British Columbia's ailing coastal forest industry is waiting until new provincial government land-use plans are finalized before undertaking a much-needed revitalization process for the central and north coast, says a forestry consultant.
The government has made it clear that one of the keys to the restoration of the region is to be much more inclusive and sensitive to the needs of the environment, the economics of the industry and the needs of the First Nations communities, says Lloyd Roberts, a Vancouver-based forest policy adviser for the BC Treaty Commission.
The province is expected to release new land-use plans for the region in the upcoming months that will reshape its land-use and forestry policies.
Mike Long, a spokesman in the Ministry of Sustainable Resource Management in Victoria, confirmed that the provincial government and First Nations are in talks.
"Once those talks have concluded the land-use plan will move on to government for a decision," Long said, but no time frame has been provided.
But until the new plan is in place, much of the industry will take a wait-and-see attitude, says Roberts.
"There is a realization that the current business model on the coast has to change and the government realizes it has to become more market sensitive both locally and abroad" he says.
His comments come after a recent coastal forest industry conference held in Vancouver heard several industry executives predict more mill closures, while they called for greater productivity in the mills, the forging of new customer relationships and the development of new markets.
"The coastal industry needs a shakeup," says Daniel Bowes, production superintendent at Weyerhaeuser Co.'s sawmill in New Westminster.
Bowes told delegates at the conference, which was sponsored by the British Columbia Institute of Technology, that labour costs and productivity have to improve for the industry to survive.
"There will be less people in the sawmill of the future," Bowes predicted. "We will swing from a large workforce managing a simple process to a small workforce managing a very complex process."
Dwayne Leskewitch, regional manager for human resources for Weyerhaeuser Co.'s B.C. Coastal Group, echoed those remarks.
The industry doesn't have a choice because of global competition, he noted, resulting in fewer mills and smaller workforces.
The entire training process for new employees also has to be re-examined, Leskewitch said. Currently it costs $325,000 to train a millwright, but he questioned if there might be a more effective and efficient way of training workers at a lower cost.
Another speaker said the industry requires a new managerial culture.
"It has to change from being production driven to supply-chain driven, said Peter Woodbridge, president of the consulting firm Woodbridge Associates Inc. of Vancouver.
The industry cannot hope that higher lumber prices will bail it out over the long term, Woodbridge added.
"Can the coast be bailed out by high lumber prices? No way ... it's not going to happen," he said. "The competition we have to take into account is there on a global basis."
Statistics show the market is changing for the industry. In the 1990s, about 74 per cent of all forest products from B.C. were sold to the U.S. Today, that has dropped to 64 per cent. Forest product companies need to be sensitive to those changes, Woodbridge added.
"Companies need to adopt a market-driven business model," he argued. "The money is no longer in the timber, it's in the downstream supply chain."
The industry also has to change the skills of employees to meet the demands of the new marketplace, and the new reality demands a new business model for some companies, he added.
Paul Quinn, a forest products analyst with Salman Partners Inc., a Vancouver-based investment firm, says the industry is undergoing a restructuring process that will take between three to five years to sort itself out.
"The financial health of the industry is troublesome," Quinn says.
A lot of the major companies are losing money although some smaller companies are "eking" out a profit, he adds.
The industry is facing a myriad of problems. European producers are making big inroads into Japan, a traditional large market for coastal producers. The net result is that B.C. companies have lost market share, analysts say.
The high Canadian dollar is making it more difficult for exports into the U.S., and the U.S. market has become a problem for the industry due to the softwood lumber dispute between the two countries.
Rick Jeffrey, president and CEO of the Coast Forest Products Association, said the British Columbia forest products industry is the highest-cost producer in the world - and changes are needed, including a new labour agreement.
The United Steelworkers of America - which represents more than 10,000 of B.C.'s unionized coastal forestry workers - had a settlement imposed upon them last year by a special provincial government-appointed mediator following a three-week strike by logger and sawmill workers in November of 2003. That agreement ends in 2007.
"It's about flexibility and productivity," Jeffrey argued. "We need to have a serious dialogue with labour between now and 2007 when the agreement comes to an end."
Jeffrey also cautioned about seeing China as an instant remedy for the forest industry's woes.
"China is a very murky place for forest products," he told the conference. "We have a lot of work to do there.
We need to know the threats and opportunities. We haven't done a comprehensive assessment of China."
China does not have a wood culture when it comes to building houses, he noted, and many buyers feel that using softwood shows they cannot afford hardwood. "We have a long way to go to deal with that stigma," Jeffrey said.
The Chinese have dabbled in using wood, but most of the housing being built - the country records 10 million housing starts each year - uses concrete, he added.
(George Froehlich can be reached at george@businessedge.ca)
