BC Business
The financial train wreck that is B.C.’s coastal forest industry needs a hero, someone with the brains, stomach and leadership savvy to turn things around – fast. Eyes are falling to Reid Carter, and he’s feeling the pressure.
The competitive cyclist whose company just gobbled up Weyerhaeuser’s lumber operations in B.C. for $1.4 billion to become the largest forestry firm on the coast knows he’s in for the ride of his professional life. By all accounts, Carter, 49, will be the chief architect behind the industry’s massive, long overdue and guaranteed-to-hurt restructuring. “I know my career will be measured on how we succeed or fail in this initiative,” says the managing partner of Brascan’s Timberland Investment Management group. “There is no room for arrogance here – this industry has been underperforming since 1988. We’re going to fix our business and at the same time provide leadership for the industry.” He says he’s been working 80 hours a week since the deal was signed in the spring, talks to the CEOs of the other major forestry operators on the coast almost daily and recently lunched with B.C.’s new forestry minister Rich Coleman. Shortly after the deal closed, Carter split the assets into two companies – Island Timberlands and Cascadia Forest Products – and hired CEOs to run them. He describes one, Cascadia’s new boss Hugh Sutcliffe, as an extremely aggressive talent with “ice in his veins.” He’ll need it. Island Timberlands is the simple business. Worth $1.2 million, it owns 250,000 hectares and will grow, harvest and sell lumber based on market demand. Cascadia comes with Crown harvest rights, five old sawmills, two remanufacturing plants and 2,000 employees but is in a shambles. By comparison, it’s worth $300 million. “We will be making different products and working smarter,” says the polite and poised Carter. Still, the business has been burning cash in a big way, and Carter vows to stop the bleed by next quarter and turn a profit in three years. He won’t say how, except that Brascan’s key strategy in restructuring coastal operations will be to open the books. Total financial transparency is the only way to get the buy-in necessary for him to pull off the radical restructuring. “Otherwise you have people lobbying us to pay for a new community hall in Port Alberni when we’re losing significant amounts of cash there, or labour leaders saying we need to invest more,” he says. “I won’t say we’re not going to close mills, but closing mills is not the solution.” Before jumping to Brascan, Carter was a forestry analyst for National Bank Financial and has spent his career in the sector. Much will rest on his lobbying efforts. Even though the BC Liberals unveiled new forestry policy last year, Carter has a laundry list of demands. “The whole stumpage environment is completely broken,” he says. “They tried to fix it but it doesn’t reflect real markets.” Expect more such reality checks. The future of B.C.’s coastal forest industry depends on it.