Boniferro hails mill as success: alliance carves path to new market, new products.

Former Domtar employees are back working at a Sault Ste. Marie hardwood sawmill with a renewed sense of commitment, purpose and pride.

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After remaining idle for six weeks during the winter, hardwood production resumed at the Third Line and People's Road mill last spring under a new ownership banner. The new ownership is a partnership between Sault resident Jim Boniferro, Domtar's general manager at the mill, and Tom Fox, president of Fox Lumber Sales of Hamilton, Montana.

Over the next five years, Boniferro Mill Works Inc. (BMW) plans to invest $5 million in a capital improvement program on a workstation-by-workstation basis. The company plans to fix up old buildings on site and install some new signage, while paying wages through a five-year contract with Industrial Wood and Allied Workers of Canada that provides similar wages as under their previous agreement.

With no head office to deal with and the requisite layers of bureaucracy to consult in making decisions on site, Boniferro senses a new attitude among mill employees.

"They've taken ownership in the place," says Boniferro, the president and CEO. "I don't know if it's a better morale or if it's the better attitude. They know it's now their mill."

Boniferro says last November's announcement by Domtar that the mill would be ceasing operations as of Jan. 31, 2003 came as a surprise, but not a total shock to the 120 active employees on site.

"The employees knew they never fit in the bigger picture," says Boniferro, the former Domtar mill manager of the hardwood and veneer mill for more than three years, who, like many of the employees was also handed a pink slip.

As the third-largest producer of uncoated, free-sheet paper in North America, and a leading manufacturer of business, printing and publishing papers, specialty and technical papers, for Domtar to have one lonely hardwood mill did not mesh with their long-term strategic plan. However maintaining that supply of fibre was essential to their Espanola pulp and paper operations.

By striking a 50/50 partnership deal with Tom Fox, Boniferro's business and personal contact for 20 years, Boniferro helped engineer a deal to keep a major local forest products plant operating while continuing to supply fibre to Domtar's Espanola mill. Finally last March Domtar sold all the assets of its Sault mill and half of its 80-acres to the newly created Boniferro Mill Works Inc.

While the physical presence of Domtar at the mill site is now gone, a relationship with the international paper giant remains through a number of key agreements.

Boniferro Mill Works is committed through a hardwood pulp supply agreement to provide 107,000 cubic metres of fibre to Domtar's Espanola operations, which Boniferro describes as "critical" to the mill's harvest operation on the Algoma unit.

As part of the purchase agreement, Domtar entered into a five-year deal with Boniferro to secure all the chips generated on site and ship them to Espanola. Key to the deal was the transfer of all operating licenses over to the new company to secure all the fibre necessary to keep the operation running.

Boniferro says what Fox Lumber brings to the table, besides financial support to move the project forward, is marketing expertise with more than 35 lumber traders in house, thus giving the mill exposure to larger markets, more customers and access to new products.

Although much of the Sault plant contains original manufacturing equipment dating back to the mill's beginnings in 1948 when the site was built by Roddis Lumber, Boniferro believes his mill can be profitable. The strength of the operation has always been the expertise of its workforce to harvest, saw and manufacture quality hardwood products.

Domtar's plan was to operate the Sault plant as a source of wood fibre for its paper operations elsewhere.

"Now we get to focus our attention on the product of hardwood lumber, which had lost focus over the years. The mill wasn't here to generate hardwood lumber, but generate by-products for the pulp."

Under their new business plan, Boniferro Mill Works has gone back to the plant's early days of concentrating on producing its primary product.

Today, with 32 employees aboard - 26 hourly saw mill employees and six administration staff - they are producing 45,000 board feet on a one-shift basis. Under their hiring criteria with the union, all mill employees must be able to work at least three different kinds of machinery.

Boniferro says they have met all their business plan expectations this year.

From March to the end of this year, BMW is expected to produce eight million board feet of hardwood maple product and should generate gross sales of $8 million (Cdn).

About 95 per cent of their product are shipped to the U.S. Midwestern states of Michigan, Wisconsin, Indiana and Ohio, with a smaller amount to southern Ontario and Quebec. About 40 per cent of their market are medium-end manufacturers who produce industrial floors such as gymnasiums and squash courts. The rest of the product is earmarked for higher end kitchen cabinet makers and furniture manufacturers or lower range makers of pallets, crates, push brooms, scrapers and bowling pins.

As a shareholder of the Clergue Forest Management Group, BMW utilizes four larger harvest contractors that deliver wood from their Crown units to the mill.

Boniferro says when he left Buchanan Forest Products in Thunder Bay to take the Sault Domtar job he could see the vast potential of the mill. He says, he can see its potential because of its proximity to the U.S. border, road and rail connections, high level of employee expertise with graders, saw operators, quality assurance inspectors and the ability to expand into new markets.

Although the workforce is only a fraction of its original size, "by keeping the operation running today, we can grow into a bigger and larger employer in the future."

With hardly any capital investment on the site since the Weyerhaeuser days of the 1970s, a multi-saw trimmer was removed and a simple three-saw Canadian trimmer was installed - a $100,000 investment - to be more conducive to sawing hardwood logs.

BMW also installed a smaller boiler - a $150,000-investment - to complement a larger on-site boiler to give the mill some flexibility to kiln-dry hardwood lumber for smaller batches, which customers demand.

Down the road, Boniferro is entertaining ideas of value-added products and examining some expansion ideas. With plans to install a third line, which would boost them from an eight to nine million-foot producer to to a 20 million-foot producer, secondary manufacturing is definitely on the books. Their business plan also includes adding a $1-million two-band Scragg saw, more adequate for cutting smaller logs, once the Ministry of Natural Resources supports that initiative.

"Absolutely, we are going to get into value added, but it's going to be done in stages to give us cost-efficiency."

With a huge amount of space on site, including 255,000 square feet of mill space, of which BMW utilizes only about half, Boniferro says the gates are open for other operators to come and develop a new business.

They are working with the city's economic development corporation and the industrial marketing strategy group to look at other complementary and compatible businesses, which could re-located in that space. The mill has access to raw fibre, a railway siding, an on-site re-load centre, indoor storage, automated truck-weight scales and acres of fully serviced developable land.

Domtar is negotiating with the city to extend Third Line through the property to access some unused industrial land for development, next to their Anthony-Domtar plant.

www.bmwssm.com

By IAN ROSS 

Northern Ontario Business