July August 2005 - The Logging and Sawmilling Journal
Quebec’s cut reduction taking a toll
A 20 per cent reduction in Quebec’s Annual Allowable Cut has already started to
By Martine Frigon
Although it has only been in place a few short months, a 20 per cent reduction in Quebec’s Annual Allowable Cut (AAC) has already triggered some restructuring pain in the province’s forest industry.
The reduction is contained in the province’s Bill 71, which came into effect in April and runs until April 2008. Bill 71 applies to areas where forest companies have Timber Supply and Forest Management Agreements, commonly called CAAFs (Contrat d’approvisionnement et d’aménagement forestier in French).
The reduction in AAC took place on the heels of recommendations published last December by the Coulombe Commission on the sustainability of public forest management in Quebec. The mandate of the commission, which was set up in October 2003, was to study the management of public forests and make recommendations in response to the needs and aspirations of the population of Quebec. Public consultations held in 16 cities and four First Nations communities across the province, and more than 300 briefs were submitted.
The forest industry is one of the main economic sectors in the province. Quebec ranks second, after British Columbia, among Canadian provinces for softwood lumber production. More than 300 mills operate in the province, and the lumber industry is the economic basis of close to 250 of Quebec’s municipalities, representing an estimated 40,500 jobs.
Many regions are concerned about the situation, especially Abitibi- Témiscamingue (in the northwest), the Lower Saint-Lawrence, North Shore and Gaspé (in the east), Mauricie, and Saguenay-Lac-Saint-Jean. This past May, more than 2,500 people demonstrated against the changes in Chibougamau, where surrounding villages in this northern part of the province are totally dependent on forestry.
The forest industry has already seen major disruptions as a result of the new law, with some companies announcing layoffs and plant closures since March. They have asked for government support, but, according to their spokespersons, are still waiting.
“Quebec’s forest industry is living in a period of transformation,” says Denis Leclerc, corporate affairs director at Abitibi-Consolidated. “We had the Canada-US softwood lumber dispute, then the increase in the Canadian dollar and now, among other things, this 20 per cent reduction.”
This point of view is shared by many in the industry in the wake of the adoption of Bill 71. Whether it is sawmills affiliated with major paper mills or independent companies, the line is the same from company leaders: Bill 71 is definitely causing a slowdown in production and resulting in less work for the industry.
“For us, it means three weeks less production than last year,” says Marc Dubé, executive director of Alma, Quebec, sawmill E Tremblay, who is also president of an association that represents unaffiliated sawmills in Saguenay- Lac-Saint-Jean.
Dubé argues the Quebec government chose the worst recommendation contained in the report. “The Coulombe Commission forecast compensation plans, as well as the responsibility of foresters to reorganize the territories for cutting.” But, “So far, we haven’t seen any compensation plans from the government.”
It’s the same situation in Abitibi, in northwestern Quebec, where forest and mining activities are the most important sectors of the region’s economy. “We use the entire territory allowed in the Timber Supply and Forest Management Agreement,” says Mario Tremblay, executive director of the Domtar sawmill in Val d’Or. “We are looking at various scenarios at the moment. This 20 per cent reduction means 12 work weeks less for our employees per year. We have not yet decided if this decrease will be in effect during the winter or summer.”
Meanwhile Tembec, which operates more than 18 sawmills in Quebec, opted to shut down one of its five Abitibi installations. “Our sawmills located there were not being used to their full capacity,” says Pierre Brien, vice-president, communications and public affairs at Tembec. “By adding a 20 per cent reduction to the wood harvest, it will decrease their volume even more. We therefore decided to close our sawmill in La Sarre and reorganized production in the four other sawmills in the region.”
Other Tembec installations in Quebec could also be reorganized. “Our Temrex branch operates other sawmills in the east of Quebec,” adds Brien. “We are currently analyzing the effects of the legislation in that region.”
There’s a similar story at Abitibi-Consolidated, which manages more than 21 sawmills in Quebec. Like other companies, it will result in major layoffs. “Bill 71 will reduce 18.6 per cent of our wood harvest,” says spokesman Denis Leclerc. “We believe that we will have to lay off 500 workers, including subcontractors in forest activities and sawmill workers.”
Leclerc decries the quick haste with which the legislation was applied. “As soon as the recommendation was issued, the Bill was voted upon. No industry can lose 20 per cent of its raw material without there being effects on its production.”
At Kruger, 177 layoffs are planned, most of which will be in plants in the North Shore region (east of Quebec City). “The estimated losses represent 150,000 tons of chips per year. This situation also concerns our paper mills,” says Michel Lessard, executive director of the company’s Forest Division.
In April and May, Pierre Corbeil, Quebec Minister of Natural Resources and Wildlife, conducted a province-wide consultation, meeting representatives of the forest companies, municipalities and economic spokespersons in every region affected by Bill 71. He asked them to create an action plan by region, with the aim of proposing ways to reduce the bill’s effects, as well as to establish regional strategies to restructure and diversify the industry.
“The forest sector is living under a lot of uncertainty,” says Guy Chevrette, former Minister of State for Natural Resources in the Parti Quebecois government and new CEO and spokesperson of the Quebec Forest Industry Council (QFIC).
The council’s membership includes 165 sawmills that specialize in softwood, 40 in hardwood and 62 paper mills in Quebec. The organization argues that this proposal results in a blanket measure applying to all regions, and will have the effect of deliberately penalizing certain regions on an arbitrary basis, with all the socioeconomic consequences caused by such a measure.
“The government did not conduct any impact studies before it adopted the recommendations contained in the Coulombe report. For example, there are mature forests, which should be cut because they are exposed to potential fires and insects, and they are not being considered in Bill 71. The 20 per cent is being standardized everywhere, regardless of the type of forest,” says Chevrette.
Among other things, the Coulombe Commission put the emphasis on the development of niche products, especially secondary and tertiary processing. In a document outlining the QFIC’s position, the organization asks the Quebec government to “cease claiming that activities involved in the secondary and tertiary wood processing activities constitute the solution to all the current problems.
“It is essential to remember that reductions in resources will affect the entire industrial timber industry, including secondary and tertiary processing activities and the pulp, paper, cardboard and paneling sectors.”
Marc Dubé says he is disappointed in Minister Corbeil. “When he came to Saguenay-Lac-Saint-Jean, he asked company representatives in the region to make suggestions aimed at reducing the effects of Bill 71.
“We wrote a report, with a team of
representatives from community corporations,
researchers from the Université du
Quebec à Chicoutimi and other
spokespersons from the region. “Thirty-five people worked on the
proposals. When Minister Corbeil
In June, Guy Chevrette met Quebec Premier Jean Charest and Minister Corbeil. Chevrette told them that the QFIC would like to start a working group, with government representatives, which would apply specific measures to each region concerned by the reductions.
In addition, the industry organization wants to create a special workgroup under the authority of the premier, in which manufacturers, QFIC representatives, industry experts and representatives of the ministry would analyze the situation and make solutions to improve the competitiveness of the forest industry.
According to a statement from the Quebec Ministry of Natural Resources and Wildlife, the government is studying the proposals. “We’re analyzing the proposals from the regions. We notice that similar solutions are being made from one region to another, especially in intensive silviculture.”
For Guy Chevrette and the QFIC, sustainable
development begins with economically
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