B.C. politicians look for answers as forestry sector and workers face sustained hardship

By Shannon Waters
July 25, 2019

By any metric, forestry operations in B.C. are a shadow of what they once were.

Long before the latest mill closures and curtailments hit struggling rural communities, the province’s foundational industry was shedding jobs as annual allowable cuts shrank and exports remained tied to boom and bust cycles familiar to resource industries.

Since the beginning of this year, the NDP government has introduced two separate initiatives aimed at “revitalizing” both branches — coastal and Interior— of forestry operations in the province. Those initiatives aim to stabilize the industry and facilitate a significant shift in the way it operates, according to Forests, Lands, Natural Resource Operations and Rural Development Minister Doug Donaldson.

Medium term, the forests minister has launched a “forestry renewal process” and consultation package in Interior communities about how best to resuscitate the ailing industry.

“The long term, especially in the Interior, is getting the focus off maximizing volume — which has been the focus due to the beetle-kill wood which is no longer available — and putting the focus on maximizing returns and value,” Donaldson told BC Today.

As Premier John Horgan has become fond of saying, “It’s time to stop chasing volume and start chasing value.”

But Liberal Forestry critic John Rustad would like to know precisely what the premier means by that.

“I’m not sure he quite understands what he’s asking,” the former forests minister told BC Today.
“Those are all nice, political words to say but the reality is, you can’t put [in place] cost structures and bureaucracy and make us the least competitive industry in North America and expect people to want to invest in new technologies and new processes. The two don’t match.”

“You have to create an environment where people want to invest, where people look at this as an opportunity — not trying to figure out how to get around all this additional regulation and cost being imposed by government,” he added.

Rustad believes strongly in the resilience of B.C.’s forest industry and just as strongly that the NDP government’s approach — to what he says needs to be a “generational shift” in how the industry functions — will not have the effect the province needs.

“We have got some of the best landscape in the world for growing trees,” the former forests minister told BC Today. “We have an industry that is very technologically advanced … and we also have the potential for real innovation. What we’re missing is the right environment.”

Short-term solutions
Along with his opposition colleagues, Rustad has spent much of his time since the House rose in May visiting forestry-dependent communities — most recently Cranbrook — around the province, many of which have “gone through fires and floods and now closures and curtailments” all in the past two years.

He estimates that at least 1,000 people working directly in the forest industry have been impacted by recent cutbacks while another 3,000 forestry contractors are also feeling the effects.

Canfor announced last week that it is reducing operations, including the elimination of an entire shift, at its Isle Pierre sawmill in St. George beginning in September. The company is also indefinitely reducing work at its sawmill in Mackenzie. All told, there have been over 20 curtailments at mills in B.C. in recent months. Fort St. James has gone so far as to declare a local financial crisis, after the closure of the Conifex sawmill there left 226 people jobless.

During his travels, Rustad said he’s heard a lot of frustration from industry operators and workers, many saying the government has not been as robust as they’d hoped.

“Government needs to do the work,” he said. “It is, quite frankly, not a hands-off job. This is going to take a minister that is going to be driving it … we’re not seeing that.”

Donaldson — one the NDP’s few cabinet ministers to hail from rural northern B.C. — says the government is working and its efforts involve multiple ministries.

“We have community transition response teams that coordinate when a mill shuts down in a small community,” he told BC Today. These teams provide services, such as mental health supports and income assistance, as well as retraining options, to displaced workers.

Donaldson sees a plethora of opportunities for affected forestry workers as a result of the NDP government's ambitious public infrastructure plans — $20 billion in public infrastructure spending over the next three years — which will include “things like schools being built in small communities with a lot of construction jobs.”

Competition vs ‘collaboration, innovation and creativity’
Donaldson and Rustad fundamentally disagree about the best way for the government to facilitate industry renewal.

Rustad wants to see the province become more competitive by reducing bureaucratic barriers and costs for industry operators.

“Government has a number of strings it can pull in terms of cost-structure,” he told BC Today, adding that other provinces are not seeing the fibre supply issues plaguing B.C.

“The cost structure in B.C. after the July 1 stumpage increase is about $50 per cubic metre more expensive than in Alberta,” Rustad said. “Forty per cent of that is government policy — whether that’s the employer health tax, the carbon tax …. WCB rates, administration costs.”

By Rustad’s count, the current government has implemented well over a dozen initiatives that are, either directly or indirectly, “adding costs to the forest industry.”

He fears there are still more to come, including the “new, targeted fee-in-lieu” program on coastal logs destined for export that is set to roll out later this month — a nod to days of appurtenancy past.

“I think everybody can agree that we would like to see more logs processed in B.C.,” Rustad said. “The question that I have … is why are the logs not being processed in B.C.? How do we make it more economical for logs to be processed in B.C. as opposed to making it more of a penalty for logs that are sent overseas?”

Since certain types of timber are not processed in the province and local mills often can’t compete with the price a log will fetch for export, forestry operators currently bank on selling high-quality logs to exporters to offset the cost of hauling lower quality logs to local mills. Rustad said the “fee-in-lieu” system will impose financial penalties on those exports, leading to less logging and an even more meagre fibre basket than the province currently has.

“It makes it harder for them to justify going in and logging an area,” he said

The process for issuing timber licences also needs attention, according to Rustad, who said the NDP government’s requirement that Indigenous groups be consulted before permits are approved has bogged down the process.

He pointed to stands of timber in the Kamloops timber supply area that were damaged by wildfires in 2017. “There has been no permits on that fire-damaged wood — I asked the ministry why that is the case and they said … because government, through its efforts on UNDRIP, has got a new approach working with First Nations,” Rustad said. “That wood has a lifespan of 3-5 years depending on the severity of the damage. Two years has gone by and there aren’t any permits?”

The Elephant Hill wildfire burned about four million cubic metres of timber near 100 Mile House in 2017 but less than half of it is currently under permit for logging, according to Rustad.

“They’re not going to get to 2.5 million cubic metres of wood — that’s wood that could have been used to keep Chasm Mill open and Norbord open and to get the area rehabilitated and replanted … without the cost to government,” he said. “They could have given that wood away at 25 cents per metre and still come out ahead.”

“There are long-term supply issues but when you have a short-term problem like we do with … the damaged wood from fire, being able to recover that wood and get it replanted, that should have been a priority for government to deal with,” he added.

Donaldson disagrees — “in the vast majority of cases,” the ministry has been expediting salvage permits for damaged timber stands.

“Our staff is very cognizant of interests on the landscape,” he said. “There might be some specific circumstances where more consultation is required with First Nations, but we take the approach that First nations have … interests and we respect that ... we want to increase the interest they have in the forest.”

Working with First Nations on forestry issues is one of the ways the NDP government is pursuing reconciliation, Donaldson added.

“Those comments are quite disturbing coming from a former [cabinet minister] who was in charge of relationships with First Nations,” he said of Rustad’s implication that increased consultation is slowing down the permitting process.

He touted the government’s forestry policies as popular in many communities, specifically Bill 22, Forest Amendment Act, which created “a public interest consideration when one forest company is proposing to buy tenure from another” and is already in effect in a couple of communities.

“What I am finding across many of the rural communities … is that local governments are very frustrated with the situation that has been left by the previous government and they want more ability to influence how the forest sector undertakes their activities in the forests that are close to their communities,” Donaldson said.

For his part, Rustad foresees forestry being a key plank in the Liberal Party’s platform for the next election.

The stakes are high: without a significant shake-up, Rustad believes “the forest industry is going to reduce probably by another 15 to 20 per cent over the next five to 10 years.”

He is not the only one to have reached that conclusion: In May, a report commissioned by Woods Markets Group estimated that a dozen B.C. mills could close over the next 10 years.

“It will just limp along,” Rustad said. “If we take ... steps to become competitive, to be hungry for our forest industry and support that shift, I’m very optimistic.”