Return of the Forestry Sector Downturn
The Council of Forest Industries (COFI) representing the
forest oligarchs has publicly stated that between eight and 10 BC mills
could close this summer resulting in hundreds of layoffs and seriously
damaging the economic well-being of many communities across the
province. BMO calculates that the combined reduction of lumber
production to date this year adds up to about 500 million board feet. A
report commissioned by Forest Economic Advisors Canada concurs saying
the province will likely lose 12 mills in the next decade.
These shutdowns are occurring at a time the big
companies are adding two to three new mills every year in the United
States in part because of the aggressive U.S. softwood lumber tariffs
that block Canadian production from entering the U.S. market but also
to take advantage of the terrible exploitation and anti-worker terms of
employment
for workers in the southern United States.
Control of the industry in fewer hands means
decision-making is concentrated in the headquarters of a handful of
oligarchs such as those of the Jim Pattison Group (Canfor) that operate
globally in multiple sectors. Forest workers' unions report that the
big companies are using the recurring crises and unresolved problems to
attack workers and
demand concessions in their terms of employment in BC.
Tolko
Workers at Tolko Mill in Williams Lake stage one-day strike, October
16, 2018.
Tolko reported in mid-May the complete
shutdown of its mill in Quesnel resulting in a loss of 150 jobs. It
also has eliminated a shift at its Kelowna mill for another 90 jobs
gone. More than 150 employees at Tolko's Armstrong sawmill thought they
would be going back to work on June 3 after two weeks laid off.
However, the company informed workers that the sawmill would be taking
another two weeks of downtime.
The Vernon-based company has announced a series of
temporary and permanent cutbacks in BC. Troy Connolly, Tolko's vice
president of solid wood attempted to explain the situation in a media
release: "As the recent rash of curtailments and closure announcements
indicates, current market and cost conditions are making it difficult
to operate
in BC."
Taylor said the price of 2×4 lumber is currently
less than half of what it was a year ago, and below its price of
production. Taylor did not explain why prices could fluctuate so wildly
in such a short period or offer any solution to this dilemma. He gave
the standard answer of a conflict between supply and demand in a market
out of his
company's control or the control of anyone for that matter. Taylor said
supply in the U.S., Chinese and Japanese markets currently outstrips
demand.
At the same time as Tolko announced the extended
downtime at the Armstrong mill, the company also said another two weeks
of downtime would occur at its Soda Creek mill in the Williams Lake
area.
Canfor
Canfor began permanent closure of its sawmill in
Vavenby, BC on June 4, with 172 job layoffs. Vavenby, located 150
kilometres northeast of Kamloops, is a community of just 700 people.
The closure will decimate the entire community. The Canfor press
release said nothing of how the people in the community
will manage without their main source of livelihood. One assumes the
standard imperialist "fend for yourself" is the dictum even when the
socialized economy is not under the control of the working people. The
mill has an annual production capacity of approximately 250 million
board feet. Canfor is looking to sell its forest tenure associated with
the sawmill to Interfor for $60 million. The Jim Pattison Group owns
and controls Canfor.
Regarding the transfer of the forest tenure for $60
million, Interfor argues this deal will be in the public interest as
the supply of wood fibre in the tenure will go to its non-union mill in
Adams Lake.
Canfor surprised many workers on June 11, with the
announcement of a curtailment of production at 12 of its 13 BC
sawmills. The only exception is the WynnWood mill in Wynndel. The
majority of mills will be down for two weeks with extended curtailments
of four weeks at Houston and Plateau, and six weeks at Mackenzie.
Teal Jones
BIV.com reports, "Teal Jones is shutting down second
growth logging operations in its Honeymoon Bay operations on Vancouver
Island, citing high stumpage prices. And that will inevitably translate
into more curtailments at the company's sawmills, said Teal Jones CFO
Haniff Karmally. 'It's very significant for the mills,' Karmally
said.
"Like most other forestry companies in BC, Teal Jones
has already taken several curtailments at its lumber mills in recent
months, due to both falling lumber prices in the U.S. and rising
stumpage costs, resulting in temporary layoffs.
"'We have taken more curtailment this year and over the
last 12 months than we can recall ever taking,' Karmally said. 'Our
mills have been down for one month to the end of April already. So
we've taken 25 per cent curtailment this year in the mills.'
"About half of Teal Jones' tree farm licence on
Vancouver Island (TFL46) is old growth. Logging will continue on the
old growth, Karmally said, which accounts for about half of the
company's annual allowable cut of 368,000 cubic metres per year. But it
will cease all logging on its second growth. The immediate impact will
be on logging
contractors. 'They will have to create some layoffs,' Karmally said.
'They have no choice. This is impacting about half the operation. The
old growth is profitable, just because of its value,' Karmally said.
'Second growth, by its very nature is of much less value.'
"Stumpage is what the provincial government charges
companies to harvest timber on Crown land. The market value of logs
affects stumpage prices. Karmally said the higher premiums from log
exports (especially last year) have boosted stumpage costs. He added
the company believes there has also been speculative bidding on BC
Timber
Sales, which could also be driving stumpage rates up."
Western Forest Products
Western Forest Products plans to cut shifts at three
Vancouver Island sawmills, where organized workers in USW Local 1-1937
are in the midst of bargaining for a new collective agreement and
strike votes at all units are underway. Western Forest Products will
curtail its Duke Point sawmill for two weeks and its Saltair sawmill
for one week
in June. The company will also reduce operating levels from 120 hours
per week to 80 hours per week at its Chemainus sawmill.
Norbord Inc.
Norbord Inc. announced on June 11 the indefinite
cessation of production at its mill in 100 Mile House, BC beginning
this August. One hundred and sixty workers are affected by the
shutdown.
West Fraser Timber Co. Ltd.
West Fraser says all mill activities will be curtailed
temporarily for a week in June at five BC sawmills. West Fraser says
cutbacks and layoffs will take place at sawmills in Chetwynd, Quesnel,
Williams Lake, Smithers and Fraser Lake.
Interfor
Interfor recently announced it would also cut back on
operations this June.
This article was published in
Number 22 - June 13, 2019
Article Link:
Return of the Forestry Sector Downturn
Website: www.cpcml.ca
Email: editor@cpcml.ca
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