Premier calls for forestry round table

Gordon Hamilton,
Published: Saturday, January 19, 2008

VANCOUVER -- Premier Gordon Campbell pledged a province-wide review of the B.C. forest industry yesterday aimed at restoring lustre to the battered image and bleeding balance sheets of the province's hard-hit forestry sector.

Campbell announced the new review, termed a "working round table," in a speech to the annual Truck Loggers Association convention, where contract loggers have spent the last three days saying previous attempts at change on the coast have failed.

The forest industry provincewide is facing the worst downturn in memory, and hours before the premier spoke, B.C.'s second-largest forest company, Canfor, announced it was shutting down two more mills affecting 435 workers. (See story B3)
Canwest News Service / Loggers have been especially hit hard as companies cut back production on the coast. Four falling contractors, two from the Island, have folded in less than a year.View Larger Image View Larger Image
Canwest News Service / Loggers have been especially hit hard as companies cut back production on the coast. Four falling contractors, two from the Island, have folded in less than a year.

The B.C.-wide roundtable is to examine what needs fixing in the forest industry. It will include two cabinet ministers -- Forests Minister Rich Coleman, Lands Minister Pat Bell -- and others drawn from industry, communities, labour and universities. It is to report to cabinet every 90 days.

Campbell said the province is considering "structural changes," a degree of commitment to change that won his plan support from the loggers even though it was short on specifics.

And he peppered his speech with references to issues he considers crucial:

- The role of forests in climate change, through bioenergy and through new, as yet unspecified, silvicultural initiatives. He said the province needs to find incentives to get the industry to invest in growing trees.

- Changes in the tenure system, which currently has allocated most of the province's timber through licences to major sawmilling companies.

- The need for the industry to wean itself from selling commodity lumber to the United States.

"We cannot simply think of wood as a commodity," Campbell said. "If we want our forest industry to be a commodity-based industry, there is nothing the government can do to protect you from the volatility of the marketplace."

He talked about maximizing value from the whole forest. Currently, logs are being left behind as waste because there is no market for them.

"We are going to be encouraging licence-holders to co-operate with third parties to use wood waste for a growing alternative-energy market," he said.

"We know about the challenge of greenhouse gas emissions. This is an industry that can respond to that challenge and help not just British Columbia but the world meet its goal of reducing its greenhouse gas contributions over the next couple of years," the premier said.

The premier's plan got broad support from the loggers.

"It's certainly a move in the right direction," said Don Bendickson, president of the Truck Loggers Association.

"With the marketplace the way things are today, if there ever was a time for major change, this [round table] may spark the debate to get us there," said Mike Hamilton, past-president of the association.

Rick Jeffery, of the industry lobby group Coast Forest Products Association, also backed the review.

"The operative word here is that it's a working group. What we don't need is more 'visions' and those kinds of things. We need people to sit down, roll their sleeves up and get on to achieving the results we need to get to. I think people genuinely realize that this is a structural problem and we need to deal with the

NDP forests critic Bob Simpson described it as "a good start."

"But why didn't they do the thinking to give us the terms of reference and the membership today? It's one of these two-week promises, you'll see it in two weeks. It shows a lack of real depth of understanding about the nature of the crisis."

"We should have got specifics today instead of generalities."

Meanwhile, forest company investors are also hurting. Canfor shares lost 44 per cent of their value between July and November -- from $13.74 to as low as $7.64 -- before rebounding to around $9.00 this month.

The news of yesterday's mill closures pushed the share price up 35 cents to $9.35, as the market reacted positively to the company's attempts to douse the flames.

Analyst recommendations for Canfor are bearish, with not an outperform or buy recommendation from any of the 11 analysts listed on Bloomberg. Price targets go as low as $6.00. The same gloomy outlook faces most of B.C.'s forest companies.

Analysts say the key is to pick companies that can weather the storm.