicates the company sees long-term profits in the mill.

But a real recovery for forestry is unlikely to emerge this year, he said.

"We've probably come through the bottom of the market," Mr. Taylor said. "We think [recovery]is going to be next year."

The restart of the sawmill could be an indicator of where the industry is heading and what it will look like as it rebuilds and tries to gain traction from an economic recovery. The business will be smaller than it once was, Canfor will run the mill at less than half the capacity it ran at when it was shuttered, and even with some jobs returned, 1,500 forestry jobs remain lost in Mackenzie, where the population is 4,500. It all means forestry will be less of a cash cow for governments.

As part of months-long talks ahead of the announcement, Canfor gained concessions on rates it pays the province for the spruce trees it cuts down. The District of Mackenzie agreed to Canfor's demand for a 25-per-cent break on its property taxes for three years, a $100,000-per-year loss for the district. And union leaders agreed to undisclosed concessions for workers.

Canfor plans to move away from the rough-hewn wood generally sold to home builders, and produce more of the better-finished lumber for the renovation market sold through stores like Home Depot.

The company is also mulling a $2-million investment to improve the mill's equipment, on top of the $5-million it will spend to stock the yard with raw logs and restart the mill.

Jim Shepard, speaking in Mackenzie on Friday afternoon, relished the first bit of good news in his difficult two-year tenure as chief executive officer of Vancouver-based Canfor.

"It is my sincere hope that today marks the beginning of a bright and sustainable future for sawmilling here in Mackenzie," Mr. Shepard said.

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