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Housing slowdown sparks more uncertainty over Cook siding mill

Marshall Helmberger
Posted 3/14/19

COOK— A slowdown in the housing industry has trimmed growth in the siding sector for Louisiana-Pacific, but that hasn’t diminished the expectation of company officials for continued growth in …

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Housing slowdown sparks more uncertainty over Cook siding mill

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COOK— A slowdown in the housing industry has trimmed growth in the siding sector for Louisiana-Pacific, but that hasn’t diminished the expectation of company officials for continued growth in siding sales in the longer term. That’s according to the company’s most recent presentation to investors.

Growth in the company’s siding sector is key to prospects for a new siding plant at the site of the former Ainsworth OSB mill near Cook. Louisiana-Pacific purchased the former mill site in 2016 with the intent of expanding its siding production capacity, but the company has offered less certainty in recent months surrounding the timeline for that conversion.

The prospects for the new mill in Cook suffered a setback two years ago, when the company decided to convert an existing OSB plant in Dawson Creek, British Columbia, to siding. That’s left the company’s engineers and available capital budget largely tied up since then, limiting the progress on conversion at the Cook site.

Company CEO Brad Southern told investors last month that the work at Dawson Creek is largely completed and he expects the plant to begin initial production by the end of March. Still, he said he expects the plant start-up will continue to occupy the company’s engineering staff during the start-up phase.

“We’re focused on a good start-up,” he said. “As far as the next mill conversion, we’ll get into that after Dawson Creek is set up. I think we’ll be in a position by the end of Q4 to have enough information to know where we’re going.”

The Cook plant is one of two idled facilities that the company has purchased for possible conversion and it would be a more costly project than the retrofitting of a mill in Val d’Or, Quebec, that L-P bought as part of the same acquisition that included the former Ainsworth mill. The Quebec mill, unlike the Cook site, came with a wood press, which is an advantage since start-up costs would be lower in Val d’Or. But access to wood has been an issue in Quebec, as has a sluggish transportation sector, which are disadvantages for the Canadian plant.

Continued weakness in the housing sector, and the expectation by many economists of a possible recession by 2020, are other potential risks that could impact the timing of any expansion decision. But Southern said other factors are important as well. “A big part of our success will be in our ability to penetrate and grow market share,” he said.

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