NA’s 13 biggest lumber companies increase production by 2.3% to 34.2 billion board feet in 2017

The annual Wood Markets’ “Billion Board Foot Club” list of top global lumber companies showed further gains in production by 10 of the 13 companies making the list in 2017 (as compared to 2016 output). Three companies recorded output declines despite robust U.S. and export market demand (due to timber supply issues in the B.C. Interior, the U.S. West and Chile). The largest North American firms increased their output, mainly because of mill capex programs or shifting at existing operations.

There was only one major sawmill company acquisition in 2017: West Fraser’s purchase of Gilman. The average rise in production was only 2.3 per cent for the 13 companies on the list — a slower pace than in the last three years. The list is based on companies with reported softwood lumber production exceeding one billion board feet (bf) on a nominal basis (or, for mills outside North America, more than ~2.3 million m3).

11 of the companies that made the list since 2005 did so again in 2017. The breakdown is as follows:

  • 11 North American companies (six headquartered in Canada and five in the U.S.);
  • One European company; and
  • One South American company

The total output of these 13 firms was 34.2 billion bf nominal (57 million m3 net) in 2017, an increase of 1.3 billion bf from 2016’s 33.4 billion bf (+2.3%). This compares to total global lumber production growth of about four per cent (+3.4 billion bf net) over the same period. In 2016, the global market share of the largest 13 sawmilling companies remained at 16 per cent (where it’s been since 2012).

Four of the top 10 largest firms are based in B.C. (West Fraser, Canfor, Interfor and Tolko), with the first three holding substantial sawmilling assets in the U.S. Collectively, these three companies own 45 sawmills in the U.S. (versus 31 in Canada). The other company with sawmills in both the U.S. and Canada is Weyerhaeuser (3 mills in Canada and 16 in the U.S.). These four companies have a total of 18.5 billion bf of production at 95 mills, with 34 in Canada and 61 in the U.S.

Despite a dramatic increase in U.S. prices in the fourth quarter of 2017, Canadian mills decreased their shipments to the U.S. by 4.9 per cent; exports to all other markets fell as well. Despite duties of 20 per cent commencing in late December 2017, U.S. lumber prices soared as a result of supply-chain constraints that slowed shipments.

West Fraser remained the largest global softwood lumber producer for the tenth year in a row. The company operated a total of 7 SPF mills in B.C. (34% of company capacity), six SPF mills in Alberta (23%), and 21 SYP mills in the U.S. South (43% of capacity). Total lumber output for the year was 6.23 billion bf, a gain of five per cent from 2016. Its 34 sawmills have 7.2 billion bf of capacity (4.1 billion bf in SPF and 3.1 billion bf in SYP).

Canfor stayed at #2 with 5.16 billion bf of output. Production was only slightly higher (+0.6%) in 2017 as the company integrated and modernized three 2015 acquisitions made in the U.S. South. Canfor operated 24 sawmills with a total capacity of 5.5 billion bf, with its 11 mills in the U.S. South comprising 27 per cent of total output for the year. It has 13 SPF lumber mills in Western Canada (12 in B.C. and 1 in Alberta) that make up 73 per cent of production. A rising proportion of Canfor’s lumber production is comprised of specialty products.

Weyerhaeuser remained in third spot in 2017 with 4.51 billion bf of output, almost even with 2016 (-0.2% from 4.52 billion bf). Weyerhaeuser operates 16 sawmills in the U.S. (11 in the South; 5 in the Northwest) and 3 in Western Canada. Its total lumber capacity is 5.0 billion bf, and it achieved the highest average lumber output per mill (237 million bf) of all the firms on the list.

U.S.-based Georgia-Pacific, a private company, remained at #4 with output of ~2.6 billion bf (+3.6%) at 17 sawmills (15 in the U.S. South).

Vancouver-based Interfor was at #5 and almost tied for fourth spot. It produced almost 2.6 billion bf in 2017, an increase of 4.3% from 2016. It operates nine sawmills in the U.S. South and four in the U.S. Pacific Northwest, with five in B.C. (Coast and Interior regions). Interfor’s total mill count is 18, with lumber capacity of 3.0 billion bf (64% in the U.S.; 44% in the South). In 2017, Interfor’s U.S.-based mills represented 66 per cent of overall company production.

On a board foot basis, Stora Enso remained at #6 spot with 2.33 billion bf “nominal” in sawnwood deliveries from 19 mills in nine European countries (+7.2%). As we’ve noted before, Stora Enso is actually the fourth largest lumber producer when lumber is more correctly counted on a “net” basis (it shipped 4.9 million m3 on a net basis).

Of note, several companies — Weyerhaeuser, Canfor, Georgia-Pacific, Interfor and Tolko — have announced expansions or new sawmill projects to be implemented over the next few years, so the big companies will continue to get bigger.

As we indicate each year, most non-North American mills produce lumber that is sold on the actual (or net) size of lumber produced; their North American counterparts sell lumber on a nominal basis (e.g., 2×4 is actually 1.5” x 3.5”). As a result, if the rankings are viewed on a cubic-metre, net-size basis, non-North American mills have higher output in terms of solid wood — a more accurate basis on which to make comparisons (e.g., on a net-cubic-metre basis, Stora Enso is technically #4, not #6).

Source: Annual reports/ FEA Canada – Wood Markets