_ BRITISH COLUMBIA

Takeover tightens
grip of monopoly
on B.C.’s forests

Continued from page 1

Sition, the transaction is unlikely to produce a
Single job in the forest industry in this pro-
vince.

_ In fact, if the company’s record is any
indication, it will likely cost jobs as a result
of continuing corporate rationalization.

When Fletcher-Challenge took over
Crown Forest from Crown Zellerbach in
February, 1983, the company moved to cut
its Operations, including the closure of two
Major logging camps and the elimination of
a number of jobs in production, mainte-
Nance and supervision in the key Fraser
Mills operation.

Although those job cuts have been dupli-
cated in other forest companies, the increas-
ing foreign control of the industry — and
the concentration of that control in fewer
companies’ hands — has aggravated the

crisis in the province’s forest resource and
the role it plays in the economy.

International Woodworkers president
Jack Munro charged last week that the
takeover would result in another “absentee
landlord” exercising control over the
resource.

Three Fletcher-Challenge top executives,
including chairman Sir Ronald Trotter and
group managing director Hugh Fletcher,
currently sit on the Crown Forests board of
directors, and company president Ian
Donald is a former Fletcher-Challenge
officer. That pattern is likely to be followed
in the BCFP board and although the New
Zealand multinational has said that it
would not move to merge the two compan-
ies, that would undoubtedly change if a
merger was seen to increase profitability.

With its purchase of BCFP, Fletcher-
Challenge will be second only to MacMillan-
Bloedel in the assets it controls in B.C.,
estimated at some $2 billion.

B.C. Forest Products also holds Tree
Farm Licences in some of the most prime
timber areas on Vancouver Island. The
value of those timber holdings was not dis-
closed in the share sale, but it is estimated
that they constitute an important part of the
value of the shares.

BCFP currently operates 27 logging divi-
sions, 10 sawmills, two major pulp and
paper mills in Mackenzie and Crofton as
well as a stud mill in Alberta and paper mill
in Minnesota. The company chalked up
profits of $40.2 million in 1986, an increase
of 34 per cent from the previous year’s
operations.

That surge of profits has been repeated
throughout most of the B.C. forest industry,
with most of the major companies moving
well into the black for the second year in a
row. That profitability in turn has made
resource companies particularly attractive
to foreign investment.

The Globe and Mail’s Report on Busi-
ness reported Feb. 6 that foreign investors
were “shifting from U.S.-based companies
to those in the Canadian natural resource
sector,” sector being the leading example.
For Canadians, however, that investment
will provide few benefits — while incurring
long-term liabilities.

In the first place, the industry’s profitabil-
ity has been achieved in this province at an
exceedingly price in lost jobs — some
20,000 over the six years — as companies
have moved to cut their payrolls, both
through the introduction of technological
change and the contracting-out of union-
ized positions.

Increases in lumber and pulp and news-

, Print prices as well as a favorable Canadian
exchange rate, both in comparison with the
U.S. dollar and European currencies, have
also been significant factors in the high prof-
its and the increase in foreign investment.

But that poses once again the age-old
problem of foreign investment in this pro-
vince: the flight of profits from B.C. and the
prospect that once conditions are not as
favorable, that the investment will be
quickly moved elsewhere in the multi-
national corporation’s empire.

In fact, workers in Fletcher-Challenge’s
New Zealand operations have already felt
the effects of that policy.

Last year, the company moved to shut
down its huge pulp mill complex in Kawe-
rau in New Zealand, putting some 5,000
workers on to the unemployed rolls.

Ironically, the move was prompted by:

the rationalization that had already taken
place in Crown Forest Products operations
at Elk Falls, near Campbell River, which

—

SAN

B.C. FOREST PRODUCTS V
multinational’s B.C. holdings.

ANCOUVER SAWMILL ... added to New Zealand

B.C. Forest Products
Revenue (1985)

Total assets (1985)

Profit (1985)

Profit (1986)

Crown Forest Products

Revenue (1985)
Total assets (1985)
Profit (1985)
Profit (1986)

had reduced production costs for a tonne of
pulp by 40 per cent compared to costs at
Kawerau.

Before it closed the New Zealand plant,
Fletcher-Challenge demanded sweeping
concessions from plant workers on techno-
logical change, shift scheduling, wages
and — an issue all too familiar to B.C.
woodworkers — contracting-out. When the
main union, the Pulp and Paper Workers
Federation, resisted, the multinational
mothballed the plant.

The closure is unlikely to be permanent
since New Zealand expects to have huge
new tracts of timber available for harvesting
early in the 1990s, the result of extensive
reforestation efforts in the 1960s. Most of
that will be at the disposal of Fletcher-
Challenge since it is currently bidding for
control of New Zealand Forest Products,
currently the largest forest company in New
Zealand.

But in the meantime, Fletcher-Challenge
will likely supply markets with more
cheaply produced pulp and newsprint from

/

Fletcher-Challenge: a tighter
grip on B.C.’s forest industry

$1,140 million
$1,204 million
$ 30.1 million
$ 40.2 million

$ 853 million
$ 746 million
$ 16.6 million
$ 38.3 million

B.C. Forest Products and Crown Forest
mills — while using the shutdown at
Kawerau to whipsaw workers into accept-
ing job-cutting technological change and
contracting-out.

Two or three years from now, British
Columbia workers could be on the cutting
edge of that whipsaw.

It is with the same objective in
mind — to drive down its labor and pro-
duction costs — that Fletcher-Challenge
has decided to invest in fascist Chile. The
company has earmarked some $100 million
for investment there, including a $50 million
(U.S.) joint venture with a Chilean forest
company.

Hugh Fletcher, group managing director
of Fletcher-Challenge, summed up the
company’s credo in announcing the plans
for investment in Chile.

“There is little secret,” he said, “that
Fletcher-Challenge Ltd. has been having a
serious look at opportunities in Chile,
where trees grow faster, labor is cheaper and
there is less industrial disruption.”

PACIFIC TRIBUNE, FEBRUARY 11, 1987 e 3