Today we have fewer contractors harvesting about
the same volume of wood. Among other things, age
demographics and diminishing contractor sustainability
don’t favour increased investment.
Using the addition of new sawmills as a bellwether of
significant investment, consider the following. In a region
widely known to have a shrinking timber supply, the BC
Interior has seen both a number of new or major sawmill
rebuilds as companies strive to utilize the increasingly
challenging wood basket while staying profitable. Yes,
some mills have closed in the Interior, but most closures
are a result of impacts of the mountain pine beetle.
Another comparison is the US Pacific Northwest, which
has seen a multi-decade transition from smaller, highercost sawmills to larger, more-efficient sawmills. That trend
continues today with Sierra Pacific building a new sawmill
in northwest Washington this year.
And this is a region with a significant log export program.
One has to ask, “Why hasn’t investment occurred to the
same degree on the BC coast – after all, the timber supply
is green and productive?”
One reason is that the coast carries the stigma of being
a region with high delivered log costs. And for good
reason. The slopes are steep, the areas remote, and using
old equipment does not support increased productivity.
Higher-value markets of the past that helped absorb these
costs are no longer the size they once were. The softwood
lumber agreement (and pending future machinations) is
one barrier that discourages investment as well.
However, northern Europe is, in many respects, comparable
to the coast with very high costs of logs. However, the
European way has been to invest in technology to offset
its high input costs. Europe is a complicated region to
analyze as each country is unique in its circumstances,
but much of the region’s investment over the last decade
has been to position European producers to capture
that long-pending upswing of a rebounding US market.
It is forecast that when US lumber demand eventually
returns, European lumber producers will fill the supply
gap, increasing shipments from well under half a billion
board feet today to over three billion in a peak market.
There is a host of reasons for why the BC coast is different
from the BC Interior, Pacific Northwest, or European
countries, but it is fair to ask why investment has
been lagging here. It is clearly not because of a lack of
profitability as the major manufacturing companies
operating here have seen significant returns over the
past few years. But the time for squeezing that extra drop
out of the supply chain needs to transition into one of
investing in it.
It should be noted that Western Forest Products, the
largest coastal lumber producer, has invested $94 million
in approved projects over the last few years, including a
$28 million modernization of its Duke Point mill this year.
While it is a start, undoubtedly, more needs to be done.
At the same time, many contractors would like to move
forward with equipment updates of their own, but without
better prospects for their businesses, that investment will
be kept to a minimum.
The province’s Competitiveness Strategy intends to
address many aspects of this article, including how to
attract investment as well as looking at ways to fully utilize
the potential of BC’s coastal forests. Hopefully, the results
of this Strategy will help form a new coastal narrative,
where the BC coastal industry will be able to out-compete
European supply. The BC coastal industry should not be
pitched simply as an opportunity to backfill a decline in
the BC Interior supply given it is an apples to oranges
comparison with species and products. Maybe it’s time to
consider if those who control the resource are not willing
to invest to use it, then let those who are motivated take
over.
Set a target to be more competitive on the global stage.
After all, others like the Europeans want our market pie
and they have already started to shake the whipped
cream.
David Elstone is the executive director of the BC
Truck Loggers Association.
FALL 2015
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