January 2001 - Logging and Sawmilling Journal -

Two major forestry associations in New Brunswick recently joined forces, which should give the industry a stronger voice with government.

Relations between the provincial government, which controls Crown land in New Brunswick, and approximately two thirds of the industry, which depends on those lands for much of its wood supply, has just moved into a new phase with two major association players joining forces. When New Brunswick's innovative Crown Lands and Forests Act came in force in 1982 the effect on the industry was massive. Access to Crown land was through a system of licences which has grown over the years some huge and some hardly more than large woodlots. Some were worked and some were held on speculation. Some were almost forgotten, as companies were sold, amalgamated or traded. After in-depth studies and major discussions, existing Crown licences were annulled and completely reallocated into 10 licences held by eight licensees, including major saw, pulp and paper mills. The formula was based on demonstrated use over the recent past, with consideration for new investment and solid expansion plans.

One issue the New Brunswick forest industry continues to grapple with is wood supply but at least they will now be doing it on a more united basis. The New Brunswick SubLicensee Forestry Alliance, made up of smaller to medium sized sawmills in the province, has voted to join forces with the New Brunswick Forest Products Association, enabling them to present a united approach to government on forestry issues.

The eight licensees included the core membership of the New Brunswick Forest Products Association (NBFPA), an industry group that had been in existence since 1959. But something entirely new was ensured access to Crown land for the operators of local sawmills, ranging from a few medium sized, modernized mills to a large number of small, often family owned and operated establishments perhaps 150 in all. Groups of these operators, now called sublicensees, were assigned to licensees who were required as a condition of their licence to ensure access to the allocated quantity of wood, strictly determined by the government. Obviously there were differences of opinion about the quantities of wood allocated to the different players, but government held its ground and, while expansion and change of ownership have resulted in lots of pressure, the basic plan has worked well.

The relationship between the big licensees and the smaller sublicensees was a different story. The "Evergreen" provisions governing the licensees made them essentially responsible for forest management management which became steadily more complex, and expensive. To offset these costs the licensees were entitled to levy an "overhead charge" for work done in relation to land accessed by sublicensees and this quickly became a major cause of disputes. Government was inevitably drawn in and, in an effort to escape the flak, the minister of the day suggested that the sublicensees form an organization to sit down with the NBFPA and resolve the issues. The New Brunswick SubLicensee Forestry Alliance was quickly formed, but subsequent discussions made little progress and arguments continued over the controversial overhead charge.

Then, about 10 years ago, something happened which was destined to change the relationship: Yvon Poitras became the President of the Alliance. Poitras, who has always enjoyed being on the side of the "little guy", was right at home with the sublicensees, and was personally opposed to any suggestion that his organization might agree to be eaten up by the older and bigger NBFPA. However, as a former cabinet minister, he was aware of the bigger picture, and of the need to iron out the differences between the organizations. After lengthy discussions, both parties agreed to bring a neutral party to examine the books of the licensees the big players every five years. They would set a fair figure for the overhead charge, which would be binding for the following five years. This worked and, with the major difference having been resolved, members of both organizations began to reconsider joining forces.

This came to a head in the spring of 2000 when Yvon Poitras accepted the invitation of the NBFPA to become its fulltime President and CEO, with the understanding that he would work for a marriage of the two organizations. The SubLicensee Alliance promptly developed a proposal, which was approved by its board and submitted to NBFPA. That body made some minor changes and accepted the proposal. A special meeting of the alliance this past October unanimously adopted the final version, with the union to be completed on or before the end of the year. So, what does it mean to the industry? "It will have a tremendous positive effect," says Poitras. "The first person I met with after the final decision was Jeannot Volpé, the Minister of Natural Resources and Energy, who said, 'It will make my life much easier'. "Now he only has to meet with the spokesperson for one group, his staff only deals with one organization in the field, industry only has to have one meeting and, most important, there will be no more multiple approaches when government and industry meet to resolve issues and to resolve and agree on changes."

The NBFPA head explains that "the new board is set up to represent the two former organizations on an equal basis the same number of directors from the big parties as from the small and the associate members are represented by one director elected on an annual basis. Everybody has a say and a vote." However, there is a fourth player, the New Brunswick Federation of Woodlot Owners. Its members hold about one third of the forested land in the province and its member associations, through their marketing boards, are a significant factor in wood supply especially as demand pushes the Annual Allowable Cut closer to, and perhaps over, the acceptable limit. What about them? Poitras is reassuring, but cautious, anticipating little short-term effect, and certainly nothing negative. He notes that the Woodlot Owners could join NBFPA as associate members, but agrees that they would be unlikely to be interested in such a junior role. However, the overall question of wood supply won't go away. Poitras recently met with a company wanting to know how to approach the minister about getting more wood. "I was completely frank.

I know what the pile looks like the wood that could and should be used to operate in a sustainable way is being used. So don't ask for any more wood you're not going to get it. The minister of the day is very definite on that." Obviously the private woodlot owners, with their one third of provincial fibre, will always play a major, if still unclear role. Combine maximum utilization of wood with the government push to increase in province processing and value-added manufacturing and it is clear there will be changes. Poitras believes firmly that for the smaller players amalgamation is inevitable. "When I started with the alliance in the late 1980s there were 112 subs and today there are 67.

Some fell by the wayside fires or bankruptcy but a lot have amalgamated with one or more small operations. "One viable trend is a combination of a sawmill and a value-added operation, but unfortunately the smaller operations, often family owned and operated, can't handle the costs of upgrading, unless they find a specific niche." Poitras added that he knows of one operator who is losing a significant amount of money, and before too long the cushion he built up over the preceding three good years will be gone. What does he see immediately ahead? "Lots of work, lots of challenges. We'll be putting out a lot of programs for members, a lot of communication like our familiarization tours for teachers, and to the general public. There are 30,000 New Brunswickers who depend on this industry, so it's essential to let people know what we are doing."

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