The president and CEO of Eacom Timber Corp. said his company will withhold making any major investments in its recently-acquired Northern Ontario sawmills until there is a change in Ontario's forest policy.
In an interview with Northern Ontario Business, Rick Doman sharply criticized the provincial government for snuffing out Eacom's expansion plans in the northwest and for making it tougher to harvest wood in the northeast.
Doman is hopeful that a new minority government will result in a “pro-business” policy and a provincial legislature that demonstrates it is committed to the forestry industry.
“We came into Ontario with a lot of capital, and more to spend, and were not going to spend it until we see a change,” said the British Columbia-raised lumberman.
Eacom has five Ontario sawmills and two Quebec plants stemming from its $127-million acquisition last year from Domtar. The company also has a 50 per cent stake in an engineered wood manufacturing plant in Sault Ste. Marie that it picked up in the deal.
Doman said global lumber demand is poised to rebound in 2013, and Ontario can be a big part of it.
But Doman said the province is making it tough for companies like his to harvest the annual allowable cut of 26 million cubic metres with forest management policies geared toward conservation. He's particularly concerned about caribou protection measures proposed for the Abitibi River Forest that will take a quarter of the available timber there out of circulation.
“I feel there's huge potential in Northern Ontario, that's why we're here and want to expand here. The only thing holding us back is the current government.”
The roots of the 47-year-old lumberman are traced to Duncan, B.C. and his late father, Herb Doman, a self-made industry magnet in that province who built Doman Industries into a 6,000-employee company with sales in excess of $1 billion at its peak.
Raised in the family business, the younger Doman moved to Montreal to establish Eacom in 2008.
Based on his experiences on the West Coast, and his knowledge of the forest devastation caused by the mountain pine beetle, Doman said Ontario forest management practices need to go back to the drawing board and practice proper science.
Preserving vast swaths of mature forest only leads to disease and more forest fires, he said.
And allowing whole log chipping of softwood sawlogs for the pulp and paper industry in Ontario is not, in his eyes, positive environmental or economic practices. “This is very bad policy and it should not be going on.”
Although in favour of protecting wildlife, preserving habitat and chain-of-custody certification, Doman makes it clear he is “pro jobs” and “pro investment.”
His vision is for Eacom to become a green energy producer, utilizing waste bark and selling wood pellets to the province to be used as part of a fuel mix for coal-fired plants. Surplus steam from drying kilns could be used to heat local government buildings and hospitals.
Doman said if Ontario forests were managed in a sustainable way, the industry could easily create 10,000 to 20,000 jobs in the North.
“We have a government that is not making the best use of the forest, (and) not getting the best value out of it for communites and is losing jobs.”
The company wants to gain access to an additional 300,000 cubic metres of fibre from the Romeo Malette Forest, near Timmins, but has yet to hear back from the province on the status of its application through the Crown wood supply competition.
Doman said the company is exporting lumber to customers in the U.S., the United Kingdom, Northern Europe and the Middle East, but they need more wood to sustain its Northern Ontario operations for the long-term.
Doman said his fledgling Montreal-based company is prepared to spend $40 million in new equipment to run more consistently and add more shifts. With only its Ear Falls sawmill still shuttered, the company employs 1,400 millworkers and woodland contractors in Ontario.
“If we see a government that offers security and surety of wood supply, ensures the allowable cut is maintained as per harvest levels, and supports green energy initiatives, we expect to grow our workforce significantly in Ontario.”
Eacom also planned to acquire two bankrupt sawmills in Thunder Bay and Atikokan, but those deals fell apart when the province told the company there was no Crown wood available.
The machinery from the former Buchanan Group mills was being sold off at auction in late September.
Doman said those mills would be operating today if his company hadn't been “chased off.”
Atikokan Mayor Dennis Brown said it was “disheartening” to hear how Eacom was treated in attempting to revive the mill. “It doesn't speak well for a Northern Growth Plan.”
The mill was the town's largest employer at 225 during the 1980s after the Steep Rock iron ore mine closed.
Brown said the mill had a small allocation of 137,00 cubic metres annually, but the Buchanan Group made deals to secure as much as 600,000 cubic metres.
In Brown's eyes, the wood supply competition “went too far” and “our community had no say in what happened.” The town's efforts to purchase the mill for $2 million failed when they couldn't find interested investors.
Bill Thornton, assistant deputy minister in the forestry section of the Ministry of Northern Development, Mines and Forestry, said the government was well aware of Eacom's interest in those bankrupt mills earlier this year.
In an emailed response, Thornton said Eacom officials were told that 30 per cent of the Atikokan mill's wood supply was awarded to other parties, most of it to AbitibiBowater (now Resolute Forest Products) for its Fort Frances pulp and paper operation. The remainder was obtained through business arrangements developed with AbitibiBowater.
Thornton said when the Atikokan mill went bankrupt, those arrangements were terminated. The same thing happened with wood supply at Northern Sawmill in Thunder Bay.
“Eacom was made aware of this, and was advised that the government did not intend to interfere with these business arrangements,” said Thornton. “It appears that Eacom subsequently withdrew their offers to purchase the mills.”
In the Romeo Malette Forest near Timmins, Thornton said there are so many competing interests for that wood supply, including from Eacom, a facilitator was hired to reach an agreement. Once the facilitator's report is filed, the ministry will decide the matter.
Thornton said while it's disappointing to see business fail, he points out there have been major investments by AbitibiBowater to expand or restart mills in Fort Frances, Thunder Bay and Ignace.
He emphasized Ontario welcomes investment in the forestry industry, including from Eacom, but also “believes in a balanced approach to managing its forests, combining economic opportunity with environmental sustainability.”