West Fraser announced further curtailments for approximately three weeks of production throughout the first quarter of 2019 at their Chasm, 100 Mile House and Chetwynd sawmills. The Williams Lake sawmill will be shut down for approximately one week to complete certain capital upgrades.
“The decision to temporarily reduce production at Chasm, 100 Mile House, and Chetwynd is a result of price declines in lumber markets, high log costs and log supply constraints,” the company said in a statement.
It’s the second such curtailment in recent months, although according to Cariboo-Chilcotin MLA Donna Barnett the first closure, which occurred around Christmas, is more common for maintenance reasons.
According to the release, “Total production curtailed in the first quarter of the year is expected to reduce SPF lumber production by approximately 50 million board feet, in addition to previously announced measures.”
Barnett calls the curtailments inevitable.
“When you take the cost of logs, the price of logs, you take the fact that there’s no softwood lumber agreement and neither government, federal or provincial, seems to even be talking about it or working on it. You’ve got tariffs from the United States, you’ve got [a] new carbon tax, you’ve got this new healthcare tax, you’ve got a permitting process that has become so onerous and so expensive and so time-consuming. You’ve got pine beetle wood, you’ve got fire-wood, a lot of it is not the best condition, a lot of it you can’t utilize. So when you have to pay stumpage and all the different things you have to do and the price of lumber is down, it’s inevitable and it’s sad.”
The cost of business is going up but the cost of the product isn’t, she says.
“To me, we’re just going back to the ’90s. We’ve lived through this in the ’90s and I hope that the government does something, gets a little more vocal with softwood lumber agreements and tariffs and takes a second look at the carbon tax.”
The resource jobs are good paying jobs and you’re seeing the same thing elsewhere, like at Mount Polley, she says.
“Resource industry jobs are the backbone of the province of B.C. It even affects the people in the Lower Mainland when these types of industries have to curtail or shut or whatever,” adding that many people are tourists and spend their money while travelling and all the corporations, like lawyers, accountants, marketers etc. that may be in the Lower Mainland.
The impact on the local economy will be large as it affects not only the people in the mills but also the truck drivers and that all trickles down to restaurants, gas stations etc., says Barnett.
“It affects the whole province of British Columbia. I hate to see this happening.
“Government has to get busy fixing the softwood lumber agreement. [When] we were in government they blamed us we never did anything… we were at the table continuously, I haven’t heard a word about it for a year.”
According to the Ministry of Forests, Lands, Natural Resource Operations and Rural Development, “There are currently no talks scheduled with the U.S. on softwood lumber.”
Furthermore, according to their documents, the Annual Allowable Cut (AAC) in the 100 Mile House timber supply area (TSA) was significantly reduced late last year from 1,948,002 cubic metres, of which no more than 477,707 cubic metres was attributable to live trees to 967,805 cubic metres of which no more than 477,707 cubic metres are attributable to live trees until a next determination is made.
When there’s a decrease in the AAC, under the Forest Act, the Minister then needs to make an apportionment decision. He needs to decide how the allocation of AAC to each forest licence will be “apportioned.” That decision hasn’t been made yet, according to the ministry.
That, however, is not affecting the current curtailments, according to Larry Gardner, Vice-President, Canadian Woodlands at West Fraser.
“Our curtailments are not directly related to that [AAC] reduction. However, the overall [AAC] reduction is a reflection of the Mountain Pine Beetle impacts and so they do have, over time, an impact. Mostly because we already have such significant timber supply shortages that we are facing a lot of competition for log purchase, which is driving up the cost. Those costs are driving up but they don’t respond downward when markets drop. So markets have dropped but the log costs haven’t dropped with them.”
That’s a reflection of the overall shortage of timber supply, according to Gardner.
“The 100 Mile [AAC] reduction is a reflection of the timber supply but not a reflection on their decision at this point because we have timber and permits right now that we need to get through the winter, into post-break-up. We’d have to be out of wood for that to be an effect right now.”
AAC reductions, however, are definitely a long term concern, according to Gardner, as it is everywhere in the interior of B.C. The current curtailment is a result of everything that’s going on, says Gardner.
“It’s everything. It’s the cost of competing for logs in a shortage of timber supply, it’s the cost of putting our wood on the market across the U.S. border, it’s generally the cost environment that we have in B.C.”
Natural Resources Canada called the U.S. duties on Canadian softwood lumber “unjustified and are damaging to workers, communities and consumers on both sides of the border. In the past, U.S. claims have been found to be without basis. Canada believes this to once again be the case.”
They further pointed to Canada’s $867 million Action Plan, financial services (i.e. loans) through the Business Development Bank of Canada and Export Development Canada, job loss mitigation programming, partnerships with Indigenous communities, market diversification, investments in the Forest Industry Transformation program, the Expanding Market Opportunities Program and the Indigenous Foresty Initiative.
“On top of the Softwood Lumber Action Plan (SLAP) program, a further $100 million was allocated to the forest sector under the Strategic Innovation Fund during the most recent Fall Economic Update.”
Forest industry leaders are also gathering in Vancouver this week to hear from the B.C. government how it will move ahead on the province’s log export policies.
B.C. cabinet orders allowing logging contractors on the Central and North Coast to export up to 20 per cent of their unprocessed logs are due to expire at the end of January. It was reduced from 35 per cent by the previous B.C. Liberal government in 2013, with a portion retained to keep logging companies working in remote regions where there are few viable options for trucking to sawmills.
Barnett says that she spoke with West Fraser and that they’re doing everything they can to try and mitigate the situation.
“I think that we have to really stop and take a good look at what is happening and to ensure that our families are fed and they’re safe and kinda stick together and help each other out in any way we can.”