What was planned as a six-week shutdown is now a complete closure. Tolko Industries Slave Lake OSB mill is closing its doors indefinitely citing a continually poor market, low prices, and diminished demand.
Market price for OSB (oriented strand board) is $159.80 per thousand square feet, less than half of last year's price of $333.85. Peter Meyer is the plant manager for the Slave Lake plant. He reports that the operation cannot compete in such a depressed market.
"We're close (to profitability) but prices are just a little too low," he says. "The market is down and the forecast is it's not going to get any better any time soon."
Tolko bought the Slave Lake operation in 2004. A six-week shutdown was executed in 2001 (under Weyerhaeuser) because the market was poor but in that case the market rebounded and employees went back to work in four weeks. Meyer says that the local mill's small scale dictates the closure. Larger mills in High Prairie, Meadow Lake, and Fort St. John (not Tolko) can produce three times as much product with the same number of employees.
"We regret the impact this has on our employees and their families," says Tolko vice-president Rick Huff in a prepared statement. "Employees have demonstrated great commitment and effort through the challenging conditions faced in recent months."
One reason for the closure is the dwindling U.S. housing market. Housing starts are down 27.5 per cent since last year. The Alberta Forest Products Association (AFPA) was not surprised with Tolko's announcement and says there are many mills facing similar prospects.
"They're all looking at the their books everyday, trying to figure out how to get over this crisis and hang on," says Neil Shelly, executive director of the AFPA. "Tolko is probably the first of several announcements across North America."
Even though Tolko is closing one plant, it forges ahead with another. The new mill is going ahead and laid-off workers are encouraged to apply. There will be no automatic transferring of employees but they may have a leg up at the proposed job fair coming up on May 4 and 5.
"They would need to go through that process," Meyer explains, "But they would have some advantages, such as no need for housing and experience."

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