Tree Frog Forestry News

Independent Wood Processors support Premier’s vision, have plan to replace lost sawmill jobs

By Russ Cameron
Independent Wood Processors Association of BC
October 9, 2019
Category: Business & Politics
Region: Canada, United States

Part 1 of 2

Russ Cameron

The Independent Wood Processors Association (IWPA) represents BC’s community based value-added enterprises.  We are in complete agreement with the Premier that we need to replace lost sawmill jobs with jobs that add more value to the lumber that comes out of our sawmills.

BC’s family owned non-tenured wood processors have the ability to do that, but only if we can get access to a share of the BC Public’s resource and get access to the US market. Unfortunately, neither of these requirements have been met for the last 15 years and the result is that 54 of the 107 member companies that we had prior to the Forest Renewal Act (FRA) of 2003, have gone out of business.

FRA 2003 allowed the big public companies to consolidate control of the resource; eliminated the Small Business Forest Enterprise Program (SBFEP) that allowed non-tenured companies to competitively bid for a share of the timber resource; replaced the SBFEP with BC Timber sales; introduced the non-responsive Market Pricing System (MPS); slashed the already meager Category 2 value added program by 2/3rds; and it led to our subsequent disqualification from bidding for BCTS timber unless we paid a 15% export tax on the cost of adding value in BC. I am sure the Act was well intentioned, but the FRA 2003 has not served the Province well.

We believe there is a fix, but the big tenure holders aren’t going to like it. Making the Premier’s vision of the future into a reality is going to require guts and resolve on the part of the BC Government.

First, they need to break up the control of our resource with a ‘use it or lose it’ policy with respect to Tenure, and they need to restore and auction a substantial share of the resource for non-tenured wood processors to bid for. The big tenured companies claim that they must have Tenure to operate. But the 50 or 60 sawmills that they have collectively acquired in the United States don’t have any Tenure. Why do they need to keep their security of Tenure for the curtailed BC mills but not for the operating US mills pray tell?

Did you know that the 5 biggest tenured companies now control about 30 million m3 of our resource for their exclusive non-competitive use? Did you know that BC’s dozens of non-tenured value-added companies now have a province wide total resource share of only 1.1 million m3 for which we compete?

Next, the non-responsive Market Pricing System that we are currently defending at NAFTA and WTO, has to go. It’s not that it isn’t defensible. It’s that it simply doesn’t work for us here in BC.

These changes, and others, have to be made prior to entering into a new Softwood Lumber Agreement with the USA. The last Agreement froze BC Forest Policy “as is” and prohibited any significant changes for 9 years.

And then there is the problem of the Americans not liking that BC’s stumpage rates are set using a formula instead of through competition. They repeatedly find that using a formula to price tenured timber amounts to a subsidy and they slap duties on all our wood products. Even on the value-added products of non-tenured companies that remanufacture lumber purchased on the open market in direct competition with the Americans.

The value-added sector that the Premier wishes to grow, is presently trying to compete in the US market while paying a 20% Duty on the wood, and a 20% Duty on the cost of employing British Columbians to add value to it. As was the case when Canada imposed a 15% export tax on our products from 2006 until 2015, these Duties are designed to make us uncompetitive in the US market and they are effective in doing so.

And now, in addition to high levels of log exports, some of BC’s big tenured companies are sending the lumber they cut from BC’s forests to the USA and employing Americans to do the value-added work that we used to do in BC.

Interfor has been doing it for years in Sumas, Washington. Western Forest Products has recently purchased a large remanufacturing facility in Arlington, Washington.  Western has begun sending down 110,000,000 bf a year and employing Americans to add value to it. The first of what is inevitably going be the permanent closure of several more BC value-added plants, occurred in September when Western diverted their supply to their new American value-added facility.

The BC Government needs to stop and reverse this practice. The IWPA has no problem with BC companies operating in the USA, but if they wish to do so, they should feed those plants with US grown fibre, not BC’s.

These changes will get us back to where we were, but there still remains another obstacle that could make the Premier’s vision an impossibility.