Tolko Takes Downtime and Slows Construction Project

Vernon, British Columbia, Canada, 29 May 2007 -- Tolko Industries Ltd. is taking several steps to address adverse market conditions that affect its manufacturing operations.

The company announced it will take market-related downtime at its Quest Wood Division in Quesnel, and Lakeview and Creekside Divisions in Williams Lake, British Columbia. In addition, the company’s Nicola Valley Division in Merritt will move from a three-shift to a two-shift operation until market fundamentals improve.

“The decline in U.S. housing starts, which has resulted in depressed commodity pricing, coupled with a strengthening Canadian dollar and high transportation costs have forced us to make these difficult decisions,” said Mike Harkies, vice president and general manager, Solid Wood and Kraft Papers. “We will review these decisions and the operating status of our other divisions on a weekly basis.”

These curtailments represent 38 million board feet of dimension lumber production.

The shift reduction at the Nicola Valley sawmill will take effect 22 May and will affect 25 employees.

The Quest Wood Division’s two-week shut down will run 22 May through 04 June.
The Lakeview Division shut down will occur 28 May through 01 June, and the Creekside Division shut down will take place 22 May through 28 May.

Tolko Industries Ltd. also announced it will take market-related downtime at its veneer operations in Lumby, Armstrong, and Kelowna, British Columbia.

“The decline in housing starts has resulted in depressed veneer and plywood pricing on both sides of the border,” said Jim Baskerville, regional manager, Okanagan Operations.

The curtailments represent approximately 20 million square feet of green veneer production and will affect up to 120 employees.

The curtailments will be implemented on a rotating basis, commencing at the White Valley Division in Lumby during the week of 18 June. Subsequent shutdowns of two weeks each will be taken at both the Armstrong and Kelowna veneer facilities through July and August.

These decisions will be reviewed regularly throughout the summer.

In addition, Tolko Industries is slowing construction of its I-joist plant in Sturgeon County, Alberta. The company anticipates completing the plant in late 2008.

Continuing poor market conditions called for a review of the project's timeline, explained Brad Thorlakson, president, Tolko Marketing and Sales Ltd. The plant was initially scheduled to be completed late 2007.

Major components, including building erection and equipment installation, will be completed when there is clear indication of sustainable markets.

"Tolko remains committed to this project and the Sturgeon site," said Thorlakson.

This decision does not affect construction of Tolko's Athabasca Division in Slave Lake, Alberta.

Tolko Industries Ltd. is a private, Canadian-owned forest products company based in Vernon, British Columbia. The company is a major producer and marketer of lumber, veneer, plywood, oriented strand board, and kraft papers, with manufacturing operations across western Canada. The company's woodlands operations have received third-party certification of their sustainable forest management systems.