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BC Politics

In One Small Town, a BC Story of Ups and Downs

Welcome to Houston, where the mill is closing and lives and dreams hang in the balance. First in a series.

Katie Hyslop 15 Apr

Katie Hyslop reports on education and youth well-being for The Tyee Solutions Society. Christopher Grabowski is a veteran photojournalist and contributing editor to The Tyee.

[Editor's note: As part of a Tyee Solutions Society inquiry into growing economic inequality in British Columbia -- its causes and costs -- reporter Katie Hyslop and photographer Christopher Grabowski visited the people of Houston, a town emblematic of the province's reliance on boom and bust resource jobs. This is the first of five reports.]

No one in the town of Houston, British Columbia, expected the Houston Forest Products mill to stay open indefinitely. But before last October's closure announcement by mill owner West Fraser, they didn't expect it to close so soon, either.

"We didn't expect it for another two to three years," District of Houston Mayor Bill Holmberg said.

The district had suspicions West Fraser was considering closing their mill: it's a known fact in the area there isn't enough wood available along Highway 16 to keep all the current mills running, and West Fraser hadn't invested in major upgrades to Houston Forest Products in a few years. But the district thought they would at least wait until the province released the results of its ongoing timber supply service review before making any closure decisions.

Holmberg found out how wrong they were when their Nechako Lakes MLA John Rustad called him a little after 2 p.m. on October 24, 2013 to ask if he knew West Fraser was about to announce the mill's closure. Shortly after West Fraser called the mayor to break the news; the company's press conference took place at 3 p.m.

"The timing was piss poor," said Holmberg.

But it was still more notice than many of Houston Forest Products own workers received. Employees working the day shift in the sawmill -- Houston Forest Products has both a sawmill and a planer mill -- found out when West Fraser went public at 3 p.m. that day. Troy Tofsrud, who works in the planer mill, didn't find out until another meeting was held with the mill's second shift at 4:30.

"My dad found out about it while he was driving through Quesnel an hour before I had [heard]. And he was trying to get ahold of me. It seemed like we [in planer mill] were the last ones to know," he said, and that was an extra blow.

If they weren't at work that day, mill employees found out when their supervisor called their house, when they heard it on the radio, or when they returned to work the next day.

Houston is a small town. The kind of small where being mayor isn't your full-time job -- Holmberg manages the local Finning branch, a Caterpillar heavy-duty equipment dealer, in addition to serving as mayor. It has a population of just over 3,000 people, so losing 225 jobs -- with a spin-off affect on other businesses depending on the mill expected to increase it to 300 jobs -- is like no economic blow Houston has felt before.

Holmberg says transitioning the local economy from its dependence on the two mills -- Canfor operates the world's largest sawmill just a couple of kilometres down the road from Houston Forest Products -- would be much easier if the province were more focused on helping forestry towns than they were on promoting new projects like Liquid Natural Gas.

"I said to our MLA the other day, if you put as much energy into protecting the forest industry and getting it healthy as far as timber tenure, and more time on developing mines, I think there'd be way more economic prosperity in the province of British Columbia than there'd be in chasing the 'selling LNG' project," he said.

A visit to Houston during February's coldest grip of winter introduced these two reporters to many townspeople who demonstrated the tenacity and strength in tough times that life in B.C.'s resource towns can demand. The more we looked at the past, present and potential future of Houston, it became clear, as well, that the community is part of a larger story unfolding elsewhere in the province. As we explore in this five-part series beginning today, the shortage of job prospects, limits to education, and lack of government preparation for foreseeable transitions threaten to trap this community, and others like it, in economic limbo.

'Our horizons are a lot longer than five years': West Fraser

Houston Forest Products closure is part of West Fraser's three-part Mountain Pine Beetle Plan, which also consists of trading timber rights in the Morice Timber Supply Area -- which supplied wood to Houston Forest Products -- with Canfor Corporation, their biggest competitor in the Houston region, in exchange for Canfor's timber rights in the Quesnel and Lakes Timber Supply Area; and investing in major upgrades to mills in Smithers and 100 Mile House.

Although the pine beetle destroyed just one-quarter of the Morice Timber Supply Area's trees, the remaining wood will now be used to supply Houston's Canfor mill. Canfor shut down its Quesnel in March, freeing up its forest license in the Quesnel and Lakes Timber Supply Areas for West Fraser's mill in Quesnel.

The move caught everyone in Houston off guard, including the millworkers' union.

"I was aware of mills that were [closed] and still doing their annual cuts and selling logs to generate revenue," said Brian O'Rourke, financial secretary for United Steel Workers Local 1-424. "But not to this effect."

West Fraser says the Ministry of Forests and the local MLA were told of their plans ahead of their October 24 closure announcement. Forest Minister Steve Thomson said in email the ministry found out "just before the announcement."

MLA John Rustad acknowledges he was told prior to October 24, but he had to stay quiet because West Fraser is a public company and has privacy obligations to its shareholders.

"The surprise for me in the case of Houston was I believe--and I'm still looking at the overall timber supply -- there is enough wood there, or there may have been enough wood there, to consider running two mills," he said, adding Canfor and West Fraser would know for sure.

The two companies, which own and operate 31 B.C. mills between them, can trade forest licenses because of changes made by the then-premier Gordon Campbell's Forest Revitalization Plan in 2003.

Before the plan, it was expected communities would benefit from the timber supply areas that surrounded them. Known as appurtenancy, wood was processed at the local mill, benefitting the local community.

It was also harder for owners to close mills before the Plan. Companies had to prove their mills were no longer financially viable, and even if government agreed, they could take back part of the company's Timber Supply Area as punishment.

Industry didn't like this, and government agreed. They saw forestry regulations as crippling business, and if a mill was losing money because of a poor lumber market, further punishing a timber licensee for trying to cut its losses seemed like it would discourage business in the forestry sector.

Others, including the New Democratic Party and those millworkers, argued policies like appurtenancy were the only thing preventing large companies like Canfor and West Fraser from closing mills, consolidating other mills and employing less people for higher returns.

But former opposition MLA Bob Simpson says the province didn't expect their laws would one day translate into industry closing down two profitable mills.

"And then behind that this massive timber swap between these two companies," he said.

Both the federal government's competition bureau and the provincial forests ministry are reviewing the trade. Minister Thomson said he has the power to cancel the agreement if he "finds that the licence exchange 'unduly restricts competition'" as stated in Section 54.5 of the provincial Forest Act. He isn't aware of companies ever exchanging licenses in B.C. before.

West Fraser refused to comment on the timber swap because of the ongoing review. Chief Financial Officer Larry Hughes did say West Fraser considered all of its options regarding Houston Forest Products, but there weren't enough trees left in the area to justify the mill's costly upgrades.

"Running a saw mill that is one or two generations behind its competitors means that you're effectively risking losing money. So your options are either that, investing, or closing and strengthening your remaining mills," he said.

"I wouldn't argue if someone said there was five years left of wood, but there weren't 20 years left. Our horizon is a lot longer than five years."

Transfers and retraining

Not every mill that shuts down gives its employees six months notice. In fact the May 9 shut down date for Houston Forest Products isn't actually the last day. No more wood will come into the mill, but a few workers will stay on until the last logs are processed, wrapped, and loaded onto trains to be shipped to customers, a process West Fraser says could take months.

Almost 60 employees have accepted positions at West Fraser mills in B.C. and Alberta. The Canfor mill in Houston is going through with $36 million in upgrading this year, as well, and is expecting the contractor will hire Houston workers for the job.

Already an employer of 335 people, Christine Kennedy, Canfor's vice president of brand and external relations, said in a March email the mill was hiring for 13 positions but didn't know how many hires will come from Houston Forest Products. West Fraser employees who want their pensions must remain at the company until the last day.

Some employees, particularly those ages 40 to 65, have been spending the remaining months upgrading their education. By February Northwest Community College had granted two adult dogwood diplomas to Houston Forest Products employees, with eight others working on theirs, and more upgrading applications coming in.

West Fraser only started requiring their employees to have high school diplomas in the last decade, and a lot of mill employees are undereducated for today's workforce. It's a similar problem to the one Houston faced when Equity Silver Mines, Canada's largest silver mine which provided 160 jobs for the area, stopped production in 1992.

The mill surveyed its employees in January to find out how many were interested in trades training at the college after the mill closes. Out of 199 surveyed, 36 employees indicated they were interested in retraining, though that number could change as May 9 gets closer. By March that number had increased to 38.

'They come here and they struggle': Holmberg

There might not be that many people sticking around for training in September, though. Even if they wanted to live off their severance, they'd be better off moving to Smithers.

That's where most of Houston's community services now live, including family doctors, nurses, and social workers. It's even where a lot of Houston goes to buy groceries because of a bigger, less expensive selection than the local store.

Adding to the pressure is a recent influx of low-income people to the community. Houston is one of the few places in the province where the income assistance shelter allowance actually covers rent.

"It's a struggle and right now it's at the bursting point," said Holmberg.

"There's a lot of people that can't afford to go to Smithers. There's no services to get them to Smithers. So they come here and they struggle."

But if you want to move out, that's hard, too. The local Remax agent's website lists 30 houses for sale and 15 housing lots for sale, a much bigger housing supply than demand. Houston Forest Products employee Tofsrud is lucky because he and his wife have paid off their mortgage. But some of his friends aren't so lucky.

"When the mill announced the shut down, the first thing most people thought of was house prices falling," he said. "Some of my friends are five years into their 20-year mortgage, and the thought of their houses losing in value freaks them out."

The Tyee Solutions Society previously reported MLA Rustad has raised the issue of Houston's lack of services with other government ministries, but it's the jobs, tourism and skills training ministry's Community Adjustment Team that is working out what Houston's next steps should be.

Working towards the development and fulfillment of an Economic Action Plan, three committees made up of the ministry's team, Houston's district council, the chamber of commerce, and local business owners are discussing Houston's economy, transition strategies for mill employees, and community services.

There is no money for the Action Plan, but the ministry has made their employees available for meetings and paid for projects including the development of a community resource guide, a video highlighting the benefits of moving to -- and investing in -- Houston, workshops on grant writing and procurement opportunities, increasing Work BC's office hours from one to five days a week, a job fair, and more.

"I have to take my hat off to [Jobs Minister] Shirley Bond," said Mayor Holmberg.

"I think sometimes these transition committees get caught up in the politics of it all and they tend to spin their wheels a bit. We were encountering some of that, and Shirley came to the rescue and she did a very good job."

Houston Forest Products provides $600,000 in property taxes to the district of Houston every year, so even businesses that don't depend on the mill were concerned about their taxes, as well as access to district services like the local arena and swimming pool. But Houston's Chamber of Commerce says the affect, at least in the short term, should be minimal.

"There is going to be a small increase in [property] taxes, as there is every year. But nothing significant. As far as the services go, it's business as usual," said chamber manager Maureen Czirfusz.

Houston faced something similar when Equity Silver Mine closed, and many were predicting then the town would die without it. But it didn't.

It's Houston's lack of services that Czirfusz sees as its salvation.

"We could definitely diversify into secondary and smaller businesses, including some new retail. There's endless opportunities in tourism that could be capitalized on," she said.

"I think Houston needs to look within themselves and discover what we have."

Whither the community transition plans?

But Bob Simpson doesn't think it's going to be enough. The former NDP and independent MLA for Caribou-Chilcotin says government might not have known Houston Forest Products was going to close, but they knew mill closures were coming because of the pine beetle. They should have had a better community transition strategy in place by now.

"What the government did was put some money into these beetle action coalitions, but I dare you to go and look at the beetle action coalitions and find transition strategies for any community," he said.

MLA Rustad disagrees, pointing to the Omineca Beetle Action Coalition. Since 2005 the coalition has released dozens of reports on small developments or changes to the area including extra funding to Geo Science BC for mining and oil and gas exploration; expanding the Prince George airport runway; changing forestry licensing to encourage supplemental usage of wood, like pellet and biomass plants. And then there's liquefied natural gas.

"Houston could potentially be a significant staging area for a lot of the work that will need to happen," said Rustad.

"The pipeline components of LNG, there's two projects that run basically right south of Houston, and one project that will be just north of the Houston area. So Houston, because it's got good rail access, it's got a good industrial site and could very easily be a staging area for pipes and crews and a number of other things that could happen associated with the build out."

But Holmberg doesn't buy it. The work won't last longer than a decade, and he doesn't believe liquefied natural gas will boost the economy. Instead government should be focusing on natural resources that have been B.C.'s backbone for over a century.

"Mines and forestry provide more jobs for the people of B.C. -- that are real jobs that last for 10 or 15 years -- than I see LNG doing," he said.

"And then along with the LNG comes all the issues as far as power generation and are we going to hit the marketplace in time? That's my concern. We're already behind the behind the eight ball: there hasn't been one piece of pipe put in the ground yet."

But Holmberg also knows a lot of Houston's transition is going to be left up to the municipality. Government's transition team will move on to the next town with a closing mill, and Houston Forest Products is officially closing on May 9 regardless of whether Houston is ready to move on or not.

"So we better have our ducks in a row by the time they go," he said.

"It's been painfully slow, but that's politics: nothing seems to happen in a minute. For me, coming from the business side of the world, I find it very frustrating."

Six months is a lot more notice than employees usually get to rearrange their lives around a job loss. But with only six months to transform a local economy, Houston's success or failure could be a sign of things to come for B.C.s precarious resource-based towns.

Tomorrow: 'We dedicated our lives to this mill.' In Houston, the bottom drops out of real estate prices, and life plans, as mill shuts down.  [Tyee]

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