The US housing recovery is accelerating, driving the demand for lumber. Demand for our commodity and Cedar products is expected to be strong in the second quarter of 2013 as we move into the prime building season in North America.
Japanese lumber demand has improved as well, with housing starts up 4% in the quarter, supported by government initiatives and the beginning of the Tsunami reconstruction. As expected, the increased demand for wood products within the US has resulted in fewer log and lumber shipments moving from the US to Japan. This has created an opportunity for Western to expand our market share in Japan.
Demand for log and lumber products in China was strong in the first quarter of 2013. We remain positive about the Chinese market as China is competing for global log and lumber supply, which is providing solid margin opportunities for Western's products.
Western's business plan for 2013 is focused on increasing production to meet rising demand. Improved demand for lumber products will allow us to fully utilize our flexible manufacturing platform to refine our product and market mix to maximize margins.
Investing in our manufacturing base. Implementation of our strategic capital plan continues to progress well. To date we have invested $11.3 million of the projected total cost of $38 million for the Saltair mill upgrade. The first phase of the project will be completed in the third quarter of 2013 and will deliver benefits immediately. The total project will be completed in the first quarter of 2014. The upgrades will increase production, reduce unit costs and enhance our ability to provide a greater variety of finished products for our customers.
In addition to our Saltair project, we have been collaborating with a leading equipment provider over the last year to develop auto grading technology for coastal species. The first auto grader will be installed at our Alberni Pacific operation late in the third quarter and we expect to roll out additional installations of this breakthrough technology.
We are pleased to announce the appointment of John Mann as Vice President of Timberlands. John has extensive leadership experience in timberlands at senior levels on the BC Coast. His immediate priorities will include delivering improved safety results in our timberlands and contract operations as well as driving operational efficiencies with a focus on margin.
We are also pleased to announce the promotion of Tony Peiffer to Vice President, Log Sales and Marketing. Since joining Western in 2012 Tony has demonstrated a solid ability to drive positive financial results and advance our business strategy. In his new leadership role, he will be responsible for working with our timberlands group to maximize the margin from every log we process.
Safety and training. We are committed to providing the resources and training necessary to identify and manage hazards in the workplace. Our relentless focus on education and awareness is yielding positive results and we are seeing the benefits of our safety programs and initiatives reflected in a reduction in workplace incidents. We will continue to work diligently to foster a culture of safety in order to achieve our goal of making Western a zero incident workplace.
Our commitment to continuous improvement is netting some exciting results and enabling us to build upon the hard-earned momentum we have created in the marketplace. I would like to take this opportunity to thank our employees, shareholders and the communities in which we operate for their continued support of our business.
Don Demens, President and CEO
Western Forest Products Inc.
Western Forest Products Inc.
CFO and Corporate Secretary
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