PRESIDENT’S MESSAGE

Most indicators point to
strong forest industry

by Gerry Stoney

jhe wood products industry is doing
- very well, recording unprecedented
profits. And all the important trends,
which we in the IWA follow closely,
suggest that the industry in general is
| going through a positive, fundamental,
and we believe permanent improvement in its
near and long-term prospects.

The most obvious signs of that shift are the
dramatic increases in lumber prices. They are
roughly double the highs that they reached in
peak market periods of the late ‘70’s and mid-
to-late ‘80's.

The most significant factor is timber supply.
The major timber producing regions in North
America, particularly in the United States, are
either at their limit in terms of increasing pro-
duction or are so permanently constrained that
they have been forced to drastically decrease
their production.

In the U.S. Pacific Northwest, federal regula-
tions on the management and preservation of
forest lands and the abuse by environmental
groups of the U.S. court system have effective-
ly shut down harvest activity on U.S. federal
Jands in that region.

President Clinton’s election promise to
somehow undo the legal and administrative
gridlock has not produced any real solutions. If
anything, Clinton’s proposals only confirm and
confound the problem. Over 6 billion board

feet of lumber has
been permanently
removed from the
North American
lumber market.

The U.S. South is
not in a position to
significantly offset
the declines in the
Pacific Northwest.
The physical limits
of the forest re-
source are butting
up against a major
overbuilding of pro-
cessing facilities.
The region has a
serious and grow-
ing quality problem
with southern yel-
low pine. More and

continue to gain confi-
dence enough to buy
and spend in ways
which are positive for
wood products.

And our dollar is at
the lowest level it has
been in about seven
years. That is not good
new for Canadians
touring in the U.S., but
it is very good news for
our industry. Most ana-
lysts are forecasting the
dollar to fluctuate in
the mid seventy-cent
range, a prospect that is
certainly positive for
softwood lumber pro-
ducers.

Unfortunately every

more juvenile wood
is making itself into the marketplace.

That's bad news from the consumer perspec-
tive because the stability and strength of this
wood just isn’t there and so product quality is
going to suffer.

How those quality issues sort themselves out
is hard to say. But it is pretty clear that it is a
problem which will work to the long-term
advantage of S.P.F. producers.

These supply and quality problems are being
super-imposed on a North American market
that is finally beginning to emerge from a long
and slow recovery

Moreover, these supply and quality con-
straints occur at a time of increasing demand
for lumber. The U.S. economy, despite the
recent tick-up in interest rates, is entering a
period of reasonable stable and balanced
growth. And as that happens, consumers will

silver lining has its own
dark cloud and for producers in several
provinces that problem is on the pulp side.
Prices on that side of the industry are low and
most projections don’t show any substantial
improvement in pulp industry fundamentals in
the very near term.

Inevitable, however, timber supply pressures
are going to effect the pulp industry, especially
mills in the U.S. The loss of residual chips from
U.S. sawmills that are being closed because of
the timber shortage down there will force a
rejigging of U.S. pulp capacity and that should
provide some benefits to B.C. pulp producers.

So on the whole the industry is in good
shape and employers have no reason to play
games in negotiations.

Woodworkers have made enough sacrifice to
keep this industry in good shape. Now it’s time
for a little payback.

LANDS AND FORES

Preservationists receive U.S.
charity and foundation help

by Kim Pollock

f the forest in your area is turned into a park
and you lose your job, chances are that
American charities and trusts helped do it.

Green groups hostile to forestry in British
Columbia appear to have used huge grants
from American foundation to undermine Canada’s
position in the softwood lumber dispute with the
United States.

Preservationists also used buckets of U.S. foun-
dation money to support their anti-logging efforts
at the publicly funded B.C. Commission on
Resources and Environment.

A planning document obtained by the IWA indi-
cates a coalition of anti-logging groups set out a
$1.43 million budget, aimed mainly at influencing
regional CORE tables. Of this the groups had
requested some $1.03 million from American foun-
dations, including the Pugh Charitable Trusts,
Lazar Foundation and Bullitt Foundation.

Sources say actual grants totaled about $900,000
Canadian. :

The groups campaign coordination committee
included John Broadhead of Earthlife Foundation
Canada; Ric Careless of Tashenshini Wild; Vicky
Husband of the Sierra Club of Western Canada;
Colleen McCrory of the Valhalla Wilderness
Society; Greg McDade of the Sierra Legal Defence;
and Lloyd Manchester of Sierra Legal Defence.

Their strategic plan, entitled the B.C. Ancient
Forests and Wilderness Plan, calls for a coordinat-
ed plan to “identify, motivate and organize local
grassroots activists to participate in CORE” and
the Protected Area Strategy. As well, the strategy
aims at building coalitions, conducting research in
mapping and economics, developing “local cam-
paign materials for building public support” and
developing local organizations.

Economic analysis is highlighted as a major con-
cern, likely because the plan’s authors acknowl-
edge that “the ‘job versus the environment’ conun-
drum poses probably the single greatest obstacle
to completing and maintaining a protected area
system in B.C.” In other words, if people continue
to be concerned about potential job loss, the
whole grand scheme will fail.

One element of the strategy, therefore, is to pro-
vide apparently “learned” studies that will show
how wrong we all are to worry about our forest-

based jobs. Therefore,
the environmental groups
are keen to “counter the
myths about the contri-
bution of logging to the
economy and employ-
ment.”

One such study, pub-
lished in November by
the Sierra Club with
funding from two US.
foundations, purports to
show that the forest
industry is declining in
its importance to the
B.C. and Canadian economy and that the urban
and rural economies of the province are being
“decoupled.”

The study, by Ray Travis is extremely one-sided,
but it’s not hard to see how useful it would be if
your intent was to shut down the forest industry!

Travers states, for instance, that forestry con-
tributes only 6% of B.C.’s gross domestic product.
He neglects to point

So the argument that the “two economies” are
“decoupling” is unfounded. But even if it. were
true, does it make sense to beggar one part of the
province simply because the other is doing rela-
tively well?

The same group of preservationists have since
created a new front organization, called B.C. Wild.
It too feeds merrily on U.S. foundation funding
and it also see part of its role as “delivering critical
research and information to organizations
throughout the province including economic
analysis.”

This was its intention when it hired erstwhile
CORE table rep and Green Party candidate
Michael Mascall to look into the costs and benefits
of government investments in forestry.

Mascall’s conclusion was that “the annual cost
to the public of the forest industry public invest-
ment is $930 million, and that B.C. stumpage is
“undervalued” and our wood “underpriced.” In
other words, at a crucial moment in the Canada-
U.S. softwood dispute, Mascall and B.C. Wild
explicitly take the same position as the Americans.
Mascall even bases his

out that when you add
in the spin-offs of for-
est-demand in other
sectors that rises to
16.9%, according to a
1991 B.C. government
study for the Forest
Resources Commis-
sion.

Since a huge propor-
tion of our forest prod-

One strategy

“learned” studies to show
we are wrong for worrying
about forest jobs

calculations on the
same — erroneous —
assumptions used by
the U.S. Commerce
Department!

As economist Gary
Bowden reports in a
review of the Mascall
paper: “the Mascall
report selected for its
calculation a prelimi-

is to provide

ucts are exported, the
forest industry injects a flow of “new” wealth into
our economy, wealth that would otherwise not be
available to “drive” other industries.

Over 40% of British Columbians live in commu-
nities in which the forest sector contributes 30
percent or more of basic employment. Across
Canada, over 240 communities depend on forestry,
but contrary to Travers’ claim that the rural and
urban economies are being “decoupled” into a
urban fast track-high tech economy and a rural
slow growth-resource based one, even Greater
Vancouver and Victoria are massively dependent
on forest-sector activities and spin-offs.

A study last year by UBC Dean of Forestry
Clarke Binkely, for instance, showed that in 1989
the forest sector directly or indirectly contributed
about $6 billion to the economy of Greater
Vancouver, including 115,000 jobs with wages and
salaries of over $3 billion. As well, provincial gov-
emment revenues due to forestry amounted to
$800 million: most of those tax dollars flow to
Victoria and Greater Vancouver.

nary finding by the U.S.
Department of Commerce that the rate (of sub-
sidy) was 6.88 percent and ignored the fact that
the Department subsequently revised the rate to
2.91.” That makes a difference of $520 million in
the total alleged subsidy.

The same sort of error runs throughout the cal-
culations, making Mascall’s work useless in under-
standing the costs and benefits of forest invest-
ments by government.

As Bowden concludes: “The report’s claim that
the public bears a $1 billion annual cost to support
the forest industry is based on meaningless com-
parison of incomplete and appropriate numbers
and is found to be without foundation. Indeed it is
difficult to believe that such a flawed and inade-
quate report was meant to be taken seriously.”

Well, maybe not in Canada. But in the board-
rooms of U.S. foundations? Perhaps.

Kim Pollock is the Director of IWA-CANADA’s
Environment and Land-Use Department.

SSS
4/LUMBERWORKER/AUGUST, 1994