, LOG EXPORT DEBATE ~@ LAYOFFS HEAT UP With the announcement on Febru- ary 17, 1989 that Fletcher Challenge Canada would be permanently clos- ing one of its mills and downsizing some of its logging and operating facilities, TWA-CANADA has renewed its call for a total ban on the export of raw logs from British Columbia. Inits layoff announcement the com- pany acknowledged that the closure and downsizings were the result of a “log shortage problem”. For the hun- dreds of employees directly affected by the announcement, the “shortage” was another bitter example of how poorly regulated logging practices and ineffective provincial log export con- trols are contributing to the loss of full-time work in B.C.’s forest products industry. The IWA’s call for a log export ban focused attention on the current rules which control export activity. One of the governing principles of those rules is that logs could only be exported if it could be shown that they were “sur- plus” to the needs of B.C. mills. “,... the surplus rule (can) easily be manipulated by large Forests products companies... to contrive a surplus...” The IWA and others opposed to export have complained that the sur- plus rule could be easily manipulated by large forest products companies who could control harvest activity sufficiently to contrive a surplus. Although a 1983 report on provin- cial log export policy confirmed the IWA’s assessment of the flawed surplus rule, no major change has taken place. Over the years log export support- ers have tried to downplay the need to toughen the rules which currently govern log export activity within the province. Their arguments have focused on a number of points. They contend that government statistics show that the volume of log exports represents a small portion of our annual provincial harvest and the quality of the timber exported is far from exceptional. In addition, they point to statistics from the major log importing countries which indicate that curtailing B.C. log exports would not influence those countries to import more B.C. lumber. And finally, they argue that many logging shows on the coast would have to be curtailed if they could not export. Although the current statistics on log export volumes show that they account for only 3-4% of B.C.’s annual provincial harvest, those statistics are very misleading. They assume that exported logs were sourced from every region of the province. However, the vast majority of exported logs are harvested from the coast region. When you compare export volumes with annual harvests on the coast, 9-10% of the coast harvest in 1987 and 1988 was directed into log exports. To put that figure in some perspective it is important to remember that ten years earlier the same statistics showed that only 2% of the coast harvest was making its way into log exports. The question of log quality in the export trade is a more difficult one to address. The statistics on the grade of logs exported show that most of the 8/LUMBERWORKER/MARCH, 1989 volume is a mid-range grade of log. However, industry sources familiar with the export market say that the quality in the export logs cannot be accurately assessed by simply look- ing at the “statutory” grade of these logs. According to one industry observer, just looking at statutory log grades is like trying to gauge the quality of a car by just looking at its age. Within each grade category there is a wide spectrum of quality and the exported logs are typically the very best within the particular category. For example, an export buyer may be looking for “J” grade logs (small diam- eter sawlogs), but his specifications are very strict. The log must be sound, preferably forty feet in length, have very little sweep and minimal defect. When the export buyer is finished sorting out this better quality mate- “\.. the vast majority of exported logs are harvested from the coast region...” ——<—<—$—— ___ rial the domestic mills are then left to manufacture the “guts-and-feathers”. One of the more serious contentions made by log export supporters is that, Phillip Legg Research Notes the major log importing countries would not react to our export restric- tions by buying more BC. lumber. Instead, they would source the logs from other nations. However, over the last decade a number of log exporting countries have successfully imple- mented restrictions on log exports which resulted in an increase in their shipments of sawn lumber products. Prior to the imposition of log export, restrictions in the mid-1970s, Malay- sia and Indonesia were the dominant producers in a log export trade which shipped approximately 22 million cubic meters of logs annually to Japan. Once the restrictions were in place, log export volumes fell by more than 50%. Although skeptics pre- dicted that Japan would find other sources for its log requirements rather than import manufactured wood prod- ucts from Malaysia and Indonesia, the facts show a much different story. Since imposing the restrictions a healthy domestic manufacturing in- dustry has developed. And both coun- tries have experienced steady in- creases in the shipment of manufac- tured wood products to Japan. Ac- cording to lumber marketing sources in BC., log export restrictions in the two countries have been directly responsible for a 30% increase in ship- ments of manufactured wood prod- ucts to Japan. What appears to be the most com- pelling argument made by log export- SQUANDERING A RESOURCE — This cold deck of coastal hemlock is. marked for overseas export. At the same time B.C. sawmills have curtailled operations due to log shortages. ers is the‘ viability of poor quality logging shows on the coast. They argue that withopt export these oper- ations could not continue. However, to accurately assess the question of viability it is important to examine all logging operations under a company’s control not just the “tough” ones. Most forest products companies har- vest timber from a mix of logging shows. A fair assessment of viability woujd mean averaging the losses from the poorer sites with the profits from the better quality operations. In fact, one of the problems with current log export rules is that there was no mechanism in place to stop compa- nies from logging their best quality sites for export. Although this strat- egy provided windfall profits for the company, it did nothing to promote the viability of mills on the coast. At the heart of the log export issue is the question of how to control our forest resource in a way that provides the best long-term benefit to the prov- ince. That's not just political rhetoric. Few in the general public appreciate “... When the export buyer is finished .. . the domestic mills are left to manufacture the ‘guts and feathers’. ..” that 95% of the forest land in BC. is owned by the province. When com- pared to areas like Oregon and Wash- ington where over half of the forest land is privately owned by timber companies, B.C. is in a unique posi- tion to direct logging and milling activities in a way that would gener- ate positive long term benefits for the province. The greatest form of benefit is employment. By developing log- ging activities which supply a domes- tic manufacturing base, B.C. could generate three times the number of jobs than if it simply allowed the logs to be exported. And those jobs are just the direct employment associ- ated with logging and milling. If you add the spin-off jobs, another 2-3 jobs are added to each job created in the forest industry. The prolonged recession from which our industry has finally emerged deci- mated the employment in every part of our industry. On the coast, employ- ment in I.W.A. certified operations has fallen by close to one-third. Log- ging and milling jobs have both shared in this decline. It is essential that industry be directed in a way which will regain the jobs which were lost during the recession. The role of the provincial govern- ment is the key to meeting this objec- tive. Through proper control of the forest resource, it can ensure that harvested timber is used to promote domestic manufacturing for export. The experience of the past has shown that succumbing to the interests ot those who promote log exports over domestic processing is not the solu- tion. It is short-sighted and does not come close to restoring the kind of employment this industry enjoyed a decade ago. If the current provincial government is not prepared to take the necessary steps to meet these objectives, it is time to elect one that will. Phillip Legg is the Assistant Re- search Director at IWA-CANADA in Vancouver, B.C.