Economic Impact

Worker standing next Western Fraser lumber

The ripple effect of our mills’ economic impact in our communities is much greater than the direct employees of our Company and the local taxes we remit. Our business depends on local third-party providers for services such as log purchases, logging, road building, reforestation and silviculture, supply support, trucking and transportation. 

The forest industry creates more jobs and contributes more to the balance of trade for every dollar of value added than do other major sectors.

                                                         Forest industry contribution to Canada’s economy, in the State of Canada's Forests Report, 2019

 

Our business model is based on integrating contractors, small and local businesses and services to our mills, and this induces more jobs in the areas where our facilities are located. 

For more than 60 years, West Fraser’s business strategy has been straight-forward and consistently focused on three key drivers. They are:

  1. To be the low-cost, high-margin producer in each of our product lines and geographic regions;
  2. Reinvesting in our business assets, and
  3. Maintaining a conservative balance sheet to manage for the inherent cyclicality of our industry.

This strategy is important to the indirect economic benefit that West Fraser provides in the communities where we operate.

Maintaining a financially conservative, high-performing business in a cyclical sector means that we are more likely to be able to provide more stable employment for direct employees and for the local contractors and suppliers we depend on for crucial services such as harvesting, trucking in the communities where we operate. By reinvesting in our business to maintain modern, efficient facilities, our mill operations are more likely to remain competitive, economic and operating through all phases of a commodity price cycle. This operating philosophy is a critical factor in the communities where a West Fraser mill may be one of if not the major employer for the town. By operating and conducting our business responsibly: socially, environmentally and economically, we can continue to consistently provide direct, indirect and induced jobs through low or thriving market demand.

From a donations perspective, our primary areas of charitable giving are to enhance community life, health and wellness and education. We designate a portion of our pre-tax profits each year towards charitable and community giving in the communities where our employees live and work. We define an annual donation budget for every division so that our operations can maintain our charitable funding in these rural communities even in tough financial years given we are a commodity business that experiences up-and-down business cycles. Larger donations and gifts beyond annual divisional spending are recommended to senior management by our communities for corporate donations.

Information about our community donation activity is included in following sections. You can also read more about our activity in the Local Communities page.

Foundational Economic Principles

As a business, our objective is to find the best commercial value for the trees in order to generate sufficient profits over an economic cycle. We do this while incorporating several important social values associated with forestry. From the early days of our founding, West Fraser has never waivered from three foundational economic principles:

  • First, we promote a low-cost culture throughout the Company in good times and bad. 
  • Second, we reinvest our cash flow into our business to ensure we have the lowest cost and most highly efficient mills in the industry. 
  • Third, we strive to maintain a prudent balance sheet throughout the business cycle.

Objectives

Our objective is to be the low-cost, high margin producer in each of our product lines across geographic regions. We are working towards this by investing in growing the footprint of our operations, modernizing our mills and upgrading technology, improving safety and supporting employee development. Reinvestment in our operations is crucial to ensure we operate efficient, modern mill facilities. Within a comprehensive capital program, we invested $2.5 billion between 2014 and 2019 across our operations. This included the reconstruction of  sawmills,  planer upgrades, energy and bioproducts projects and the addition of more than 30 energy-efficient continuous kilns. 

Sales Revenue

Year ended December 31 2019 ($ millions)

 

201920182017
Lumber3,4424,4563,671
Panels605676600
Pulp & Paper9661,163988
Intracompany fibre sales(136)(177)(125)
 

4,877

6,118

5,314