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Chinese Have Lots Of Money To Invest In Wood's Industry - If They Want To

By Ben Meisner

Tuesday, November 24, 2009 03:45 AM

If there is a case to be made to have the Worthington Pulp Mill in Mackenzie and West Fraser’s Eurocan Pulp and Paper in Kitimat made viable; it sits in the hands of the right person to make that decision.

You may all remember David Emerson, Head of Canfor, then appointed to the Liberal cabinet without benefit of an election. He is a bright bird; he knows when a mill could make some money. He also knows the importance of a wood license.

Emerson is now the point man in Canada for The China Investment Corporation.  That company is responsible for managing part of the Peoples Republic of China’s foreign exchange reserves, with about $200 billion dollars in the pot in 2007 when it was established.  At the end of 2008 CIC’s assets had grown to $298 billion dollars, sufficient one might say to pick up the assets of both of these pulp mills if Emerson can make a case for the Chinese.

There is a price to be paid for buying all of that Chinese merchandize that Canadians and Americans alike have come to like, that price is a huge surplus sitting in China.

The Americans cannot any longer, burden with debt, be a major player in the world stage of economics and so the recent move by the large lumber companies and the province to ramp up trade with China to offset those sales was a good move. We may have just opened the door a crack at this point, but if we ever succeed in getting the Chinese to think lumber, we simply cannot supply enough and it would be rather pleasant to sit down at the next round of soft wood lumber talks and tell the Americans that we cannot supply their market with soft wood lumber to the extent that we have in the past and the soft lumber agreement can be torn up.

That in itself would change the whole picture of how lumber is sold across the world and Canada is a major player.

If Pat Bell and the rest of the crew continue to make inroads, and David Emerson, the point man for the Chinese in Canada is able to get the ear of the Chinese in lumber matters, the next ten years in the industry could be very different than what we are experiencing today.

I'm Meisner and that's One Man's Opinion.


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Comments

First....

Oh yeah, good article too!
Boom times on the horizon? Lets hope.
I agree totally with the article. We must remember though, we still have a shortage of timber sitting out there due to the MPB. The short term can have some better news and better conditions than we have now, but it will take a completely different approach to the use of the wood that we have to use over the next 50 years, as well as the addition of agroforestry as part of the mix of how we grow trees for a generation or two if not for many more if we get used to doing what Europe has done for a century or more.
Hogwash.

An economic coup has taken place in our largest trading partner where the banking elite are in the opening stages of an information age war for the financial, political, military, and 'informational' control of the United States in order to thin the herd via a slow death of starvation, at best, of the world (as well as America's) population in anticipation of future environmental resource constraints envisioned by the real powers behind the financial elite. Deception and deceit are essential force multipliers for such a small cabal of treasonous low lifes that will push any boundary to achieve their goals. The middle class is blinded and ignorant of the enemy at the gates with the system of self governance being turned on the people it was supposed to govern through the perversion of informed consent.

Selling the BC's forest industry to Wall Street bankers and the Chinese foreign investment funds has nothing to do with building jobs in BC for the benefit of BC communities. Its about enslavement to an agenda that is not sovereign to the people of BC.

The United States is currently being looted by their 'too big to fail' banking cartels, which in turn are intentionally undermining the US middle class and the foundation of the US economy in the long term. This is an engineered recession in the US by a faction in the US Federal Reserve that is at war with the American people using the Chinese as their agents in creating a NWO that makes comfortable partners between communist Chinese gangsters and fascist zionist banksters... that both see a world controlled by a 1% elite dealing in an environment of manufactured ignorance with facts routinely suppressed to shape debate. A NWO that denies meaningful choices, while leaving in tact the appearance of open debate that is nothing more than disinformation displacing real facts with 'false beliefs' meant to prod decision making towards a preset goal. This is the greatest threat to democracy, and this is how war is waged in the 21st century by an unaccountable multinational banking elite against the citizens of sovereign countries around the world.

IF we think selling our industry to the Chinese is going to be our savior, and that we could use that opportunity to stick it to the Americans, then we are unwittingly doing the foot work for an agenda of financial enslavement and a slow death of our economic ability to keep Canadians employed with meaningful employment and Canada itself sovereign as a nation.

If we truly wanted to save ourself we would look to save a currency from manipulation, and build a financial sector that is accountable to restraints that prevent corruption and abuse of the 'main street' economy from the ravages of a financial sector that thinks it is above and overlords over the 'private sector'.

The Chinese might have dollars, but their dollars are not our solution IMO. They don't even have a market for lumber and never will. Surrey BC will build more houses out of wood this year than all of China, and this is a record year for China....

IMO our political parties are all occupied by double speaking agents of foreign agendas that are harmful to the people they claim to represent in the name of ideological game theory politics of staying in the 'in crowd' for an assumption of power. We need new political parties and a new political awareness, because we are being buying snake oil if we think the political parties operating today are operating in the best interest of our communities.

We can not save the United States from their financial elites, but we can be doing things to protect our own communities from the side effects of what is happening to our largest trading partner and provide moral support and guidance towards getting them back on the right track. Selling to the Chinese is akin to giving up our heritage and sovereignty, and surrendering to the financial enemy from within with out so much as putting up a fight.

We could start fighting back by rolling back the BC liberal policy of removing community based tenures... so as to retie the resources to the communities, as well as banning raw log shipments from the province. We should have policies that encourage and protect local ownership, so local profits are reinvest into local communities and not off shore banking havens. We should be encouraging a free enterprise market and not a monopolistic market. We should be protecting the value of truth and facts in the education of youth and the dissemination of media 'facts' and conjectures which influence opinions, because that is our strongest weapon in protection our future from the vultures that are circling the corpse of our economy and democracy today.

AIMHO
Why couldn't we do that domestically Gus? Why do we need to sell our future to the Chinese or the Americans for that matter in order to diversify our products that are in demand around the world?
Oh and $300 billion is small potatoes in international finance. Many Canadian mutual funds have many multiples of that invested around the globe. Canada itself invest over $50 billion a year in American equities alone. The only difference with the Chinese money is it is controlled by a very elite few with strong connections to a powerful state apparatus... so has little public accountability for the decision makers of finance in making deals happen that wouldn't otherwise stand the light of day.
"Why couldn't we do that domestically Gus"

I spoke about something completely different than Ben. I backed him with respect to buying mills.

Then I brought in agroforestry which I assume would be domestic, relatively small enterprises although could be large licensees as well.

With respect to who buys mills and which country invests in which other country, I simply do not share your point of view. If I did, I would have to take the point of view that we cannot be hypocrites and buy their products. I would then ban any business transaction with such countries. Might as well close our borders to all trade in that case.
"The only difference with the Chinese money is it is controlled by a very elite few with strong connections to a powerful state apparatus"

And this is not true in the capitalist world ..... LOL
I assume you have read such books as "the blue eyed sheiks" and the "canadian estasblishment"

Eagleone has it right on the money! I am proud of you for actually talking about the banking elite and their NWO plan. I hope the sheeple dont trample you over it though. Have a good day.
Give it a break Gus and Eagle one the real issue is that why would the chinese want these mills when our labor costs are so high in canada. They don't need these mills ,they just want a foothold to get the fibre then ship it all to china were labor is cheap and make it into goods we buy here. We need to start producing the finished products here rather then china.
"We need to start producing the finished products here rather then china."

How much more are you willing to pay for your goods made here? 500%? 1000%? Let's face it, we can't compete with China in terms of labour costs. Either that, or everyone's going to have to stop shopping at Walmart.
"You may all remember David Emerson, Head of Canfor, then appointed to the Liberal cabinet without benefit of an election."

I don't think that is what actually happened. Emerson was elected as a Liberal and then was *lured* to join the Conservatives as a cabinet minister even before the first session of the new parliament.

Lumber has historically been sold on the open market for the highest price.

For the first time ever we have sold more lumber to China than to Japan, however because Japan buys quality lumber, and China buys cull, we make almost three times as much selling to Japan. The same thing applies to the USA. They buy 80% of our lumber production, and pay the market price.

During 2005 and 2007 lumber was selling for $400.00 per 1000 FBM. It now sells for approx $220.00. So we have good times and bad times.

Once the price rises again, we will continue to sell prime lumber to Japan, USA, and other Countries at the Market Price. If China doesnt pay the price they will not get the lumber. It is a simple matter of supply and demand.

The Chinese Government and commercial business's may have a lot of money, but how much does the average person have to spend. It will be a long time before we can expect the average chinese citizen to be building houses out of lumber like we do.

If anyone cares to look at the site for the BC Transmissin Corp. they would see that David Emerson is the Chief Executive Officer, so if he is also the point man for China Invest Corp., it would appear that he is **Moonlighting**
Sovereignty all the way. I am tired of foreign ownership. Canadians need to invest in Canada for Canadians.

If there is any confusion. David Emerson was nominated as the Liberal Candidate for Vancouver-Kingsway, in 2004, by then Prime Minister Paul Martin without an election being held for the candidate to see who would represent that riding.
"Sovereignty all the way. I am tired of foreign ownership. Canadians need to invest in Canada for Canadians."

Protectionism doesn't work. We do not operate in a bubble. We operate in a global economy and must face up to the realities of such.
Eagleone ....

Well said!

In addition we must decide if we want clear cut logging or Salmon.

I choose Salmon.

The days of clearing the forests like we think of them simply as a lawn that needs to be cut must end or we'll lose not just the Salmon but other species as well.

Those that don't think Salmon decline is related to clear cut logging are living in denial.

Wood pulp can can replaced with Hemp, now legal to grow in Canada and far superior to wood pulp for making paper. Check the data for yourself.

I know this is counter to the majority opinion around this area but it is very much my wish that these mills NEVER open again, that the people of this area will open their eyes that's it's time to make some changes in attitude and expectations.

The Salmon cannot wait much longer while we fiddle around with old, stupid ideas about how to make a living.
It's all hopeless anyway. Might as well get in line for the dole.
metalman.
mr pg if we invested in automation and focused on producing products here where the raw goods are. We could compete on a global market. But everyone assumes it can't be done so therefor we don't try. Look at lumber with enough automation to reduce labor and the savings of not shipping the raw goods, our lumber can be less expensive in china then it costs the chinese to import the raw logs and mill the lumber there.
Why can't this be carried over to furniture and other finished products from the raw goods.We have the power in the form of the raw goods its about time we started to think forward rather then take the easy way of selling the raw goods now for a small part, when we could be using the raw goods to support new industries .
Morning kevin1006!
Nice to see you are still around!
I had heard someone may have shot you....
Is it true that you hate everything and even the things you don't actually hate...you don't like very much?
Good posts by all!
Kevin1006: Just what do you expect us folks to do for jobs if all the industries go away? Go back to school? Can't afford it. Move? To where? With no job how can I afford to pay the exorbitant prices people want for rents and mortgages?

You people are all alike. We gotta do this...we gotta do that...well I GOTTA have a job. Preferably one in a nice Canadian run company making a product that we can sell abroad rather than just shipping our raw resources out of the country.
"mr pg if we invested in automation and focused on producing products here where the raw goods are. We could compete on a global market. But everyone assumes it can't be done so therefor we don't try."

If it could be done here, it would be. We have too much overhead (compared to China) in terms of labour costs, regulatory costs, medical plans, etc. etc. to make it fly. If it's such a slam-dunk, why not take a proposal to a bank and see if you can get a loan? Good luck.
There is a lot of shallow talk here. "If WE invest in automation.." who is 'WE'? The govt.? Yeah that works so well. 'We should ban raw log sales'...You are aware that the vast majority of raw log exports are from private lands are you not? 'We should choose between clearcuts and salmon'... forestry, for better or worse is our bread and butter AND the fact that selective harvest is NOT better suited than clear cuts for interior forests (the latter more closely resembling natural processes up here). 'sovereignty all the way, i am against foreign ownership'...does that include publicly owner companies? Do you only invest in canadian funds/markets?
This as all just stuff and nonsense, the same old calls for sweeping reforms we hear every time there is an article on forestry. It is true that forestry is in the toilet right now. It is also true that much of the worlds forest industry is there too. Given the current economic climate there is little reason to expect anything different. Expanding our markets is a good idea, abandoning the industry, or trying the reinvent the whole deal in response to the current slowdown is like converting your house to run on propane during a temporary powere outage. Relax, folks. There isnt a hell of a lot that can be done about the industry's fortunes until the market for lumber improves.
I believe the Chinese are not interested in lumber. They are interested in pulp for paper. Infrastructure being built in China is shifting to wood fibre technology due to the influence of western partners and consultants. Indonesia, Russia, South America and Canada are the key areas where they will pick up the pulp.

The Chinese are increasing their world wide market for paper manufactured in their country. The feedstock they are looking for is pulp, not logs for a number of reasons.
Thanks for the words of encouragement folks... I appreciated that. Wish I had more time to write more :)

Gus, I haven't read those books, but will put them on my list... I have however recently read a book called 'Who Owns Canada Now' by Diane Francis that is a good break down on Canada's billionaires and major concentration of capital. Also I read Stephen Jarislowsky (25% shareholder of Canfor) 'The Investment Zoo'. Both kind of related to ownership of industry and fairly good books for information. Not sure they provide the kind of answers Eurocan or the Mackenzie pulp mills need thought... those mills need something unique made in Northern BC from strategic, operational, and financial ownership perspectives... IMO its the only way those mills will be of a future benefit to Northern communities. I don't see it happening though for greedy political short sighted reasons, as a result of the parochial perspectives of uncreative cerebral midgets acting and representing on our behalf.

IMO NDI funds could be used to offer loan guarantees to perspective employees that would buy into a non-union employee owned operation that has a future dividend policy that has obligations not only to its employee's, but also to economic diversification and the communities they operate in. Win win conditions and arrangements between stakeholders need to be built that sustains win win conditions for all stakeholders going forward. Tax laws need to change and become more flexible to realities in that large mills have loyalties to their communities first and foremost before loyalties to provincial and federal tax collectors and IMO this needs to be made effective through a new system of classifying employees as a capital asset that has cost allowances for tax purposes making it profitable to keep people employed, and expensive to trim jobs for net income adjustments in the short term for potential asset sales or foreclosures/shutdowns. Lots can be done, but looking for a foreign solution is the easy way out for loser ideas that rely on others to solve our own home made problems... Pat Bell IMO is essentially saying he doesn't have any solution when he goes to look to foreign ownership as the solution.

Time will tell I guess....
If you work at Eurocan or live near Kitimat then you should read the above post by Eagleone.

Time is ticking and once the operation is closed, it will be almost impossible to be restarted on an employee owned basis.

So its a matter of whether a group can be formed and how to charge ahead for staving off what others are looking to do with your livelyhoods, your investments in your homes and so on.

I don't think the Chinese or anyone else is coming to buy and operate a pulpmill in Canada. Why would they do such a thing when its about 3 days by ship to send the chips to China, where 30 dollars a MONTH keeps a very devoted worker happy.
That is less than what an entry level Union wage per HOUR is when overhead is included.

I actually believe that as more plants fail in countries like Canada, the more will be built in China, a country which is obviously and absolutely focussed on becoming the next global economic superpower. They need raw materials and not the finished goods in order to develop the dominating industrial presence which they are seeking. Everyone knows this.

Ownership is different than simply trading with another country.

When it is realised that ownership is what determines the commitment to the greater good of the local economy, the provincial economy and the country as a whole...then perhaps our choices will change and our people must stand up and force our governments to look beyond the simplest quickfix saleouts which we will certainly regret.