Investing in Forestry Creates Enormous Economic Benefits

Government and industry have been long time partners working to create a healthy forest industry in B.C.  Great strides have been made by taking steps to diversify forest product markets especially in emerging markets like China, and recent gains in market share there are pointing to our success.

In 2010 exports to China reached $342 million and have grown 10-fold in just seven years, increasing to 3.3 million cubic metres from 368,000. More than 10 B.C. sawmills and a thousand employees are dedicated to producing lumber for China alone.

This is not accidental. Market growth in China is the direct result of strategic investment in product development and design, technology transfer, and sales and marketing by a partnership that includes the forest industry, the federal government and the provincial government through Forestry Innovation Investment.

However, instead of the provincial government increasing FII’s funding to further grow these vital product and market development programs worldwide, its funding is steadily declining, dwindling from a high of $22.5 million to its current budget of $18.5 million.

A few weeks ago in January 2011, the Ministry of Forests, Mines and Lands released its third status update on the Working Roundtable on Forestry report that includes a vision, six key priorities, and 29 recommendations.

One of the key priorities identified in the report is “Embracing Innovation and Diversification”. Recommendation #18 states: “We should continue to diversify forest product markets with particular emphasis on emerging markets such as China, ensuring that marketing efforts are sustained, coordinated and based on what end users want.”

The goal for the British Columbia forest industry is to achieve “a vibrant, sustainable, globally competitive forest industry that provides enormous benefits for current and future generations and for strong communities.”

Markets like China hold the answer. With 8 million housing starts annually, if we were to capture just 10% of that market share we’d match the total U.S. market in its former glory days.

But for this to happen, when the Liberal Party elects its new leader this month, he or she will have to believe in investment in B.C.’s forest industry, and support product and market diversification by putting the money back where the most potential growth is.

 

For the full report “Implementation of The Working Roundtable on Forestry’s Recommendations” visit:

http://www.for.gov.bc.ca/mof/forestry_roundtable/20110120-RoundtableStatusUpdate.pdf

 

 

 

Does the HST have a future in B.C.?

It’s not news that the B.C. forest industry would vote to keep the HST when or if the referendum occurs after the B.C. Liberal leadership race takes place and someone decides what to do about the tax.

There are a plethora of options depending on who is elected by the party on February 26:

• Frontrunner Christy Clark says she’d likely forgo the referendum and put the HST to a vote in the legislature

• George Abbott, Kevin Falcon and Moira Stilwell support the HST, but Abbott and Stilwell would hold an HST referendum as soon as possible and Falcon says he might lower the HST to 10% over time

• Mike de Jong would also get the vote over with as soon as possible and thinks it’s time to start considering alternatives to the HST

• Don Cayo says “the HST is a much less economically damaging way for government to raise money than is the PST it replaced”, a statement most business leaders and economists support

Don who? Okay, so Cayo’s not a leadership candidate although many in the coastal forest industry wish he was. Rather he’s a well read columnist in The Vancouver Sun, known to take thoughtful, level-headed approaches to issues facing the citizens of our province.

In his column today [Wednesday, January 26], Cayo cites two key positions of support for the HST: one from Jack Mintz of the University of Calgary’s public policy school and the other from Gregory Thomas of the Canadian Taxpayers Federation.

A new paper released this week by Mintz shows that in B.C. and Ontario the introduction of harmonized sales taxes “are milestones for growth prospects in the two provinces.” And according to an article in the Financial Post (January 25), Mintz’s paper illustrates that, “Reversing this step, especially in British Columbia where it is very unpopular, ‘would be investment killing and would cause considerable harm, including losses in employment and hence an erosion in living standards.’”

The Canadian Taxpayers Federation points to the cost of reinstating the old PST, citing duplication as its downfall. As Cayo points out, it would create a need “for duplicate tax collectors, duplicate forms to fill in, duplicate records and rules to follow, duplicate payments and the oversight required.” The Federation is recommending British Columbians say ‘Yes’ to the HST and vote ‘No’ on the PST.

The B.C. coastal forest industry stands by these experts. The HST is saving the B.C. forest industry money that it can reinvest in its mills and machinery, and use to sustain and create jobs. Not to mention, the HST is a deal breaker when it comes to the industry’s ability to compete in the global marketplace and meet China’s low-cost demand.

One Year Later…

Coast Forest Products Association is working with government officials in Japan to incorporate results of a tremendously successful earthquake simulation test into the country’s stringent building code.

Visit the Coast Forest website for more information: www.coastforest.org

Coastal Forest Industry Supports HST

At a time when B.C.’s coastal forest industry is struggling to sustain itself through unprecedented economic hardship, the introduction of the Liberal Government’s harmonized sales tax comes as good news.

For years Coast Forest has been pushing for the introduction of a value-added tax like the HST. Why? Because “approximately 40% of the PST revenue collected by Victoria is paid by businesses on a wide variety of inputs used in producing goods and services,” according to the Business Council of BC. “Under the proposed HST, the provincial sales tax now paid on inputs is effectively eliminated, as the 7% provincial portion will be credited along with the 5% GST for all goods and services purchased for business operations.”

Other jurisdictions do not pay this tax, so, like many producers and manufacturers in the province, to remain competitive worldwide the forest industry has been unable to pass the current PST on to its customers, and it has cost the industry $140 million per year.

Remember, the forest industry along with the other major manufacturers and exporters in this province are the industries that generate the high paying jobs and wealth which support our quality of life. By government creating a level playing field, businesses are more able to invest and increase productivity, which means they’re more able to sustain those high paying jobs, so people continue to have the ability to buy homes and eat out at restaurants. In fact, consumers can expect to see the price of most goods and services fall as the PST disappears, a trend evidenced in other jurisdictions under the HST.

The premier understands the introduction of the HST will not be as easy for some industries as others, and is offering to help with the transition as businesses adapt to the new regime. But timing is everything. With Ontario’s introduction of the HST, that province automatically becomes more business friendly.  B.C. can ill afford to lose investment dollars that could subsequently flow east. This is a time when government and business need to work together to strengthen B.C.’s economy.

– R. M. (Rick) Jeffery, President & CEO, Coast Forest Products Association

Moving the Coastal Forest Industry Forward

Minister of Forests and Range, Honourable Pat Bell. Photo Credit: Government of British Columbia

Coast Forest Products Association congratulates the Honourable Pat Bell on his re-election as MLA of Prince George-Mackenzie and his reappointment as Minister of Forests and Range. The association looks forward to continuing to work with the minister and his staff to strengthen the relationship between industry and government, and build a strong and sustainable coastal forest industry.

B.C. Wood-frame Housing Rebuilding China

A demonstration house in the Guanzhuang Township used to train local builders on-site in the techniques of wood-frame construction.

One year after the devastating Sichuan earthquake the first wood-frame houses constructed of B.C. wood are now being completed in China.

This 124 square metre demonstration house is located in the Guanzhuang Township and was used to train local builders on-site in the techniques of wood-frame construction. Local builders, used to working with brick and concrete, are now recognizing the superior strength and earthquake resistance of wood-frame construction. For the first time ever B.C. lumber sales to China are rivaling those to Japan, partly due to historically low lumber prices, but also due to joint industry/government projects like these that are opening up markets for B.C. wood products in Asia.

Comparing the A and the A+ Student

In a province where forests are a major part of our collective identity, the more citizens that are aware of sustainable forest management (SFM) and marketplace tools like forest certification, the better off we all are. However, Christopher Pollan’s recent article in The Tyee (www.thetyee.ca) entitled “The War over Eco-Certified Wood”, leads readers to perceive conflict where none should exist.

While the article threads facts into the story, the overall picture is one of misguided negativity. As the CEO of the Coast Forest Products Association, I think the people of British Columbia have enough negativity on their hands right now with the biggest economic hit to the forest sector we’ve ever seen.

The article mentions the ad campaign SFI is running, which focuses on the fact that 90% of the world’s forests are uncertified. The ad promotes SFM, with a call to source products from certified forests and encourage responsible forest management. Calling SFI a “better than nothing” approach is shortsighted and is a slap in face to those who are on the ground doing right by our forests and our communities here in BC and on the coast.

Coast Forest’s members manufacture products from well-managed forests and compete with international producers that may be absent the legal forest management framework we have in BC, and may also not have independent certification. The fact that BC has the most certified area of any jurisdiction anywhere in the world is something we should be proud of. BC’s widespread adoption of independent certification sets the bar for the rest of the world, so I wholly agree with SFI’s approach – and the approach of many major forest product customers – of not wasting energy arguing over the A and A+ student.

With 90% of the world’s forests remaining uncertified, the fact is that most of the class isn’t doing well or isn’t showing up at all, and that is a globally significant problem.

I believe in inclusive procurement policies – policies that don’t limit a company in their efforts to meet their sustainability goals. We promote all three of the major systems used in BC and Canada – CSA, FSC, and SFI. And we are not alone – companies and governments around the world take an inclusive approach. For example, the UK’s independent Central Point for Expertise on Timber (CPET) has deemed all three systems as providing a legal and sustainable assurance for forest products. This rigorous independent assessment doesn’t see a war over certified wood.

On a final note, the article talks about the all-to-common occurrence of greenwashing. Influencers and governments across North America are addressing this issue – and both SFI and FSC are positively referenced in their independent reports (Terrachoice Environmental Marketing, and Canada’s Competition Bureau, among others.)  Mr. Pollon speaks of a “war over eco-certified wood.” Perhaps that war only exists in the minds of a few campaigning organizations and the certification system they exclusively endorse.

– Rick Jeffery, President & CEO

Moving Forward…

Now that the provincial election is behind us and hopefully the rhetoric has begun to fade away, attention is focused on the pressing economic issues that continue to face the coastal forest industry as the downturn in the U.S. housing market and the global financial crisis persist, challenging us to grow stronger or wither away.

With 50 per cent of coastal wood exports going south of the border and home construction activity in the U.S. expected to go on falling this year, it’s predicted the current economic crisis will continue. However, despite these challenges, forestry remains one of the three major economic drivers of this province along with mining and oil and gas.

This spring Coast Forest visited communities from Powell River to Campbell River to talk to local governments about these challenges and what the future holds for communities that depend on our industry. Today we are carrying on our work with the provincial government to build a stronger understanding of the forest products business across multiple levels of government. Together we are working to reduce costs, increase product value, boost productivity, shift production into emerging or promising markets and create hosting conditions to attract much needed investment.

The B.C. coastal forest industry’s challenge is to produce positive economic results so that it can continue to provide high paying sustainable jobs for the 12,400 forestry workers and their families who will still rely on the coastal forest industry when the market recovers, in addition to generating the spinoff employment of another 24,000 related jobs.

Let’s not forget the coastal forest industry is one the most diversified manufacturers of forest products in the world and global demand for these products continues to grow year after year. Over the next four years, we have the opportunity to make sure British Columbia’s forest industry not only recovers but continues to be a major contributor to the social and economic well being of our province.

– Rick Jeffery, President & CEO

Correcting the Record on NDP Forestry Critic’s Attack

In a desperate political move, the NDP’s Bob Simpson has decided to pick a forestry fight and side with the Americans and in the process put thousands of B.C. jobs at risk. To make matters worse, Simpson hasn’t even got his facts straight.

Simpson’s latest outburst in a Canadian trade journal [Madison’s Canadian Lumber Reporter] is dishonest, ill-informed and reveals a lack of understanding of an industry looking for leadership not political opportunism.

Claiming that high-grade cedar logging and heli-logging on the B.C. coast is causing “two-bit stumpage” is ludicrously untrue yet may provoke the United States lumber lobby to file costly court challenges which our industry will have to defend.

The facts are that stumpage on the coast has not fallen below $8.99 a cubic metre since 2006 and was at $11.85 a cubic metre through the first quarter of 2009. If Simpson can count, he’ll realize that’s a long way from 25 cents.

The ill-informed NDP critic also attacks the Market-based Pricing System, calling it a mess and implying that it contravenes the Canada–U.S. Softwood Lumber Agreement – another patently untrue and dangerous statement.

MPS was updated in January as part of the annual update process to reflect ongoing market conditions and the market price of logs and lumber. The update was 100 per cent in compliance with the Softwood Lumber Agreement and followed the rules and procedures provided in Article XVII (2) of the SLA. Indeed, the changes improved the accuracy and reliability of stumpage prices ensuring they are truly market based.  Picking up another old fairytale from his union bosses, Simpson also wants to “restrain and restrict log exports through incremental taxation”. If the NDP did this, it would bring immediate trade action by the U.S. because it is a clear circumvention of the Softwood Lumber Agreement. The result would shut down what’s left of B.C.’s forest industry.

With less than a week to go before the election, Simpson has clarified the NDP’s position on forestry. Unfortunately, it is a position that will result in thousands of lost jobs and millions of dollars in lost provincial tax money that could have funded schools and hospitals.

– Rick Jeffery, President & CEO, Coast Forest Products Association

FORESTRY LEADERS REJECT NDP PLAN TO TEAR UP SOFTWOOD LUMBER AGREEMENT

During challenging economic times, B.C. forest industry leaders are calling for stability and certainty, but NDP candidates are putting the sustainability of forest communities at risk by threatening to tear up the Softwood Lumber Agreement.

Speaking at an all-candidates meeting on April 24, NDP candidate for Prince George – Mackenzie, Tobias Lawrence, said: “Carole James has stood up and we have said that we would like to renegotiate the Softwood Lumber Agreement… so standing here today, yes we would like to renegotiate.”

“Leader after leader in the forest industry is saying their companies and employees simply can’t afford the reckless promises of the NDP,” says Prince George-Mackenzie BC Liberal Candidate Pat Bell. “It is time Carole James stands up for forestry dependent communities, renounce the comments by her candidate, and support the Softwood Lumber Agreement.”

Coast Forest Products President and CEO Rick Jeffrey noted in a news release on April 24 that without the Agreement, countervailing anti-dumping duties “would shut down the sawmilling business in B.C. and drag the pulp and paper companies, remanufacturing industry and loggers along with it. It would be catastrophic.”

In a recent speech to the Quesnel Chamber of Commerce, the head of the world’s largest softwood producer rebuffed the NDP approach. “In my opinion, it is the height of irresponsibility to put the future of our industry at risk by advocating the province walk away from this deal,” said West Fraser Timber CEO Hank Ketcham.

Lumber Trade Council President John Allan told the Vancouver Sun on April 9, “I don’t see any point in adding gasoline to the fire that is already raging in Washington about protectionist sentiments and enforcement of trade deals.”

“The NDP’s reckless plan has no support from our province’s forest leaders – people who are creating and protecting jobs in northern and rural BC,” says Bell. “In fact, not one major industry group across BC supports the NDP’s plans which include tearing up the Softwood Lumber Agreement.”

In terms of softwood lumber, the forest sector exported $10.1-billion in wood, pulp and paper products last year and $5.6-billion went to the American markets.

– Shane Mills, BC Liberal Party   Tel: 604-648-4258

Authorized by Jim Pipe, Financial Agent, BC Liberal Party