This week:

Logging the |\Forest ry

Insights

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

bottom

‘

ast week Milton Jovial

Partll |.
saw his management

L team’s bottom line and

didn’t like it one bit. It wasn’t
worth doing business for an esti-
mated profit of only $616,750 per
quarier, particularly when Jovial’s
flawed thinking had come up with
a bottom quarterly line of $12
million. So Jovial gave Herby
Squish an ultimatum. Come up
with a better bottom line... "If you
like working here.” But Squish
wasn’t about to give up quite that
easy, .

"But I love it here," Squish lied.
In reality, it was simply a job that
paid more than he had ever earned
when he was in business for him-
Self.

"Then prove it,” Jovial replied.

"Sir, your plan, as you like to
call it, is impossible. You're miss-
ing just about every point in the
book. In the first place, your AAC
might be 600,000 cubic metres, but
on the average only fifty-five
percent of that 600,000 are saw
logs. The rest are destined for the
chipper."

Jovial groaned his embarrass-
ment, "I knew that," he snapped.

"And in the second place,"
Squish continued. "You can’t get
40 percent export grade lumber out
of the saw logs you've got. On the
average, you can count on only
about 15 percent."

"That’s trash, Squish. You told
me once that 25 percent of my two
licences contain top quality timber
and that’s what we’re going to cut
first."

"You can’t do that and survive,

line-

Milton. You’ve got to harvest
according to your timber profile.
Let me explain." |

Squish handed Jovial a piece of

paper containing a table on which ~
_ his quarterly plan had been based.

He explained that he, Syd Silver
and Buzz Sawyer had considered
all factors very carefully, and that
in the end, everything had been
based on the average size and
quality of timber available in
Jovial’s two timber licences.

Fifty-five percent, or 330,000
cubic metres, of the 600,000 cubic
metre Annual Allowable Cut in
Jovial’s licences are saw logs. The
average rate of recovery in Jovial’s
sawmill is only about 48 percent,
which means those 330,000 cubic
metres of saw logs will be turned
into 148,400 cubic metres of lum-
ber... Only 15 percent of which
will be overseas quality,

The balance of the production
profile, will look something like
this: 50 percent Grade Two, which
is worth far less, and 35 percent
Grade Three... but only 15 percent
of Grade Three timber is permitted
in an export order, and it is there-
fore sold at a loss. It’s necessary

- to include some Grade Three lum-

ber in a export order in order to
make up the quantity ordered, but
the balance of the Grade Three
lumber, 20 percent of the total
production, can be put through
Jovial’s finger jointer operation
and tumed into a value- added
product worth a_ considerable
amount of money.

At any rate, the average profit
for the overall product manufac-

tured will be $83 per cubic metre,

Lumber Grade

% of production production/quarter,

cubic metres

“Terrace Review —— Wednesday, September i199 47 -

profit per
cubic metre

Profit per quarter,

High

15 $200.00

estimated average

5,940 $1,188,000

#2's

$11.00

$217,800

#3's (20%)

-$30.00

$178,200

#9's, finger jointed

$260.00

$2,059,200

#3's, chips

Gross profit

$92.50

0

$3,286,800

Chip sales

-$2,621,800

Net profit .

$665,000

This chart shows Herby Squish's consolidated efforts to make the best of Milton Jovial’s forest
licences: it makes maximum use of low grade timber (#3's) while avoiding the folly of high-grading
the timber in the initial years of operation. Next week he'll plug some different numbers into the
same chart to show Milton what the future holds for sawmills that high-grade the resource,

which translates into $13.15 mil-
lion per year on the market. From
that, however, you have to subtract
$10.49 million annually due to
losses in the sale of pulp chips.

The 270,000 cubic metres of
pulp logs Jovial must harvest are
sold at a joss of $23.75 per cubic
metre, and then there's 38 percent
of the saw logs inevitably wasted
in the milling process, which will
eventually become chips at a loss
of $32.50 per cubic metre.

Theoretically, then, the net
annual profit will be $2.66 million,
or $665,000 per quarter.

"Damned chips," Jovial muttered.
"Milton, this is the only way to
harvest."

"Poppycock," Jovial

gtunted.

“Stop: arguing and write me a

better plan."

"There. isn’t a better plan
Milton," Squish pleaded.

"Poppycock."

Squish could see the futility in
continuing his argument. "Fine," he
eventually gave in. "You want a
better plan. I'll write you a better
plan. But I can tell right now,
you're not going to like it either."

As Squish left his office, Jovial

The Way I
See It...

by Stephanie Wiebe

I’ve heard a few amateur pre-
dictions about the forthcoming
winter lately. Someone said that
the squirrels are seeking winter |
shelter already, thus forecasting a
long, biting-cold season. I must
admit, the squirrels seem pretty
busy lately. Another person
claims that a rainy summer is
always followed by a mild, rainy
winter. That sounds reasonable,
too. And the Canadian Farm and
Home Almanac predicts a little of
both, a safe position.

But the experts look elsewhere
for their information, and scien-
tific predictions alm toward a
mild winter. According to a Vic-
toria meteorologist, the tropical
warm current El Nifio is creeping
toward the coast of Peru, which
will practically guarantee a mild
winter throughout the province.
Oddly enough, most of us don’t
relate Peruvian currents to B.C.

weather, but Victoria meteorol-
ogists put their trust in these sorts
of things. According to past
weather charts comparing Peru-
vian currents to our winter
weather, there is a definite rela-
tionship between the two. (The
question is, would a meteorol-
ogist in Victoria know the differ-
ence between a mild winter and
anything else?)

On top of that, scientists in

Pullman, Washington suggest that
the entire planet will bask in a
balmy season, due to burping
cows which are accelerating the
atmospheric greenhouse effect.
Evidently, the 100 to 200 litres of
methane gas burped up each day
by your average cow will assist
_in warming up our winter. (Isn’t
it fascinating to think that some-
body actually measured the gas
produced by a cow? Must've
been on a governmenit grant.)

Multiply that amount by the

- number of cows in this world

(about 1.2 billion) and we're
lalking about a serious amount of
belching.

Cud-chewing animals produce
about 15 percent of the methane
gas in our atmosphere, a product

which is increasing by close to 1

percent each year, according to
these scientists. No figures have
been released about human pro-
duction, but I imagine our local
population is doing its part
toward global warming,'too —
some more than others.

So our weather should be
steaming up pretty soon. After
all, we have cows. I’d guess our
local cows can belch as well as
any. Come to think of it, 1 put
more faith in our northwestern
cows than in some distant Peru-
vian current. I’ll bet most people
have never seen a tropical cur-
rent, but you can always count on
a cow to spew forth a good
stream of methane,

Just imagine the ramifications
of this theory, Wouldn’t it make
sense thal in heavily cow-popu-

" lated areas, the temperature might -

rise more than in a less cow-
populated area, like say, Victoria?
Maybe we could actually control
our local climate through the

digestion of our resident cows —

sort of a bovine thermostat. With
just a little Diet Coke, it'd be a
hot time in the old barn, adding a
few Rolaids to keep the tempera-
ture even. This might also work
with human residents — again,
some more than others.

This weather control system
might be useful, if only to deter-
mine the duration of the winter
season. Just about the beginning
of February, when residents have

_had their fill of ice and snow, our

cows and cola in full force could
literally blow the lid off winter.

Yet Victoria meteorologists
haven't caught on to this natural
thermostat, preferring to study
Peruvian currents instead. It’s
ironic, actually, considering that
the amount of hot air manufac-
tured in those Parliament build-
ings makes our cows envious.

Which is fine with me — as
long as it doesn’t upset their
digestion.

wondered what he had meant. If
Squish had a better plan, why
wouldn’t he like it? |

"Poppycock,” he screamed at the
open door. .

Next week, a different bottom
line... But will it be better?

Letters to
the Editor
on page A&

PAY-OUT

What the government's

doing with our money

The Kitimat-Stikine Regional
District was handed a cheque
last week for $333,333, the.
second instalment in a GO
B.C. grant of $1 million to
Tebuild and expand the MK
Bay Marina in Kitimat.

Indian and Northern Affairs
Canada announced a $300,000
grant toward the cost of a 20-
unit housing ‘project for the
Kitselas Band. Other federal
contributions include $160,000
per year in subsidies for the
life of a 15-year, $1.5 million
mortgage from a private lender
guaranteed by Canada
Mortgage and Housing.

The Kitwancool Band
Council got a cheque from GO
B.C. for $197,843 last week,
the second instalment in a
$593,528 grant toward

consiruction of a community
hall.

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