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Lumber Giants Don't Like CN Anymore

By Ben Meisner

Thursday, October 22, 2009 03:45 AM

Back when the opposition was growing over the sale of BC Rail to CN, (did I say sale? Forgive me, 999 year "lease") the forest industry jumped into the mix by saying this was a very good move by the government because BC Rail couldn’t operate efficiently and quite frankly couldn’t compete with CN.

In return for that support they got a 5% break on the rates they were paying to CN, but the honeymoon lasted only a few short months before grumblings began that companies like Canfor and West Fraser were having a tough time getting cars and the service had actually fallen from the old BC Rail days.

Ah but CN and the Liberal government had done their job arguing that even the mayor’s up and down the line, (there were about 6) including our Mayor Colin Kinsley, supported the sale, sorry, "lease".

Just as John Backhouse got a reward for his help in the Ramsey Recall, I have always wondered what promises were made to Colin Kinsley. Is it still to come? The City Council of Prince George didn’t support the "lease", but the deal had the necessary grease to make it happen.

So fast forward today when Peter Ewart, CNC instructor and Opinion250 editorialist writes that the major logging companies don’t like what CN is doing to them. They want  to be able to establish rights on the CN line so that they could go into competition with CN because, surprise, surprise, the costs are too high and the service is not what it was supposed to be.

Hunter Harrison meantime of CN rail, is retiring after telling his shareholders what great profits he has been able to generate with the addition of BC Rail to the fleet.

To add insult to injury, the lumber giants are suggesting the province needs to hand give them forest tenure of 99 years if they are to compete in a meaningful way.

They also suggest  there may only be room for a couple of super mills, of course owned by some super companies in the north of BC.

Now let’s see, these mills are complaining about a monopoly by CN rail but yet, want to have the government create one for them? That’s double speak operating at its finest.

It’s rather strange that a few rag tags with no lumber experience could see through the plan that CN put forward and the Liberal government tripped through its shorts to okay, but lumber barons who earn a million dollars a year couldn’t see the future. All the more reason that they shouldn’t be put in charge of our forests.

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


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Comments

Ben! Ben! Ben! Careful what you say lest all the Liberals and "Free" enterprisers on this site start calling you a 'commie' for what you are suggesting!
The liberals are not free enterprise... the liberals are monopoly capitalist.

Free enterprise is enabled by public forests, because only through public forests can free enterprise have access to resources.

Public ownership of resources and infrastructure does not make one a 'commie'... but rather a sovereign. Government owned and controled enterprise for the purpose of government monopoly of the economy makes one a 'commie'.

The sale of BC Rail in my opinion involves fraud, treason, and hidden fund transfers as yet discovered. The people of BC were had by an organized corpocracy that the liberals are fronts for.
These are two situations which are not similar.

Crown Corps in Canada are notoriously inefficient. Therefore BC Rail had to go. Period.

There was probably an error made on leasing the rail. It would have been better to keep the rail public and charge companies to use it thus eliminating the current monopoly issue. But the problem was that if we had kept the rail lines and only sold the rolling stock and other infrastructure we still would have been locked into inefficient union contracts for maintenance of said rail. Thats the recipe for inefficiency at the expense of the taxpayer.

Long-term leases for forest companies is about commitment that will justify building a mill that may well cost half a billion. No one is going to make that type of commitment if they are not guaranteed fibre. If you want to build a mill and just hope that the government provides fibre on a daily basis go nuts. Oh right thats stuipid.

Thats just reality, regardless of how you have tried to spin it.
Eagle's right, the BC Liberals are certainly NOT for "free enterprise".

Free enterprise posits that the PRIMARY purpose of economic activity is to provide actual goods and services to the general public of the country or province in which it operates, and to do so in the most efficient manner possible.

And that the general public will always have a choice in deciding who it wants to provide goods and services to it. And the ability to freely exercise this choice by spending where, and on what, it wishes to spend.

Neither the BC Liberals, nor the NDP believe that the above is the PRIMARY purpose of economic activity. The Liberals substituting instead "financial return", i.e.'profit'; and the NDP "employment".
Long term forest leases over the kind of area necessary to support any mill that's going to cost half a billion dollars are simply not going to be sustainable. And it's we who are "nuts" if we let anyone bamboozle us into thinking that they are.

In the good old USA, where most large timber companies OWN their own timberland (or did ~ many of them are peedling it for real estate development nowadays), only ONE company of all the larger publicly traded companies was ever completely sustainable in timber on a long term basis. The rest, no matter how large their private land holdings, all had to go after additional publicly owned timber to survive.

That ONE company was The Pacific Lumber Company, which had a 22 square mile block of redwood and Douglas fir timberland in nothern California, and could have operated in perpetuity without ever having to buy a stick of timber from anyone else. Ever. It operated completely on a sustained yield basis.

I say "could have", because The Pacific Lumber Company ran its sawmills, there were three or four of them, on a five-day a week, eight-hour a day, one shift basis. And made money. But not "enough" money, at least not in the eyes of the corporate raider who could only see the dollars signs an accelerated liquidation of PALCO's timberlands might bring him.

So he bought up the stock, enough to gain control, in a highly leveraged buyout. And began to wreck what it had taken the former family owner/managers of PALCO a century of careful management to achieve.

The mills went on multi-shift operations ~ look at all the 'employment' he's creating, those who can't see past the "job", cooed. And the trees came down. Far faster than they'd ever grow back.

Instead of a conservative company, operated as one wag put it, "As if the Sierra Club were running the show", 'cut out and get out' became the order of the day. And where are all the "jobs" today? Gone. Just like the opportunity to access the forests in a responsible way, to the mutual benefit of both the Company and the forests themselves are gone. What's left is all "locked up". It'll fall over and rot. And all because of the same kind of mindless 'greed' that it's now being proposed be a model for the future here.
The lumber companies are getting precisely what they deserve for their support of the sale of BC Rail. It looks good on them!
Just my opinion, but I think the future of the forest industry in BC is going to depend on our ability to innovate, to produce value added products, to be extremely flexible and reactive to what the market is dictating, to develop new products, etc. There are areas where, generally speaking, huge companies like Canfor do not do very well. They are better at producing homogenous products in high volumes and at low unit costs. Basically, they are run of the mill "widget" producers and not innovators.

It would be insane, IMHO, to allow companies like Canfor to basically have entire control over our forest resources. Sure they should have some level of access, but if anything, I think in the future we need to be prepared to open up more of the resource base to some of the smaller and mid sized companies who are more innovate and flexible in their operations. If this means cutting back the amount of access that the Canfors have, then so be it. We have to get some level of balance back into the overall industry structure and you can't really do that unless people have access to the raw resources.
I'm quite certain we will never solve the problems with our forest industry until we begin to realize that a large part, probably the largest part, of the problem lies elsewhere.

It is a problem that affects ALL our industries, not just forest products, and until we begin to understand and deal with it virtually all our efforts in forestry at trying to 'value-add', or, alternately, increasingly 'commodity' produce; or to reform 'tenure' (again) ~ whether it's now to be taking from the 'big' and giving to the 'small', or a further continuance of the opposite, are going to be largely or completely ineffective.

The "problem's" solution is what will determine whether we are to have true "free enterprise" ~ an economic system that serves Consumers whose actual demand for goods and services is the only sane origin of all productive activity; or continue on the path we're on towards either 'monopoly Corporate capitalism', or, ultimately, its replacement 'monopoly State capitalism'. Both with continued final control by FINANCE, and both with a completely different ultimate objective in mind than serving the Consumer.

To put it shortly, the primary reform we need to initiate, not just in our forest industry but throughout our entire economy is to make the "figures" we call 'money' properly REFLECT the "facts".

Not do as we have been increasingly deluded into doing, where we now continually try to modify the "facts" to fit a set of pre-determined "figures".

All other types of reform, however well intended, are entirely pre-mature, and will FAIL, if we do not move to tackle this main problem FIRST.

A country such as Canada, and especially a province such as BC, has the all the physical and human resources extent within our boundaries to produce for each and every one of us a far higher standard of living at a far lower cost of living than what the majority of us presently enjoy.

But instead of utilizing what we possess in bountiful abundance to our best advantage, we increasingly prostrate ourselves into a phoney international trade of real wealth for 'money' as we become ever more 'trade dependent' and ever the less 'self sufficient'.

We know, I believe, the kind of country we'd like to live in. It involves our being able to act and live increasingly like 'human beings', not being further reduced to the status of 'ants'. Already it takes most people now two incomes to do what one used to be able to do. As we advance in our physical progress as a 'nation' we are regressing in our collective and individual ability to have our economic system serve us.

There's the never ending call for "more production", whether it's of straight volume based 'commodities' or to increasingly commoditize specialties. And this in the face of a glut of product that already can't be sold, anywhere, for the 'financial' costs of its making.

But do we ever stop to analyze the make-up of those 'financial' costs, and whether there's an accurate nexus between them and REAL costs? We do not. It's as if the "figures" were set in stone, and the "facts" have to be bent to conform to them. But are they? Or are we too timid to open our eyes and take a look at reality for fear of what we will most certainly find?