- Western Forest Products has suspended manufacturing operations for at least a week, effective immediately
- Manufacturing facilities in British Columbia will be curtailed due to COVID-19 shutdowns affecting operations
- The company still believes it will maintain packaging and shipping of products to customers
- The Cowichan Bay and Ladysmith sawmills will remain closed
- Western Forest Products (TSX:WEF) is down 11.59 per cent at C$0.61 per share, and a market cap of $236 million
Sawmill operator and timber manufacturer Western Forest Products (TSX:WEF) has announced it is winding down production due to COVID-19.
The BC-based company believes that the stoppage could run for a week in some sections of the business. Other areas may be staring down the barrel of a much longer delay.
The company announced that due to COVID-19 shutdowns, it would be curtailing its manufacturing facilities currently operating in British Columbia.
This planned curtailment is scheduled for a week, but Western admitted that this is contingent upon specific conditions. During the week, management will conduct a review to assess if market conditions have improved enough to warrant reopening.
The company maintains that packaging and shipping of lumber products will continue to meet customer requirements.
However, Western has stated that curtailments of its Cowichan Bay and Ladysmith sawmills will probably continue into the second quarter. This is due to reductions in log supply and weak market demand during the shutdowns.
The mills initially shut down during the protracted strike between Western and its employees in the Cowichan Valley.
The almost 8 month-long strike resolved on February 20, a few days after workers signed their new collective bargaining agreement.
There are now genuine fears that other BC mills and manufacturing facilities will close, just 30 days after the strike ended.
Western had a 20 per cent share price spike, when news broke that they had agreed to terms with workers.
However, this bounce disappeared almost over night. From February 20 onwards, the company has lost a staggering 56.52 per cent of its share price since then.
For their part, Western has committed to halting all capital expenditure, with plans to only spend on their safety, environmental and committed capital expenditures moving forward.
President and CEO, Don Demens, said the shutdown was necessary to prevent employees from potential exposure to the virus.
“Western has taken steps to mitigate potential exposure to COVID-19 throughout our operations, by implementing strict health and safety protocols.
“The decision to temporarily curtail manufacturing operations in British Columbia is as we respond to the evolving COVID-19 situation.
“We will continue to monitor market conditions and government directions in the jurisdictions where we operate, and adjust our business as circumstances change,” he said.
Western Forest Products (TSX:WEF) is down 11.59 per cent, trading at C$0.61 at 11:43am EST.