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Chinese Shopping for Pulp Operations

By 250 News

Friday, November 20, 2009 10:08 AM

Prince George, B.C.- Minister of Forests and Range, Pat Bell, says he remains hopeful there will be a buyer for the   Worthington-Mackenzie mill in Mackenzie and the Eurocan mill in Kitimat.
Speaking on the Meisner program on 93.1 CFISFM this morning, he said there are at least five companies interested in taking a close look at the two   mills. While the Eurocan mill is a little different because it produces liner board and newsprint,  he says the Chinese   are   showing a lot of interest in pulping operations. At least one company entered a memmorandum of understanding with the Province over the Mackenzie mill.
“I am hopeful we are going to see something happen in at least one if not both locations.”
The Worthington Mackenzie Mill was purchased from Pope and Talbot’s receivers over a year ago and has not operated since that time. Up until recently, the Province had been paying to keep a skeleton  crew on scene to ensure there were no issues with the   chemicals on site. Those chemicals have since been   removed and the mill has been    shut down for the winter.
As for the Eurocan mill,   it is scheduled to be closed at the end of January.
“It’s not over yet” says Bell.

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Pat Bell should have serious conversation with Prince Rupert in regards to doing business with the chinese!
It could happen and it would be nice to see, but you better send your biggest and best guns before you start dealing with them!
Or they will clean your clock in any deal!
And that is a well known fact with both the Chinese and the Japanese.
A friend in the overseas shipping business once told me that when the asians smile,shake hands, and sign on the bottom line...it is safe to assume they got the better part of the deal!
It's an art form with those guys!
Somehow I don't get the feeling that Pat Bell should be doing the deal!
Maybe send someone like Jimmy Patterson?
Bell and the Government doesnt own the mills anyway. Any deal for Eurocan at this time would be handled by West Fraser, and a deal for Mackenzie, I assume would be handled by Worthington Mackenzie.
Dear mista minaster, Sankyou fo the good deow on pupmeow offa....Dis pupmeow need many cheep chip to be good deow fo us.
Giva many cheap chip and we have cheap pupmeow to mak a papa and wite on paper letta to sankyou fo da cheap chips and cheap pupmeow. and pupmeow is fozen now.
sankyou.
Is that really necessary, woodchipper?
This site is rife with bigotry & xenophobia.
And people spewing big words like xenowhatever that us rednecks never heard of.
Y'all weigh in on every subject, guess I assumed y'all wuz edjacated or whatever.

Try Google.
Well, Woodchipper might not be PC. but there is a good point in all that. We have to be careful that we do not feed the mill with too cheap of fibre source, otherwise, that is long term pain for short term gain.

We can all worry about China taking us over, but look deeper. Husky is owned by China, Celgar in Castlegar is owned by China. I am sure a lot of big companies all over and around us is owned by China. The biggest shipping company is from China.

Lets be smart about this, and we can do quite well for ourselves.

Who want to own a pulpmill these days anyway. Newsprint demand is down by 40%, why... the internet.




"Who want to own a pulpmill these days anyway. "

That is easy, the Chinese. They need to feed the paper mills they have been building. So they buy chips and pulp.
---------------------
"That is Newsprint demand is down by 40%, why... the internet."

So??? ... Newsprint is to paper products what 2x4s are to construction materials .... a dominant market product of this country. However, there are other countries and there are other products and that is where China is increasing its market.


I thought the extreme satire of it would explain that; what we (our forest minister) as seen to be trying to promote is in fact an asset sale which: a) he doesn't own and b)cannot be seen by anyone as viable and c) that the very intelligent and business savy Chinese, with eyes allover the world searching for good business opportunities have already looked at...analysed and know what its deficencies are....and we (our minister) is looking like promoting what could well be a dead horse,.. is something like being a snakeoil salesman..wellmeaning as it might be.
How ridiculous that looked is where I seen all the humour in this. I would sincerely give and fully intended that any oriental/asian person the credit to have understood this humour.

The hint that the only thing which the minister might effect is the cost of the chips, which might perhaps be part of what could actually make it viable. Overall the point which I was trying to get accross is that it doesn't matter who you try to promote this enterprise to, it is government's job to improve (wherever it can) the economic environment within its control. If it can, then it is a matter of whether it should, as other posts have inferred, regardless of how politically correct their valid concerns are stated.
I thought Opinion published an article saying that Worthington was sold to four local companies. Is Minister Bell the new salesman?
Worthington hasnt been sold to anyone as far as I know.

Eurocan is up and running at least until January. This is a Linerboard Mill, and a sack kraft paper mill, not a newsprint mill as reported above.

The market for Linerboard could rise, and if Eurocan wanted to make bleached sack kraft paper the same as Prnce George Pulp and Paper now do, they could get a better price for their sackkraft. However changing over is expensive, and I doubt they want to spend the money.

With the elimination of Skeena, at Watson Island, The Mackenzie Pulp, mill, and the Eurocan sackkraft mill, there is a better chance of the local mills surviving. Canfor competed with all three.
Eurocan is taking its windfall corporate welfare check (liquor rebate) and sinking it into Hinton. Canfor is now on a hiring junket in Kitimat seeing if they can rustle up some trades people. Good business sense as that easier than hiring apprentices locally. Kitimat will soon be the next Mackenzie as the Liberals have all but abandoned northern B.C.
First of all, Eurocan produces Linerboard and Kraft paper, not the Newsprint that the article implies.

Secondly, I thought Woodchippers' parody was perhaps politically incorrect, however still very entertaining.

Thirdly, we have a very dangerous scoundrel as our Forest Minister. Who else travels with the provinces forestry Bigwigs to promote our wood products? Sheer nonsense, Hank travels to promote BC Lumber and associated drowned pulpmills to the Chinese when 13 of his operating sawmills(non confirmed as to operational status)are south of the border. Tradeoff? What is happening with West Fraser's timber license for the North Coast area as it probably won't be included in any purchase of Eurocan. The mill itself ran off of sawmill garbage, and has a 25MW Turbogenerator capable of assisting BC Hydro's call for power. Previously Hydro was not interested in that power without insane stipulations.

The UnHonourable Pat Bell implies that Eurocan sale would not be deterred by any lack of fibre issues. Yes I will be out of a job and I will rebound, whether or not with the help of the Chinese. I don't begrudge the Chinese or expect a handout like the Banks, GM, Ford or Chrysler. All I want is the Federal government to stop portraying Canada as a "for sale" country when it comes to its' resources.

Finally, a word of caution to fellow wood and/or by-product workers, get out while you can as your place of employment will inevitably be next. Better to be prepared than shocked. For the record I am not bittered about losing my job, I had already expected that scenario and prepared for it, I move on. However upon my retirement I will not vest any money into Canada, perhaps that is meaningless but if the status quo follows the same avenue, really what does the country have left?
Hey lay of the hillbillies, without them who would the rest of us be superior too?
Speaking of Bell...I caught him on the Meisner Show today. He said he was "dead set against moving forestry jobs to other countries like China, Japan and the US." He also said he "was happy when mills are closing there".

So I am confused. Why would we be exporting our logs? Why try to woo a foreign buyer when recent history has proven our local jobs go the way of the dodo bird upon sealing the deal?

Don't get me wrong, foreign investment or any change in ownership has the potential for securing our local economy, but without the bite, isn't what Bell is promoting in his eagerness just a tad hypocritical? BC legislation lacks the teeth to keep our resources and jobs secure. I am not as confident as the Forest Minister appears to be. I am of the opinion that the employees are caught in the middle of all the backroom celebrations and political mumbo jumbo.

The NDP has got it right - little if anything is being done to assist the families affected by the souring of the forest industry.

Perhaps the employees at Eurocan will be able to purchase the mill and make a go of it. Rumour mill says West Fraser won't deal. It is really a shame if that is true. That is what I call a kick in the teeth to 565 families.

They cometh, they useth and they taketh away.
Woodchipper is right in that Pat Bell's only role is to create the business conditions for a viable forest industry, while protecting the other stakeholders involved such as the employees, the environment, and economic value for resources.

Why doesn't Pat focus on creating a winning business model in the forest industry with new entrants building new plants that increase the diversity of our forest industry. Why not focus on building new pulp mills and saw mills by attracting existing companies in these sectors that operate elsewhere to the BC advantage and seek capital investments in new plants; rather then trying to flog existing mills with all their problems in fire sale deals to foreigners that may turn out to be harmful to the communities involved.

IMO the existing mills with problems should have an employee 'buy-in' option as the first option explored before any outside investors are even talked about. I have no doubt an employee run mill can out compete any mill without employee ownership.

Canfor pulp trust is one model to go from, but even that doesn't necessarily create the kinds of efficiencies that are possible in the operations from dedicated employees. Some Canfor mills are the most efficient mills in the world with some of the most inefficient employees... Northwood comes to mind and tens of millions could be saved at that mill alone if only their employees bought into efficiencies... they are successful despite their work ethic solely because of the design of the mill. I would think many pulp mills have the same employee inefficiencies that if properly addressed would make them viable operations. They hold the stockholders hostage until they kill the goose that lays the golden eggs (some deliberately stick the stick in the spokes because they can and their entitlement justifies it), but if the workers had ownership interest things could change dramatically IMO at most operations... and save many communities in Northern BC.

IMO the BC liberals are doing everything they can to ensure Northern BC is dependent on foreigners for our future prosperity and economy... because it plays into their form of power politics.
I think people are forgetting about the effects of the MPB. Some 5+ years ago, those who work on projecting various scenarios of the aftermath indicated that there will be a 40% fall down in softwood availability over at least a 50 year period. That means 2005 to 2055.

This is only 2010 coming up.

We had a time of scrambling to get some of the fibre out and scrambling to flood the US market with dimension lumber as a way to offset the "illegal" tariffs. Those were good times.

The scenarios forecast a considerable drop in lumber and associated drop in jobs. The only area where jobs were seen to be increased was in “silvicultural enhancement” such as more planting and stand tending to reduce the rotation time and increase the quality of the wood which could eventually be harvested. It was an investment in the future as well as a method of mitigating the short and medium term forestry job losses.

In addition, there were options to be explored in agro forestry – possibly only one term plantations using fast growing hardwood species such as are used in the Midwest of the USA as well as parts of Oregon to achieve harvestable fibre in 20 to 25 years.

The problem appears to be that no companies are prepared to make those investments, since such investments are a requirement attached to their harvest. But they are not harvesting. It is a Catch 22.

No one appears to be getting off their butts with this predicament, neither the government nor the licensees. Predictions for the next three years are fewer and fewer trees being planted and little, if any stand tending.

Here is the high level overview. We have had an industry breaking natural disaster. Neither industry nor the government is “insured” against such a scenario. Industry is already pressed with their margins and could not add such loan costs to their current productions. The wood belongs to the province, not the industry. The industry has duties to ensure that they tend the forests, but they do not take responsibility when it deals with “acts of God”. The ball is in the government’s court and so far, nothing much has been coming from the government.

Remember, the Ministers come and go. The bureaucrats stay on. The different Ministers are merely people they have to tolerate. Some bureaucrats are better at doing that than others. From what I have heard from the MoF staff, they are likely better at handling the politicians than many others.
Dear Woodchipper, OMG you made laugh. Thank-you for saying what most would not have said, The Truth.

One thing that you would think that any politician shouldn't do is try to pick a winning horse when it comes to who should buy or own anything. Governments and politicians have no business favouring any one or any company above anyone else.
Have you ever heard our forest minister say a sentence without the word canfor in it? That company is obviously big and very influencial, but is that what an elected official should be seemingly giving priority over anything else? Is this priority actually preventing any other solution from happening?

The employee buy-in suggestion that Eagleone refers to, is in my mind the best and probably only solution to many existing and upcoming shutdowns of the older facilities.
Many of the older and more established plants have higher levels of labour required than the more modern facilities do or will. The only way to compete or have a chance to compete is by motivated owner/workers which can and will be efficient.
I will say it again: If people and governments are actually looking to the future wellbeing of communities having local employment, then this is the ideal (if not the only) way to achieve it. Ignore this and it will be at everyone's peril. It applies currently for the plants which have or are slated to be closed, BUT inevitably every plant will have its day which it will expire if it isn't owned and efficently operated by locally committed people. Be prepared for the future if you work at any such place.

I agree with the former post 100% on the fact that these will be unstopable businesses if they are employee owned. Its just a matter of convincing the people to shake off being supposedly looked after by a union and that they have to participate directly with "their business".

Our governments, feds and provincial should wake the hell up, and quit cowtowing to big international corporations which have /are/ will continue to keep shifting the wealth they extract from here in good times, only to shift to investing these profits into new pastures in other countries , which compete against us. When they wakeup, the thing they need to do is help find a way to have these local employee owned investments easier and more beneficial to these people. I think they could thread the needle in terms of providing a benefit to a worker without having the softwood jerks pounce on these as subsidies.

The last important point which the previous post identified is that rather than big corps dictating to everyone who can or cannot be a successor owner op to what they want to shut down should not be allowed to be a unilateral decision on the part of the company. Virtually every one of these operations were put into business with the social contract that is now owed to the public as to who and why an operation is allowed to have its timber rights transferred. Their corporate market share is not our problem nor it should be allowed to be used to justify harming our workers all over the country.
How quickly we forget that a forest license has two parties to it and that if the government imposes unilateral changes, that it can be and should be held accountable.......

Just like the cry "remember the Alamo" we could cry out "remember Carrier".

Read it for detail in this condensed version to remind yourself or find out about it for the first time.

http://forests.org/archive/canada/lumbcase.htm
---------------------------------
from that article:

The judge paid specific attention to several who played various roles
in suppressing evidence, writing self-serving memos, holding secret
meetings, misleading Carrier or pressuring the company into accepting
new terms.

Of one, Mike Carlson, regional manager of the Cariboo forest district,
Parrett wrote: "[He] demonstrated and again an inability to be candid
and forthright." Carlson was a witness who sacrificed truth for his
own interests or those of the ministry, Parrett said.

Another, Ron Reeves was "a district manager who is calculatedly and
deliberately creating not a true and accurate record but one
calculated to deceive and conceal the actions of the ministry while at
the same time laying the blame for any failure at Carrier's door."

Despite testimony from the two bureaucrats that they made the final
decision to cancel Carrier's forest licence, Parrett said he believed
it was too big a decision to be made by bureaucrats and had to be done
a higher level.

Making matters worse, the B.C. government was harshly criticized for
failing to disclose more than 2,000 relevant documents to the court.
------------------------
I won't remind anyone under whose watch this all happened. :-)

If you read it, you will understand why I mentioned in my post above that you may all be looking at the wrong people when you are looking at a cabinet minister.

Look at the bureaucrats!!!! They run the show.
Gus your point is well taken. I agree we have an unaccountable bureaucracy and have for sometime... I always rail against that when ever I get the opportunity, because they are killing our free enterprise economy for their own idea of a monopolistic corpocracy. I had it explained to me by PG regions chief land asset manager that it is easier for them to deal with one or two large multinationals, then all those small operators that make their job 'difficult'. The bureaucracy in the name of 'efficiency' favors the big multinational business model over the free enterprise model our economy was built with.

That said our politicians are the ones we need to hold to account, because it is their servility to their party handlers that allows the corpocracy to set our provincial bureaucrats agenda in the first place. WAC Bennett would never have allowed our ministry of forests to be run the way it is today if he was premier... and so we should not be giving Pat Bell and his ideas to 'make' the players in our forest industry a free ride IMO. Accountability starts at the top and must start at the top or there will be no accountability.

In your above example I seem to remember that Minister of Forest Dave Zernhlt (slpl?) was MLA for a riding with the natives involved in the land claim that put a stop to Carriers pine beetle wood lots... the native bands were actually funding his political activities to make the decision he directed through the bureaucracy. So more then enough blame to share with our politicians and the faults of our democracy leading the the pine beetle crisis we see today....
Woodchiper good points. The strange thing is that if the workers were allowed to have a path to buy-in they could make these operations work and they could keep communities viable, and they could continue to contribute to the provincial economy... rather then become future drains on the financial resources of the government. The government provides no avenue or path to make this happen, because they are in the business of making big business for a financial corpocracy... and not an economy for the people they represent.

An employee buy-in would require access to capital for the potential co-op, addressing the union issue for co-op mills that would be self governing, addressing the taxation issues of existing mills that are taxed into closure by local governments which are starved by senior governments, and a whole host of issues where the government would need to take a lead role to secure the livelihoods of rural communities.

The problem is the government focuses on the efficiencies of taxation collection for their own purposes and not the efficiency of employee creation for the community purposes... but yet we still vote for those same politicians time and time again... look at Mackenzie they had their entire town shut down under the guidance of Pat Bell and his policies (BC Rail and local tenures), and yet choose to vote him into office again... so that he could sell their industry to the communist Chinese.

IMO we can't save ourselves from our government if we keep voting for the same people that caused all our problems in the first place. I'm hoping that when things get bad enough that enough people will wake up and see the light and start to find political solutions to our political created problems... short of that I see Northern BC losing half its population in the next decade as those that see the light no longer want to suffer from the ongoing homegrown political abyss.
I think that what Gus is pointing to is right in some cases, but the Carrier fiasco was lead by political decisions and then followed by beurocrats that set out to execute their duties.
It is a scenario that reminds one of the nazis, where a few people can lead a large organisation to do anything imaginable.

I don't think the really bad guys got caught or punished in what happened to Carrier. They are now gone from the scene and only one beurocrat mentioned by Parrett, still remains. I still cannot believe that the two lower level officials took the entire rap for what couldn't have been anything but the whole group's efforts. Parrett pointed to this, but nothing went beyond that.

I agree with Eagleone that the political side must ALSO be held to account for such gross and improper conduct. They must lead the beuracracy with completely legal, ethical and proper directives..and if this has not or is not followed accordingly that it is the minister's responsibility to fix what is wrong and hold to account who in the beuracracy is responsible. If the beuracracy simply appoints a lawyer to defend what the government did wrong to someone..and knowingly does so, they should be punished accordingly. The attorney general is also accountable to this improper governance as well.

An inquiry should be held into what actually happenned to Carrier and why such a thing could have happened and why and who directed its wrongfull legal defences which escalated this to such a magnitude.

That government, that political group, that group of beuracrats and lawyers prevented justice for over a decade and I seriously doubt that any one of them didn't fully understand what they were doing to an innocent taxpaying company..destroying it with taxpayers money...denying it justice with taxpayers money..and in the end.. causing the liability to be paid by the taxpayor.

The missing box of documents excuse..horsecrap! They were probably just the documents that missed the shredder because of workers being exhausted.

One question that no one seemed to have asked is:How could the attorney general and its lawyers not have known what they were defending was totally improper? Is that what we should pay for.. having government..knowingly and ilegally screw an innocent company? An inquiry is needed.

It is outrageous and not likely the only case of its kind but rather a case where a very resilient family stayed a course of principle to uphold higher standards of government.