Last November will be a month that BC’s forestry industry will remember for many years, if not decades.
The month began with an explosive announcement from the British Columbia government ending logging in 2.6 million hectares of old-growth forest. Shortly thereafter, the province announced a series of policy changes to the forest tenure system aimed at reducing timber harvesting rights for key players and redistributing them to First Nations and small businesses.
The so-called atmospheric river hit the Lower Mainland of British Columbia and wreaked havoc in mid-November. Transportation disruptions caused by damaged infrastructure have slowed many manufacturers of lumber and value-added products.
And, in late November, the United States struck a fatal blow by doubling tariffs on Canadian softwood lumber shipments. The BC Independent Wood Processors Association described the news as driving more nails into BC’s value-added coffin.
The writing may have been on the wall for some of these nails, as evidenced by the long-term trend of major BC lumber producers to diversify their assets with US and even European acquisitions.
Unsurprisingly, acquisitions seem to be happening at a rapid pace these days.
Interfor’s diversification plans have recently focused on Eastern Canada. The company announced in mid-November its intention to buy 100% of the stakes in EACOM. The acquisition includes seven sawmills, an I-joist plant and a renovation plant in Ontario and Quebec. With EACOM in the mix, only 18% of Interfor’s total lumber capacity is in British Columbia
West Fraser, currently the largest lumber producer in the world, recently added a turnkey sawmill in Lufkin, Texas to its portfolio. The new mill increased its US lumber capacity to 50% of the company’s total. West Fraser executives say the acquisition is just one more step in their US expansion plans. (Read more about West Fraser’s acquisition of Angelina Forest Products and see the factory interior here.)
And Canfor made headlines in December with its $420 million deal to buy the solid timber operations and tenure of Millar Western Forest Products in Alberta, adding 630 million board feet of lumber capacity. and a forest management agreement area of nearly half a million hectares.
We applaud Interfor, West Fraser and Canfor, all Canadian business success stories, but we also wince at the decline in investment in Beautiful British Columbia.
Many Industry Experts Blame B.C.’s Hostile Business Environment At the Truck Loggers Association’s virtual convention in mid-January, experts expressed frustration and concern about the future of forestry in Province. (Read our findings on the convention.) Despite a positive outlook for the North American lumber market, British Columbia is unable to take advantage of strong US lumber demand.
Don Wright, former deputy minister to British Columbia Premier John Horgan and now a senior fellow at the Public Policy Forum, suggested that changes in forest policy in British Columbia are due to the industry losing its social license. “He hasn’t demonstrated that he is essential to the prosperity of British Columbia,” he said.
This is an interesting point. For years, my conversations with forest operators and managers have included concerns that forestry has a public relations problem. I have reflected on this in past editorials, and no doubt will again.
At this point, with the ink dry on Bills 23 and 28, we can only hope that BC politicians make these sweeping policy decisions with a clear, achievable, long-term plan in place to revitalize the forestry sector and bring back investment.
Their stated goals are laudable and, in some cases, exceeded: to protect caribou habitat and old-growth stands, to combat declining timber supplies, and to increase First Nations involvement in forestry. But it remains to be seen whether their decisions will lead to these results.
What we do know is that there will be victims, probably many.
Is forestry activity over in British Columbia? This is certainly too strong a statement and overlooks the many small lumber producers and value-added manufacturers who still call British Columbia home and will continue to fight for their right to operate under this new forest regime.
But are companies leaving British Columbia? Absoutely. And will he return to the forest province? Time will tell us.