Mar 28, 2012

Log exports: waving the white flag of economic defeat


Hi folks — I recently wrote this op ed for the Times Colonist on raw log exports and wanted to share it here too. We’re told there’s no alternative to sending our unprocessed wood out of the country; but some in the industry beg to differ…

As more and more raw, unprocessed logs leave British Columbia’s coast in ocean freighters bound for the far side of the world, a common refrain from some in our forest industry is that we have no choice.

Because workers in mills in China are paid so little, log buyers there can afford to pay more for our logs than domestic buyers pay. The result, we’re told, is that we have no alternative but to sell our logs overseas.

But there’s much to suggest that such a defeatist argument doesn’t hold water, and that the real problem is a lack of investment in mills here at home.

Take the Ladysmith sawmill, for example. On a recent bright, winter morning I found myself driving from Victoria up the southeast coast of Vancouver Island to the mill, where I met Arnold Bercov, president of Local 8 of the Pulp, Paper and Woodworkers of Canada.

In 2010, the mill owned by Western Forest Products was dangerously close to shutting its doors for good. It had been dormant at that point for more than two years due to the sharp decline in continental lumber demand triggered by the sub-prime mortgage crisis in the United States.

Relations between the union and its employer, moreover, were past the point of absurdity. Bercov recalls one conversation in which a senior company executive said: “Even if your members agree to be paid $1.50 an hour that mill is dead.” But the company eventually changed its tune when it realized what it would have to pay its workers in severance payouts in the event it closed the mill permanently. In September of that year, the mill re-opened with a skeletal staff of 17.

Today, 60 people work there on two shifts. They make rough-cut hemlock boards used to form concrete walls. Such boards are clearly not high-value lumber products, yet they are sufficient to generate a profit for WFP and to see the mill’s workers paid an average of $25 an hour. And oh, by the way, those boards sell into that market BC companies allegedly can’t compete in – China.

Further up-Island, the Harmac pulp mill with its 300 salaried and hourly employees is a beehive of activity – a far cry from 2008 when a bankruptcy trustee was close to selling the operation’s depreciating assets to a buyer intent on disassembling the mill’s machinery and shipping it to out-of-country buyers. Instead, the mill’s workers bought their way back to work in an employee-led acquisition of 25% of the mill’s assets.

Last year, Harmac’s board of directors approved payouts of $4,000 in dividends to each of the mill’s employees and shareholders; their reward for generating handsome profits selling market pulp to — you guessed it — China.

The mill’s shareholders aren’t, however, resting on their laurels.  They’re investing in a second steam turbine that will produce more than enough thermal electricity to meet the mill’s on-site power needs. The extra power will be sold to BC Hydro and feed into the Vancouver Island power grid. And something else is happening. The shareholders are actually contemplating building a sawmill on site.

That’s right, a company rescued by mill employees wants to reverse the disastrous, job-killing decisions of its predecessors — MacMillan Bloedel and later Weyerehaeuser — who, in an effort to placate corporate shareholders, split Harmac’s operations into its constituent parts. Those parts included two sawmills that were summarily shut down, sawmills that once made lots of lumber and sent their so-called “waste” in the form of wood chips and sawdust to the adjacent pulp mill for conversion into wood pulp.

With those sawmills closed, Harmac was forced to buy entire shipments of logs and turn them directly into wood chips without any of the logs first being run through a sawmill and a portion of them turned into lumber. It still does so today.

Meanwhile, within eyesight of Harmac and Ladsysmith, ocean freighters are loaded with hundreds of thousands of unprocessed logs each year.

And that’s just the beginning of missed economic opportunities. In some coastal logging operations in recent years, fully half of all the trees logged were left to rot on the ground.

This is environmental and economic lunacy. But it’s what the defeatists claim is inevitable.

Nothing could be further from the truth. The overarching problem in BC’s coastal forest industry today is a lack of investment. We could lower overall logging rates tomorrow while increasing forest industry employment. Here’s how:

  • Place an escalating tax on raw log exports;
  • Legislate an end to the rampant waste of public forest resources at industrial logging operations; and
  • Require companies logging publicly owned forests to make minimum investments in existing or new mills.

The policy options are there. It’s time to stop waving the white flag of surrender.

Ben Parfitt is resource policy analyst with the Canadian Centre for Policy Alternatives and author of Making the Case for a Carbon Focus and Green Jobs in BC’s Forest Industry.

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