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How to Revive BC's Timber Jobs
Shift policies to encourage making goods with wood
Softwood deal hurts manufacturing that could revive rural BC.
For proof that the Softwood Lumber Agreement is bad for British Columbia, look no further than what is absent from the list of forest products covered under the deal, namely, raw, unprocessed logs.
By excluding logs from the list and shielding them from export caps and taxes, the deal opens the door to a ramp-up in log exports from B.C. in the months and years ahead.
That is not good news for regions of the province along the coast where mill closures and already high levels of log exports have left many communities reeling. Nor may it be welcome in the Interior where there are proposals floating about to export massive numbers of raw logs from beetle-attacked pine trees to markets such as China.
Making matters potentially even worse, for forestry workers and rural communities alike, are other terms of the agreement that penalize lumber and value-added mills once export levels or prices hit certain benchmarks. Process a log into lumber under the SLA and you pay taxes. Move into secondary manufacturing, employ more people re-cutting lumber into higher value boards, and pay higher taxes still.
So on the one hand, the SLA has a built-in incentive to ship out a crude raw product and on the other hand it has built-in disincentives as far as adding value to logs here in B.C. is concerned.
From a progressive, social policy perspective, the SLA -- and a number of related forest policies the B.C. government enacted in a failed bid to appease the seemingly unappeasable U.S. softwood lumber lobby -- are a disaster.
And the question we ought to ask ourselves is what our government should do about it.
Stop pandering to U.S. interests
Well, for starters, it needs to fully embrace a value-driven strategy for the forest industry. And it needs to use powers at its disposal -- timber pricing, tax incentives and allocating forest resources -- to make that happen.
As mentioned earlier, it is not just the SLA that will harm workers and communities in the years ahead, but forest policies that the provincial government enacted over the past five years and that were designed to appease the U.S. lumber lobby. Those policy changes:
- Scrapped the awarding of public timber directly to value-added companies.
- Did away with stringent no-waste provisions governing logging in the province.
- Ended the sale of timber to small, independent mills.
- Broke (seemingly) the long-standing social contract that required forest companies to operate mills in specific communities in exchange for exclusive rights to log public forestlands.
The ostensible aim of these and other "market-based reforms" was to create an open market for logs in B.C. by lifting restrictions on who could bid on allotments of public timber and to put the forest industry on a more "commercial" footing.
The province then set out to expand the volume of wood sold under auction by "taking away" some timber previously allocated under long-term renewable licence agreements to various forest companies. It then compensated the affected companies to the tune of $200 million, for wood that they "lost" and that would now be available to any interested party to bid on through auction.
The words "taken away" and "lost" appear in quotations because it is doubtful whether the companies actually lost anything. For one, substantial logging increases in the Interior in the past few years far outstrip what the province took back from the companies. For another, those companies losing wood were free to reacquire it through auctions, which is precisely what they have been doing with a tremendous amount of success ever since.
It is difficult to see how it could be otherwise. One company -- Western Forest Products -- controls one out of every two logs coming off of public forestlands on the Coast. In the Interior, three companies – Canfor, West Fraser and Tolko -- own the lion's share of logging rights. And all four companies control the bulk of B.C.'s lumber production.
Consequently, we don't have a fully functioning marketplace in the province. The great majority of value-added companies and smaller independent mills lack their own secured timber supplies. Yet they are forced increasingly to compete in a market dominated by large companies, with deep pockets and an assured supply of millions of cubic metres of timber under long-term, renewable forest tenure agreements. Unless the province takes the highly unlikely step of taking all the timber allocated under long-term forest tenures away from established interests and auctions it, value-added manufacturers and independent sawmills will require assistance in order to succeed. And that assistance will, in all likelihood, have to come from government.
Start creating incentives to create jobs
One constructive thing that the province could do right now to stimulate more secondary forest product manufacturing in B.C. is implement a new stumpage and taxation regime. Under such a scenario, payments to government would be high on items such as logs, but progressively lower as more value was added to forest products. For example, commodity lumber would generate a lower tax bill than a log, a wooden truss would generate a lower tax bill than lumber, and a wooden door would generate a lower tax bill than a truss. This would provide a powerful incentive to add further value to forest products here in B.C. And if the government got really creative, it could allow lumber makers to defer paying taxes on products that they sold to domestic re-manufacturers. When the resulting higher value product was made, the lumber maker and the re-manufacturer would split the lower tax bill.
And while on the subject of tax incentives, the government needs to consider what carrots and sticks it will yield to ensure the rampant and egregious wasting of usable logs is brought to an end in B.C. It is simply unconscionable, as earlier noted by The Tyee, to allow 3.5 million cubic metres of usable raw logs to litter logging sites in a single year in the province when they could have been used to put 3,500 people to work.
Another way for the government to stimulate more value-added manufacturing is to drop the ruse that its timber auctions are open and get back to the business of awarding allotments of timber directly to higher-value producers. Some will argue that the province can no longer do this because it has scrapped "appurtenant" mill provisions, whereby companies are required to maintain mills in specific communities in exchange for long-term access to timber on public forestlands.
But the reality is that the government has not completely abandoned this concept. In fact, in a previous article in The Tyee it was shown how the recent awarding of a long-term forest tenure to Ainsworth Lumber was linked by the province to that company building a new Oriented Strand Board (OSB) mill.
Furthermore, there are all kinds of higher value forest products that, under the terms of the SLA, are not subject to export caps or taxes. These products include wood trusses, I-Joist beams, pallets, garage doors, edge-glued products and finished window and doorframes. All of these items are higher value products that would provide badly needed jobs here in B.C. and that would help elevate the province from its present and sorry position. B.C. remains a jurisdiction that performs extremely poorly when it comes to capturing optimum value from its forest resources. We generate only about a third of a dollar in higher value products for each dollar's worth of lumber we produce, while forest industry workers in Ontario and Quebec turn out $1.50 in value-added products for each dollar's worth of lumber.
A chance for rural renewal
It is long overdue for the provincial government to figure out how to stimulate more value-added manufacturing in B.C. And one of the most powerful tools at its disposal is the direct awarding of timber to companies that make higher value products.
Workable solutions in the face of the Softwood Lumber Agreement are at hand. The question must be asked: will they be pursued?
If they are, we may see a resurgent rural economy.
If they are not, the future may well be one in which we witness a mass exodus of raw logs from the province, more mothballed mills and a gutted rural economy. ![]()




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Moosebeer
5 years ago
Comments on "How to Revive BC's Timber Jobs"
We should of kicked the U.S. out of our lumber store and told them to find their wood somewhere else. We have the upper hand, we have the trees and there will always be buyers. Unfortunately our leaders are idiots.
Grumpy
5 years ago
We should have put a export tax on power sales to the USA, equal to the punative duty on lumber.
We must cut our ties with America and go our own way.
The brain
5 years ago
A most excellent article, Ben Parfitt!
The summation of it is that Harper and Emerson srewed us on this softwood deal. Not only did they cost the taxpayers more than a billion of our hard earned forestry dollars, the Cons put nearly half of this money (454 million) into Republican hands. We got screwed, folks, no doubt about it, and all for Harper & Emerson greed.
This is no accident. One of Emersons directorships for being a Liberal crook in this province was from Teresen, for Emerson's part in the sale of BC gas to Teresen... which ended up owned by Morgan Kindle... which ended up being bought out and is now privately owned by Goldman Sach's and 4 other firms, of which lion share is owned by Carlyle.
Anyone remember Carlyle? Its the GWBush senior and junior nest egg. Once again, this deal did not go down the way it did by accident. Harper has been in thick with the Republican party since joining the NCC, and Emerson has been corrupt for decades in BC, coming into the Harper and Republican fold before the Martin regime ended.
Harper and Emerson are quite simply, CROOKS!!! They need a whole lot more than just being merely voted out of office. Hand cuffs behind bars and a good old fashioned shit kicking once inside is a tenth of what these traitorous sellout pigs deserve.
Cynic
5 years ago
Beware the notion of elite incompetence.
No they're not.
Right.
RickW
5 years ago
Simple fact is, we depend on the revenues from resource exports to finance our lifestyle. We ARE "hewers of wood, drawers of water". We've exported raw logs into US, and even if their economy grinds to a halt, we will either continue to export raw logs, which in turn will be re-shipped to China....or we will ship to China. In either case, we are forced to dance to the importers tune. That is what China was telling Harper recently. China is simply putting Canada in it's place.
The ONLY way out of this conundrum is to take over ownership of our own resources. That is to say, NONE of it can be owned by private interests. Only the value-added can enter the marketplace.
doggone
5 years ago
Makes me nervous when I agree with all the posters and the original article.
Somebody give me something to chew here.
Maybe I should check out my neighbour: "Island Timberland"
No they pulled up stakes and turned into "BrasCan" last time I looked. What on earth are "Carlyle" and "Brascan" doing with the properties they have recently clearcut?
My suspicion is:
Selling it to each other and making a profit on each (fantacy) transaction.
Now this does not create any jobs nor does it preserve any resourses - it simply makes
Money
Apparently if you have enough of the "Money" stuff you can purchase a politician (or a whole political party as we see in B.C.)
Then you can carry on making more "Money"
maestro
5 years ago
I wonder what would have happened if the BC NDP would have still been in?
Likely not much, and non partisan speaking.
As Fiat Lux/Ed often discusses and shares his wisdom,insight and experience, one thing he talks about is over-capitalization. I read into this as so much investment in labour saving technology...stories about mills so efficient that by the time a logging trick drops off its load at the log yard and leaves the gate the equivalent of the load has been fully processed.
So what is the solution, to limit capitalization ? Fix and allocate numbers ? "X" town has "Y" jobs ? Then where do we stop and at what industry ?
We have gone to the BC interior since the early 1970's and seen the transition...the small mills close. I know a contractor who logs in the winter, and the bidding process for certain cuts , which one can see on the forestry office walls. That option existed if not still exists. Also, according to him and others, the BC forestry regs are their own internal "taxing" issue.
One of his logging competitors has a mini mill
and produces rough cut lumber...probably more of a subsistence business than getting rich. He doesn't have much small scale competition.
The Lumber industry is one of the more volatile there is...how many old mills have we seen close down along the Fraser River in the last 20 - 25 years ? I think its a far bigger picture, hence problem than simply Softwood Lumber Agreements etc. Beating on that horse defelects attention on what we can and may have control over.
RickW
5 years ago
Getting rid of the 5th columnist Clark may have gotten the NDP back more to it's "roots"........not to mention the O&G windfall would have allowed them the option of putting some brakes to wholesale raw log exports.
Ah, what if, what if...........
Fiat lux
5 years ago
As a professional woodworker at the manufacturing end, I've been advocating this for 50 years, here in BC.
We had the makings of an excellent woodworkig industry The FTA, NAFTA and the WTO have ruined whatever chances we had to build up our own manufacturing. Which was the purpose of these treaties to begin with: Ruin the industrial base and force people to buy from the sale of resources, which is the selling of capital, but kacks up the GDP.
Another purpose is the depopulation of rural areas and force everybody into cities, again so they have to buy everything from the middlemen and jack up the GDP even more. The Interior is losing people by the thousands and with the GATS, even loggers will be kicked out and replaced by imported slave labour.
Now we have wood products imported from China, Sweden, etc.
As long as we stay in and accept these criminal treaties, there's no hope for any improvements. The article doesn't mention that under the NAFTA and the WTO we can no longer reduce, or stop raw log exports. The Campbell gang knows this very well, so they keep on increasing the exports.
Ed Deak.
doggone
5 years ago
There's the "Horse" yet again.
Jungian "Archotype" or what
Once you get enough of this "money" in your "EFT" based account you can use it to "purchase" some of the coveted "Real" estate from BrasCan or whoever you choose.
Then you (this seems to be required by most building inspection) hire an architect to make a wooden monument to Balal and go golfing or fishing.
anarcho
5 years ago
I saw a bumper sticker that said "Ban Raw Log Exports." A good start, but better yet with lengthy jail terms for the traitors who allowed this export to happen. These scoundrels have to be held accountable for their actions...
maestro
5 years ago
Well, the only solutions , given the status quo, is perhaps quasi- co-ops get created and the little guys and little communities band together and outbid etc. the bigger companies, and re- patriate both the resource and its processing locally.
Other curveball would be to pull out the Land Claims issue and work with the First Nations to acquire the resource...and again repatriate it locally. Example : The First Nation's have a mill in Shuswap area, near the Canoe mill.
Maybe someone can comment on this interaction with First Nations claims and international and intra- national legislation .
Also, I heard that First Nations have passport cards that designate them as " North American" citizens, the borders don't necessarily apply to them ...maybe that would be useful to explore further.
If there's a will there's a way, back to my own "pet" rant to think outside the box.
Working Man
5 years ago
Ummmm, since they are by far away our largest trading partner, that might cause some hardship.
Steve P
5 years ago
I think this matter is further complicated by our high cost of labour relative to other jurisdictions: what can we build in BC from our wood that cannot be built far less expensively elsewhere?
In Fort Nelson they thought to add value by building a chopstick factory. This ill-fated venture did not last long, as chopsticks (surprise, surprise) are less expensive to produce elsewhere.
Fiat lux
5 years ago
In the early '70s, I realized that my largest "trading partner", bigger than all the other stores and my private customers put together, the home decorating and contract departments of Woodward stores, were trying to put the squeeze on and give me the royal screw.
So, I sent the same letter to all my commercial and private customers that from then on everybody will get the same prices, no more preferential treatment and wholesale prices to anybody.
The screams were loud and clear, predicting that I was going to be ruined etc. Within a few weeks they all were back on track with everything, because they needed my work more than I needed their orders and I had to expand into premises 3 times the old size and workforce.
In short, do a good work and treat your customers the best you can and business will come.
Having a "largest" trading partner is like putting all your eggs into one basket, and an economic suicide anyway, our warped economists should warn against. To hell with them and the largest "trading partner", who's already giving us the royal screw and is using its worthless money to buy up our country before our goverments wake up.
Ed Deak.
Bailey
5 years ago
This is about the umpteen thousandth story of this type I've read in the last few years. Everybody howls 'crooks!', and it seems to be a fairly well substantiated conclusion. Kevin Potvin's article in The Republic of East Vancouver is a perfect example.
http://republic-news.org/archive/113-repub/113_potvin_media.htm
But all these articles and all these outraged posts skip one vital step.
Evidence.
There are so many rumours; so many suspicious circumstances; so many deals like this one that is so bad for the province and so absolutely unlikely to have the advertized effect on the economy of the world. So many lies being told that there must, surely to God mustm, be evidence somewhere of criminal misdeeds that could be exposed.
If these guys aren't exposed, if the true reasons can't be established and documented properly, brought into the light, into the courts both of law and public awareness, then we're stuck with it.
Our children and their children will live in slums and drool over the leavings from the Billionaire's tables like the poor in Dicken's stories about the worst unregulated period in the history of industrial Capitalism.
Somebody, please. Leak a document or six you're not supposed to have copied. Write a story your boss has forbidden you to write, and find a way to get it out. Come forward and tell what you know.
Please.
Fiat lux
5 years ago
Steve... wages must reflect local monetary conditions. 40 years ago we could feed our family of 5 for $25. a week and we bought a bungalow in Vancouver for $6,000.
If conditions and prices were still the same, people could get the same wages as then. As it is, prices in the stores are going up every day, without any other reason, but to give bigger profits to the corporations, or else their stocks will crash. That bungalow would now be $.5 million.
In any case, this is a perfect example of monetary costs not representing anything else, but artificially induced, temporary perceptions.
Money is not a reality, but an imaginary concept, therefore economic calculations
can not be based on monetary figures.
"Canadian workers priced themselves out of the market" was the battlecry of Weenie Manning and his neocon imbeciles, wanting to bring on what his disciple, Harpie is doing now, a fascist economy dictated by a sacred, predestined ruling class.
Ed Deak.
RickW
5 years ago
Ansrcho:
My God, Man! Do you realise what you are saying??!! Holding politicians accountable????!!! Why, the Lege would MT in a minute! Put the "rats leaving a sinking ship" analogy to shame...........
The brain
5 years ago
Oh, there's evidence, Bailey. The paper trail is there. The problem is that when the sheriff is crooked, the lawbreakers go free and in these circumstances, the lawbreakers are the law makers.
Take Emerson for an example. Emerson was behind the sale of BC gas to Teresen and got a directorship from Teresen for his role in privatizing this crown corp. What follows is the issuance of shares towards directors for a "job well done". BC's code of ethics is horribly lax. If this happened on a federal level or in most other provinces, he would have lost his job in disgrace and risked charges depending on the extremes of the situation. As it was, this example is extreme. But legal. Only in BC.
And this isn't an isolated incident with Emerson. His becoming a CEO of Great Western Bank after holding the position of deputy treasurer of BC as another example. Only a handful of government officials could have exploited his intel on provincial banks in this country concerning balance sheets and weak management. David Emerson exploited it. His role as CEO of Canfor is another example, spun off by his gov intel and influence as the chairman of the council of chief executives.
http://en.wikipedia.org/wiki/David_Emerson
Fact is, Bailey, that Emerson has been selling off government intel AND assets to private corps for dough by way of directorships. To say that he isn't after reading this link alone, is to not know how politicians steal and slide through the loop holes of the system.
Mulroney's 24 directorships and airbus? The paper trail is there. Softwood lumber deal? The paper trail is there. And like I say, when the law makers turn into law breakers, they are invincible until they are thrown out of office. And until honest lawmakers come into power, nothing will change. Evidence? Don't you read the paper? The paper trail is there.
G West
5 years ago
The brain,
Did you read the article from the Republic? That's the kind of evidence that Bailey's looking for. Somehow or other the fact that the purchase price of a certain railway operation amounted to a saw-off for the purchasing party is at the bottom of a transaction that worked to one party's advantage and perhaps to the advantage of certain other unnamed individuals. It’s that kind of evidence Bailey wants.
If you could buy an asset and get all, and perhaps more that the total purchase price back from future tax savings on your consolidated businesses it would be a pretty good deal wouldn't it? If you were the only party that happened to get a certain package of corporate information when you were doing your due diligence prior to the bid closing it would give you a big advantage, wouldn't it? Might not even have to do much arm-twisting at the bank either.
I think clear evidence of something like that is what Bailey's talking about - not just directorships.
doggone
5 years ago
Looks like we got 'em with their pants down.
To "Capitalze" on our good fortune I'm thinking we should:
1) Get rid of Harper by supporting the Federal Libs no matter what other concerns we have
2) Get rid of the Socred derivative that now governs in BC as "Liberal"
3) attempt to deal with our resourses (and problems) in a "made in Canada" process
Bailey
5 years ago
Dear Brain; You're right, of course. Your well documented history of the career of Mr. Emerson clearly shows a cycnicism of process reminiscent of Capone's Chicago.
Mr. Parfitt's excellent article above here beautifully exposes a policy stream so bad for the country and so absolutely unlikely to have the advertized effect on the economy of the world that the only explanations that come to mind are appeasement of superiour military threat or, well, treason seems to be the word coming into play. Betrayal of principles that have informed western civilization from the beginning.
But what we really need are charges that can be laid.
I know this is made difficult by the fact that the ones we suspect are legislators, who changed the laws prohibiting the crimes they were about to commit.
Even a valiant opposition of two couldn't be expected to prevail against such odds, and now that the odds are better, valiant is no longer a word one thinks of.
Mr. Potvin's premise that the press is meant to be the true opposition whoever is in power, just points to the deregulation by legislators, and gives some sense of how long they've been working on this, and ditto the weakening of oversight mechanisms, like auditors and ombudsmen and watchdogs. All true and verifiable and outrageous.
But what we really need are charges that can be laid.
In public. Then when they're renamed 'John Does 1, 2, 3, 4', that will just be so much more evidence that everybody can see.
alive
5 years ago
Thank you Fiat Lux!
It is strange that such advice is needed, but unfortunately most business in this country operate under the illusion that advertizing is all that they need to worry about.
Yes, at the moment we are indeed the hewers of wood and drawers of water, but only our own stupidity makes it so!
We worry about how fast we can deplete our rescources to please "the market", when we could as easily do like OPEC and restrict how much of our rescources we wish to let go on the open market!
Our stupid politicians have sold us out; when will the voters rebel?
G West
5 years ago
Anyone have any idea how many communications professionals, of one kind or another, now serve the Campbell government - all of them in their jobs by virtue of Order(s) in Council?
Anyone have any idea how much Mr Campbell's Chief of Staff gets as salary? He's also an order in council appointment....and just one of a very long list.
doggone
5 years ago
I'm working on it GWest
Connections are good . Not sure how good mine are but we will see
G West
5 years ago
doggone, I'll give you a tiny hint, you can find Martyn Brown's salary in Order in Council No 589, Approved and Ordered July 21, 2006.
He is, at least I think so, very well paid.
A little better paid than a laid-off mill worker.
Bailey
5 years ago
Is this a serious question? Here's a quote from Kevin Potvin about Campbell's cheif of staff.
G West
5 years ago
Bailey,
See OIC # 589 - July 21, 2006 for all the details..non of which are 'normal' public service appointments.
G West
5 years ago
You have to cross-reference between the OIC cited above and this:
http://www.dir.gov.bc.ca/gtds.cgi?show=Branch&organizationCode=PREM&organizationalUnitCode=EXEC
to determine who the OIC appointments are.
But, even that won't give you the complete picture.
More on this later.
doggone
5 years ago
Hah, Hah, Hah
So the Bonehead: Campbell, has Identified Daufinie's profession but is still negotiating the final cost.
Scroll^ what's the topic?
Oh yeah, Value added on Campbell's timber.
That simply will not do! Adding value when Gordon has already figured out exactly how much he can take. Yanks get uppity, BrasCan and Canfor have to hire a bunch of CGAs to figure out how much they might win or lose if "what's her name" takes Gord for a ride.
wiley
5 years ago
and if we really want to talk about how the BC elite have manipulated the raw log export situation to their ultimate benefit, just think about Jimmy Pattison, who now owns majority shares in Canfor, that owns licences covering a sizeable percentage of BC's Interior timber land, and also owns Roberts Bank "coal port". The last time I flew over it, half of the terminal was converted to container traffic (incoming Save-On goodies from China, cars from Asia, outgoing whatevers etc). If our junk-grade coal takes a dive in market value, Jimmy can switch to log export in a big way with this port. He probably owns the railway too, but some things are harder to determine about this former socred car salesman, hero of Expo, no doubt a frontrunner in the Olympics of Gluttony to come.