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Future bright for B.C. Interior

forest industry—but clouds need to be weathered first

By Jim Stirling

The future is bright and investment positive for the British Columbia Interior forest industry—but storm clouds and turbulence must first be weathered.

That cautionary message was repeated by industry speakers to delegates when the two-day B.C. Natural Resource Forum convened in Prince George in January.

Timber supply is the elephant in the Interior’s room as the realities from the mountain pine beetle epidemic cast deeper shadows. The provincial AAC of around 70 million cubic metres is unsustainable. But it has allowed salvage of the diseased pine to be accelerated while the timber retains sawlog value.

A 43 million cubic metre level is more realistic, suggested James Gorman, president and CEO of the Council of Forest Industries. It means despite the sawmill casualties through the recession and the collapse of the U.S. housing market, the Interior forest industry is facing more downsizing.

“We are trying to work with government to increase certainty around timber supply so each company and each community can plan accordingly,” said Gorman. Evidence of the timber supply crunch was evident in 2013 with the deal brokered between the province’s two largest integrated forest companies. Both West Fraser and Canfor have sawmill operations in Houston and Quesnel. But West Fraser will close its sawmill in Houston and Canfor will do likewise in Quesnel, and the companies plan to swap timber harvesting rights within the respective closure areas. The industry titans’ deal represents the first time a profitable mill will be closed because of a looming beetle-induced timber shortage. It is unlikely to be the last.

The provincial government is in the second phase of a review of B.C. Timber Sales, which controls allocation of around 20 per cent of the annual cut. The wood comes from licencee clawbacks instituted a few years ago to support First Nations aspirations, and provide licences for groups like community forests.

It appears the results of the timber sales review will be pivotal to how the government anticipates mitigating the timber supply falldown. It is also likely to prepare and encourage the industry to embrace tenure reforms.

One of these reforms is encouraging licencees to move more toward area-based forest tenures. The government believes that will encourage companies to do more intensive silviculture in their interest areas from which, in time, they can reap the benefits in improved growth and yield.

When the final U.S. housing starts statistics are crunched, they’re expected to show just above a million housing starts in 2013, continued Gorman. And that figure is likely to increase in 2014. But another uncertainty is on the horizon. In 2015, the Softwood Lumber Agreement with the U.S. is up for renegotiation, he added. Getting that renewed favourably is key, Gorman said.

Skilled labour shortages in the forest industry—like the timber supply crunch—have come home to roost. Attracting and retaining talented people to the forest industry is likely in general terms to become more acute before it alleviates.

Delegates to the Prince George Natural Resources Forum did receive some upbeat news on the forest industry’s radar. Asian wood product markets—led by China— continue to be a bottom-line saver for Interior lumber producers. Chris McIver also informed delegates of new products that might produce similar positive impacts. New sustainable wood products like cross laminated timber can potentially be another China for lumber producers, enthused the vice-president of lumber sales and corporate development for West Fraser Timber. B.C. is leading the “build with wood” initiative, he said, and competing head to head with concrete and steel.

McIver represents West Fraser on the Canada Wood Council and WoodWorks! He believes B.C.’s potential is greatest as a product supplier for wood structures in the five to 10 storey categories, like the Wood Innovation and Design Centre, now under construction in Prince George.

The conference’s opening speaker delivered a simple message to the assembled resource industry heavies that was echoed throughout the event. “Talk to us!” urged Dominic Frederick, chief of the Lheidli T’enneh Nation of Prince George. All the billions of dollars of industrial activity planned in northern B.C. are on the traditional lands of the region’s First Nations.

Another development was not on the conference agenda, but still in the minds of forest industry delegates. The decision by the Crown not to lay criminal or regulatory charges against Babine Forest Products for the explosion and fire at its sawmill near Burns Lake has upset and frustrated many observers. Robert Luggi Jr. and Carl Charlie were killed in the blast, and 20 more sawmill workers injured. The Crown said part of its motivation for not laying charges was because WorkSafeBC’s investigation of the incident was flawed and charges were unlikely to succeed.

B.C. Premier Christy Clark has asked her deputy minister to examine the case and a coroner’s inquest with a jury is to be held. The jury makes only recommendations, not findings of fault, though.

Feelings run high, especially in the Burns Lake area, about the current lack of accountability for the tragedy. Watching all this unfold with undoubted trepidation are the principals of Lakeland Mills in Prince George. A similar incident four months after Babine destroyed the Lakeland mill, took the lives of Al Little and Glenn Roche, and another 22 employees were injured.

Ways are needed to get beyond these tragic events before that bright forestry future that’s promised comes to pass.