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Industry Watch

Copyright 1998. Contact publisher for permission to use.

In the midst of all the painful restructuring brought on by export quotas, the highest logging costs in the world and the toughest forest practices code, the British Columbia forest industry has been handed another unexpected problem to worry about.

When Canadian Forest Products Ltd. (Canfor) tried to close its chronically money-losing Eburne sawmill in Vancouver this spring, the 200 workers there said it couldn't be done and locked themselves in the plant. Only after negotiating a more generous severance and job placement package than it originally offered and undertaking to open a veneer slicing operation was the company finally able to shut the doors

But in the process a crack has been opened in the forest tenure system that has the corporate thinkers wondering about their right to make economic decisions. The workers, through their union, the IWA, rolled out Section 71 of the province's Forest Act. It says did if a company curtails or closes a timber processing facility using Crown Wood, the government can reduce its annual allowable cut (AAC).

How Canfor's harvesting licence would have been affected had there not been an amicable solution is not quite clear. The workers claimed that the Canfor Tree Farm Licence to which Eburne was tied was being breached and that was enough for everyone to sit up and take notice.

The section is not of the NDP govern ment's making, It predated its mandate by some considerable time. But with the NDP's links to organized labour, the industry feared that Glen Clark's people might be tempted to start tinkering with tenure. Clark has talked frequently about changing the tenure system.

The legislation allows the forest minister to reduce harvesting rights (though it doesn't require him to do so) if a processing plant is closed. The NDP has staked a future in BC on keeping or creating more jobs. Its Jobs and Timber Accord has so far proved a dismal failure. It could not afford another. So it might be tempted to do something drastic to save those Eburne jobs.

After all, it wasn't as if Canfor was about to go under like Skeena Cellulose or Evans Forest Products Ltd, where millions of dollars have been laid out to keep a couple of operations breathing that probably should have been allowed to die peacefully. But even if Canfor finds replacement jobs for the Ebune workers, it's planning some restructuring that willl involve job cuts elsewhere.

"Canfor has been losing money ($25.6 million in the first quarter this year) but it's still considered solvent And operating and not under threat of going into receivership," says one industry analyst. "Canfor is doing something that needs to be done at Eburne."

Eburne is an important precedent. It's been in the cardiac care ward a long time. Other mills have been there too, although not quite so long, and there'll be more closures. It's not a case of Eburne suddenly running into difficulties this year or of the company simply allowing the decline to continue. The economics have made death inevitable for operations like Eburne.

Of course, families are always hurt when the economics don't work any more and mills close. Generations have earned their living at Eburne - one man had worked there for 44 years. But hurt can't always be avoided when these decisions have to be made.

Nobody quesfions the principle that a corporation has to try to get itself back on a firmer footing at some sacrifice to somebody. On the other side, workers insist that users of a publicly-owned resources - the trees - have to do more than just close a mill. Corporate decisions are hedged by the rules of tenure and the need to make some sort of commitment to people so drastically affected That's a heady principle if indeed that's what Section 71 means.

The industry is quite shaken by this case. Section 71 gives the government up to a year to respond to company decisions like this. So the Eburne chapter may not be over.

The fact the government isn't huffing and puffing over this one suggests it's feeling no pressure. The rescue plan Canfor negotiated gives Victoria an option to do nothing.

But there are many other mills in many other areas facing a similar economic crunch. In fact there is no area or company that is untouched by this issue. Tom Stephens, the new chief executive at the province's biggest forest products company MacMillan Bloedel Ltd., has said there will be a lot more restructuring, meaning Mill closures and job reductions.

The Coast is Where most of the operational juggling Will take place and where tenures Will be questioned. Eventually the northern and southern interiors regions will also be affected.

Most of the mills are unionized So it's not likely the workers will be without a voice to make their point about tenure responsibilities and compensation for job losses. And as long as the NDP is in Victoria, government will want to be seen as much as possible on the side of the workers.

Price Waterhouse has been working on the employment picture in 1997 and the impact of change on hours worked as well as the actual number of jobs.

The numbers have fluctuated since 1990 when the work force reached 93,800. In 1996 the number of direct jobs increased to 99,100. But last year saw a change in approach. Companies were taking more and more downtime rather than out-and-out mill closures. Workers may still have had jobs but the number of hours worked was going down. More and more so-called "job equivalents" were finding their way into the mix, at what impact on employment nobody can yet say with any assurance.

Eburne, with employees occupying the plant until job replacements and special compensation can be bargained for, is one way of dealing with the problem. It's hardly the way the government should want to handle it. Corporate economic decisions should not have threats to the harvest tenure system over their head. The government should do more than just feel no pressure.

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