May 11, 2009

Where’s Our Danny Boy (2)? Mayor of embattled town weighs in on needed forest reforms


Few British Columbia communities have been hit as hard by the forest industry crisis as Mackenzie.

Some 1,500 jobs, by mayor Stephanie Killam’s estimate, have been lost in the community as sawmills, planer mills and pulp and paper mills closed. With hundreds of good paying mill jobs gone, jobs in related service industries have disappeared at an alarming rate too, leaving the town’s citizenry reeling.

Killam hasn’t seen anything like it, and she’s lived in Mackenzie since 1972.

During the current election campaign, the plight of forest industry towns was in the news. But the mud really started to fly in the past few weeks in response to an NDP proposal to revise the province’s forest tenure system (a proposal, by the way, that has been made off and on for decades by self-described free enterprisers and socialists alike).

At present, the bulk of the trees logged in B.C. are controlled by a relatively small number of large companies who hold long-term, renewable licences or tenures awarded by the provincial government. The licences grant exclusive access to trees on a non-competitive basis. The NDP propose to change all of that by moving to a system where half or more of all timber logged in the province is subject to competitive auctions rather than being the exclusive domain of any one company.

The presidents of three of the larger companies holding the big licences – Canfor’s Jim Shepard, Interfor’s Duncan Davies and West Fraser’s Hank Ketcham – have taken the unusual step of publicly and vocally entering the electoral fray to champion the ruling Liberals. They warn of black days ahead should the NDP form the next government. Changing the tenure system, they argue, would “jeopardize business investment” in the province. Additionally, Ketcham has personally visited Quesnel, home to NDP forest critic Bob Simpson, a former forest company executive himself, to denounce the NDP’s proposals.

On one level, Killam agrees that redrawing the forest tenure map could, if mishandled, have negative consequences for the provincial economy. She cites as an example events last December in Newfoundland. Danny Williams, populist Conservative premier, “expropriated” global newsprint giant AbitibiBowater’s Crown timber and hydro assets after the company announced plans to close its Grand Falls pulp and paper facility, which had operated in the same location for more than a century.

Williams justified his action on grounds that the company and its predecessors had gained access to Crown resources on the condition that they operate a mill. With the mill closed, the company had broken its end of the bargain. Williams was simply doing the same. Killam, while understanding Williams’ response, says she worries about the signal it may send: “We’re not open for business and therefore investment drops off.”

Music though this may be to the heads of the province’s major forest companies, it would be wrong to assume that Killam is unquestioningly behind them. In fact, some of the other songs in her repertoire would likely strike a more discordant note.

To understand how Killam’s thinking is shaped, it helps to know a bit about how her town’s economy really began to hum. In the late 1960s, the grand vision of former B.C. Premier W.A.C. Bennett came to fruition when the turbines below a massive earth-filled hydroelectric dam, which now bears his name, began spinning. The water impounded by the dam near the community of Hudson Hope created Williston Lake – then the largest reservoir in the world, and today BC’s biggest freshwater body.

The more than 2.4 million kilowatts of power generated at the dam, along with a million plus more kilowatts generated at another dam downstream, would go on to light many a Vancouver home, but also foster the development of the modern day forest industry in central B.C.

That included Mackenzie, north of Prince George, where before long two forest companies – BC Forest Products and Finlay Forest Industries – built pulp, paper and sawmills. They were helped by the Bennett government, which offered up vast tracts of timber on public forestlands in exchange for the companies building and operating mills in specific communities. This quid pro quo policy became known as appurtenancy and it would remain a central facet of forest tenure agreements long after W.A.C. Bennett exited the political stage, indeed pretty much up to the time his son, Bill, stepped aside as B.C.’s premier in 1986.

But by then, the face of B.C.’s forest industry was beginning to change and rapidly so. In 1987, New Zealand-headquartered multinational, Fletcher Challenge, bought out the assets of BC Forest Products, marking the beginning of several ownership changes at mills in Mackenzie and elsewhere. Fletcher’s foray would be mirrored by others, culminating with the disappearance of MacMillan Bloedel, a name synonymous not only with B.C.’s forest industry but its entire resource-driven economy, when US-based forestry giant, Weyerhaeuser Company, purchased it in 1999.

With a few companies holding a monopolistic position, mill closures were certain. Rather than putting dollars into mills in each community, companies made investments in a select few. Older, less efficient mills closed as newer mills with their larger, more efficient outputs, survived for another day.

The idea of appurtenancy was dealt a second blow by the interminable lumber wars between Canada and the United States. During Premier Gordon Campbell’s first mandate (2001-2005), the provincial Liberals formally scrapped appurtenancy on grounds that it was considered a form of subsidy by the powerful US lumber lobby. The truth be told, however, appurtenancy was already dying a slow death in the years of Social Credit and later NDP rule that preceded the Liberal administrations of much of the past decade.

For Killam and other mayors struggling with big job losses in their communities, the question arises: What will replace appurtenancy? If the historic quid pro quo no longer exists between large corporations, the province and resource communities, must communities simply accept that companies get unfettered access to Crown resources to do with what they wish?

Killam thinks not.

Fittingly, AbitibiBowater, the same company that raised Danny Williams’ ire, also controls a large forest tenure in Mackenzie. The global newsprint giant arrived on the scene in northern B.C. only a few years ago. Nevertheless, it closed its sawmills and paper mill shortly thereafter, and has recently filed for bankruptcy protection as it struggles to deal with a nearly US$9 billion debt load. Should a bankrupt company that has neither the ability or, seemingly, the intention, of continuing to operate in the Mackenzie area now be free to simply sell “its” forest assets to someone else? Or, should the province intervene in some way, perhaps signaling that it intends to place some conditions on the transfer of what remains a publicly owned asset to another party?

Killam’s biggest fear is that the company may try to sell its Crown-granted timber holdings to a competitor, perhaps one of the larger forest companies in the province, and that a new buyer would simply treat the forests around Mackenzie as a “fibre basket” to be emptied to feed mills in some distant community.

In response, she has embarked on a series of intitiatives to help her community thrive once again. A new, community-held forest tenure is in the final stages of being negotiated with the provincial Forests Ministry, which would give Mackenzie and a local First Nation approximately 30,000 cubic metres of timber per year. Compared to the close to one million cubic metres per year controlled by AbitibiBowater, the new licence would be small, Killam admits. But it would represent the start of a much-needed transition, she says.

The embattled mayor has also told the provincial government and local MLA and Forests Minister Pat Bell that she wants the province to consider transferring AbitibiBowater’s tenure, in its entirety, to her community and local First Nations. In partnership, the communities could then directly manage local forests and, hopefully, use some of those resources to create new arrangements with companies interested in doing business in Mackenzie and area.

And she has told the government that she thinks changes must be made to a program administered by the province whereby limited amounts of timber are auctioned, rather than turned over to the exclusive control of individual companies.

The objective of a revised auction system should be to promote the interests of small, community-based businesses, Killam says, not as an additional source of wood fibre for the large companies that dominate the province’s forest industry.

Killam and her fellow council members are also doing what they can to work with the larger companies to get something – anything – going in town, and have agreed to tax breaks to encourage one of them – Canfor – to reopen a local mill on a one-shift basis later this year.

But all in all, the objective is to strive for something new: a revised forest tenure system that does not exclude large companies but that allows for substantial community participation. Such a system, Killam says, would mark a new beginning. It would give communities something tangible to build on and, hopefully, encourage new entrants into the industry.

After nearly 40 years residency in a town dominated by big companies who came to be there because of a grand industrial vision, Killam says the time has come to try something new. Getting there means change, and change is something the big companies that have pulled up stakes in Mackenzie and elsewhere have resisted with ferocity this election campaign.

It awaits a new government to determine which perspective will prevail: that of an industry that has closed mills across the province and displaced thousands of workers or that of the shell-shocked communities that are being forced to deal with the fallout.

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