BUSINESS

FALLING ON HARD TIMES

THE B.C. FOREST INDUSTRY FACES NEW PRESSURE TO PRODUCE MORE JOBS AND PROFITS WITH FEWER TREES

BRENDA DALGLISH August 24 1992
BUSINESS

FALLING ON HARD TIMES

THE B.C. FOREST INDUSTRY FACES NEW PRESSURE TO PRODUCE MORE JOBS AND PROFITS WITH FEWER TREES

BRENDA DALGLISH August 24 1992

FALLING ON HARD TIMES

BUSINESS

THE B.C. FOREST INDUSTRY FACES NEW PRESSURE TO PRODUCE MORE JOBS AND PROFITS WITH FEWER TREES

The Vancouver head offices of some of Canada’s biggest forest companies are fluffing up their images. They have recently become showcases for

elegant furnishings made from British Columbia’s softwood forests—spruce, pine and fir trees that usually end up as two-by-fours or newsprint. At Canfor Corp., the boardroom is panelled in rich brown Douglas fir. At the Council of Forest Industries of British Colum-

bia, the industry’s influential

lobby group, the door frames are made from hemlock. And the council’s massive boardroom table has been crafted from burnished Douglas fir.

“They said it couldn’t be done,” said council president Michael Apsey, running his hand over the knot-free grain of the table. “But here it is.”

If the refined furnishings are any indication, British Columbia’s largest industry is gradually gaining a new respect for the wood that it has been cutting down and slicing up for the past century. But its critics, and there are many in British Columbia, say that the industry’s enlightenment is too little and too late. The province’s old-growth forest stands, on which the industry will depend for its timber supply for at least another 20 or 30 years until the so-called second-growth forests are

mature enough to harvest, are dwindling. At the same time, the provincial government, which controls most B.C. forest lands, is under pressure to set aside more of the old-growth stands for a variety of environmental, recreational and native land-claim purposes.

The timber supply crisis is hitting as the province’s forest industry suffers through record losses of $869 million on sales of $10.9 billion in 1991 (compared with a record profit in 1987 of $1.4 billion on sales of $12.6 billion). The companies also face rapidly increasing costs ($1.5 billion in 1991 alone) in the next decade to upgrade old, inefficient mills and to meet tough new pollution-control standards. “There are people in this industry right now who are despairing of the future,” declared Philip Dobson, MacMillan Bloedel’s Chemainus sawmill manager. “It is time for the industry to get its act together and get into the 20th century.”

The companies' enormous problems cannot be dismissed as merely those of a doomed sunset industry and its 90,700 employees. The Canadian forest industry, of which British Co-

lumbia accounts for about one-third of the employees and sales and one-half of the profits a year, is the country’s largest net exporter, bringing in more than $15 billion in foreign exchange each year. As well, the West Coast forest industry was cited by Michael Porter, Harvard University’s competitiveness guru, in his widely quoted study on the Canadian economy last year, as one of the country’s most competitive sectors. Unfortunately, as Porter noted, the B.C. industry’s competitive advan-

tage comes almost entirely from its virgin-forest resource base. It is also one of the few major industries that is largely owned and controlled by Canadians, rather than foreigners.

The industry also provides particularly rewarding jobs. The average B.C. forestry employee earned $41,700 in wages and $12,800 in benefits in 1991, far in excess of the average provincial wage of $28,300. “We could never replace these jobs, it would be impossible,” said Deborah Simmonds. An export sales co-ordinator, she has been working with her husband Kenneth, a grader, at MacMillan Bloedel’s most modem and profitable sawmill, in the small seaside town of Chemainus on southern Vancouver Island, for seven years. After the company shut down the old Chemainus mill in 1982 during the last recession, the one-industry town re-

sorted to painting murals on the walls of its downtown buildings in a desper-

ate bid to attract tourists. When the new mill opened three years later,

2,000 people applied for 100 jobs.

Not surprisingly, forest workers disagree with environmental activists who are pressing for ever-increasing amounts of the old forests to be preserved. “Without the industry, our province would be a welfare state,” said Simmonds. “Forests do grow back, they are a renewable resource.”

But to environmentalists, the eight-footdiameter, 1,000-year-old logs that the Chemainus mill occasionally processes represent the destruction of a piece of the province’s natural heritage, trees that have been growing in British Columbia’s unique coastal rain forest for centuries. They say that the cutting is taking place to meet the demands of the market, rather than the ability of the land to sustain growth. Said Joseph Foy, a spokesman for the Western Canada Wilderness Committee in Vancouver: “We want a forest industry to be here forever, and that won’t happen if the cutting keeps going at today’s rate.”

Environmental groups have scored a number of recent victories against the forest industry. The federal government created a national park on South Moresby Island in the Queen Charlotte Sound. Logging has been halted on Meares Island while the government negotiates with natives. At the same time, a decision due in 1993 on creating a wilderness reserve in the Stein Valley in southwestern British Columbia is expected to be favorable, and half of the Carmanah Valley on western Vancouver Island has been designated a provincial park.

In the courts, serious new challenges are emerging from such organizations as the Sierra Legal Defence Fund. Gregory McDade, the fund’s executive director, says that one of its

legal actions last year convinced the federal government to ban commercial logging in Wood Buffalo National Park in Alberta. Following the release this summer of a government study highly critical of the forest companies’ attempts to protect fish habitats when they log near streams, the fund warned that it would seek enforcement of the laws, which carry penalties of fines of as much as $1 million and jail sentences for company officials.

Meanwhile, grassroot protests continue. Small groups of protesters routinely fink arms and block loggers’ routes to the trees. Earlier this year, Earth First!, a radical environmental movement from the United States, has become active in the province (below). Earth First! promotes such controversial actions as pouring sand into the gas tanks of logging equipment and pounding large metal spikes into trees so that they become too dangerous to log.

The solution most often cited for the dwindling supply of trees is for more so-called value-added production. Unfortunately, industry and environmentalists do not agree on the definition of what adds value. For the government and environmentalists, value|added means more processing of the timber and pulp within the province so that more jobs are created. But for the industry, whose profit margins have been

the past decade, adding value means finding ways to turn wood into more profits.

At times, the two goals seem destined to clash. The almost state-of-the-art Chemainus operation, for one, is MacMillan Bloedel’s most profitable mill, and the only one that has continued to operate at full capacity throughout this recession. It uses such sophisticated equipment as an X-ray machine that can locate

I HARD TOUGH OPINIONS TACTICS,

From his wavy brown ponytail to the braided bracelet around one of his frail wrists, there is little about Dan (the only name he would disclose) that suggests links to group blamed for environmental terrorism. But he is a spokesman for the Vancouver branch of Earth First!, a movement that recently arrived from the United States.

Earth First! calls for direct action to stop environmental destruction—even if laws are broken. “No compromise in the defence of Mother Earth,” reads the motto on newsletter it distributes out of Montana. advocates what it calls monkeywrenching—sabotage damaging to target companies. Tactics against forest firms include pouring sand into the gas tanks of equipment and hammering metal spikes into it for

fell them. Since Earth First! arrived, logging equipment has been damaged and trees spiked in the Walbran Valley on Vancouver Island. “We believe that it is no different than if we were in Nazi Germany and had an opportunity to dismantle the gas chambers,” said Dan. “We don’t see humans as any different than a marbled murrelet [a rare seabird] or an old forest.”

His group proclaimed Aug. 3 a day of action and published the names and addresses of 80 senior forest company officers. That day passed quietly, but Dan says that it was a success because the companies spent money hiring security guards and patrolling the forests. Such mainstream groups as the Western Canada Wilderness Committee are also concerned about Earth First! tactics. Committee director Joseph Foy says that on the eve of the declared Earth First! action day, loggers threatened him with violence. Complained Foy: “That’s what happens when some moron photocopies a piece of paper and starts making threats.”

hidden knots and custom design a cutting pattern for each log that will make the best use of the wood. In addition, mill manager Dobson has implemented highly productive management and work practices in an industry that often suffers from bitter labor relations. The Chemainus mill is clearly the mill of the future. But it provides far fewer jobs per cubic foot of wood processed than the antiquated mill it replaced.

Small companies that specialize in a few particular product niches boast that they will produce the most new jobs in the future. But the problems facing that sector seem equally daunting. In Prince George, the financial strains of the recession are etched on the faces of the father-and-son management team of Peter and John Byl. Their company, Woodland Windows Ltd., had been growing steadily, producing windows and knockdown pine furniture for such companies as Swedish furniture retailer Ikea.

Since 1990, the Byls have been caught in the complicated stumpage war—involving the price the provincial government charges forest companies for the trees they harvest on Crown land—between Canadian and American lumber producers. “The stumpage system is too inflexible as it stands right now,” said an evidently weary John Byl. “The whole system is designed around making two-by-fours or pulp chips. There is no room for our type of industry.” But the Byls employ about 10 workers per cubic foot of wood processed for every one that a local sawmill requires.

However, many forest companies are beginning to develop some remarkably innovative

products. Vancouver-based MacMillan Bloedel, the country’s largest forest company, is working on a number of new products from stained cedar siding to laminated wood beams as strong as traditional steel, and recyclable corrugated containers that can take the place of steel drums. MacMillan Bloedel is even considering the possibility of making roof tiles out of the sludge left over from its pulp mills.

But perhaps the single most surprising product is a pressed wood-fibre inner door panel for cars manufactured by Canfor and used in some Honda Accords manufactured in the United States. Said Canfor chairman Peter Bentley:

“The big forest companies are doing all sorts of new things right now. But it is going to take a while before we find the right products that we can make money with.”

Meanwhile, Bentley and other insiders say that the entire Canadian industry is due for a shakeout. Many pulp-and-paper mills in eastern Canada are old and inefficient and face a daunting new challenge from legislated requirements for recycled newsprint in their markets in the eastern United States. And B.C. mills, although generally healthier because of better resources and fewer inefficient operations, also need rationalization. B.C. executives

say that by the end of the century, there will be fewer forestry companies in Canada and the survivors will be bigger and better able to compete in the increasingly sophisticated and demanding global market.

But it will take much longer than that before the fine showpiece Canadian wood furniture on display in the offices of British Columbia’s beleaguered forest companies is ever available for sale. Despite the effort, B.C.’s wood is just too soft and knotty to be commercially suitable for such glamorous products.

BRENDA DALGLISH

I‘ALMIGHTY TAKES OVER' BUCK

In British Columbia fishing language, Edgar Birch is a “highliner,” a superior fisherman who knows where to find fish, how to get them into his boat and then how to get the boat back safely to harbor. In 1948, when he first started working on the West Coast, fishing was a full-time job for 10 months a year. But gradually the fishing fleet grew, the fish stock shrunk and the time Birch spent on the ocean declined. The Ladner ¿11 netter began spending his free time working on environmental issues. “When I started fishing, nobody thought about the fact that fish couldn’t run if you logged off the sides of a creek and the dirt washed down into the spawning beds,” said Birch. "But we know now that when the salmon do not come back, we have an environmental problem somewhere. The salmon is to the B.C. environment what the canary was to coal miners.”

The salmon’s life cycle makes it especially vulnerable to outside interference. Hatched in rivers, the small fry eventually swim down to the ocean, where they live for

four or five years before returning to their original freshwater spawning beds to spawn and die. But West Coast salmon stocks are in far healthier supply than the depleted East Coast cod stocks. Because the salmon are so dependent on B.C. waters, it is common for fishermen like Birch to become ardent environmentalists. Birch has worked on environmental issues for his union, the United Fishermen and Allied Workers, and for the government.

The B.C. government released a report in late July on a random survey of 58 fish-bearing streams on Vancouver Island. The audit revealed that 34 of them had suffered moderate to major damage as a result of logging practices that did not meet government standards. “I

was really shocked,” said Birch. “The forest companies have been telling us for 10 years that they are doing a better job of logging and then this comes out.” He has no patience with companies that knowingly damage the environment. “It seems like the Almighty Buck takes over and some people will do anything,” he said. The only solution,

declares Birch, is much tougher enforcement of both the forest and fishing industries. “We have to have better policing,” he said. “Nobody is going to change unless they know the enforcement is there.” Birch has a special interest in making sure that the industry stays healthy. He thinks his 10-year-old grandson might one day decide that he wants to be a fisherman. Just in case, Birch, 64, says that he is going to hang on to his boat and licence for a few more years. “But the way things are going right now,” said Birch, “I am not sure it would be a very good idea for me to talk him into it.”

B.D.