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BC Job Goal Meets Skepticism

By Reg Barclay
Copyright 1996. Contact publisher for permission to use.

Summary: The BC government says it will create 42,000 new forestry jobs in the next 10 years. The question that won't wriggle away is – how?

Electioneering some weeks back, BC Premier Glen Clark addressed prevailing gloom over unemployment in the forestry sector with the stun-ning announcement that his government would create 42,000 new forestry jobs over the next 10 years . In an era when job creation at almost any level is news, the reaction to this revelation has been strangely muted. Given that harvest levels are predicted to decline 15 per cent or more in the next few years, with an anticipated loss of 14,000 jobs, the question that has to be asked is whether this goal was inflated election rhetoric or whether it is actually achievable.

Dennis Streifel, shortly Minister of Forests until replaced by David Zirnhelt, explained at the time: “Over the past five years we have seen 15,000 more direct forest jobs created, because of government initiatives — an increase from 1.2 to 1.4 jobs per thousand cubic metres harvested. Now it’s time to build on our strengths and reach a ratio of 1.7 jobs in the next five years, and a ratio of 2.0 jobs in the following five years, for a total of 42,000 new jobs by the year 2005.” Premier Clark added: “Our neighbouring jurisdictions to the south in Washington and Oregon get two jobs or more per thousand cubic metres cut from their forests, and there is no reason why we cannot aim for and achieve the same thing.” H ow will the government go about meeting this goal?

BC For a start, Streifel was directed to forge a jobs and timber accord working with the Forest Sector Strategies Committee, a partnership of government and others with an interest in BC’s forests. The intention is to tie access to timber on public lands to job targets. The value-added sector will be given preference, for in the words of the Premier, “value-added is poised for tremendous growth.” On the surface, the government’s goal is praiseworthy and the rationale makes it look achievable. A closer look, however, leads to a different conclusion entirely.

It is true, surprising as it may be, that in BC direct forestry jobs have actually increased over the past five years. Each new direct job has in turn created two new indirect jobs. It is not true, however, that jobs in BC have increased despite a reduction in the harvest. The fact is that the annual harvest during this five-year period has been reasonably level, varying from a low in 1991 of 73.7 million m3 to a high in 1993 of 79.2 million m3 , averaging 75.8 million m3 over five years.

The prospect for job growth in the value-added sector — to the extent envisioned by the government — isn't overwhelming.

But this is not the complete story. Harvest figures do not include logs imported from outside the province from 1993 through 1995. During this period, markets were very strong, the BC harvest was insufficient to meet this market demand, and (for the first time) the industry began sourcing wood from outside the province.

This additional volum e undoubtedly helped maintain jobs at a higher level than the harvest would have normally warranted. Each year, Price Waterhouse undertakes a comprehensive survey of jobs within the industry in BC. Their survey covers (by sales volume) over 85 per cent of the industry, with information from other sources also included. Both permanent and part-time jobs are counted, but the latter are counted on an annual equivalent basis. Thus, 18,500 silviculture part-timers are counted as 4,500 full-time jobs. This is an important factor, as part-time jobs have proliferated in the past few years as full-time jobs have declined.

The Price Waterhouse survey shows that from 1990 to 1995, full-time equivalent jobs increased from 93,800 to 97,500, an increase of 3,700. Based on these numbers, the jobs to cubic metre (harvested) ratio during this period is constant at 1.3, not an increase from 1.2 to 1.4 claimed by the government. Within the different industry sectors, however, job growth was mixed. In manufacturing, despite the growth of value-added plants, jobs declined by 6,200. This was offset by an increase in jobs in log-ging [+5,900], provincial government [+1,400], and silviculture [+2,600]. The increases reflect the new Forest Practices Code where stricter regulations require both a larger bureaucracy and more people in the field. (Recent reports have advised that the Code would increase logging costs by 20 to 30 per cent; some of this added cost goes to added staffing.)

BC As in any discussion where statistics are involved, job numbers depend on the source. The BC government claims an increase in the past five years of 15,000 jobs, 11,500 more than Price Waterhouse. The government has used as its source t he Statistics Canada Survey of Employment. While this survey shows a trend for forestry jobs similar to that of the Price Waterhouse survey, the StatsCan figures are much higher for 1988-1989 and 1983-1985, both periods of stron g demand for wood products. While the explanation for the difference is not entirely clear, it is strongly suspected that the StatsCan part-time jobs are not fully expressed as equivalent full-time jobs, and thus the number of jobs is overstated. Increasing numbers of part-time workers is typical throughout the labour scene generally, and forestry has been no different.

As well, part-time work in the industry increases at times of high market demand. As Premier Clark indicated, the government is looking to the value-added sector as a big player in achieving its jobs target. But, as many in this sector are only too aware, value-added export markets are becoming increasingly competitive. Further growth will be based on market demand and a competitively priced, quality product.

Unfortunately, given that BC is now one of the highest cost producers in the world, the prospect for growth to the extent envisioned by the government is not overwhelming. Currently, there are 680 value-added plants in the province, with an average 20 jobs per plant. Over the past five years, value-added growth has created 1,500 jobs. It would have to create 10,500 in the next 10 years to account for just half of the government’s job target.

So what about our neighbours to the south in Washington and Oregon? Is their 2.0 jobs-per-cubic-metre cut average, as cited by the premier, a reasonable target for BC? There is a danger of oversimplicity here — I am reminded of the old story of the man who drowned crossing a river an average two feet deep. As well, how reliable is that 2.0 figure? A report by consulting forest economist Gary Bowden, circulated by the Coast Forest and Lumber Association, concludes that the Washington-Oregon job rate is overstated, as at least 10 to 15 per cent of their fibre requirement is imported. This reduces their ratio from 2.0 to 1.7 (against 1.3 for BC). Bowden also points out that the ratio of jobs in BC itself is vastly diffe rent between its disparate regions. The Coast, for example, has a job ratio in the order of 2.0 to 2.3, well above the government target. The Interior has a ratio of 0.9 to 1.0, mainly because it has depended on automation to compete in the North American rail market. Washington and Oregon are just as different: in togography, forest cover, and their high proportion (in comparison t o BC) of small mills.

George Weyerhaeuser Jr. of Weyerhaeuser Canada, had this to say about BC’s job targets at a recent Price Waterhouse conference: “I guess I’ll be skeptical until someone helps me understand where those jobs can possibly be in a mature industry that is destroying capital (i.e., not earning an adequate return on capital invested). I think we can create wealth and over a long period of time the spin-off employment will be there, but I doubt we’ll see primary manufacturing going up to 40,000 jobs in BC in the time frame we’re talking about.”

The government faces a quandry. Will it tie jobs to timber quota only in the Interior, or will will this apply to the Coast as well, where the ratio is already at or above the target? Will the new jobs target result in a “jobs at any price” strategy? Will it force the industry to employ more people in order to get their quota, and thus accept a higher production cost? It is certainly hoped not, but don’t be too sure. The Coast Forest and Lumber Association pointed out recently that in 1995, Forest Renewal BC created the equivalent of 164 full-time jobs at a cost of $117,000 per job. Was this the result of a careful cost/benefit analy-sis? Or was the rationale behind it jobs at any price?

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