Perfect Storm Threatens Central BC Economy

Thursday, October 09, 2008 03:45 AM

300 people hitting the bricks in our region is just another symptom of what is happening around us. If anyone says the central part of the province of BC has not been subjected to a perfect storm, read on.

First we are hit with the most severe mountain pine beetle epidemic to ever hit the province. Our pine forest is decimated.

The US housing market goes into the tank , so while we need to cut the beetle killed wood as quickly as we can to get some value out of it, there is no market for the product. Canada’s largest trading partner in lumber products, the USA is in the tank, homes are selling in some parts for as little as one third of their building price. Our market in the USA, for lack of a better way of describing it, is a dead duck for years to come.

The American economy goes down the chute and those countries to whom they owe money suddenly find themselves struggling to keep their economies afloat. Demand for any products and services drops dramatically and the moment that happens, a large section of the working economy not affected by the forest downturn reign in their spending, they are scared about their investments, damn scared, and the goods and services section of our economy begins to falter.

If the politicians of the day were being honest with the voting public (and I for one am suspect that we are not being told the entire story) they would explain to us in BC just why, if our economy is so strong against the Americans, our dollar has dropped from over one dollar, to close at around 89 cents US yesterday?

What do the international markets that control the value of the US and Canadian dollars in trading know that we don’t.

If the American economy is in a super slide, it should stand to reason that the Canadian dollar would be more valuable. The US, our largest trading partner will continue to need, energy, in gas, oil and hydro power that we export to them. They will continue to need the potash for fertilizer to produce the crops that they need to feed their people. So if we as Canadians’ export largely these items, why then is the Canadian buck heading for the toilet?

Tackama Plywood products has been the latest casualty. That plywood manufacturing plant owned by Canfor and operating in Ft Nelson was brought back to life by the workers of the branch of Canfor, who took a wage cut several months ago to stave off a closure . Are we now being told that the market is so bad and the economy is in such a tail spin that it can no longer survive and if that is the case what other mills in BC can expect a similar fate?

I’m Meisner and that’s one man’s’ opinion.

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Posted on Thursday, October 09, 2008 03:45 AM in Views by Ben Meisner

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Comments

Posted by: Mercenary on October 9 2008 6:13 AM

These companies seemed perfectly willing to make money off the backs of the workers for decades. Now that we are in a slump or (dare I say) depression they close the doors at the slightest hiccup. What they are really saying is that they want to keep all the capital that they made over the years for themselves and damn the lowly worker who made it for them.

Don't these companies have contingency policies that would keep the doors open in the rough times? Maybe a scaling back of hours worked is needed. Perhaps investing in a fund that would keep the workers working while times were tough?

Thanks Ben...good to see you back!

Posted by: Quaddin on October 9 2008 8:41 AM

Canfor has a company slogan on their signs at almost all their mills. " Our roots are in this community".

Now you would hope they would be the roots that spread out from the company and keep it stable and profitable as well look after the hard working contractors and provide jobs and stability to the surrounding communities that rely on the forest for their survival.

But unfortunately it is only a "Tap Root" that goes down so far as to suck the life blood out communities in which it operates.
A tap root that squeezes contractors until they go broke and strips the resources from the land. A tap root which sucks the profits from the resource and when the profits begin to drop they fold up and run.
IE: Ft St. James, Mackenzie, Ft. Nelson etc. etc...

Sounds more like a corporate parasite to me

Posted by: Shellshadow on October 9 2008 9:46 AM

All Canfor did was shut down the mills that were not making money long before all these problems began. There are still many Canfor mills in operation!! If what you say is true they would have shut down ALL their operations. For instanse, Canfor sold the mill in Fort St James 2 years prior to any of this...how come no one complains about that?? That mill was old and not making any money (the worst of the bunch). Even the company who bought it went under!!
Jimmy Patterson owns shares in Canfor, do you think he is stinking riche because he holds onto sinking ships?? Give your head a shake!! I repeat, THE ONLY MILLS THAT WERE TERMINATED WERE THE ONES NOT MAKING ANY MONEY long before the dollar went up!! Canfor got rid of these mills in order to keep the jobs of many more people. Anyone with any business sense would of done no different. My husband still works because of the actions taken.

I for one appreciate Canfor and it's business sense.

Posted by: Mercenary on October 9 2008 10:28 AM

Shellshadow: While that may be true it is Canfor's policies and managerial skills that sink these mills. They are not profitable for a reason and weather or not they claim it is market related or whatever its the guys steering the ship that sinks them.

Maackenzie is a prime example. We still have vast sections of trees not affected by the pine beetle. A good base of highly skilled workers who did a good job and yet the place was shut down because the management couldn't figure out how to run the place.

My point is that these mills were profitable in the none too distant past. As things tightened up and money got scarce Canfor was all too happy to shut the doors. The folks that were affected by these shuts were happily making Canfor plenty of money previously and how does good ol Jimmy Paterson repay them?

Canfor had to sell the Ft St James mill when they bought out Slocan. It was deemed that Canfor was creating a monopoly in the forest industry so they were forced to sell it to a competitor.

Posted by: Bridge on October 9 2008 10:48 AM

Climate change and polution will not destroy our planet. It is greed that will desroy us all.

Cheers

Posted by: diplomat on October 9 2008 11:04 AM

Our largest customer's economy is in the tank and we depend on exporting to that customer.

Would exporting be easier with a high Canadian dollar or would it be easier with a low Canadian dollar?

The idea is to keep as much of our industry going during the tough times and rebound when conditions improve.

If our dollar is kept high we may end up mothballing many of our plants - often they don't start up again after a lengthy shut-down-cold peruiod.

Imports become more expensive for us when our dollar goes down. That would give our own manufacturers a better chance to compete with the imports, wouldn't it?

For instance, we may choose to buy vehicles which are Made In Canada when the imported ones cost too much.

Good for the Canadian auto workers, eh?

Posted by: gus on October 9 2008 11:49 AM

First we complain when the dollar goes up because we can't sell to the US anymore. Then we complain when it goes down because US goods are too expensive.

Which way do we want it?

The Canadian dollar is down because we are primarily still a resource based economy in addition to a manufacturing nation. People have called our dollar a petro dollar. If we did not have the tar sands, we would have been in a deficit trade situation, as simple as that. Our dollar went up with the rise of the cost of oil. Our dollar is dropping with the dropping of the oil price. OPEC is having emergency meetings. We should be as well.

Almost all commodity prices are dropping. Almost all countries are propping up the US$ because they are all in a similar situation as we are. The US dollar is in at at least a one year strong point against most currencies.

The lesson is that it pays to be in debt for trillions of dollars and have lax regulations of financial institutes.

Posted by: lost it all on October 9 2008 12:50 PM

Shellshaddow, "All Canfor did was shutdown the mills that were not makeing money long before any of these problems began". The perfect Canfor induced storm started for the Fort St. James division when Canfor acquired the Northwood assets. With the Northwood assets the Fort St. James forest district was almost completly surrounded by Canfor operations. The northern part of the FSJ district was logged and shipped by train to Rustad [formally Northwood] in PG. The northwest section of the FSJ district was then sent to the supermill Houston [formally Northwood] division. The south was mostly shipped to the Polar division in Bear Lake. The Canfor PR department then took over and told the people and the employees that the Fort St. James division was outdated and not profitable. Canfor basically stopped reinvesting and updateing the FSJ mill to strengthen the no profit theory. The reason this was done was the Fort St. James division had a desirable timber supply but with the bigger newly surrounding acquired mills they could access the FSJ wood with very little change in log transportation cost. Therefore makeing the Fort St. James division a target for permanent shutdown at a huge saving to Canfor in eliminateing 200+ direct and indirect jobs. The final piece to the puzzle was the Canfor purchase of Slocan and more specific the Plateau division [supermill]in Vanderhoof. Thankfully the federal government competition bureau stepped in and made Canfor sell the Fort St. James division. P@T then acquired the FSJ mill and immediatly proved that the FSJ mill was profitable, unfortunatly for Fort St. James P@T was not a very fiancially fit company. And that is another mans opinion!

Posted by: dow7500 on October 9 2008 1:40 PM

This is much bigger than the US having a tough go and greedy canfor closing doors. Iceland is broke. GM will be soon. Europe is in recession. We closed dow 8500. The emrging markets are getting creamed. WOW!!

Posted by: diplomat on October 9 2008 1:55 PM

Hey dow7500, maybe things will pick up again once the Dow has gone below 7500?

:-)

Posted by: Chester on October 11 2008 3:29 PM

Posted by: Chester on October 11 2008 3:33 PM

There seems to be a direct correlation between the price of oil and our Canadian $. That is apparently why our Cdn $ lost .05 yesterday.

Canfor was mentioned. Is it a surprise that Jimmy Pattison is buying more Canfor stock. I understand that he already owns about 50% of the company. I wonder what the heck he is thinking?

| am reminded once again that for each person panicking and selling their shares of a company, there has to be a buyer on the other side of the trading desk.

So, here is what I think. Someone is selling in panick mode and someone is excited at the opportunity to buy great companies at incredible prices. Currently, discounted by about 35% in some cases.