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New Brunswick Mills: Create jobs or lose fiber

The New Brunswick government turns up the heat on forestry operators to create 1,800 new value-added jobs.

By Harold Hatheway
Copyright 1997. Contact publisher for permission to use.

New Brunswick's small sawmill operators seem caught between a rock and a hard place. Natural Resources Minister Alan Graham has laid out a three-year future where value-added technology must be maximized, and operators who won't or can't play by the rules stand to lose both future and existing Crown land allocations.

Like an iceberg, the proposal has been a long time developing, and what's visible is just part of the story. The first warning from the Minister came last fall when the 80-odd forestry companies were told they had five years to put together what he called "value-added" business plans.

When he got little reaction, the heat was turned up early in '97 by a demand for proposals to be turned in within a year, or wood would be taken away from non-compliers and redirected to the mills that were creating new jobs. That's the key - 1,800 jobs. Asked to spell out the objectives, Hon. Alan Graham didn't hesitate. "We want to create jobs, as many well-paid, long-lasting jobs as possible, but, first and foremost, jobs for New Brunswickers."

While no one disagrees with the absolute need for jobs in this high-unemployment province, influential members of the forest industry are quietly concerned that the practical side of growing wood may get overlooked in the rush. Hiring and training the unemployed and and social assistance recipients for thinning programs, while experienced workers are laid off, is one example.

The Minister is untroubled by doubts. "We're presently cutting a billion board feet of wood a year in New Brunswick, and while we're vigorously moving to increase our AAC, that will take time. Right now our best option is to make the most of every one of those board feet, by using basic and advanced value-added procedures which add up to $50 a thousand. That's a potential $50 million!"

In reality almost all of that billion feet is already debarked and chipped as a matter of simple economics, and many smaller mills already route their lumber to a big outfit's kilns, so most of the gain from these first-level processes is history. Still, some small mills will have to invest or face a bleak future.

The real opportunities and challenges are in things like finger jointing, short wood selection, specialty plywood shapes, high-tech veneer processing that yields 60 sheets instead of the usual 17, and laminated I-beam production, (presently limited by the province's only OSB producer's inability to provide the higher-density material required.)

With only five per cent of the annual cut currently going to to these second-level value-added activities, there are obvious opportunities for the big companies with cash flow, expertise and market know-how - and exciting but risky openings for small firms to develop niche markets.

Along with new equipment, skills and processes, this also means new partnerships and levels of co-operation. The Minister is quick to agree that, with New Brunswick's stressed AAC and multiple small family mills, it makes no economic sense to ask every company to install a kiln: "We don't have the wood supply," he admits. His agenda is clearly not to require each mill to do everything, but to make sure all wood is processed as far as technically possible, always remembering job creation.

Access to Crown wood is both the carrot and the stick. Provincial forests are 48 per cent Crown-owned, 21 per cent owned and utilized by large and medium industry, and 30 per cent owned by private woodlots. Operators who don't play by the Minister's rules won't qualify for limited new allocations, and could end up with only what is available from private woodlots.

The Minister is walking a narrow line. "Mills which appear to be stalling could, theoretically, be subject to punitive action as early as this summer, but we know it takes time to identify markets, and order and install equipment," he says. Mills won't actually have to actually create value-added jobs during the current year, and there will be flexibility for mills having financial difficulties, which could mean the difference between life and death for small operators plagued by cash flow and log shortages.

On the positive side, a value-added team, headed by Forest Management Director Tom Spinney, is searching for both solutions to improved value-added production and markets for potential products.

"They don't even have these restrictions on Crown land around Wawa yet," Casavant says. He is aiming for a year-round operation, but works in the bush about eight months a year. He spends part of the year building roads. Overall, the effort has been worthwhile.

"Nevertheless," concludes the Minister, "if operators don't give us a serious indication of future plans by this summer, we'll start taking wood away by mid-season." That's a serious wake-up call for operators who may have been ignoring what they saw as simply "politics". All this needs to be seen in the context of future wood supply, and private land rights versus the provincial economy.

Government claims that expanding silviculture on Crown land has "eliminated" the wood shortage long predicted for early in the new century are contradicted by the woodlot owners' federation, environmental groups, and recent workshops on Maritime woodlot problems organized by the National Roundtable on the Environment and the Economy, who all agree "hit and run" contractors on small woodlots are seriously exceeding the provincial AAC.

Woodlot owners, while recognizing the need for corrective action, react ferociously for fear of being forced, by legislation or tax pressures, to turn their land over to someone else to manage or, at worst, to sell out. Politicians are equally determined to avoid being seen as threatening the sacred rights of landowners. Small operators have always seen their log source, the big leasees, as competitors with advantages of scale, cash flow and control of the resource. Now, facing the costs of upgrading to value-added, many feel they won't be able to compete, that only the big operations such as J. D. Irving Ltd., and Fraser Inc. will survive.

For Alan Graham it's a catch-22. At present big mills are almost the only ones with any immediate potential for increased value-added production - yet obviously any significant downgrading of small community mills is unacceptable to a government committed to job creation, rural renewal and the development of small industry. In the long run, success may depend on his ability to persuade and help big and small operators to work together to find effective, efficient and new ways to add value to our wood.

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