 |
|||
 |
Vol.3, Issue 3 · Sep. 2007 |  |
|
 |
|||
|
|
It's one of those pristine days in Cowichan Bay, the sun painting a pathway across the water to Western Forest Products' state-of-the-art sawmill, which currently lays dormant behind United Steelworkers' picket lines. Coast Forest member company executives and Vancouver Island mayors have come here "in times of trouble" to discuss the future of forestry in a place that symbolizes both the industry's past and its future. On September 11, 2007 we are somewhere in between, looking for "words of wisdom" from industry experts to lead us forward. And we are not disappointed. Insights come from speakers like Tanner Elton, who tells us about the progress we've made in our safety performance, from Russ Taylor and Michael Loseth talking about the challenges of markets and products, highlighting the cold, hard realities of globalization. They also come in Paper and Forest Products Analyst Paul Quinn's perspective on ways to attract investment and in the noticeable concern and passion of the mayors in attendance for an industry that's helped build their communities, an industry that is changing. They come from the CEOs who have gathered together in Cowichan Bay to hear what the mayors have to say about the changing landscape. The CEOs listen. And then they respond. They talk about an industry that is operating in a policy environment that the Ministry of Forests and Range's David Morel explains has undergone drastic change, unprecedented in its 100-year history. In this backdrop, they talk about the need to stay the course, to let the dust settle like the classic Beatles tune, Let It Be. They talk about giving the new drafts time to develop into all-star players, about giving the markets time to adjust and about the forest companies' determined efforts to focus on what's important: the business. Looking across the bay to the sawmill that has "a recently installed high-tech curved sawing breakdown line" I find myself thinking about how the coastal industry is moving forward, about the tremendous hard work spent in product and market development, in cost reduction strategies and in investments that are improving productivity, lumber recovery and the coast's competitiveness. We are on the right track. But for the coast to succeed, we must continue to work with government, with communities and other stakeholders to build strong relationships, improve our business practices, streamline regulations and give our managers the opportunity to focus on running their companies. These are critical elements in making the coast competitive again. |
|
|
|
|
 MARKETS Loseth points to Vietnam as an example of an emerging competitor. Vietnam? Yep. He told the Island mayors that an industry delegation will be visiting Vietnam in October because furniture exports have increased from $2.93 million to $2.53 billion in just 10 years. Vietnam now accounts for 43 per cent of the U.S.'s wood furniture imports. Because of this dramatic growth, FII is hoping opportunities will soon open up for our coastal softwood species there, and Loseth points to the new kiln-dried hemlock product, F330, as a great example of coastal innovation opening up opportunity in Japan. FII, co-host of the session, is conducting further research into market opportunities in India, Pakistan, Malaysia, and China. Critical keys to the coast's success are: developing and producing the right products; ensuring and maintaining market access; positioning and promoting our products; and finally "linking our products to our sustainably managed forests," he notes, adding, "In B.C. we have more certified forests than anywhere else in the world." INVESTMENT But despite the bleak outlook, Quinn looks into his crystal calculator and sees a few bright spots ahead, with a scarcity of timber globally creating strong log export markets and increased demand in proven markets for cedar and high-value niche species and products. He emphasizes though that "the future is up to labour, employers, government and communities." PERFORMANCE
But Taylor adds, "At the end of the day the bottom line is you need to be a low cost producer." It was no surprise then a few days later that Taylor's Global Lumber/Sawnwood Cost Benchmarking Report, published with data from PriceWaterhouseCoopers and the Beck Group, gave the sawmilling sector on the coast the notorious distinction of being one of the worst performing regions in the world. The report shows that the coast's unit costs, which are tied to mill efficiencies and labour costs, are among the highest in North America. Commenting on the report, Coast Forest's Rick Jeffery makes it clear that "it's important to be competitive and fair to our workers to keep them in the industry and in high-paying jobs that contribute to community stability. However you simply can't ignore the market and economic challenges facing the coast." So what's the solution to the high labour costs and lack of investment on the coast which are creating these sawmilling inefficiencies? "The solution is to get costs lower," explains Taylor in an interview with the Vancouver Sun [Sept. 13]. |
"It's not news to you that the coast faces challenges," Morel sighed, as he began to outline those challenges and the progress government has made in helping the coastal forest sector meet them. With the Canadian dollar rising to 96 cents US (as of Sept. 11), the Tenure and Revenue Division Executive Director pointed out that the continued "effort to reduce costs is crucial" just to stay afloat in this kind of exchange rate environment. Harvesting costs declined by about 20 per cent from 2001 to 2005 as a result of industry initiatives and government moving forward with the Forestry Revitalization Plan and the Forests and Range Practices Act. Stumpage rates also fell to reflect market conditions with the introduction of the Market-based Pricing System in 2004.
At the same time, industry needs to develop new markets and products and needs to continue to invest in its operations. Coast Forest's Rick Jeffery says that since 2003 the coastal industry has invested $350 million in upgrading its sawmills and its pulp and paper operations. $180 million in capital improvements in sawmills has increased average capacity by 19 per cent, productivity by 18 per cent and lumber recovery by 7 per cent. On the pulp and paper side, more than $160 million has been invested to improve environmental performance, increase energy efficiency, improve productivity and reduce greenhouse gas emissions. "The one message I hope you take away today is that the coastal forest sector has a bright future," Morel says with a smile. "It will not be a smooth ride; however, I believe the coast is on the road to recovery and our policy changes are making a difference." 
Jeffery told the mayors, "Forestry revitalization has facilitated the evolution of diversified business models and a better industry in the long run, so the challenge now is trying to manage that change." |
|
|
 NATIONAL FORESTRY WEEK CELEBRATES IMPROVED SAFETY The coastal forest
industry has improved its safety performance in the woods with significant reductions in
fatalities and injuries, Tanner Elton of the BC Forest Safety Council told the group of
Vancouver Island mayors and forestry executives meeting in Cowichan Bay.
Coastal companies are continuing to pursue SAFE Company certification, designed to improve safety at all levels of operation. "The program looks at companies 'and prime contractors' current safety programs and conducts a gap analysis to adjust procedures to improve safety and meet the certified standard," says Keith Rush, Coast Forest's Safety Consultant. In 2006 there were two deaths in the coastal forest industry, down from 18 in the previous year, and there were no faller fatalities. "We have not had a faller fatality in 18 months," Elton said. "That's never happened in the industry before." 
According to statistics released by the Council during National Forestry Week, serious injuries were also down, resulting in a 35 per cent decrease in serious injury claims in the coastal forest sector. Overall the number of serious injury claims in the coastal forest industry decreased from 52 in 2005 to 34 in 2006. Province-wide there was a 21.5 per cent decrease in total claims between 2005 and 2006, from 1,193 to 936. All of these safety improvements have saved the industry more than $70 million. Additionally, the coastal forest industry is ahead of other high risk industries, such as heavy construction and oil and gas, where there were only modest gains in safety performance last year. Alternate shifting has become a real flashpoint in the current labour dispute, but Coast Forest President Rick Jeffery is quick to point out that "there is no evidence correlating a decline in safety performance on the coast to alternate shifts. Our progress on the safety front has been the result of a cultural change that was brought about by forest workers, contractors, companies and government - all of them driving this change." 
With his trademark openess Western Forest Products CEO Reynold Hert says that prior to 2004 Western Forest Products had the second worst safety record in the industry and "someone should have been standing up saying, 'they ought to be fixing their problem'". But Hert adds, "Now we're better than the average. We're not the best yet, but we're better than the average... Since 2004 we've taken our injury rate down by five times. Where we used to have 20 injuries per 100 employees that required someone to go see a doctor or a nurse, we now have 4.5 [injuries]." To put Western's safety record in perspective Hert explained that world-class companies have about .5, or one person out of 200 per year, "so we've still got a ways to go but there's been a dramatic improvement." To Elton the future of the B.C. forest industry is clear. "Part of the future industry," he says, "will be a safe industry, and that will be fundamental to our success." INDUSTRY IMPLEMENTED SAFETY IMPROVEMENTS
|
|
|
|
