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Deal maker: you might wonder what they put in the water in Duncan BC, where contractor Hayes Forest Services continues to grow. It recently penned agreements to bring its annual harvest to 2 million m&snot;

Canadian Forest Industries, Mar 2003 by Tice, Bill

A recent agreement between Hayes Forest Services Limited of Duncan, BC, and Weyerhaeuser Company Limited, has helped Finning (Canada) secure a $10 million sale of Caterpillar forestry equipment and Finning services.

Hayes and Weyerhaeuser closed their Timber Supply Execution (TSE) agreement on January 2, 2003. The deal, which was developed by Hayes in conjunction with the forest products giant, allows Hayes to manage the entire timber supply chain at Weyerhaeuser's Franklin Division on Vancouver Island, from planning through delivery.

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"Our creation of the TSE agreement with Weyerhaeuser is really a quantum change in timber supply chain management," explains Donald Hayes, President of Hayes, and one the sons of company founders, Harriet C. Hayes and Donald Hayes Sr. "It is one of the first real outsourcing of an entire timberlands operation in British Columbia, and it makes Hayes Forest Services the only true industrialsized forest services provider who is not a licensee," adds Hayes, who expects his company to harvest about two million cubic metres of timber in 2003, including the newly acquired volume to be harvested from the Franklin Division of Tree Farm License (TFL) 44.

New Approach

Hayes is an independent, diversified forest services and logging company that has been aggressively expanding in recent years (see CFI May/June 2002). Under the new TSE agreement, Hayes is responsible for all of the operations of the Franklin Division including all aspects of engineering, road construction and maintenance, ground based and helicopter logging, sorting, and log delivery to Weyerhaeuser's mills and customers. Weyerhaeuser will continue to maintain forestry and higher level planning control and will continue to own the TFL and all of the timber produced from it.

Hayes says his family-owned company saw the TSE agreement as an opportunity to provide a solution to many of the problems that have crept into licensee/contractor relationships, as the agreement gives Hayes control over the entire log production process.

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"We conceived the TSE agreement concept, and then pitched it to Weyerhaeuser's senior management group," explains Hayes. "Weyerhaeuser's team saw our vision immediately, but before going any further, we did something unusual by seeking the agreement of the union. The union, which is the Industrial, Wood & Allied Workers of Canada (IWA), also saw the vision of Hayes as a legitimate alternate employer to Weyerhaeuser for its members, and saw the benefits of working for a locally-based employer. We formed a binding agreement with the union in August 2002, and then the serious dealings with Weyerhaeuser began."

The IWA involvement ensures the continuity of the employment rights of Weyerhaeuser's IWA crew, as employment and seniority rights of the 300 Franklin employees will remain unchanged.

In a press release issued by Hayes, Dave Haggard, President of IWA Canada was quoted as saying, "Hayes did this right by approaching us first and looking after the existing employees of Weyerhaeuser," adding that "Hayes has a proven vested interest in the forest industry in British Columbia."

Hayes says the cooperation from the IWA in making the transition has been encouraging, and the feedback from the union so far has been very positive.

"We have met with many members of the Franklin crew and have had very good feedback from them in terms of working for Hayes. They were, of course, nervous about the change, but are also very happy about being part of a local company, with local owners who are totally committed to the British Columbia forest industry."

Paper & Iron

Hayes says the administrative part of the transition involves a considerable volume of work, but adds that it has also gone extremely well.

"We have had excellent support from our suppliers in areas such as payroll benefits packages, and we were able to transfer most of the administrative aspects of the switchover electronically. Everyone really came to our aid, and to the party," adds Hayes.

Putting the iron together to back this commitment was also a challenge, but a single $10-million deal with Finning Ltd. has made life easier. As part of the agreement with Weyerhaeuser, Hayes had the option of purchasing the equipment that was already in use at the Franklin Division.

"We did take a substantial portion of the equipment from Weyerhaeuser, but we also looked at the agreement as a chance to acquire exactly what we needed," says Hayes. "We know all of the equipment suppliers in the market and we spoke to most of them. A couple of the suppliers did not respond, but those we are used to dealing with all came to the table. We were very careful to make sure we were comparing apples with apples in terms of the equipment and service, but what we were really looking for was a commitment and a long-term relationship. We believe that Finning offered both, and came through with the best available value and service package."