Logging Costs Skyrocket
Make-Work Forestry Jobs No Help For BC's Unemployed
Questions, eyebrows and blood pressure were simultaneously raised
when British Columbia's NDP government decreed there shall be 21,000 new forestry jobs in
BC by 2002.
By Jim Stirling
A year later the government's resolve remains firm but the focus is hazy on excactly how that goal might be realistically achieved. No one disputes the desirability of job creation. But there are jobs and there are jobs.
Make-work projects look good on a government's political resume but they are rarely effective in the long term and do little for the gross domestic product. Does the government's vision embrace full-time jobs, part-time jobs and temporary positions? Does that 21,000 figure include direct and indirect forest industry employment? Are we talking minimum-wage entry jobs, union scale positions, salaried employees? Does the number include those enrolled in forest industry training programs? And why 21,000? Why not 20,000 or 25,000 ? There must be a more scientific reason than merely entering the 21st Century. Mustn't there?
Price Waterhouse reckons the forest industry creates about 290,500 direct and indirect jobs in BC. About 95,000 of those are direct forestry jobs and the figures have remained stable between 1990 and 1995. The creation of 21,000 jobs would require a 22 per-cent increase within five years. That would be asking a lot from the healthiest of industries.
Technological change is essential if the forest industry is to enhance or even maintain its competitive edge. But technological change can cost jobs and it isn't going to go away.
Forest Renewal BC is viewed as a driver of forest industry employment. Roger Stanyer, FRBC's chair, has said the Crown corporation hopes to create 3,000 to 5,000 jobs in stand-tending activities. Nice numbers, but they're a little vague. He added the organization plans to invest about $500 million in projects in 1997-98, up from the $330 million in the year just ended. But he also said industry has a responsibility to create longer-term employment than FRBC's project-by-project approach. That is interesting. One might be persuaded that funding FRBC's $500 million worth of projects, not to mention Mr. Stanyer's salary, represents a substantial fulfilment of forest industry responsibility.
The Ministry of Forests identifies the independent re-manufacturers and value-added sector as having prime potential for job creation. The ministry suggests 30 per cent of the 21,000 jobs could be realized that way.
The ministry has also promised a response to industry complaints about high stumpage rates and costs associated with the Forest Practices Code. It indicated a more results-based Code will emerge, one that will accelerate administrative procedures.
A recent KPMG study commissioned by the ministry shows the Code impacts a provincial average of $12.22 per cubic metre on delivered wood costs. A break on stumpage or some fine-tuning may be forthcoming in specific geographic areas. The cost of harvesting pulp-quality timber is one possibility. But the ministry is scared to death if it institutes a wholesale reduction from the highest stumpage rates in the land, the US will respond with a countervail action. Possible American reaction is also a useful smokescreen for a cash-strapped government loathe to relinquish stumpage revenues. But if Code and stumpage changes are announced they will come with a payback clause. The forest industry will be expected to show more initiative in job creation. How it might do that is moot.
Stumpage, as a component of total log costs, has risen 197 per cent in BC between 1992 and 1996. Total log costs have risen 75 per cent across the province and higher in the interior during the same time frame. It will take more than a few dollars in Code savings to offset that burden.
The provincial AAC has been declining since 1985. It is 71 million m3 now and some observers predict a drop to 60 million m3 by 2005. Independent re-manufacturers obviously need more wood than they're getting if they're going to generate a possible 30 per cent of the 21,000 jobs. We can't clone mature trees like the Scots did to sheep.
And does it make sense to create 6,000 odd secondary jobs - and there's no disparagement intended toward this sector - by jeopardizing some of the 95,000 existing primary ones? New business start-up figures always look impressive until countered with business failure and bankruptcy statistics.
BC's taxation levels are higher than its competitors in Canada and in the Pacific Northwest, and there are more regulations imposed on business. The provincial government is examining a new tax assessment on sawmill machinery and equipment assets, in addition to occupied land. If it's implemented, the annual tax increase per mill will be substantial. The competitive position of the forest industry is worrisome enough, with a return on investment of about 4.5 per cent in the last five years. That is lower than prime.
None of this augers well for a surge in job creation. Lower costs, not higher ones, are the desired stimulus. And it's worth repeating that creating more worthwhile jobs from a public resource is a laudable aspiration and worthy of support. But it appears the provincial government has failed to think its 21,000 job target through. It is tire-iron politics: dream up a Motherhood policy and force it into the economy any which way, regardless of the cumulative consequences.
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