Here we go again - throwing $$$ at Coastal forestry

Here we go again - throwing $$$ at Coastal forestry

Postby hobbyguy » Jan 18th, 2019, 1:13 pm

https://www.theglobeandmail.com/canada/british-columbia/article-bc-premier-horgan-announces-policy-reforms-to-rebuild-coastal-forest/

"Plans are in the works to rebuild the wood and secondary timber industries in British Columbia by ensuring more logs are processed in the province, said Premier John Horgan.

The forest sector revitalization plan will be done through incentives and regulation changes, he said in a speech at the annual Truck Loggers Convention on Thursday.

The policy changes include increasing penalties for late reporting of wood waste, and reducing the waste by redirecting it to pulp and paper mills.

The actions will reverse a systematic decline that has taken place in the coastal forest sector over the past two decades, he said"

To me, this has shades of the 1990s NDP who threw $320 million at Skeena Cellulose - only to have it go poof!

It has been a looong time since I worked in the coastal forest industry, but it seems to me that the headwinds against the coastal forest industry are pretty darn strong, and no amount of government intervention can feasibly change them.

1. The coastal forests, and especially Vancouver Island, are a hotbed of environmental activism. The BC NDP, "the party of protest", have supported this mightily. There are further moves afoot, supported by the Green* party as well, to eliminate old growth logging. From the Great Bear rain forest on down, logging is increasingly "off limits".

2. Labor costs in coastal forestry are very high. I don't know what the labor environment is today, but when I worked in it, I got pressured to stop working so hard, do less (which I ignored). Wages and benefits are quite high to start with, and couple that with poor productivity and you get a poor competitive outcome. The terrain means that the options for mechanization are very, very limited - resulting in high cost fiber. (Interior forestry is far less labor intensive.) The primary costs for logging are labor and diesel (which the BC NDP just made more expensive by increasing the carbon tax).

3. The processors of wood products are very sensitive to wood costs, labor costs. Markets are increasingly competitive, especially in a protectionist US market. Yup, the small to medium log size mechanized interior forestry log input costs, plus highly mechanized processors, can deal with those factors. The large log coastal forest wood products are in a bind, as such mechanization is not practical for large logs (which yield the lowest labor/fuel per log = lowest cost input) and the supply of small/medium logs is inadequate. Interior wood processors are able to achieve very high wood utilization through highly mechanized mills that coastal producers have been, to the best of my knowledge, unable to match. All of that puts coastal wood product producers at a very distinct disadvantage.

4. While coastal wood product producers have not been able to achieve the wood utilization of interior producers, they have improved utilization to a significant extent. For every action, there is an equal and opposite reaction. That means less waste = fewer chips to supply to pulp mills. The death knell for Skeena Cellulose was a combination of factors, but the lack of chip supply played into.

The pulp industry suffers from supply issues as log costs rise, incentivizing higher wood producer efficiency, and that results in less fiber for them to process. In the context of declining print media, increasing recycling, increasing US protectionism, and world oversupply - that is a really tough mix. Add in that interior pulp mills have greater flexibility and some are much newer (and more efficient) and one can see that BC's coastal pulp mills are in a really tough spot.

So the BC NDP response is to stiffen up the "waste" rules for loggers, I suppose in an attempt to increase fiber supply for pulp mills. That will actually increase log costs. Higher log costs will either drive coastal sawmill wood producers out of business, or they will have to invest in mechanization to get higher utilization of logs - and so reduce the chip supply. Net effect: probably less supply of fiber for pulp mills, and fewer jobs.

This, when in countries like Brazil, (and the southern US) they have massive stands of fast growing pulp specific trees.

So for the coastal forest industry, we have a perfect storm of decline factors. High log costs that the BC NDP are driving up and driving up further. Less available wood/fiber due to environmental concern. Pulp markets that are highly competitive. Aging pulp mills with (by world standards) high labor costs.

Yes, world markets for pulp are forecast to increase in the long term (more consumers in China etc.) - but they are highly competitive and many world producers have lots of pulp specific low cost forests available. Countries like Finland, Uruguay, and Brazil have very significant competitive advantages and are actively chasing those markets. The coastal wood sector just does not have the fiber available - and especially if you factor in cost competitiveness.

To me, this whole BC NDP "effort" is just another example of the BC NDP banging their heads against wall (with taxpayer $$) while shooting themselves (and us) in the foot (carbon tax increase, union promotion, higher taxes [the MSP tax will double whammy wood producers this year], less log supply, less chip supply.

And so it goes with the BC NDP recycling of failed policies....

We have seen this movie before. Twice. Dave Barrett and the BC NDP tried save Ocean Falls - and wasted a ton of taxpayer $$$. The 1990s BC NDP tried to save Skeena Cellulose - and wasted a ton of taxpayer $$$.
The middle path - everything in moderation, and everything in its time and order.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby Urban Cowboy » Jan 18th, 2019, 2:13 pm

Only plan the NDP has ever had is to recycle old habits and hope for a different outcome. Some would define that as a sign of insanity, and appropriately so.
“A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do.” -Bob Dylan

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby JagXKR » Jan 18th, 2019, 2:27 pm

Skeena Cellulose is still a huge albatross around the neck of the North Coast. Litigation has been ongoing for many years for that failed "bailout". Luckily for the people up there the Fairview Container Port came along and now the mill is just an eyesore waiting for litigation to finish so they can mothball the stinking pile of junk.
Why use a big word when a diminutive one will suffice.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby Urban Cowboy » Jan 18th, 2019, 3:12 pm

Here's another sign that under the NDP we're heading back to the 90's.

Take a look at BC compared to the rest of Canada............. https://www.castanet.net/news/Business/ ... -in-Canada
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby blueliner » Jan 18th, 2019, 4:12 pm

So So typical NDP
Shoot , Ready , Aim :200:

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby hobbyguy » Jan 18th, 2019, 5:02 pm

From looking at the StatsCan figures, the biggest inflationary jump item was alcohol and tobacco. Yup, the BC NDP "soup nazis" whacked both hard in their gleeful tax and waste excuse for a budget.

Food was the second biggest jump, and we can expect a healthy jump this year as the employers along the supply chain try to recoup the double dip MSP replacement nonsense.

But that is all an aside.

Do those who currently work in the forest industry agree that the BC NDP are just circling $$$ down the drain regarding the coastal forest industry??
The middle path - everything in moderation, and everything in its time and order.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby seewood » Jan 18th, 2019, 5:20 pm

In typical NDP fashion they want to solve a perceived problem politically instead of talking/listening to industry and work to some solutions that way.

Currently the AAC ( annual allowable cut) on the coast exceeds the milling capacity.
Currently there are many stands with over mature trees in them with corresponding volumes of rot. Some trees in that stand are valuable. Mixed cedar hemlock stand for example.
Any new road construction is hundreds of thousands $ per kilometer to build.
The cost to harvest a cubic meter of wood on the coast is upwards of 4 times or more the cost to harvest a cubic meter in the interior.
The south end of the Island is predominately private land and crown granted before 1917 ( for the construction of rail way) and the company can export to their hearts content. So how can the NDP change that??

The mid coast area is heavily protected now and only a fraction of that area is open to harvest. Bears are happy now.
What companies claim is they need to export a portion of their cut to subsidize the harvesting of lower grade logs with corresponding lower grade values. A Fir H log might be worth $110 on the domestic market, $165 on the export market, cost to water after expenses might be $100 m3 or more depending on stumpage paid. The x grade Hemlock might be $40 m3 , basically pulp wood but costs more to harvest than leave in the bush and pay waste penalty. So, to harvest that *bleep* log, they need to subsidize it with logs that are sold for a premium on the export market to get that average price where no one is going into the red.
Currently there is a ton of wood being harvested from stands that were first cut 100-150 years ago. The regen capability of the coast in most sites is truly remarkable.
Many areas on the coast can use mechanized harvesting as they are on the valley bottoms or not so steep sides of the valley. Steeper ground, still hand felled and there is a shortage of fallers now. The size of the machines and their capability is remarkable. They are now starting to mechanically harvest steep slope with winch machines at the top of the slope.
https://www.woodbusiness.ca/slope-solutions-4053/

Some Q&A from the Truck Loggers Association.
http://www.tla.ca/LogExportsQA
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby seewood » Jan 20th, 2019, 10:24 am

Here is another op-ed regarding log exports. https://theprovince.com/opinion/op-ed/p ... t-of-sense

Basically, the reduction in log exports reduces the provinces revenues.
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby Scrobins94 » Jan 20th, 2019, 12:09 pm

Canadian wood products only compete somewhat directly with US wood products. The Southern Yellow Pine can't hold a candle to Coastal or Interior Spruce-Pine-Fir in terms of strength or fiber length (for high quality craft paper).

That said the BC forest industry is still a leader in terms of wood technology and the more products we can diversity our industry into (pre-fab, value-added timbers, nanocellulose crystalline fiber technology, etc) the more we can secure our future.

Our slower growing trees have totally different physical properties than fast-grown plantation trees in the Southern US or Brazil.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby hobbyguy » Jan 20th, 2019, 1:05 pm

Interesting notes on steep slope logging. We weren't supposed to, but there were times when building logging roads that we would "yo-yo" with cats, and even had to do it with a tank drill once. Freaky doing it, and yup, dangerous.

I think about the technology developed for drones, and that could easily apply to steep slope logging and even road building.

All that aside, the whole notion of the promise that Horgan made to "bring back the old time forestry jobs" is simply a bunch of nonsense. Every step forward in forestry technology has improved safety by reducing the number of workers exposed. All the way from logging through to the end product out the door. The older, smaller, manual type sawmills are virtually all gone. The newer mills are not only capable of churning out huge volumes, but do so with about 1/4 of the people that used to be involved (or less).

Forestry will never be the high paying low skill entry job producer it used to be. "Sticky fingers" Horgan and the motley NDP crew need to watch this video: https://www.youtube.com/watch?v=44IQcWK4xFY
The middle path - everything in moderation, and everything in its time and order.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby seewood » Jan 20th, 2019, 2:49 pm

hobbyguy wrote:All that aside, the whole notion of the promise that Horgan made to "bring back the old time forestry jobs" is simply a bunch of nonsense.


:up: :up:

Princeton mill now mills volume that used to go to OK Falls and Kamloops and old Princeton combined.
500 million bdft/yr used to be a super mill, becoming the measure now.
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby madmudder » Jan 21st, 2019, 4:36 am

Princeton mill will be closing soon.
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby hobbyguy » Jan 22nd, 2019, 12:05 pm

madmudder wrote:Princeton mill will be closing soon.


Can't find any info on that. Link?

Why would they close a mill that was just upgraded? And they are still advertising for employees... so this sounds like a false rumor.

Anyway, :topic:

I was checking the stats on the government website (hasn't been updated since 2016) and noted a couple of key facts:

1. Interior mills get 23.5% better log utilization than coastal mills, having improved it dramatically since 1990.
2. Interior mills, while far fewer of them since 1990, are producing more lumber than they did in 1990.
3. Coastal sawmills went from 40+ down to 18 as of 2016.
4. On average, coastal mills are less than half the size of interior mills.
5. Coastal mills have made almost no improvement in log utilization since 1990.
6. Coastal mills are producing roughly half the volume of limber they did in 1990.

Other fun fact:

5 of the world's 10 largest sawmills are in the BC interior.

What we see with coastal sawmills is a failure to upgrade, a failure to upscale, leaving them uneconomic or marginally economic. Some of that is location driven. Mills in the lower mainland are sitting on hugely expensive land, and can't grow as more land is just not available.

Throwing taxpayer $$$ at coastal sawmills and pulp mills just isn't going to accomplish anything except make the BC NDP voter base feel good for a little while.

Coastal pulp mills use a significant amount of raw logs (expensive) as they don't have the sawmill "waste" (chips) to feed them. Interior pulp mills use almost no raw logs, which gives them a lower cost input. Without the sawmill base to support them, the coastal mills will always be high cost producers, and struggle in an increasingly competitive market.

There are no pellet plants located on the coast and so a poor market for other wood waste products.

All of this goes to the nature of business today. You need low cost inputs, the economies of scale, and efficient integrated facilities to have a long term future. The coastal forest industry, located in a hotbed of tree huggers as a further complication, has none of those.

The BC NDP incompetents can promise the moon, and waste a lot of taxpayer $$$, but those business realities mean the coastal forest industry is definitely not ever, ever, going back to "the good old days".
The middle path - everything in moderation, and everything in its time and order.

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Re: Here we go again - throwing $$$ at Coastal forestry

Postby seewood » Jan 22nd, 2019, 4:26 pm

hobbyguy wrote:The BC NDP incompetents can promise the moon, and waste a lot of taxpayer $$$, but those business realities mean the coastal forest industry is definitely not ever, ever, going back to "the good old days".


So true.
The varied log profile. harvesting costs, fewer sawmills all contribute to the fact it is comparing the coast forestry to interior forestry to apples and whatever you want other than apples.

The interior log profile for the most part is relatively uniform. That is a mill will stockpile logs between certain diameters allowing for considerably higher line speeds.
The coast offers a variety of dimensions, not to mention species, and then the logs are shipped about to the mill that can utilize them best.
Seems to me every government has mentioned the "re-design" of the coastal forestry industry for votes, but the industry leans in and explains behind closed doors, these are the issues we are dealing with ( high stumpage for one) fix those first.
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Re: Here we go again - throwing $$$ at Coastal forestry

Postby Terris » Feb 10th, 2019, 11:56 am

It's funny to see the same players here decry the losses of the Alberta oil industry while at the same time throwing the BC forest industry under the bus because they despise an NDP government.

Alberta has their oil industry concerns and BC has forest industry concerns.

I have yet to see the federal government bailout the forest industry to the same extent as the oil industry, but we here in BC are being fed a line about how Alberta's oil industry is in the "national interest".

Why not the same considerations for BC's forest industry??

https://www.princegeorgecitizen.com/int ... 1.23628235

Someone has to represent the people who do the real, heavy and dangerous, front line forest labour work here.

It certainly has not been the union busting, suit and polished shoes wearing, Cheshire smiling, liberal party pencil pushers with B.Admin degrees who will represent the workers...
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