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We Need More (not less) Wood Manufacturing – Part 6

By Peter Ewart

Monday, May 10, 2010 03:44 AM

by Peter Ewart 

To read previous articles in this 7 part series see Part 1 ; Part 2 ; Part 3 ; Part 4 and Part5)

 

 

As any experienced player will tell you, one of the key things when shooting a game of pool is to keep your eye on the ball.  If not, you will miss and eventually lose the match.

 

Over the last several decades, BC governments, whether they style themselves “left” or “right” have repeatedly taken their eyes off the ball in regards to forestry and other resource-based industries.  The result is that these industries have not developed  as they could have, or, as in the case of forestry, have actually gone into decline.

 

By the 1970s, the first step in British Columbia’s economic development of the Interior was completed.  This step included the development of substantial resource extraction (mining, oil and gas), hydro-electric and primary forest industries, all of which were based on the province’s rich and abundant natural resources.  Of course, this did not happen accidentally.  A well developed transportation, energy and logistical infrastructure had paved the way. 

 

But since then, it can be argued that the crucial second step – secondary processing of resources and extension of value chains – has never been taken, or, at best, has been done half-heartedly or feebly.

 

For their part, the monopolies and multinationals that dominate all the resource industries have been quite happy to extract the wood, metals, minerals, and oil and gas, and ship these resources out relatively unprocessed.  Developing secondary industry is difficult, costly and time-consuming.  Why bother when you are making lots of money and have compliant and complacent governments that are firmly under your thumb?

 

On the other hand, the people of the Interior and Vancouver Island have wanted to take this “second step” in economic development for a long time.  Workers and communities have especially been interested, as have First Nations, small and medium secondary businesses, environmentalists and other sectors. 

 

Indeed, a number of campaigns have been launched calling for more secondary industry and, in the case of forestry, for more value to be extracted from the forest resource.  Some of these campaigns have been spearheaded by workers and their organizations, and others have been supported by them.

 

In response, the various governments have been fickle.  They pick up the issue of  fostering “secondary industry” from time to time, make some noise, but do not follow through.  Above all, they do not take on, in any serious way, the entrenched monopoly interests who simply want to continue shipping out relatively unprocessed wood, metals, oil and gas, and other materials.

 

As a result today, we risk slipping even further backwards to the “hewers of wood, drawers of water” model of early Canada. 

 

So what must be done?  It is has become clear that we need a strong workers’ opposition in this province that has its own aims, program and vision for what the province could and should be.  One of the more important aims would be to turn back the “de-industrialization” of the province and move forward to “re-industrialization”, i.e. the expansion of secondary manufacturing based on the province’s existing resource riches and the extension of “value chains”. 

 

Such a workers’ opposition could rally around it all those forces in the province who want to get more value out of our natural resources and expand manufacturing, whether it be communities, First Nations, businesses, environmentalists, and others.

 

In terms of politics and elections, however, as frequently happens in BC, the “cart” must not be put before the “horse”.  An effective workers’ opposition needs its own distinct aims and program which it does not give up, irrespective of whichever government is in power or who is running in the elections, either provincially or federally.

 

Furthermore, a workers’ opposition should determine its support for candidates and parties, not on the basis of some diehard party loyalty, but rather on whether these candidates and parties genuinely support a workers’ and pro-community program.  If need be, it should also consider running its own candidates. 

 

Thus, demands for more secondary manufacturing and longer “value chains” (with a resulting increase in jobs) could be driven home as a permanent part of the economic direction of the province, rather than being subject to the fickle interests and maneuvering of the political parties in the Legislature.

 

It is in this way that workers and their allies can keep everyone’s eye on the ball.

 

Peter Ewart is a columnist, writer and community activists based in Prince George, British Columbia.  He can be reached at: peter.ewart@shaw.ca

 


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Comments

Similar to what I've been thinking... but I'm not sure a 'workers' based support base would be able to unify and get the right kind of policies in place.

The answer IMO is a Free Enterprise movement that opposes monopoly capitalism, opposes corporate person-hood rights (ie in regards to liability issues, and in relation to our democracy), opposes public sector unionization... and supports free markets, small corporations, proprietorship, partnerships, and the working middle class.

What we need is a draft of 'first principles' for a true 'free enterprise economy'. A 'first principles certification' of the middle class majority that any elected politician can pledge itself to regardless of party. If certification was awarded it would require the politician to swear an oath to the 'first principals for a free enterprise economy' so as to give the voter a glimmer of hope that they will have actual knowledge as to what kind of ideology they are voting for at election time.

Most people don't care for monopoly capitalism, or the ransom tactics of public sector unions, and most people with partisan party loyalties are voting for a special interest motivation and have no care for whatever else the 'party' does without a mandate as long as their own personal special interest needs are met. The political parties are thus unaccountable because they can use game theory to play one group against the other and go for the lowest common denominator of the lesser of two evils... the enemy of my enemy is my friend kind of politics that results in evasion of the truth and hidden agenda's that are not announced until after elections... in short it in no way resembles an informed democracy.

With 'free enterprise certification' it will give a kind of free enterprise constitution that supports the higher ideals of the middle class... enabling policies that foster competition, diversity, and sustainability. It gives a potential guideline for politicians of all political strip to have independence to represent their constituents, the free enterprise economy... and of importance is that it gives independents an opportunity to fill the void where the established political parties refuse to represent the people.

AIMHO

There is still no indication in this latest piece from Peter Ewart that he realises it is CONSUMER DEMAND first, and then sufficient EFFECTIVE DEMAND second, that will decide whether products that COULD be made WILL be made.

Instead he still seems to be preaching about some kind of worker's fairyland, as if creating more work will be the answer to everything. It won't be.

There is a flaw in the way modern, double-entry cost accountancy relates to money itself, and even if we had 100% full employment and value-added products to the most extreme extent possible taking up all of the wood supply, instead of the miniscule amount they now do, that problem will still be with us. And it will negate any benefits that derive from either of those propositions.

Go back to basics, Peter, and first of all define what "value-added" actually is.

So far as I'm aware a pretty good definition is that it's, "any further process beyond the initial stages of any product's manufacture that can return its costs plus an additional profit."

If it can't do that, then just WHERE have we added any "value"? In creating a JOB for someone? Not hardly! You don't need an elaborate pretense at making essentially useless wood products, ones beyond what anyone needs or wants, and most importantly, can afford, just to do that.

A pick and shovel and any old piece of bare ground will do. Where a worker can be set to digging a hole. And when he's finisished, he can fill it in again. And then repeat the same process, ad infinitum. Creating endless employment for everyone, if full-employment is your goal.

For there's just as much sense in doing that as there is in the kind of value-adding that's carried on primarally to make work, and not a product that can "recover its costs, plus an additional profit."

Now assuming there IS a genuine CONSUMER DEMAND for certain value-added wood products, yet they're not being made, then we should be asking ourselves WHY can this demand not be made fully EFFECTIVE? We're NOT going to find the answer in full-employment, at least not any answer that is truly 'progressive'.
"There is still no indication in this latest piece from Peter Ewart that he realises it is CONSUMER DEMAND first, and then sufficient EFFECTIVE DEMAND second, that will decide whether products that COULD be made WILL be made.

Instead he still seems to be preaching about some kind of worker's fairyland, as if creating more work will be the answer to everything. It won't be. "

Absolutely right. I'm not sure what planet Mr. Ewart is living on.
I think Mr Ewart is on the right planet and most people get mixed up with how they view this. Our past governments certainly have and then made a royal mess of things.
Such a mess that people are blinded to the benefits which could actually be possible.

The basic concept of "getting more from less" is actually a better definition than the term "value added". That means more OVERALL benefit with the same or less natural resources used/needed/AVAILABLE.
Ignoring the realities of shortages of natural resources will definitely restrict our options and potential benefits as we go forward i.e. JOBS. It will in fact jeopardise sustainabilty of communities which have no other resources left.

"Overall benefit" is not just profit, it can be a huge list of items such as employment but can also include "highest use" rather than highest profit or simplest high volume processes.

Diversification is more important to overall economic stability than what profit increases might occur as a result of an additional process for its own sake.

I agree that the root cause of our problems originate with monopoly capitalism and that this dominates governments which protect it while essentially preventing any chance of free enterprise from being allowed to establish or be viable.

The anti "value added" arguments originate from pretty much a case where incentives were given to entice entrepreneurs while never having the genuine intent to have them survive the burdens that were to make sure they couldn't be viable. No wonder people see them as subsidised failures with wacko business plans.

As long as people buy this for what it appears to be, then governments will continue to prevent the real opportunities from being available and secondly have no qualms in ensuring they don't survive.

Protecting the large corporate machine is job 1. Job 2 is not getting caught and everything else doesn't matter except for election day.

You still have to first have a genuine Consumer demand for whatever is being made, Woodchipper. And beyond that, assuming there is one, there has to be a way to make that demand EFFECTIVE, i.e., for the Producer to receive a price for his product that covers his costs, plus enough of an inducement in the form of profit to make it worth his while repeating the process.

A lack of EFFECTIVE DEMAND, even in the prescence of a genuine Consumer demand, isn't unique to manufacturing wood products, it exists in all our industries.

And a very large part of it, probably the largest part, is a "macro-economic" problem. It involves the way 'prices' and 'money' are inter-related through the accounting conventions and rules as they are presently carried on in the whole economy.

Fundamentally, there is no proper nexus between the two, and, in double-entry accounting, this leads to Profit being unable to be the type of feedback mechanism it should be to control future production.

Without correcting this problem, (and it IS correctable), all talk of a bright future for "value-adding", or "getting more from less" will remain just that. Talk.

We could explore all the 'micro-economic' potentials and pit-falls ad infinitum, relating our personal experiences to one another, and others, and pontificating over what could be, or should be, or would be, if only such and such were different, and it'll be just like the old saying, "The dog barks, but the caravan moves on."
Woodchipper:-"The anti "value added" arguments originate from pretty much a case where incentives were given to entice entrepreneurs while never having the genuine intent to have them survive the burdens that were to make sure they couldn't be viable. No wonder people see them as subsidised failures with wacko business plans."
-----------------------------------------

Some of the 'value-adding' I've witnessed involves people who had far more interest in tapping into those "incentives" for personal gain through pure "hype" than they ever had in making any serious attempt at genuine 'value-adding'.

WAC Bennett, wise man that he was, realised the potential for this, and refused to have his government involved in funding what he called "hot-house industries".

Those plants that needed 'special' low-interest, or no-interest loans, or outright grants to get going. And would likely be soon back for 'more', to keep going.

Instead, his government would assist in providing the 'infrastructure' ~ a new Hydro line, or a road, or a rail-spur, etc. ~ something available to ANY future industry that might succeed one that started up and flopped.

Bill Bennett, lacking his father's insight and years of wisdom, reversed that policy, and had his government doling out low interest loans and grants to anyone who presented a Business Plan that showed they might be able to create 'jobs', and maintain them for a couple of years.

The rationale for this was that other administrations were doing the same thing elsewhere, and we had to be "competitive" if we wanted to attract new business.

The intent was noble, but fatally flawed. The fundamental purpose of 'production' is to deliver needed or wanted PRODUCT as efficiently as possible. It is NOT "to make work". "Work" is a by-product of that fundamental purpose ~ a means to an end ~ NOT the end itself.

From that has sprung a new breed of value-adder. One who doesn't engage in the often futile purpose of trying to live on a shoestring while putting every spare bit of change into making that innovative new wood product he feels should be made, and more than likely risking the loss of everything he owns in the process should he fail.

The new breed doesn't operate that way. He pays himself an executive's salary. First. Before anyone else he employ's or deals with gets paid. If he loans any of it to his business, it's a secured loan, putting him high on the list of secured creditors ~ as high as he can arrange.

He cultivates, not potential customers, but politicians, and the appointees of politicians. Those creatures who also collect executive salaries to "make work". For others. Who measure their successes in "job numbers". And ignore whether those "jobs" are providing anyone with a living income.

He hires the handicapped, and the visible minorities. Not because of their worth to him as workers, which, if that's what they were there for, might be considerable. But that's not what they're there for.

He makes sure that the politician gets his picture taken standing next to these people, and that that picture gets a prominent place in the local newspaper.

He seeks out funding through "eco-trusts", and other places the well-heeled, but guilty-conscienced, have hidden some of their wealth.

He joins the Chamber of Commerce, and makes sure it's appraised of what a wonderful job he's doing, and, yes, surprise of surprises, he'd be honoured to be named "Businessman of the Year".

And all seems well, until one day, in your mailbox or mine, comes a glossy brochure from Ritchie Bros., or Maynard's, or Joiner auctioneers, detailing all the assets to be disposed of in a Receivership Auction.

Has the former "Businessman of the Year" been reduced to poverty, you wonder? Never fear, nary a financial scratch on him as he hones his "hype" for the next venture. Value-added indeed!