Economic Performance

Product Sales

2016 product sales: $4.5 billion
2017 product sales: $5.1 billion

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 $1.6 billion between 2013 and 2017 across our operations. This included the reconstruction of 11 sawmills, 13 planer upgrades, 6 energy and bioproducts projects and the addition of 33 continuous kilns.

Find out more about how we see the Opportunity of our business on our website.

201-1 Direct economic value generated and distributed

2016 Annual Report, Annual Information Form and MD&A, pages 8-42
2017 Annual Report, Annual Information Form and MD&A, pages 8-68

201-2 Financial implications and other risks and opportunities due to climate change

Climate change risks and opportunities cross many aspects of our business, from fibre supply, forest health and forest management to the environmental opportunity our wood products represent in green building.

Changes in climate, for example, may facilitate the spread of forest pests such as the mountain pine beetle and of other health stressing diseases that can affect trees. Fibre supply disruption to our operations can be caused by increased drought, forest fire activity or storms and flooding that leads to temporary cessation of operations due to physical damage to road and rail infrastructure and disruption of supply chains. A market opportunity may be increased demand for our wood products as building approaches and consumer preferences shift to require less carbon intensive, greener, sustainable, climate friendly construction materials, such as wood products and wood building systems.

Climate change issues are integrated in the discussion of business issues detailed in our annual reporting because these risks and opportunities considerations are integrated within the company's wider risk management approach, consideration of government regulations and policies, evaluation of capital projects and sustainable forestry management activities. Read more in the 2016 Annual Report, Annual Information Form and MD&A, “Risks and Uncertainties” pages 38 – 42 and the 2017 Annual Report, Annual Information Form and MD&A, pages “Risks and Uncertainties” pages 59 – 68.

As an SFI-certified forest manager (Canada), we further have requirements within SFI Standards’ performance measures to incorporate the potential impacts of climate change on the land base. We monitor information generated from regional climate models and consider how the forests we manage contribute to resilient ecosystems as an adaptation to a changing climate.

201-3 Defined benefit plan obligations and other retirement plans

2016 Annual Report, Notes to Consolidated Financial Statements pages 57-60
2017 Annual Report, Notes to Consolidated Financial Statements pages 86-91

201-4 Financial assistance received from government

2016 Annual Report, Notes to Consolidated Financial Statements, Government Assistance, page 65
2017 Annual Report, Notes to Consolidated Financial Statements, Government Assistance, page 99

Market Presence

See the Discover West Fraser pages within the Careers section on our website or see the Employees & Community section to learn more about our approach to recruitment and employment opportunity.

202-1 Ratios of standard entry level wage by gender compared to local minimum wage

All hourly employees are paid a wage consistent with local markets and are set to reflect the job performed. Hourly wage rates either meet or exceed the local minimum wage rates in the jurisdictions where we operate (Canada and the United States).

2016: 76% of employees are paid on an hourly basis
2017: 79% of employees are paid on an hourly basis.

202-2 Proportion of senior management hired from the local community

In many regions where we operate, our manufacturing facilities are a major employer in the community, and we primarily recruit new employees in the areas where our facilities are located. We draw our employees from the local region, Indigenous communities, educational institutions, cities and towns close to our operations.

Our senior management team are drawn from the United States and Canada. We believe in promoting from within and our senior management team reflects this. Our leadership teams at the local and corporate levels are comprised of employees who have developed their skills with us and moved up within the Company into senior leadership roles. 95% of our management and senior management team are drawn from internal promotions.