This is terrible. Mackenzie was like a ghost town 3 years ago when all the mills where running. Now what? I feel for the people of Mckenzie, but dont worry, PG isnt doing a whole hell of alot better.

Devastating news indeed, and the last thing anyone wanted to hear.
My condolences to all concerned.
Hang in there,there has to be something good on the horizon!

How devasting indeed! With over 2000 jobs lost in Mackenzie, there is half the town unemployed. Not too mention all of the spin-off jobs from the logging contractors, truckers and even the businesses in the town. Couldn't Canfor have found somewhere else to curtail production? What a kick in the face!

Maybe the community needs to look at getting into the logging business themselves. Buy the mill, petition the government for Canfor's forest licence and set up a co-op type forest operation.

Zoop, you think someone can run a mill with a profit when Canfor cannot? The only way a mill will make a profit in the economic climate is if the employees agree to a wage of $10. per hour.

That's the "co-op" part Ruez. Everyone that works in the operation owns part of the operation. If some years are leaner than others, so be it.

Zoop. Whos going to buy this lumber. I doubt if it would meet any of the free trade standards. The Americans would see it as subsidised lumber dumped on the US market.

Next announcement will be the permanent closure of Winton Lumber (The Pas Lumber) . This mill will be closed by mid July.

And PG City Council wants to give Canfor tax breaks? Mackenzie bent over backwards to keep that mill running and Canfor laughed all the way to the bank.

Without a doubt the lumber industry is in a deep hole, but this decision by Canfor should give PG an idea of what will happen if tax breaks are given...they will take it then close anyway.

My sincerest condolences to all in Mackenzie. It has been one kick in the face after another... I hope this one is not the last straw for your community

Didn't Canfor get a bunch of concessions from the union to keep running? Didn't Canfor get a bunch of cheap timber to keep running?

Canfor's press release states that the lost production from shutting down Mackenzie will be made up at other mills.

Why would Canfor announce this shortly after the bids were to close for the Mackenzie pulp mill?

Because the Mackenzie mill would have purchased their woodchips. They would now have to go to Prince George, Taylor, or Hinton.

Good question lumberbaron why, something is not right here. They have a contract to supply P&T or whom ever buys them with chips.

People, this is old news .....

http://www.opinion250.com/blog/view/5931/3/canfor+to+close+mackenzie+sawmill++indefinitely

Sort of like the government announcing $10 million in funding ...

then 2 weeks later announcing $5 million for a project has been awarded ...

and 4 weeks later that $3million cheque is being handed over to ABC Organization ....

and one week later $2 million to the city to couple with another project .....

then you realize, "hey, that's not $20million ... that's the same $10million announced a while ago ......."

Good question lumberbaron why, something is not right here. They have a contract to supply P&T or whom ever buys them with chips.

Good question lumberbaron why, something is not right here. They have a contract to supply P&T or whom ever buys them with chips.

Vulcan,

I thought they did to. Pope also owed Canfor well over a million bucks for missed chip payments.

I just find it a little strange that Canfor would have announced it AFTER the deadline for the bids to the receiver.

I think the chips are the only thing that is keeping these lumber mills running, financially. They (canfor) was probably waiting out the deadline in hopes of the mill(P&T) being purchased.

Quote = Palopu

"Zoop. Whos going to buy this lumber. I doubt if it would meet any of the free trade standards. The Americans would see it as subsidised lumber dumped on the US market."

The Y'alls would have to see it as an equal to all the other Canadian producers. There would be no extra government subsidies; there were merely be a change in ownership. A chance for all the union people to to stand up to their "ideals" and work for a common good.

My kingdom (such as it is!) for a freaking edit function. Geez, 2 minutes to correct some typos is not much to ask for!

A few things to consider re Canfor's contract to supply chips-
- Canfor bought the pulp mill
- someone else bought the pulp mill and allowed Canfor to exit the chip agreement

"Next announcement will be the permanent closure of Winton Lumber (The Pas Lumber) . This mill will be closed by mid July." and so it should be...one of the most poorly managed mills in Canada.

How long will the chip piles last? Once that is used up, so much for the pulp mills too. Chester

Doesn't this have more to do with raw log exports percentage increasing? You couple that with current economic climate for lumber demand and the reasons to stay in operation lose its appeal.

As for the chips, for the moment that looks stable. We are going into pellet production full steam now so the chips will be in demand. At least now maybe I can resell my Christmas tree - oops, sorry how politically incorrect of me, I meant my holiday tree!

How can PG give concessions and not look like they are subsidizing Canfor, contrary to the softwood lumber agreement? When Canfor was making the big bucks, it's not like they paid extra taxes, or shared those profits with the workers or contractors. The truckers had to go on strike just to get enough to stay in business.

If Canfor gets tax concessions so should everyone that took pay cuts when Canfor cut the rates.

Heard there was going to be a strike this summer......is that pulp mill or sawmills?

Sawmill contracts expire at the end of June 2009.

I'm suprised that Canfor isn't asking for a cash bonus out of the city to consider rebuilding NCP. Still, look at what they did in Mackenzie after receiving numerous "subsidies" to keep that sawmill running.

So you don't think PG should give NCP any tax breaks? Do you think Canfor should continue to operate at a loss in order to keep people working?

I figure a loss of a mill in Mackenzie might as well be a loss of a mill in PG, because basically anything in Mackenzie is serviced from PG. Add the Winton Global mills in Bear Lake and on River Road closing next week and the the first week of July, and then NCP, and that is a lot of primary jobs that will no longer be spending incomes and operating budgets in our economy. I don't think we've even begun to see the side effects of this yet.

I don't think paying ransom money to Canfor will get us anywhere. Those decisions will be based on logistics, manpower, infrastructure, and access and proximity to the raw resource. If there is anyway in which a government should subsidize the growth of future industry, then I would say it has to be the infrastructure where we need to compete. By infrastructure I mean location as well as services; and in the location department if requiring airshed issues we are naked in our reputation as well as our ability to designate such a location... much less service that location.

Also it looks like Quesnel gets it.

Inexpensive property in MacKenzie anyone?
metalman.

Strange that we always try to find ways to subsidize "producers", (in a way that doesn't look like a subsidy to the foreigners we compete with, and whose markets we hope to capture), yet we seem so adverse to ever subsidizing our own "consumers".

Who are ALL of us, since we ALL need to buy things to live nowadays. Virtually no one "lives off the land" in the direct sense they once did. We ALL need 'money' to access the things we need in our day-to-day lives.

Now if you realize this, it should not be hard to further realize that virtually ALL modern production is 'co-operative' in nature, and not solely the result of any one person's individual initiative.

The preponderant factor in modern production is the application of power driven machinery in ever more efficient ways through the constant advancement of technology.

Even before the current crisis in forestry that has devastated towns like Mackenzie, and spread its deleterious effects to areas no longer right on the 'front lines, there has been a constant and continual overall loss of jobs throughout the forest industry, and other productive industries as well.

This is nothing 'new', it's been going on worldwide for well over a hundred years now, and it's not going to be reversed, short of foregoing all 'progress' and reverting to an era where "all craft was handicraft".

Such a reversion would probably mean much of the world's population could no longer be fed, clothed, and sheltered, since the physical possiblilites of doing these things on 'manpower' alone would be woefully deficient to meet everyone's current needs.

The biggest overall problem we face as a society today is not in the way things are, but rather in the way we perceive them to be.

If we viewed modern 'production' (of all goods), as it is ~ an ever expanding 'pool' into which we're constantly adding not only the 'wealth' we each individually draw from to consume daily, but also the ever increasing capacity to produce more of that wealth through better efficiencies of modern production, we should realize that our modern 'money' is NOT 'wealth' in itself, but only a 'ticket' that allows us to draw from that 'pool'.

The notion that we have to do ever more 'work' to be able to access that which already exists, especially when so much of our combined, and ever continuing, efforts over the last century have been directed to putting everyone "out of work", is a perception that's patently ridiculous.

Surely, in this modern day and age, we can devise a way to provide those many in our forest industry whose 'work' is currently not needed with an 'income' to allow their continued existence? Without our having to 'pretend' that they can all be "re-trained",
or that they'll have to be "relocated, to where the 'jobs' are"?

It's time to face facts. "Jobs", as a means of distributing "incomes", are going to be ever increasingly deficient. We have huge potentials to produce. But what good is constantly adding to them if the "incomes" needed as the 'tickets' to "consume" are not there?

Find a way to distribute those "tickets", and you've solved your problem.

BTW, for those who will say, " Well, this would result in 'over-consumption', and an exhausting of the world's finite resources, so we shouldn't do it, " ask yourself this, "Does Bill Gates, or Jimmy Pattison, or any other of the world's 'wealthy' actually, personally 'consume' more than the rest of us to any great extent?" I hardly think so! They can only eat a certain amount of food, no matter how many clothes they have, they've still only one body to wear them on, and, while they may have more than one abode, still only one place is going to be 'home'.

I would ask how much these mills have made since they were purchased vs how much has been invested?
This is important to why things are the way they are.
There used to be a requirement to operate which was both good and bad---but-- at least it obliged reinvestment as a company would lose its timber rights if it shut down for any length of time.
Nobody wants to lose money and this current market is a most severe situation--But--what about twenty five or more years of average profits of 20+ million per year?
Dividends to shareholders scattered around North America were paid--but nothing available to sustain the operations now.
Profits which went to the purchase of forest companies in the southern US.

I think that when you have a community which depends upon one industry or one company--it should be an employee owned company. It is the only way to keep the focus of the local wellbeing in the community rather in a distant boardroom.

Socredible ... a wonderful view which I am afraid very few people understand ....

we need to be able to look at maintaining our society by using many new derivatives of the recent version of a "traditional" system ....

As with other forms of organization, including natural systems, the answer for me lies in nurturing diversity .... the western version of an economic system is becoming very outdated. It is not one which promotes individual and community sustainability. In hindsight, it never has. It has caused the greatest migration of people - from rural communities to urban communities. Such a migration of people has never happend in such a short period in the history of humankind.

It is continuing to this day in China as they emulate our economic structure.

Woodchipper ....

It can be called exploitation ... whether one country of another, one province of another, one city of another, or a company of resources, including people. The moving of "wealth" extracted from one place to another place without "fair" compensation.

So what is "fair"? That should be negotiated, but rarely is. Most are simply sucked into the situation. Most do not even think of it, including those who do the exploiting. It has simply become the way of doing business over the centuries.

I agree with the definition as "exploitation", as it is just that.
I also agree with the nuturing of diversity in any way possible as the current model isn't working for anyone but a few international corporations.
Like the T-REX which dominated our planet--so too have these giant corporations. Their hold on things in the forest industry at least is becoming more uncertain.
The problem is that they are likely to retain control of our resources unless we make government do something about it. I have said in other posts that these timber licenses WERE strictly bound to LOCAL processing and continuous processing. Again I say this was not ideal--but the current situation is far worse in terms of community stability.
If you look for a solution in this mess we are in you have to fix a few main problems.
The business model of which the majors have dedicated their facilities and our forest resources is into one product type for one market that has failed and may not ever resume to a level which requires anything but a few centralised supermills.
But wait--how far can you truck logs when fuel is nearing 7 bucks a gallon?
Is rail freight going to allow us to ship to southern US markets? Is there much of a future in the US lumber market?

Perhaps the ideal business model is not about exploitation at the fastest rate possible.
The resources need to be actually available to other companies and other types of companies which have the will and ability to diversify.
The transition from the current dimension sawmill to something which suits the new economic times could likely be best accomplished by the employees taking over these operations.

Knew it would happen...said it was just a matter of time last year. No matter what the government or politicians say they can do, it will always be up to the owners and major shareholders as to what happens. No profits, cease operations because they equal loss. Mackenzie first, who or where is next. Mackenzie was constructed as a mill town by the mills and its life expectancy was overdue......
Sad, but true.

Where's Pat Bell now? Oh...yeah, China.

Owl wrote:- "...the western version of an economic system is becoming very outdated. It is not one which promotes individual and community sustainability. In hindsight, it never has. It has caused the greatest migration of people - from rural communities to urban communities. Such a migration of people has never happend in such a short period in the history of humankind."

It CAN'T promote "individual and community sustainability", Owl, because the way we currently do the accounting has a (correctable) flaw in it. Leave that flaw uncorrected, and promoting 'diversity' will be as meaningless as changing ownership from private to public, or communal, through a local Producer's or Worker's "co-op", or whatever.

Even when we concentrate all the population into larger and larger urban areas, or form our countries into larger and larger 'trading blocs', or 'free-trade zones', it still won't be sustainable.

So long as there is ongoing 'labour displacement', and employment is the primary means by which we distribute incomes, and there is no OTHER way YET in which CONSUMERS can be properly credited with the normal excess of overall CAPITAL APPRECIATION over that of the overall CAPITAL DEPRECIATION we are properly charged with as a component of PRICES, we will find "individual and community sustainability" an ever more ellusive goal.

The answer is NOT to stop "labour displacement". But rather to change the accounting, to make it do what it's supposed to do. Properly 'reflect' the FACTS. And modern 'money' is no more than what it's really always been ~ even when it was made out some commodity like gold~ simply an "accounting-demand" system.

Woodchipper, it won't make one whit of difference whether the "employees take over the operations", or whether they "diversify" into making a variety of "value-added" type products, or whether the wood is tied to some community or sawmill under some type of 'social contract', SO LONG AS THE FUNDAMENTALS OF ECONOMICS ARE RULED BY FLAWED ACCOUNTING.

The mills and forest ownership became concentrated to their current level of ownership because there were insufficient levels of profit being generated to be sustainable UNDER THE CURRENT RULES OF ACCOUNTING. It's as simple as that.

Things that could be made, and possibly should be made, CAN'T BE MADE. Because under the current set-up it doesn't PAY to make them. Eventually, carried to its extremes, it won't PAY to make anything.

Not there is no demand for the vast variety of wood products we could make. But because that Consumer demand is not, and can not be, under the current way the financial system operates, ever fully an EFFECTIVE DEMAND.

Unless we move to correct this, there is really NOTHING WE CAN DO that's going to change things in any way that's going to be helpful.

People often rail against the 'profits' they see forest companies making in times of 'boom'. What they fail to realize is that those large 'profits' as a percentage of overall Sales are, and have been for years, in continual decline.

One need only look back at the well-documented history of some of the industry giants to see this. MacMillan Bloedel is no longer with us, but it's history was well covered by many authors while it was.

The combined entity of MacMillan & Bloedel Ltd. was NEVER as profitable on its combined sales as H R MacMillan Export and Bloedel, Stewart & Welch had been as independent entities with their individual sales.

And the absorbtion of Powell River Company, while it increased the profit as a dollar figure, for sure, reduced it even further as a percentage of overall sales.

The larger they grew, the worse it got. Until the Company itself was acquired by larger players, (and it declined further ~ or they would've kept it.)

The point is, it's not that these Companies are mis-managed, (though some have been), it's that they cannot overcome a system that's stacked against them. If they'd remained independent, they'd have perished. They would not be able to raise the capital needed 'sustainably'.

They found that didn't change when they got larger, only by 'growing' continually the problem can be masked somewhat, and deferred.

WE need to 'change the accounting'. Anything short of that simply WILL NOT WORK.

Posted by: RUEZ on June 10 2008 6:00 PM
Zoop, you think someone can run a mill with a profit when Canfor cannot? The only way a mill will make a profit in the economic climate is if the employees agree to a wage of $10. per hour.


You see now your learning whats going on here.
This is exactly why logs are exported out of the country to Canfor owned mills in the USA and are milled using low paid workers.

Posted by: RUEZ on June 11 2008 1:06 AM
So you don't think PG should give NCP any tax breaks? Do you think Canfor should continue to operate at a loss in order to keep people working?

NCP was not operating at a loss.

The mills Canfor owns in the USA are in the south-eastern States, and do not operate on imported Canadian logs. They cut southern yellow pine, much of which requires preservative treatment before it is sold for building purposes in that region.

One of the main reasons for investing in mills in that area is to better service their customers in competition with other large American forest products firms who can offer a variety of product Canfor (and West Fraser) previously could not.

The other thing that should be considered is that the firm which Canfor purchased, (New South ~ a sizeable regional producer), is now no longer a voice promoting the Coalition which was lobbying against Canadian softwood imports.

When Canfor and West Fraser join other south-eastern US mills in various industry associations, etc., they bring their positions to the table to make the case directly with their American counterparts that our industry is not unfairly subsidized. That they, by their investments in the US southeastern region's mills, feel that there is a good potential for profit there. Perhaps better than in BC, where their plants were, and are still, often thought to be unfairly subsidized by the government.

This, in spite of the fact that most timberland in the US south-east is privately owned, (often by third-parties, NOT lumber companies), and the competition for sawlogs intense.

The court has just ruled Canfor must continue to supply chips-

http://canadianpress.google.com/article/ALeqM5iAvQbaBbtywD7iD0RGCaWYb6pgaA

http://www.pwc.com/ca/eng/about/svcs/brs/poptal-156_061308.pdf

http://www.pwc.com/ca/eng/about/svcs/brs/poptal-157_061308.pdf

http://www.pwc.com/ca/eng/about/svcs/brs/poptal-158_061308.pdf