Salmon Arm

The lumber market collapse claimed another company Wednesday when a major manufacturer of high-tech sawmilling equipment for the Interior forest industry went under court-ordered creditor protection.

Coe Newnes McGehee, which employs 330 people in Salmon Arm, has seen its sales of computerized sawmilling equipment tumble by one third as a result of the collapse of the lumber sector.

B.C. Supreme Court granted protection to the company under the federal Companies' Creditors Arrangement Act Wednesday on an application by principal creditor Golden Tree Capital, which is owed $26.5 million.

"The desire at this time is to keep the doors open, to have the company operating as a going concern," Golden Tree counsel Sean Collins told the court. "That will require cost cutting and staff reductions."

Under the creditor-sponsored restructuring plan, the current president is to be replaced by trustee David Bowra, who is to be interim CEO, the court was told.

Coe Newnes McGehee makes machinery for the North American softwood lumber processing industry and is one of Salmon Arm's largest private employers.

"We are all hoping this can turn around," said Salmon Arm Mayor Marty Bootsma of the company's collapse. "To say this is devastating for us wouldn't be an exaggeration."

The company employs highly-skilled people, he said, including engineers and technicians. The instability caused by the company going into creditor protection could result in those people leaving the community.

"There aren't a lot of other jobs like that in this area."

He said the U.S. housing collapse that has virtually killed demand for lumber is the reason the Salmon Arm company ran into trouble.

"It's economics. We are the victims of the downturn in the forest industry," Bootsma said.

The town's other major employer, Federated Co-operatives, has closed down its sawmill in nearby Canoe indefinitely.

(prepared by Gordon Hamilton/Vancouver Sun)