BC 's Forest Industry In Major Trouble
By Ben Meisner
The cold reality is that we are watching the forest industry playing field in Canada, change.
At one time for example in this region of BC there were at least 300 small sawmills operating. To be sure many were not efficient but it provided a labour force that we can only dream about now.The annoucment on Friday past of Winton Global shutting down operations shows a changing world.
Today as the smaller companies close and their forest tenure is set to be gobbled up by the large companies like CANFOR and West Fraser we are watching an industry that is about to see some major change.
The prediction of as few as four super mills operating from Clinton to the west coast of Prince Rupert is quickly becoming a reality.
The affect will not only change the labour force of the industry but also the clout that some companies have in the industry. The prospects are not good given that experience has taught us the large companies who control a segment of the manufacturing market can quickly place a strangle hold on any community that they choose. They operate on the principal that the bottom line is all important. That philosophy extends into government where they are able to exercise major clout with elected officials and the result is an unfettered control of a market.
The US housing market has only hastened the manner in which the industry is shrinking its players. It is not unlike the gas industry where once upon a time hundreds of companies operated in competition with one another in the gas industry and the result was open pricing. As the industry gobbled up the little players they also were able to eliminate competition and we all know how that ended up.
I’m Meisner and that’s one man’s opinion.
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Purposefully? We hope not. But it's sure beginning to look that way. For it's hard to believe that we could have BOTH Parties that would lead us in this Province suffering from the same terminal ineptness.
To spell it out for them, what they seem to have forgotten is that while "unit costs are a function of volume", and while a "super-mill" can indeed signifigantly lower "unit costs", it can only do so if ALL the "units" produced actually SELL.The ones that don't have a 'cost' attached to them that carries over into the next cycle of production, and adds to its costs that then have to be recovered, and so on. Defeating the whole purpose.
There is no option with such a mill to run it at half speed in a slow market. Its 'capital costs' are too high to be recovered at anything less than full capacity 24/7.
Do the proponents of such mills think our GLOBAL competitors are going to sit still and watch us take THEIR market with such brilliant innovativeness? No, they are led by people just as 'sheeplike' as the exectutives here.
They'll build their own 'super-mills' too. And dump an increased volume of commodity lumber products into a global market that will never be able to absorb it all, still, at a price that can recover the costs.
We cannot go back to the 'bush-mill' era. But what we should be doing is looking for ways to produce lumber in more human sized operations, more local to the timber supply they'll be operating in, and more flexible in their ability to vary product, and still be able to operate at a lower volume at a profit in a slow market. There will still be job loss in doing so, but we will get a much more flexible and sustainable industry out of it. One that has a chance of enduring.
Above all we shouldn't try to believe that we can ever succeed by 'capturing' some other country's market by simply flooding it with cheap product. That cannot go on for long, simply because it always impoverishes the importing country, as its own jobs making similar product disappear; while it enslaves the exporting one to continually try to produce still 'more' ever 'cheaper'. As long as 'incomes' are based solely on 'employment' ~ everywhere ~ that will never work.
We know that the USA, for instance, is chronically short in its capacity to meet all its normal softwood lumber needs by about 25 to 29%. Our attempts to dump more than the amount they're short by is completely counter-productive. They are our natural market for the lumber we produce here in the north.
But the way we've been going, and now seem to be poised to further go, we're going to be cutting our own throats. We'll be left with strip-mined forests, no jobs, no communities (that are liveable), a build up of further 'regulation' that'll make whatever is left completely untenable, and a great many other detriments that could have been avoided.