Part 4 – OBAC and the strange case of the missing word

By Peter Ewart

    

When hiking in the wild back country of the Interior of British Columbia, a person often comes to a fork in the trail and has to make a choice as to which path to follow.  One way leads to the heights of a majestic mountain range; the other, down a path that gradually disappears into impenetrable bush or slough.

We have reached such a fork in the path in terms of the future of our forest industry, and, more than that, the future of our region.  If we continue with the status quo – a forest industry that is focused on producing relatively unprocessed lumber and pulp & paper – we face an inevitable decline.

The Conference Board of Canada has said just that in a recent report (June 2007), and, as we have discussed in this series, so have other business analysts.  The plain fact is that British Columbia’s forest industry has not diversified as it should have, and now we face the consequences. 

Craig Campbell, an analyst with PricewaterhouseCoopers, predicts that “dozens of sawmills are going to close” in the Interior of BC (Vancouver Sun, May 11, 2007).  And then there has been the ominous suggestion, first put forward at a Canfor sponsored forestry conference last year, that a number of communities in the Interior and North should be “marked for exit” and shut down (Province, Nov. 2, 2006).

Job losses, houses boarded up, services cut, population falling.  A taste of such a decline is already being experienced in towns like Mackenzie, McBride and Fort St. James where mills have been closed indefinitely.  Unfortunately, there is more to come.  The primary lumber industry faces a deep plunge in the U.S. housing market and increased international competition, while the full effects of the catastrophic pine beetle devastation loom darkly on the horizon.  Hank Ketcham, CEO of West Fraser Timber, warns that the current industry downturn is the “worst he can remember,” a comment echoed by Canfor’s CEO Jim Shepard (Vancouver Sun, June 30, 2007).

It is often not fully understood how important the forest industry is to our local, regional and provincial economies.  There are those in the Lower Mainland of the province who don’t grasp this fundamental fact.  But there are also those up here in the Prince George region, who go on at length about diversifying the economy into more call centers, tourism and mining, but see little or no need to address the issue of diversifying the forest industry into value-added wood production.

And that is the fork in the path that confronts us.  Either we diversify and expand the existing forest industry by adding value to how we process the wood and other forestry materials, or we close our eyes and cling to the status quo, relying on a shrinking primary industry that will, over time, shut down mills and bleed the life out of our communities. 

Indeed, if things keep going the way they are now, some predict that forestry operations in the region will be reduced to three or four “supermills” employing a fraction of today’s workforce.  Even if that scenario is dismissed, no one believes that the existing primary industry can maintain anywhere near present levels of employment, given the extent of the beetle kill, as well as lack of diversity in product mix.

In the past, our region has faced other forks in the trail.  Each time the people of the day – entrepreneurs, workers, foresters, suppliers, politicians, community leaders - stepped up to the challenge, made the choices and forged ahead.  As a result, a world class primary wood manufacturing industry was eventually established.

Now we face another big challenge – making the transition from an industry focused on primary production to one that also focuses on secondary (value-added) and tertiary production, whether it be in the solid wood, engineered wood or pulp & paper sectors.  The generations that came before us always had a “can do” attitude and were up to the tasks that they faced.  Will we be up to our task?  Or will we be remembered as the generation that let the forest industry – our greatest strength as a region economically speaking - trickle away like sand between our fingers?

We have all the ingredients to make this historic transition – a skilled forestry workforce; high quality timber; a sophisticated transportation system with access to national and global markets; an advanced primary industry; entrepreneurs in the secondary and tertiary wood, and information technology fields; comprehensive post-secondary education facilities; an extensive service and supplier infrastructure; access to cheap and abundant energy; and a growing world demand for secondary wood products.

But to make this transition we need to do two things: (1) establish the fertile soil for secondary and tertiary industries to develop, and  (2) promote our own “grand project” as a region. 

Let’s discuss Point (1).  The current situation, in terms of forest policy, forest practices and the granting of timber rights, does not favour the growth of the value-added industry in our region.  Instead, it is biased towards big primary producers like Canfor Corporation that have a virtual monopoly over the forests.

Fifty years ago our region faced a similar problem.  The establishment of a pulp & paper industry was being considered but conditions were not optimum for it to function effectively in terms of fibre supply and other issues.  The provincial Minister of  Lands and Forests at that time, Ray Williston, took the bull by the horns by making significant changes to forest policy and practices, and the granting of timber licenses.  As a result, the pulp mills were established – the next stage was achieved.

As various forest analysts have repeatedly pointed out, the current value-added industry in this region and province is severely hampered in its development because it does not have secure access to raw wood of appropriate species, dimensions, quality and price.  And there are other problems as well, many boiling down to the fact that a favorable forest policy environment does not exist for the value-added industry to grow (“Solid wood supply impediments for secondary wood producers in British Columbia – 2003 – R. Kozak, T. Maness & T. Caledecott).

Big companies like Canfor have a hammerlock on timber supply and a heavy influence on forest policy, and historically have made few concessions to value-added producers.  This has to change if the forest industry is to diversify and expand, and our communities to have a future.

We need clear forest policies stipulating that, if companies are granted timber rights and other advantages, they must invest substantially in value-added operations themselves or at least accommodate independent value-added producers in terms of secure timber supply and other requirements.  To make sure this happens, both incentives and penalties are needed. 

But this does not mean bailing out failing companies, as has been attempted by government in the past.  What it does mean is that the fertile soil for value-added industrial development is fostered through a range of measures.  In that regard, we should remember that the forest industry in this region was first established by small and medium operators.  The big ones came only later.

And then there is Point (2).  We need to have the vision to develop our own “grand project” - in this case laying the foundation for a world class secondary and tertiary wood industry – and to get behind it as a region.  The Lower Mainland trumps us every time with its “grand projects,” whether it be the 2010 Olympics, Expo or other initiatives.  We can berate them all we want, but unless we have our own alternative vision, they will get their way by default.

The importance of this point cannot be underestimated.  Without a coherent analysis and a clear vision, everything becomes arbitrary and haphazard.  Thus pine beetle funding is pledged by the federal and provincial government for economic development and then is proposed to be spent on everything under the sun, from the Northern Sport’s Centre and Prince George’s Cameron Street Bridge to fixing potholes and promoting “destination tourism.” 

And so, too, in such an arbitrary atmosphere, OBAC, which in the last two years has received $1.7 million from the provincial government, can omit or include the word “value-added wood” in its economic development priorities, just as easily as it could throw in the word “tiddlywinks.”  There are no criteria and no vision.  What we get, as a result, is mediocrity and missed opportunity. 

To make a significant step forward in any industrial development in today’s world requires the marshalling of a broad front of forces including forest companies, labour, government, community leaders, the high tech sector, and post-secondary educational institutions.  This is exactly what a small country like Finland did when it formulated its “grand project” and made the transition from a primary forest industry to a secondary and tertiary one.  The issue was not left to chance or “market forces,” but rather government took the lead in clearing a path for the value-added industry to develop.

The people of our region have tremendous talents and energies, and have proven this many times over.  If the task was set before them to move the forest industry ahead to the next stage, is there any doubt that they would rise to the occasion?  All the more reason why, in our economic development priorities, we cannot omit, as OBAC has done, the very word that is the key to that “moving ahead” and, indeed, to our future as a region.

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

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