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Open up the timber market
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by BRUCE STRACHAN Citizen columnist
I hate to admit it, but NDP forest critic Bob Simpson nailed it when he said, “B.C. forest policy is a mess.” Simpson was reacting to sawmill closures in Mackenzie, Vanderhoof and most recently Prince George.
It’s certainly not a pretty sight out there in the lumber business, but I guess from Simpson’s opposition perspective, the good thing about our parliamentary system of government is that no matter what goes wrong, there is always someone, or something, to blame.
Which, in turn begs the question: What is good forest policy? Is it the current system of tenured forest license holders? Not according to Simpson, and I’m sure to the good people of Vanderhoof and Mackenzie.
However, I’d say if there is any good news arising from our current forest-resource dilemma, it’s the opportunity to change government policy and bring in the discipline of a true free-market system.
By way of explanation, let’s compare forestry to mining. Both sectors involve a private company making an investment, extracting a natural resource, processing the raw material, employing people and paying a royalty to the government.
In the case of a mining company, it has to follow strict environmental and production guidelines - appropriate government policy - but from that point on, the free market rules. The investor assesses market need, the investment is made and extraction takes place. If the product sells at the right price, people are employed, and the government - that’s you and me - benefit from the mine royalty revenues. If the mine flops, the company takes the hit, and that’s it.
The discipline for the mining industry is in assessing the long-term market for its product, understanding government regulations and raising money on the basis of its best analysis.
Now to the B.C. forest industry. In this case, B.C. has a long history of government intervention -- described by some analysts as social engineering - plus, a protracted history of large-industry domination.
Canfor, Pope & Talbot and Stuart Lake Lumber - all dimension lumber producers - are down because they make a product no one wants. Not only that, if, and when, the U.S. housing market comes back, dimension lumber will more and more be relegated to the category of yesterday’s building technology. Simply put, dimension lumber - for a lot of reasons - is falling out of favour. Yet, the manufacturers of the product have tenure, and clearly the ear of government.
So, what’s hot in the lumber business and building technologies? Well, right here in town, there are two good local examples. Brink Forest Products, uses reject sawmill material to make finger-jointed lumber. There are three distinct advantages to the Brink process; one, it adds value; two, it uses waste wood; three, being an engineered product, it’s straighter and is preferred at the job or production site.
The other good example of innovative wood use is Winton-Global engineered building systems. Using modern fabrication techniques, Winton-Global produces a high-quality value-added product. A product that produces a custom-built home, completes the framed-up process quickly and requires fewer tradespeople at the construction site. Brink and Winton-Global - and I’m sure there are others - are the future of our forest industry.
So how do we encourage an innovative forest-products industry? How about an open market for timber? An unprotected timber market, where the producer with the best idea has the opportunity to bid on the resource, build the processing plant and win or lose on the basis of a good product. Just like the mining industry. Sounds gutsy, doesn’t it? Sure is, but the discipline of the market would separate the good producers from the bad. Would any investor put up the cash to invest in a manufacturing process that’s subject to artificial trade restrictions, currency fluctuations, and declining competitiveness? Not too likely.
Wednesday’s Citizen noted the current Liberal government had clawed back 20 per cent of tenured timber rights to supply an open market. I’m no economist, but since when does 20 per cent of anything constitute an “open market.”
I’m sure the established - read tenured - industry will read this and cry foul. Tough. To the forest industry I would say, make a product you can sell, continue to employ people and you can keep your tenure. Otherwise let someone else have a shot at the timber in a true - 100 per cent - open market. You can bet Jimmy Pattison - a significant Canfor shareholder -- understands that argument.
To be sure, a massive change in forest resource policy can’t happen overnight, but let’s start now. After all, given the news of the last week, it can’t get any worse and there’s really nowhere to go now, but up.
Bruce Strachan is a former B.C. cabinet minister and Prince George city councillor. His column appears Thursdays.
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