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Vol.5, Issue 1 · March 2009 |  |
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With an election in the offing, there is a quote from John Richardson, Jr. that comes to mind. “When it comes to the future,” he said, “there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.” The coastal forest industry is in the category of those who make it happen. We are shaping a strong future of economic recovery and profitability by delivering clear and consistent recommendations to government about the actions required to create hosting conditions that will manage through the current economic and market crisis. For this future to happen the provincial government must create conditions today that facilitate sustainable, long-term investment in the forest, in products and markets, in facilities, and in people and communities. This effort requires the coastal industry to be treated just like any other resource industry. That it is charged fair, market-driven economic rent, that it is provided with clear, stable rules for environmental performance, that cost-effective smart regulation is implemented, that it has competitive taxation and lastly, once government has all these conditions in place, it steps aside confident that it has the right regulations in place for us to run our businesses without further intervention. Some like to point fingers, but devastated markets and a global recession are driving the crisis in the forest sector and there is little any government can do to affect these two enormous causal factors. However, in its budget the federal government responded to industry’s needs with tangible actions to help the forest sector. The provincial budget provided additional monies for workers and communities, modest tax relief and “wood first” policies. These measures built on updated market-driven stumpage, regulatory review that eliminated costs, funding for market/product development and the Community Development Trust, among others. Forests Minister Bell has released the Roundtable Report with key recommendations that can assist the industry. They include: establishing a commercial forest reserve and growing trees better to meet commercial, carbon and forest resilience needs; creating a globally competitive, market-based operating climate supporting a vigorous, efficient and world competitive wood processing industry, including labour arrangements and municipal tax structures that advance productivity and support competitiveness; clearly defined compensation rules and competition policies for tenures; assisting First Nations to become full partners in the forest industry, including revenue sharing. The critics call these recommendations “a recipe for disaster”. We disagree. These recommendations can assist the sector in meeting its future potential. This May it’s up to you to elect those that will help make it happen. |
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Coast Forest’s international marketing programs are supported through funding from the Government of Canada and the Province of B.C. and membership fees of coastal forest companies. 2009 budget announcements from both the provincial and federal governments extended support for international forest products marketing. Federal funding of the Canada Wood Export Program was extended for another two years and an additional $10 million was added in spending for demonstration projects in North America and overseas. Provincially, Forestry Innovation Investment’s budget for 2009-10 was announced at $23.2 million. “Maintaining a consistent, high quality technical and promotional presence in offshore markets is central to developing new demand and diversifying export markets for coastal forest products,” explains Coast Forest’s CEO Rick Jeffery. “Government support of the Canada Wood Export Program and Forestry Innovation Investment opens doors wherever we do business and is critical to our success.” The two funding programs provide about $2.5 million per year toward Coast Forest programs that are aimed at communicating the benefits and superior attributes of our wood products to overseas customers. IN JAPANThis essential support translates into marked results in the marketplace. In February, Coast Forest’s Canada Tsuga Program delivered a series of technical seminars in Tokyo, Nagoya and Osaka. Aimed at transferring key Canada Tsuga performance results from Coast Forest’s 2008 shake-table test of a full-sized post and beam house, which proved the superior seismic performance of coastal hemlock, the seminars have been delivered to full-house audiences of architects and engineers. Having the right type of data to convince Japanese customers and specifiers that Canada Tsuga products are the best choice for their building environment has involved an eight-year program of technical and promotion activities that dates back to the beginnings of these international marketing initiatives.
With continued support from the Canada Wood Export Program and Forestry Innovation Investment these initiatives have made Japanese regulators, architects, engineers and other decision-makers increasingly aware of the performance advantages of Canada Tsuga. IN CHINACoast Forest and the Canada Wood Group partnership have submitted funding requests to the federal and provincial governments, and priorities have been set to open up and expand markets in China. These programs are aimed at expanding wooden roof trusses on apartment buildings in Shanghai, promoting wood-based in-fill and partition wall construction, and continuing to promote hemlock and cedar products in the landscape market there. |
 
STUMPAGE REFLECTS ECONOMIC DOWNTURNCoast Forest’s Timber Pricing Committee worked diligently with government throughout 2008 to conduct the necessary assessment and analysis of timber sales data to inform the 2009 scheduled update of the Coast Market Based Pricing System. This effort resulted in the development of a principled approach to MPS, which reduced the average sawlog stumpage price on the coast to more accurately reflect market conditions in the update on January 15. Coast Forest President and CEO Rick Jeffery explained that “the lower stumpage resulting from this routine update of the Coast MPS identified a principled accurate, reliable and market-based approach to the system, which is intended to reflect changes in market conditions.” Jeffery added, “This brutal economic crisis has seen lumber prices drop to their lowest level in decades, so in order for companies to survive it’s critical that our stumpage fees adjust to the downturn in markets while remaining consistent with our obligations under the Canada-U.S. Softwood Lumber Agreement.” The dataset used in the update contained winning bids and site specific data from 285 timber sales auctioned by B.C. Timber Sales over the five-year period from January 1, 2004 through December 31, 2008. The previous regression equations were re-estimated using the new auction dataset with some new variables introduced, such as isolation and second growth versus mature timber in order to reflect their influence on bidding behaviour. The statistical accuracy and reliability was improved for the winning bid and number of bidders equations, a test for compliance with criteria specified under the 2006 Softwood Lumber Agreement. In the Coast MPS it is important to understand that the costs incurred by long-term tenure holders fulfilling contractual obligations are recognized in the determination of stumpage rates. Long-term tenure holders manage the public forest on behalf of the Province, including the costs of main access road construction and maintenance, silviculture, forest planning and administration (e.g. forestry and engineering). BCTS clients do not have similar obligations as the Ministry of Forests and Range, though BCTS carries out these management activities on their behalf. The Tenure Obligation Adjustment (TOA) is made to reflect these differences in cost obligations. It’s important to note that a major strategic goal for BCTS is to “provide a credible reference point for cost and price for timber harvested from Crown land in B.C.” MPS 2009 continues to utilize price generated through BCTS sales of standing timber and for the first time, incorporates BCTS costs into all coast TOAs. The move away from using only major licensee costs to determine TOAs should make MPS 2009 even more softwood compliant. Additionally, Jeffery points out that “like timber prices, ultimately all costs used to determine TOAs must be based solely on BCTS data to ensure proper pricing signals for licensee stumpage.” While MPS 2009 will align coast stumpage rates to reflect current economic and marketplace conditions it has not generated significant logging activity. “Lumber prices will need to improve dramatically before sawmills can start covering cash costs and get back to some level of lumber production,” says Jeffery. “With current lumber prices at $135 US to $170 US per thousand board feet (for benchmark SPF 2x4s), there is no flood of lumber to the States. Lumber shipment data proves that our market share continues to decline in these poor economic times which is exactly what the Softwood Lumber Agreement was designed to achieve.” |
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BC FOREST SAFETY COUNCIL APPOINTMENTThe former CEO of Western Forest Products, Reynold Hert, has been appointed CEO of the B.C. Forest Safety Council. Hert, who joined the Council March 16, brings a passion for safety along with an extensive background in the forest industry. “I look forward to working with the industry to integrate safety into our sector from the boardroom to the worker in the woods,” says Hert of his appointment. Employed in forestry since 1978, Hert advanced through the ranks of the industry from harvesting area manager at Procter and Gamble to roles as vice president of Canadian lumber and later as vice president Canadian forestlands for Weyerhaeuser. From 2004 to 2008, Hert led Western Forest Products as president and CEO where he oversaw a significant improvement in its safety record. “I am a firm believer that safe businesses are the best businesses,” says Hert. ”Operations that integrate safety as a way of doing business can see improved results including fewer injuries, lower costs, higher productivity and better worker morale.” For more information about the B.C. Forest Safety Council and its programs or initiatives, visit www.bcforestsafe.org. NEW DEPUTY MINISTER Coast Forest had the opportunity to meet with newly appointed Deputy Minister of Forests and Range, John Dyble, to welcome him to the industry and familiarize him with the association, its membership and its goals. Before becoming deputy minister of Forests and Range, Dyble served as deputy minister for the Ministry of Transportation and Infrastructure. Over the years, Dyble’s role has been to foster new growth in regional economies and to help build the infrastructure that has opened up B.C. to trade and new prosperity. “John’s extensive experience in international trade will continue to be an asset to the coastal forest industry as it carries on its work to develop new products and expand its markets,” says Coast Forest’s Rick Jeffery. “We look forward to working with him to continue to strengthen our ties both domestically and abroad.” GOOD LUCK! After 32 years at Western Forest Products, Trevor Boniface will retire at the end of May. During his broad career which began as an assistant engineer at the Jeune Landing Forest Operation at Mahatta River in the late ‘70s, Trevor provided practical solutions to complicated situations, working all over B.C. from the Queen Charlotte Islands to Port McNeill and eventually being promoted to vice president of Timberland in 2006. We wish Trevor every success in his future. 2009 BUDGET HIGHLIGHTS (CONT’D FROM PAGE 1)
Federal Budget
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