Pacific Regeneration Technologies Inc. (“PRT”) announced today that it will discontinue seedling production at PRT Kirkland Lake, its nursery facility in Northeastern Ontario, for an indefinite period until market conditions improve. It also announced that PRT Summerland, located in the Okanagan region of British Columbia, will be consolidated with PRT’s three other sites in the region. Both actions will take place once crops currently in production are completed, expected within the next 30 days. Cold storage operations at PRT Kirkland Lake will continue in order to serve local customers.
PRT Kirkland Lake is a comparatively high production cost facility, as it relies on relatively expensive propane fuel for greenhouse heat. The PRT Summerland nursery site is leased under a short term agreement, and current production can be readily consolidated with other nearby sites in the Okanagan valley.
“The closure and site consolidation will improve economies of scale in light of the continued downturn in demand for tree seedlings across PRT’s market areas, while still allowing us to provide a high level of localized customer service,” said Rob Miller, President and Chief Executive Officer of PRT. “Forest seedling demand is strongly influenced by US house construction and with continued weakness in US housing markets this year we are anticipating some further decline in seedling demand for 2010. Next year’s demand is expected to be down approximately 5 to 10% from 2009, which will be approximately 50% off its peak in 2006. There is also a risk that the pace of the US housing market recovery could be slow. Accordingly, after careful review, we are taking these steps to improve our capacity utilization, production costs and efficiency. We have selected these two sites based on anticipated customer needs over the next few years.”
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