Clear Full Forecast

BC 's Forest Industry In Major Trouble

By Ben Meisner

Monday, March 03, 2008 03:45 AM

        

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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Comments

You've hit the nail pretty well on the head, Ben. The danger with 'super-mills' should be obvious, but to people like Gordon Campbell and Rich Coleman and the 'big-money' people behind the BC Liberal Party, it seems to have been overlooked.

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.
Good post socredible,and you are right about trying to capture someone elses market!
After owning my own very successful business,I have learned just that!
And in the begining,I had to learn the hard way,like most!
Never try to capture someone elses market...you have to creat your own to succeed over the long term!
"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."

I wonder if China and India and Bangladesh understand this ...

;-)
"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."

This started some time ago. It was the reason why the US wanted to change the trade agreement. Their industry was hurting and we did not listen to the real reason for their trying to change. Nice way to treat a customer.
I'm sure the answer is obvious but here goes...Why are unions & government just now responding to a situation that has been brewing for quite some time? My coworkers & I have been discussing the current scenario in the forest industry for close to 2 years now, we're just simple workers but if we could see it coming why couldn't the powers that be? I'm
very sure that we aren't unique either.
Are all the meetings too little, too late? Certainly we should look at alternatives, but are we beating a dead horse when it comes to certain elements in the forest industry? Canfor & West Fraser
are going to come out of this in control of almost all of B.C.s public forests (or
whatever multinational buys them out, especially Canfor). Maybe this is what was
desired all along, & we're just starting to realise it.
I agree completely. But it's not the governments fault. We sit on our hands and accept the BS that they give us for making the decisions and policy that we know are counter productive to the industry. We are the ones to blame for this. We haven't the strength or focus to stand up against local councils who use excuse after excuse why they can't support local mills or go to bat for them against the province, and it is us who pretend that we are all too busy with hockey lessons for the kid to go out and support these issues with a solid voice and action.

Campbell thumbs his nose at BC voters while his ministers laugh at our indifference. But in the end, we'll all be worried about our own small niche in a declining economy and vote them in again on a promise of future prosperity. Yeah right. I think BC is really beginning to be a lot like Alberta where after decades of conservative rule it's every man for himself. Where's the lifeboat?
Ain't no lifeboat coming towerview!
Sad but true, and detoe43 is also correct...this HAS been coming for a long time and the everyday working stiff seem to know it!
I think the government IS to blame for at least trying to downplay it and feed us all their spin and Bulls**t.
There is far too much backroom wheeling and dealing that goes on in the ivory towers of Victoria and Ottawa that we are not privy to, for reasons known only to a poltician!
They knew as well as anyone that we could not keep going at the rate we were and the crash was coming.
When they should have been taking measures to circumvent the damage,they just went right on spending.
The Campbell clan is STILL spending and still not listening.
We are going to regret the day we ever heard Campbells name here in B.C!!
Nearly everyone misses the mark completely and this is why problems on planet Earth just get worse and worse. I'll try yet again:

Capitalism is Cancer. They both operate in the exact same way. Both live on or in a finite world. Both demand as a base truth that growth must always take place in order to keep the system alive and healthy. Both ignore completely that this concept is impossible while living in a finite environment. As a result both destroy the very thing which they depend on for their own survival. Cancer kills the body, destroying itself in the bargain. The cancer thrives while it has resources to exploit but in the end consumes itself to death. Capitalism is doing the exact same thing to planet Earth, this is beyond debate at this point. Will humans give up our cancer like system, or will we kill our host also because we seem to have about the same amount of brains and insight as cancer cells?

When we start looking at the forest with less greedy eyes we might start to understand the concept of sustainability. With the current European mentality that everything in life is about more and more money there remains little to be hopeful about. People in this part of the country still seem very much stuck in the 1880's belief system. Not a good sign. In the mean time the jobs go away and the Salmon head for extinction.
Campbell is this, Campbell has done that. Do you people really think it would be any better under any other lie'n cheate'n politition....not, nadda, never. It's the bureaucrates and big business that run this country and that ain't never going to change. Just vote for the guy that makes you feel warm and fuzzy, at least for one year into the term. Politics stinks, always has and always will.
I think that we tend to blame a lot of people when we are faced with a problem, current or forcasted for which we have so solutions. There is a lot to be said for small business forestry, on many levels. I too have watched increased mechanization of the industry to the point where 5 men can do the work of 50. I can certainly see the benefits to employment of the old way. Why did it disappear? Could it be competitive? My own experiences indicate that small, labour ontensive forestry would require subsidy of some sort to compete with the big guys. If so, are we willing to do this? Probably. On the other hand, say what you will, Canfor is still here, employing us. There are a lot of other places, with smaller mills who are not so lucky.
I am not saying there is no reason for concern. I am saying we ought to refrain from too much rhetoric as it tends to get in the way of reason. There is no reason to talk about 'strip mined forests' as there is ample evidence that shows that forest management has improved greatly since the forest licensees took over in 1987. This includes Canfor and the other big mills. As for capitalism and cancer, well I agree it is beyond debate, or perhaps beneath it. Our forests are, I repeat ARE being managed for sustainability over the long term. If you have evidence that this is not so, then make a case for it, without screaming, posturing or nonsense!
"Why did it disappear?"

for the same reason that hand weaving became a hobby and art form when the Jacquard Loom was invented in 1801 and weaving became a predominately mechanical process rather than a predominately manual process ....

the number of "things" we have is directly related to the degree of mechanization we have been able develop over the years. e could never have had this many "things" if we had to rely only on our brawn rather than our brain.

brawn is good, brain is better ....

repeat after me .... brawn is good, brain is better ....

cutting wood is good .... figuring out what to do with it is better.. preferrably you do the latter before the former .....

;-)
"Politics stinks, always has and always will."

Amen to that.
"Our forests are, I repeat ARE being managed for sustainability over the long term. If you have evidence that this is not so, then make a case for it, without screaming, posturing or nonsense!"

You have to be joking! After the MPB epidemic and the resulting fall down in annual allowable cut for the next 50 years and resulting overdevelopment of infrastructure and human resource capacity, you are saying we have been managing our forests for sustainability in the long term?????

That is sort of like cutting the entire forest down over the next 20 years and shutting down the industry completely for 80 years and and saying we are managing it sustainably.

I cannot dispute that. But that type of sustainability is not exactly what foresters and provincial governments and even companies have in mind.

After this expereince, forest practices need a rethink. In my opinion, we need to rethink fire suppression policies, replant species policies, protected areas policies, etc. etc. in order to mitigate the impact of major natural disturbances in the future.
20-30 years from now, will houses even be made from wood or will a man made composite material take it's place? What about paper? Will electronic media become so commonplace, that it will effectively replace the mass use of paper?

I think Ben is bang on about the industry being in trouble, but I tend to disgaree about the reason. No doubt that MPB, the Canadian Dollar and the US housing market are having a huge impact, but these are "temporary" concerns. I think the primary long-term concern for these industries relate to the core product that they produce. Technology will catch up and it will be highly palatable to a population that is increasingly concerned about reducing its imapct on the environment, keeping trees where they are, reducing waste and having access to data RIGHT NOW and in a format that doesn't take up physical space or crumble with age.

Some corporation will do very well for themselves and their shareholders by focusing on these things. They'll also need employees.
No, owl i was not joking. It is patently rediculous to bring up the MPB in a discussion about management. The epidemic is outside of our influence. Period. It may be fun to blame the MOF or industry or politicians but the fact is that no amount of cutting would have stopped the spread of the beetle once it reached critical mass in the park. Also, the infrastructure did not exist to do so in the cariboo at the time.
How exactly were managers to plan for an unforseen beetle outbreak? How, other than with 20:20 hindsight was the outbreak to be predicted? Keep in mind the MPB has been around for, well ever. For most of our forestry history it has been kept in check or at least accomodated. For years we have worked hard to set cutting limits, to design cutblocks with other resource values in mind, to regenerate EVERY hectare harvested only to have so much of our planning destroyed by the beetle. Please dont act like it is the fault of forest planners that we are going to run out of pine.
The falldown effect has been a fact of life in forestry since long before the beetle. It is a result of old forest practices. It has long been known that our timber supply would dwindle in the mid term( However, dire predictions of timber shortages have not come to pass in part due to improved utilization, broader species use and other factors). Forest planning has for decades sought to supply wood in a sustainable manner. To suggest that we are not planning for sustained long term supply flies in the face of published fact. The fact that nature has thrown a monkey wrench into the works should not be used as evidence of a lack of forest planning.
If you want to blame someone for a diminished timber supply then address your complaint to God (care of the mountain pine beetle) or to previous generations of govt and forestry officials (those still living anyway). It is important to remember that PG would have suffered from any plan that drastically reduced the annual allowable cut (as insurance against future calamity etc.)
A lot of effort goes into long range sustained yield planning, no matter what people might think. Avail yourselves of the reports from the ministry of forests and you can see for yourselves.
I hear a lot of people talk about rethinking the way we do forestry. Funny that for most people this only comes to mind in our downturns or when some new forestry crisis hits the fan. PG and many of the surrounding towns were built on our current way of doing forestry. The government has shown intereest in new ideas and inovations. WHat more do people want?