Skeena Cellulose story continues with not-so-new players
The good news is the rickety old chicken shed remains standing. The trouble is, it's the same old foxes in charge. The turbulent and troubled story of Skeena Cellulose took its latest twist recently with the NWBC Timber & Pulp Company emerging as owners of the forest company's assets in northwestern British Columbia. NWBC is represented by George Petty and Daniel Veniez, two of the executives with Repap Enterprises who dumped Skeena Cellulose in 1996.
That action precipitated a crisis and chain of events that left thousands of forest workers and suppliers out of jobs and millions of dollars owed. It plunged the communities where Skeena was the dominant employer into economic chaos, a situation that persists. The NDP government subsequently bailed out Skeena in the name of preserving jobs and communities.
The effective subsidization of Skeena angered other forest companies trying to compete and survive in a high cost, poor and restricted market spiral. The Liberals and its unwilling bank partners inherited the Skeena debacle and like the NDP before them, tried to return the company to the private sector. Mercer International emerged as the government's favoured suitor with other companies, including NWBC, on the outside.
Mercer proposed purchasing Skeena for about $7 million, the company's working capital. But it also wanted concessions and subsidies to help it operate in the northwest, a spectre that raised too many red flags for the Liberals.
As yet another deadline on Skeena's fate became imminent (there were at least five extensions), the government flip-flopped, Mercer was out, NWBC was in.NWBC's original bid was for $15 million but that dropped quickly to $6 million when it realized it could gain only $280 million in tax losses from the $600 million it thought possible. But, desperate to get out from under, the province agreed to the deal.
It includes NWBC paying $2 million to unsecured creditors-which at best will amount to a handful of pennies on the dollar-and seven years to whittle down the $11 million in back city taxes owed Prince Rupert for the company's pulp mill. Adding their okays to the re-structuring agreement were five classes of creditors and a BC court chief justice. What's next now that the ownership question is settled? The answer remains cloudy.
NWBC's financial situation and ability to raise capital for needed plant upgrades is unclear. The company's principal assets-including its pulp mill and three major sawmills in Terrace, Carnaby and Smithers-remain idle at this writing. Ditto for the logging contractors and log haulers. The 29 per cent softwood duties levied by the US were due to become payable and no formal negotiations between Canada and the US had resumed.
Unemployment in the northwest remains high: a staggering 95 per cent estimate in the three Hazelton villages. For weeks Veniez has been travelling throughout northwest communities expounding the gospel according to NWBC. Petty has been keeping a lower public profile which is probably advisable: the very names elicit strong reaction in some quarters from people stiffed by Repap. But Veniez spins a convincing if evangelical line. "So much of my hope and confidence comes from people I have encountered here.
They told me that they're tired of being on the outside looking in. They told me that they want to be a part of something. And they told me they want to work together to get through the uncertainty and make things here right again. I believe them." And: "I believe your determination inspires courage, generates conviction and motivates action.
It will serve the northwest well. All the human qualities that are required to return prosperity to this part of the province are here and are here in great supply." Veniez and Petty want to make a profit which is why they're in business. But Veniez's prose seems to imply that, for that to happen, the people and communities of the northwest are going to have to give much more before they get anything back.
NWBC is firmly in the driver's seat and the company's banking on the northwest recognizing that. If it doesn't, Veniez and Petty are making no guarantees and can threaten to pick up their marbles and go home. Again. Veniez has made it clear to the pulp mill's unionized work force that the operation will stay down until a "competitive wage" is in place. And there won't be as many employees as during Skeena's day.
NWBC has terminated two "evergreen" logging contracts without cause and plans on moving away from them in the future. The move could well lead to rounds of logging rate cuts forced on cash-strapped loggers. Safety becomes an issue. NWBC has also asked communities to invest in the company through equity financing plans. NWBC may face a problem implementing its plans with regional aboriginal groups.
The Gityanow, Gitxsan and Tsimshian native groups want more say and consultation on what happens on their traditional lands. They are buoyed in that aspiration by a recent BC Court of Appeal ruling in favour of the Haida with a Weyerhaeuser forest licence transfer. The court said consultation with native groups must take place whether or not aboriginal title has been recognized by a court. Meanwhile, the provincial government has not washed its hands of the Skeena stain.
BC coastal forest company Doman Industries is following through on its warning and has filed a lawsuit against the provincial government for its bailout and sale of Skeena. Doman alleges the government's actions with Skeena unfairly compromised its own competitiveness in the pulp and Japanese lumber markets. Interesting times await.
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last modified on Thursday, October 07, 2004