Full credit goes to Alberta-Pacific Forest Industries (Al-Pac) for recognizing their need to diversify their business, and to the federal government for backing them up with last week’s $62.9 million investment.
The last few years have been tumultuous times for the forest industry, not just in Alberta but also worldwide. The global economic downturn hit the industry hard, with plants closing and downsizing all over North America.
As a hardwood pulp manufacturer, Al-Pac was somewhat more insulated from the recession than were their colleagues in the softwood lumber industry. But they still took a hit as pulp prices softened, and there were whispers of speculation that maybe Al-Pac would become another casualty of the faltering economy.
Worst-case scenarios painted a picture of armageddon as far as the local economy is concerned.
But the sharp minds at Al-Pac, already well-known for their innovation in pulp production and forest management, set to work and looked for ways to diversify their business model. The result of their efforts, a plan to maximize the electrical generating capacity created by their operations, hit the mark on multiple fronts: it adds a new dimension to their business model; it makes better use of existing operations and their byproducts; and it’s a form of green energy, which not only resonates well with the environmentally conscious, but also makes the project more appealing to government cheque-writers.
More importantly for the local area, last week’s announcement should put an end to those whispers of speculation about Al-Pac’s future. Yes, many challenges remain as far as the pulp industry goes — the same challenges that have always been there in varying degrees. But with its increased involvement in electrical generation, Al-Pac has made a move to diversify its business and solidify its future.
Really, what Al-Pac has done is follow through on a basic economic strategy. Everyone from individual investors to national governments are constantly advised that it’s wise to diversify their portfolios and income sources, so that they’re protected if a particular sector hits a slump.
The difference is that while diversification remains a goal for many, Al-Pac has executed a plan to achieve it.
