A new hope in Atikokan.

An Atikokan native son who returned home to resurrect a shuttered particle board mill is ready to embark on a major expansion project with a value-added veneer lumber mill.

The news of Fibratech Manufacturing Inc.'s $50-million capital investment in a proposed laminated veneer lumber manufacturing mill is helping to take the sting out of the Ontario government's June announcement that Atikokan's 20-year-old coal-fired generating station is slated for closure in 2007.

The loss of 110 well-paying Ontario Power Generation jobs was devastating to the 3,400 residents and economy in the northwestern Ontario community, largely dependent on the thermal generating station and the forestry industry for survival.

But since Dan Warren and his start-up company took over the former Proboard Ltd. works last year, the 130-employee outfit has poured $9 million into plant upgrades.

"What we would like to see is Atikokan become the value-added capital of Ontario," says Warren, a former Proboard employee. He has been in the particle board business for more than 20 years in Quebec and British Columbia.

The company is in talks with investors aimed at building the mill on its west-end industrial park site, generating as many as 160 jobs.

With the backing of the Town of Atikokan, FedNor and the Northern Ontario Heritage Fund, Fibratech has been conducting a feasibility study to identify the market and potential clients for veneer lumber.

Though the report was due out in January, early results indicate the market demand for laminated veneer products looks very promising, says Warren.

"Most of the people we sell to today are most of the people we would sell this (veneer) product to."

The lumber can be used for high-end structural beams, structural door manufacturing, manufactured home products and siding.

They plan to use primarily under-utilized species such as birch, ash, oak and willow as mill feed.

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"We've already had more people coming to us with more spinoffs for this one, so it's pretty exciting stuff." Warren says, adding that as far as value-added goes, the mill's product would be high on the food chain.

"It's not often done but there's some technology for this kind of product that we're looking at that was never available before. It allows us to get the costs down and gives us some flexibility on the different products used to make it."

The 2003 closure of the mill (under previous management), which sent 120 employees packing, was blamed on high operating costs and poor market conditions.

When Fibratech stepped in and purchased the assets, they were forced to make some changes to stay profitable.

Warren says they've had to be "creative" with their investment capital going into cost-cutting measures, such as the recently installed $2.5-million burning unit, which allows them to incinerate sawdust and floor sweepings.

The heat generated will be used in their presses and dryers, and should take 90 percent out of their weekly $100,000 energy bill.

"You need to get the most out of your product and value-added has many steps," he says.

With government support, they've been able to modify their product and re-model the "green end" of the 240,000-square-foot operation. In 2004, they switched from using round wood to using residual sawdust and shavings from other area plants.

That upgrade was part of a $3.6-million loan from the Northern Ontario Heritage Fund Corp. (NOHFC) to purchase and install new equipment. In July, FedNor invested more than $2.7 million in another repayable loan.

Last month, the company was firing up a new cutting plant to make intricate components for furniture and door manufacturers. Installation of a paint line to apply a finishing coat on products for drawer sides, bottoms and cabinet backs was next.

The company is also examining the possibility of building a co-generation plant to wean itself off of natural gas.

Fibratech, which bills itself as one of the industry's most innovative, engineered fibreboard panel plants, has been largely successful with flooring products and counter-top stock.

While most of their client base covers all over North America, including the U.S. Midwest and Eastern Seaboard, Warren says they've also put some feelers into China, having exported some samples of their flooring products, underlay and structural panels for plywood manufacturing.

But it hasn't all been smooth sailing since the plant re-opened in June 2004.

Warren admits "uncontrollable (factors)" such as the escalating costs of hydro and natural gas, a strengthening Canadian dollar and resin prices are part of their week-to-week challenges.

During late 2004, the company endured some brief shutdowns as they struggled to get the operation running efficiently.

"The mill and production line is starting to run well. We can certainly see the light at the end of the tunnel in January and February."

Atikokan Mayor Dennis Brown says Fibratech's expansion plans represent a "tremendous boost" to the town's morale.

"I think there's more hope now than there ever was."

He's excited about the value-added opportunity that will ensure Fibratech's long-term viability.

"There's no reason to believe this project shouldn't go ahead."

While value-added wood manufacturing is a popular industry buzzword in Northern Ontario, Brown says it is the only solution to the forest industry's sustainability.

"We know it has to happen for the future of the wood industry and we're certainly supportive of it. We need people like Dan who've been in the business for more than 20 years and he knows what has to happen. He's got the contacts and we just have to be supportive and work with him."

www.fibratech.com

By IAN ROSS

Northern Ontario Business