Coastal forest companies say industry needs overhaul

70 percent of British Columbia's operations are closed or curtailed

Posted: Thursday, September 18, 2003

VANCOUVER, British Columbia - A drastic overhaul of British Columbia's coastal forest industry over the next 10 years is crucial to stopping its downward spiral, say the heads of its three biggest companies.

Senior executives from Weyerhaeuser, Timberwest and Interfor outlined a proposal Wednesday for redirecting the industry, including a "modern" collective agreement with labor, retooling existing mills and increasing the amount of lumber remanufactured into specialty products.

The industry is on its knees with 70 percent of operations closed or curtailed for most of the last year, Craig Neeser, vice president for B.C. Weyerhaeuser, told reporters.

"If the softwood lumber duties go away tomorrow, the coast would still be facing significant problems," Neeser said.

The coastal industry is the highest-cost producer of forest products in the world, but the world is "awash in wood," he said.

"I don't believe we're going to get paid a bunch more money for our product," Neeser said. "As tough as it may sound, we have to change our business model. The market is not going to save us."

British Columbia's traditional image as a hewer of wood stems largely from more than a century of logging on the coast and Vancouver Island.

But the reality now is that the most profitable timber production is in the B.C. Interior as coastal stands of prime old-growth have diminished or been put off limits. Much of the remaining first-class timber is in steep terrain, costly to harvest, or mixed in with less-desirable species.

The companies spent the last several months working on their proposal and they urged other coastal forest companies and stakeholders to adopt and adapt its principles.

The industry requires $558 million to $730 million in new capital investment over the next few years, according to the report, which also included proposals to:

• Double the amount of lumber remanufactured into specialty products.

•Increase investment in product development and promotion.

• Retool existing mills and encourage investment in technologically advanced sawmills to process smaller, second-growth logs.

"Rebuilding the industry will require the implementation of policy reform, modernization of our labor agreements and capital reinvestment," said Paul McElligott, Timberwest Forest Corp.'s president and chief executive officer.

The report pledged to "achieve a collective agreement that is modern, flexible, free from restrictive work practices and one that ensures employees do well when companies do well."

The companies, according to the report, aim to reduce labor costs to "bring them in line with costs in other North American regions" and find savings through eliminating pay for time not worked provisions and "more flexible work practices."

"We will negotiate a separate collective agreement for value-added facilities that improves the competitiveness of existing operations and encourages investment in new facilities," the report said.

"We believe there is potential to create more than 5,000 new jobs by 2013 and that's net of the downsizing that has to occur at the front end."

There is no denying that transforming the industry will mean fewer jobs in the short term, McElligott said.

"A successful transition will assist people as they move into retirement and pursue other opportunities," he said.



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