Dec 03, 2021News
BC government policy, increased stumpage, fires, drought, beetles all adding up, mills starting to close
The body blows keep adding up. At this rate, BC’s forest sector is at real risk of going down for the count.
The latest blow is the US Department of Commerce’s November 24 announcement it is setting a 17.9 per cent duty on all Canadian softwood lumber imports – about double the existing rate of 8.99 percent. So, for every $100 in lumber we ship to the US, their government will charge $17.90 in duty, making the final price to American consumers $117.90. The net effect – and the goal – is to make Canadian lumber more expensive and thus less attractive.
The duty is driven by American lumber producers, who have argued for decades that Canada’s stumpage system amounts to a subsidy. The claim is baseless protectionism. The reality is that the US lumber market is vast – with about 10 times Canada’s population, their domestic lumber companies cannot cut and mill enough lumber to meet demand and they must import.
And, to be clear – we’re not talking about raw logs but lumber milled here in Canada, supporting good Canadian jobs, used directly by the US housing industry.
This new tax comes in the midst of a pandemic that is already causing massive supply change challenges and inflationary pressures pushing the price of lumber, food, fuel, and numerous other products higher, not to mention increasing labour and transportation costs. It comes as US cities struggle to recover from their own disasters, hurricanes and floods that require huge numbers of new houses to be built.
This is the time to come together and resolve trade disputes rather than escalate them. To open up trade in essential items rather than hunker down in protectionism.
This is just the latest blow to hit Teal Jones and the rest of BC’s forest sector.
During the current Legislative session the BC NDP government has introduced legislation that, if implemented, will radically curtail old growth harvesting in BC while simultaneously re-distributing harvesting rights and putting the government in charge of micro-managing the details of harvesting and road-building.
It comes as the province increases our stumpage rates – how much tax we pay on wood we harvest.
It comes after a summer of forest fires that burned through vast tracts of forest. That in turn followed beetle infestations.
The ongoing flooding emergency has wiped out numerous logging roads and bridges, which will cost millions of dollars to replace. The flooding is also hampering transportation of goods and has crippled our ports.
Climate change will further escalate costs in the future, which we must plan for. We have a responsibility to do our part to fight climate change – planting millions of new trees, moving to lower-emissions vehicles and equipment. All of that will take massive investment, the money for which has to come from our revenues.
On top of all these jabs, the doubling of softwood lumber duties is a gut punch putting thousands of jobs at risk – indeed, the future of BC’s forest industry.
Governments appear to be taking BC’s forest industry for granted – assuming it will just always be here to fuel our economy, support thousands of jobs, and provide essential building blocks for our lives no matter how many body blows it takes.
But that is not necessarily the case. The industry can only take so many blows. We are not too big to fail.
BC is Teal Jones’ home, and want it to stay that way. We continue to invest millions of dollars in BC, ensuring we have modern sawmills that use laser technology to extract maximum value from smaller second-growth logs. Since 2019 we’ve invested or committed to investing $60 million at our primary Surrey site alone.
However, we also need to make business decisions based on the conditions in front of us. If costs rise to the point we are losing money and the regulatory landscape remains uncertain and constantly shifting, we have no choice but to draw back – and look to other markets.
To that end, over the last couple of years Teal Jones has purchased three US operations, mills operating in states that welcome our investment. They have taxes and strong environmental regulations, but they’re reasonable and predictable, giving us the certainty we need to make long-term plans.
In the current environment, our opportunity for growth is in the US.
We were founded in BC as a value-added wood miller – started by Jack Jones as a one-man cedar roofing company back in 1946. We are committed to that vision today, shipping no raw logs but milling every log here in BC into a value-added product – employing more than 1,000 British Columbians in the work, while providing the products needed by numerous local companies to make homes, furniture, medical masks, and guitars.
And yet, we are facing the reality that 44 BC sawmills have closed since 2005 – in part due to past government decisions. Fort Nelson and McKenzie are communities where Teal Jones has history, but have been devastated as local sawmills and pulp mills were forced to close due to reductions in their wood supply.
More mill closures and massive job losses are inevitable if the government holds to its current course. That came home to us in April when Paper Excellence announced it is closing is pulp mill in McKenzie due to a lack of fibre supply, and then again on December 1, when Catalyst Paper announced it closing its pulp mill in Powell River, putting 206 employees out of work.
We need government to step up for us if more such closures are to be avoided We’re not asking for a break or subsidy, but merely a reliable regulatory framework that recognises our commitment to this province and makes it attractive enough for us to continue investing here. We need government to grapple with a protectionist US regime and put an end to unfair duties. We need government to follow the science and make old growth management decisions based on the facts.