A forestry stakeholders group might not have achieved total consensus on what ails Northern Ontario’s struggling forestry sector, but almost all agree Queen’s Park needs to act quickly to come to the industry’s aid.
The Minister’s Council on Forest Sector Competitiveness, a cross-section of industry, First Nations, labour, environmental and municipal leaders, publicly released their report June 13 with 26 recommendations on how to strengthen and diversify this resource-based economy.
Most say Natural Resources Minister David Ramsay’s pledge to deliver $350 million in government loan guarantees is not the answer.
Marvin Pupeza, a Communications, Energy and Paperworkers (CEP) Union national rep, felt the minister’s response to the council’s report was long on rhetoric, but short on details.
His union wants a province-wide audit of the wood supply because of the ongoing conflict between government and industry over how much commercially viable fibre is available.
The CEP, which represents 5,000 forestry workers in northwestern Ontario, organized a rally of 600 placard-waving members to greet Ramsay in Thunder Bay June 13.
Pupeza was disappointed Ramsay made no mention of an audit in his remarks to the membership.
He says the loan program does nothing to deliver immediate relief to an indebted industry. Neither does it address the core problems of high electricity rates and wood delivery costs.
“Unless those two issues are addressed, why would anyone put money into a sinking ship?”
He calls for the government to take immediate action to ensure the forestry sector’s survival and stability.
Industry has ‘maybe weeks’ to live: CEP “This industry does not have months, it’s got maybe weeks.”
The Ontario Forest Industries Association says there are 12 mills in Northern Ontario at risk of closure. That could result in up to 7,500 direct layoffs and the eventual loss of 20,000 indirect jobs across the province.
About 2,200 jobs have been lost in the region due to mill shutdowns over the past two years.
Many northwestern Ontario workers are concerned about Ramsay’s support for a proposed $235-million Oriented Strand Board (OSB) plant to be built by Kruger Inc. in Greenstone by 2007. They say it may threaten the hardwood supply for Buchanan Northern Hardwoods and other area mills.
Pupeza says Queen’s Park’s focus must be on saving existing mills, not helping create new mega-mills.
“The political will has to be there and identify that there is a crisis in the Ontario forest industry.”
Less adversarial dynamic needed
For logging contractors like Geoff Meakin, a co-author of the report, a more streamlined and less adversarial regulatory relationship with the MNR would allow harvesters to go about their work more efficiently.
“We are not two separate identities,” says the president of Meakin Forest Enterprises in Sault Ste. Marie. “We need (the MNR) to be more conciliatory towards the forest industry and realize it is their bread and butter as much as it is ours.”
Transportation issues are paramount to Meakin, who says the cost to haul logs from the bush to the mill has sky-rocketed in the last three years to $55 per cubic metre.
While access roads and bridges in Crown forests are built to government standards, it’s the industry that is paying the full price of their construction and maintenance.
As recommended, Meakin would like to see Queen’s Park pick up 100 percent of primary road costs, and about half the cost associated with secondary access roads.
Brian Nicks, Domtar’s director of sustainable forest management in Nairn Centre, concurs that the government needs to become involved in sharing costs for road-building.
Logging roads open up the backcountry of Northern Ontario and are often used by prospectors, trappers, sportsmen and outdoor enthusiasts.
One short-term solution being recommended is to institute a 50-percent rebate on the provincial fuel tax for off-road hauling.
“The companies built and maintain those roads at their own expense, so it’s hardly a rationale for charging us a provincial fuel tax on that portion of the haul,” says Nicks.
The off-highway portion can be documented with GPS systems, audited, and the tax rebate can result in millions of dollars in savings for companies.
Many companies have reduced credit ratings
Nicks, a 28-year professional forester who helped draft the report, says the government’s initial response “doesn’t address industry’s needs head on.
“Loan guarantees are fine, but many of our companies have had (their) credit ratings reduced and we have fairly high debt-to-equity ratios. Borrowing more money isn’t necessarily a good thing right now.”
He adds any direct government investment must be carefully considered lest they be construed as a subsidy subject to U.S. countervailing duties.
To tackle high electricity costs, Nicks suggests exploring the NDP-supported concept of regional or local energy markets to capitalize on the low-cost generation of hydroelectricity.
Northern Ontario production gets pooled in the Ontario-wide grid, he says and, when combined with more expensively produced forms of power, like nuclear, the prices escalate.
“As long as (our) industry is part of a broader pool, we have to compete with other industries and domestic users for the available supply and we don’t get a break.”
Nicks says there appears to be no short-term fix for installing cheap additional capacity. But the government must re-define the market in some way so industry can take advantage of lower generation costs.
Ontario investment into co-generation projects would help, he says. Domtar has had a biomass wood waste project on the books for a number of years.
Capital dollars would help
Nicks says in Scandinavian countries, governments contribute 35 percent capital grants toward co-generation facilities that burn forest slash and bark. “There are opportunities there just beyond the margins of economics that, with capital assistance, we’d be over the hurdle.”
On the forest inventory end, Nicks says there are regional shortages and problems with old forest management data in some areas, but he believes Ontario’s forest management planning system is sound and, generally speaking, the fibre is available.
The Pic River First Nation is one of two Aboriginal groups serving on the council. The band says the Ministry of Natural Resources and the industry are not addressing some basic rights promised their community years ago.
The community’s economic development officer, Byron LeClair, says in 1994, the Ministry of Environment established Declaration Order 71, which et out terms and conditions for the Ministry of Natural Resources to enter into negotiations to identify and implement ways to achieve equal participation with First Nations through benefits and licensing.
“That has not happened.”
The band chose not to be a signatory to the minister’s report, along with the Industrial Wood and Allied Workers of Canada.
Often lauded by Queen’s Park as “the poster child for Aboriginal economic development”, LeClair says, Pic River’s voice has not been heard when it comes to participating in the White River Forest Management Unit.
He wants 50,000 cubic metres of hardwood that was promised to them 10 years ago and is ready to urge the community to exercise their constitutional rights and harvest the resource, since the band has been refused a licence too many times to count.
“If the Ministry (of Natural Resources) wants...to stick their head in the sand, then they are not addressing the real issues.”
Forester Jim Miller, general manager of Clergue Forest Management in Sault Ste. Marie, encourages more flexible government regulations based on a company’s track record of compliance.
If a company has a clean record and performs work according to Ministry standard, more preferential treatment towards renewal of their Sustainable Forest Licences should be given.
“If people are not doing what they’re supposed to be doing, ultimately there are some consequences.”
Sue Prodaniuk, a Bowater Inc. spokesperson, agrees Ramsay’s promise of Ontario-backed loans doesn’t do anything to address the company’s more immediate needs.
“We’re looking for actions that will increase our competitiveness in this marketplace,” namely reducing direct costs in energy and wood delivery costs in transporting fibre from the forest to the mill.
The Thunder Bay pulp and paper producer doesn’t release any operating information, but Prodaniuk says the cost is “significant.”
Prodaniuk says Bowater, which placed a representative on the council, is satisfied with all the recommendations and is looking forward to their implementation.
“The report is very comprehensive,” says Prodaniuk, “with good recommendations that, once acted upon, this industry will be on road to recovery.”
