This week:
Dollars,

and the facts |

During the past two weeks, we've

_ taken a look at the preferred har-

vesting approach as presented by
Milton Jovial’s woods manager,

_ Herby Squish. It was a responsible

plan, said Squish. A sustainable
plan under which Jovial Logging
Inc. would harvest according to
the existing timber profile. Milton
didn’t like the plan, though. The

' bottom line was too low, he said,

and he wanted to see some
revisions that would bolster it a
little.

Milton Jovial smiled as he
scanned a revised quarterly man-

agement plan from top to bottom.

Jovial zeroed in on the bottom line
and the curve in his lips
straightened... but only a little. It
wasn’t a great bottom line. But it
was better than the first. It indi-
cated an estimated net quarterly
profit of $889,260 rather than the
$665,000 listed in the first altempt.
Herby Squish fidgeted with a
pencil as Jovial hummed and
grunted his way through the plan a
second time... Presumably looking
for places where he could scrape
up a few more dollars and bring
the bottom line closer to a million.
"Not bad," Jovial said finally.
"But I was hoping for better."

cents

“Milton,” Squish sighed. "You
can’t do better. What you're look-

ing at is a plan called high grading -

and..." .

"High grading? What’s that?"
“"] thought you’d never ask,
Milton."

Squish explained that his revised

-plan was oriented toward harvest-

ing all the best timber first. Not
only was the quality of the fibre
better, it was also more accessible
and the stands slated to be logged
at the beginning contained fewer
pulp logs. The bottom line, then,
was lower costs and higher profits.

"Lower costs and higher profits,"
Jovial repeated. "Now you're get-
ting the picture, Herby. Now
you’re beginning to talk like a
businessman."

"Yes sir," Squish agreed. "But
not ‘a very smart businessman."

Milton Jovial straightened in his
chair and scowled at Squish.

"You calling me stupid!" he
roared.

"No sir," Squish replied flatly.
"Just short-sighted.”

Jovial stared Squish in the eye.
"You had better explain that," he
said in a level tone.

Squish stared back at Jovial.
"Perhaps I’ve gone too far," he
thought. "This man is more inter-

Terrace Review —— Wednesday, September 18, 1991 7

|Forestry
Insights

by Tod Strachan, in consultation with Rod Arnold and Doug Davies

ested in dollars and cents than he
is in facts." The staring contest
continued while Squish searched
for a way to begin.

"Milton," Squish said finally.
"The plan you’re looking at is
what I call the five-year glut..."

Glut? Jovial wasn’t sure, but he
believed Squish was about to begin
a little name-calling. "I think you
should choose your words a little

{to run a business?”

"I’m not a baker, Squish," Jovial
said impatiently. “Make your
point." -

"Sir. Within the area of your two
forest licenses, the ratio of highly
productive sites with good stands
of timber to- poorer sites with
marginal grades of timber is 25 to
75. In other words, the bottom line
you’re looking at right now, only

more carefully,
warned.

"Sir," Squish returned in desper-
ation. "If you have a boxful of
apples, you can bake a dozen pies.
But if you use all the good apples
first, the last nine will be of a
quality nobody wants... That’s

Squish," he

what I’m trying to tell you. Don’t

you agree it would be a poor way

4

Letter to the Editor

Kemano decision shakes

confidence of business

To the Editor;

Many events have happened in
the world since I last wrote to you
from Victoria; however, no other
has shaken the confidence of the
business community (both large
and small) more than the May
judgement brought down by the
Federal Court of Canada by Justice
Walsh which overturned the agree-
ment between the federal and
provincial governments and Alcan
on the Kemano Completion Project
(K.C.P.) which would have cost a
billion dollars. (SO percent of this
sum has already been spent.) |

Without going into the merits of

- the program as to whether it was

good or bad, the fact remains that

it was approved: by both levels of

government. Up to now, the sanc-
tity of contracts has been the
cornerstone of our society. This
matter should concern all of us
because if an agreement with gov-
ernments does not mean anything,
then nothing we do is secure —
whether it’s a major development
like K.C.P., or a small agreement
to build a feed lot, dairy farm or
processing plant of any description.

We should ask ourselves how we
would like it if, having received a
building permit for a house and
spending $50,000, we were to have
the building permit cancelled or
put on hold. I cannot imagine

anyone puiting dollars into any
development project in Canada
until a little common sense comes
back into the security of agree-
ments.

With the rapidly changing events
on world trading patterns, Canada
is already facing extremely diffi-
cult times ahead. With Free Trade
and other issues, there is little
reason for companies to develop in
Canada when they can go else-
where and ship products back into
Canada. This Court decision will
have a lasting, detrimental effect
on all development, large and
small, until it is clearly changed so
that an agreement means some-
thing once it has been signed.

I sympathize with the 600 people .

who lost their jobs and the 400
others not directly employed. by
the company who also fost their
jobs. Many also fost the homes
they had worked so hard for, due
to the decision. This might not
sound much to some people, but if
it was you it would be a real disas-
ter. As I see it, this is onty the
start of a mullitude of shattered
dreams when we think about all
ihe young people coming through
our schools and universities who
will find it twice as difficult to
find work and build their dreams
due to lack of faith in agreements.

Do they mean anything any
more? The answer has to be ’no’,
I'm extremely disappointed that
our local Members of Parliament
have not come forward with state-
ments about where they stand on
the issue of agreements between
governments and industry or with
individuals, for that matter. I know
I don’t feel secure with my recre-
ation lease on a lake any more. I
want to hear from my elected
representatives to know where they
stand on such a fundamental issue
as this.

The whole structure of society is
at stake, and all we hear is silence
from those we elected and in
whom we placed our trust. In my
opinion, both the federal and the
provincial governments should
hold an immediate conference to
draft firm legislation that will
show clearly the steps that com-
panies and individuals must take in
order to obtain approval; once that
happens, it is final. The decision-
making process has crumbled and
must be restored as quickly as
possible, or else Canada will go
back to being a third world power
drifting in limbo through lack of a
decisive decision-making process.

Cyril M. Shelford,
Victoria.

applies to one-quarter of- your fibre
inventory. All the good sites will
be logged in the first five years
and you'll be left with 15 years of
harvesting the poorer, less acces-
sible sites.

Jovial pondered Herby’s remarks
for a moment. "Squish," he said

after a brief pause. "I think you're.

over-reacting to what may be a
myth. I’ve flown over most of my
licence area, and there are trees
everywhere. I don’t see a lot of
difference from one mountain top

to another. And if there’s a way to”

maximize profits in the first few
years of operation... It’s simply
good business, and that’s what
we're going to do."

Squish let out a long sigh. He

' knew this was going to be a long

morning but getting Milton Jovial
to see the light seemed to be an
impossible task. "There’s never a
miracle around when you need
one,” he half whispered.

"What's that?" Jovial asked sus-
piciously.

"Never mind, Milton," Herby
said in a discouraged tone. It was
time to drop a bomb of sorts. "I
didn’t prepare this high grade plan
with the idea it would ever be
used. I only prepared it to make
you understand that there is more
to running a successful logging
operation than the bottom line."

"Squish. Why do I get the idea

you're trying to accuse. me of
raping and pillaging the land?”

Squish ignored the remark. He
was busy shuffling through one of
several file folders. "Okay," he
said with renewed energy after
finding the target of his search.
"Take a look at this. This is what
you might see as a quarterly man-
agement plan once all your better
stands are gone. Tell me what you
think of this bottom line."

Jovial took the piece of paper
offered by Squish but he was
suspicious. He expected a report
slanted towards Herby’s point of
view and wasn’t prepared to take it
seriously.

Again, Jovial scanned a quarterly |

management plan and set his eyes
on the bottom line... An estimated
quarterly net profit of $376,164.
Jovial laughed, "Herby! You don’t
expect me to take this seriously, do
you?"

Squish was devastated. Where he
had expected surprise and concern,
he received nothing but a horse
laugh.

"Yes Milton. | do expect you to
take it seriously. You're looking at
a very realistic estimate of the
future of Jovial Logging Incorpor-
ated. A future, if you choose this
high grade option, that doesn’t
look very bright.

"Okay. Okay," Jovial compro-
mised. "Explain the difference
between these two plans and I'll
listen."

Jovial’s only motive was that he
had decided it would be fun to
poke holes in this ridiculous the-
ory. But Squish was encouraged
and began to explain.

Next week, Herby Squish explains
the bottom line difference between

harvesting the timber profile and

high grading. But will Milton
Jovial believe a word of it? |

Wings clipped

Skeena MP Jim Fulton believes
his persistence in uncovering the
cost to Canadians of senior man-
agement officials in the federal
government using airlines will save
the country about $20 million a
year, .

Fulton stated in a press release
Monday that the airline bill for
federal government employees is
around $200 million annually. He
argues that the cost is much higher
than it should be because the fed-
cral government has up to now
used a voluntary reporting system
for {requent-flyer bonus points.

Some bureaucrats, he says, were

paying top dollar for their airline |

fares to accumulate points, which
they left unreported and later used
for personal travel.

During the inquiries that fol-
lowed his questioning in the
House, Fulton claims, the govern-
ment recovered $300,000 from
federal employees who flew econ-
omy class but got reimbursed for
first class expenses.

Bonus point accumulations are
now being reported directly by the
airlincs to the government and
tallied on a computer.

wa re atten aS a toe

es ee
~ = :