MacMillan Bloedel Pursues a Solo Strategy
MacMillan Bloedel's withdrawal from the Forest Alliance of BC is the latest indication of the company's efforts to go solo and speed along a re-think of the role of industry associations on the West Coast.
Now that it is being abandoned by MacMillan Bloedel Ltd., no one is prepared to bet a fig on the survival of the Forest Alliance of BC. When you lose your biggest financial backer, your other contributors begin to wonder whether they should leave also.
MB has fed $100,000 a year into the Alliance budget of $2.5 million. But more than the loss of the money, its defection has sped up a sweeping reappraisal of roles for just about every other joint agency or association in the West Coast forest industry.
For the past year MB has been moving steadily out of the mainstream. It has broken with general industry strategy in a number of areas. It could not stay in the Alliance if it wanted to pursue its own initiatives any further.
It has, for instance, decided to phase out clearcutting and move out of oldgrowth forest on public land. It's also pressing for an open log market to change and eventually replace the current stumpage-based supply system - a proposal that would eventually mean the end of tenured harvest licensing and put MB at odds with the rest of the industry.
MB chief executive officer Tom Stephens, who came to BC a little over a year ago from the Manville Corp. in Denver, has said he will continue as a member of the Council of Forest Industries of BC (COFI). But he is being seen in other boardrooms as deserting collective strategy in order to push the interests of his own company in competition with other producers. Because of that, he is now painted as a lone wolf whose actions could harm the industry as a whole.
"What's needed now more than ever is a strong, united position on a number of things so the industry can go to Victoria and say: 'We've had enough and it's in your power to correct those things that are hurting us'," says retired University of BC forestry professor Les Reed.
"Stephens' action gives the (New Democratic Party) government the authority it has wanted to butcher tenure. Government has wanted for a long time to open up longterm harvesting licences. This has been Premier Glen Clark's tom-tom and it's the objective of some of his advisers.
"You have to worry when the industry is on its knees, slipping into an abyss of severe financial losses, that we have this critical division appearing. Every man for himself is not going to get the job done."
Even so, other voices are saying the industry was due for a fundamental reappraisal, whether or not MB had stayed in the Alliance.
COFI knows its role is going to change. But to what nobody yet knows. It doesn't want to take on the Alliance's front-line public relations work against Greenpeace and other eco-lobbies running increasingly successful boycotts against Canadian lumber in Europe and elsewhere. Its traditional job is to act for the industry in government relations. But if collective strategy breaks down, what can the relationship with government be? Would there be an industry position to represent?
Forest Industrial Relations and the Interior Labour Relations Association, which negotiate with the trade unions on the solid wood side, may see their roles change to mill-by-mill bargaining in place of the current centralized, one-agreement system. The pulp and paper side has already gone this route, to greater or lesser success, depending on the point of view. Abitibi-Consolidated, the world's largest newsprint maker, based in Quebec, went through a bitter strike in Quebec during the summer on the same issue. Solid wood companies have been thinking about trying a similar approach to labour bargaining in British Columbia.
The BC and Interior value-added associations and training systems such as the Joint Union Management Program (JUMP) face the same role reappraisal. Mandates are changing all over the place without much guidance from anywhere. The question has become so sensitive that corporation executives are reluctant to say much publicly about it. But one official admits bluntly: "The industry in BC doesn't feel it has one body to co-ordinate things. We don't know which organizations are going to be eliminated. We need somebody with his finger on the pulse to be accountable for what is going on."
The Alliance is itself a product of the lack of direction. When it was formed in 1991 it was given limited responsibility to explain and educate the public about the industry. But when Greenpeace boycotts began to be more successful in Europe, the Alliance fell into the job of organizing a counter-offensive. "That's because there's no one else on the solid wood side doing it," says president Jack Munro.
The Alliance has built up a network of experts who can respond within 24 hours to negative stories about logging in BC, he says. That will be lost if it goes under.
COFI says it still prefers to focus more on industry-government relations. And if there is any move to end the tenure system, the government will prefer to deal with a central association representing the industry. But if the companies are forced into more But if the companies are forced into more individualized roles to protect their own interests against other BC companies, there may not be an industry position to manage.
The West Coast-Interior region is the only sector of the Canadian industry bleeding red at the moment - at a rate of $67 per thousand board feet on the Coast and $30 per thousand board feet in the Interior, although profits are marginal elsewhere. So cuts in funding for joint agencies are inevitable.
But Alliance people don't have much assurance when they hear executives they've come to rely on say they're "looking at what the Alliance should be doing, what it would be nice for it to do but can't."
As the COFI people see it, the Alliance has expanded its reach too far to fight issues that aren't in its mandate, particularly in the marketplace.
"The industry has no intention of abandoning the marketplace to its critics," says one industry insider. "But it wants to work intelligently on the issues. We have to get smarter about how we do it."
The BC situation is being keenly monitored in Quebec, Ontario and the Maritimes.
"Quebec particularly has a very strong interest in seeing BC driven into a corner," says Reed.
"The bigger they can get their quota (under the Canada-US softwood export agreement) increased, the better off they are. Quebec already thinks BC's share is too big and if it shrinks because we can't afford to produce, a certain amount of quota will indeed go to Quebec and Ontario."
According to Reed, high costs, lower harvesting volumes and declining lumber quality cut from smaller timber have led the coast into the worst period in its history.
"Nothing Tom Stephens suggests will change the situation one iota," he says. Shareholder pressures are driving MB's strategy. The big mutual funds want the company to get its share price value up so they can decide whether to remain with the company, or at least get out "with some dignity," as one analyst has put it.
The strategy is not without risk for MB. There are some rumblings among loggers even within the company about the dangers in the selective harvesting it intends to use in place of clearcutting, even though Stephens insists there will be no compromise on safety. But MB obviously has opted to deal with that risk, even if it means going it alone. Equally obviously, if MB succeeds, it will pose a challenge for the rest of the industry on clearcutting, as does just about every move it makes.
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