August 17, 19868 Price is just the beginning. Vn oll Chahko-Mika Mall Waneta Plaza Hwy. 3B, Trail STORE HOURS jonday-Saturday 9:30-5:30 Thursday riday 9:30-9:00 PRICE IS JUST THE BEGINNING Forest EDITOR’S NOTE: Forestry companies in British along want a greater share of the wealth and environment- alists are changes. By MICHAEL BERNARD (Canadian Press VANCOUVER — A young woman monopolizes the microphone at the crowded annual meeting of Mac- Millan Bloedel, attacking the huge forest-products Husband, a self-appointed watchdog of British Columbia's forests, accuses the company of everything from logging in a Vancouver Island prov- incial park to conducting a campaign of ‘‘disinform- ation’’ by claiming to plant more trees than it harvests. Company chairman Adam Zimmerman thanks Husband for her contribution and assures her that his employees have ‘‘the highest possible corporate con- science”’ and always try ‘‘to do the right thing. If forestry company executives in British Columbia seem to be indulging their critics this year, it’s because they can afford to. MacMillan Bloedel and the seven other major companies in British Columbia cut almost half of all ‘Last year the major companies collectively posted record profits of $1.1 billion’ softwood trees harvested each year in Canada. And they make a lot of money doing it. PROFIT RECORD Last year, the major companies collectively posted record profits of $1.1 billion. First-quarter results show they'll probably enjoy similar earnings this year. But the industry's outlook isn’t entirely rosy. Clouding the horizon are union contract negotiations, the rising Canadian dollar, new fees charged by the provincial government and an environmental lobby that has never been stronger. Forestry is the largest employer in British Col- umbia, directly paying more than $3 billion a year in wages and salaries to 25,000 workers in logging, 45,000 in manufacturing wood products and 16,000 producing pulp and paper. Overall, it is estimated that about 234,000 people in the province — one in five B.C. workers — make a living from wood. It’s hard to escape the indelible mark the industry has left on the landscape. CUT AND PLANT Top-heavy logging trucks rumble down highways and back roads. Huge swathes of land, where loggers have clearcut, have turned forest areas into moon- scapes, while in other areas new forests of man-high trees begin to camouflage the excesses of past loggers. In the many towns that owe their existence to the industry — from Duncan to Prince George — the pungent smell of pulp and paper making is omni- present. Forestry company officials say studies show that cultivated stands of timber — with improved seedlings, spacing of young trees, fertilization and commercial thinning — can produce more than twice the wood that Rate EDITOR’S NOTE: Forestry companies in British Columbia face a transition in the type of trees they can cut. World demand and competition will determine whether they can make the transition successfully. By MICHAEL BERNARD VANCOUVER — The idea of British Columbia running out of wood seems almost absurd. But a University of British Columbia professor hopes forest companies will come to grips with that idea soon enough to save what is by far the province's largest and most important industry. The problem is not that there won't be. enough wood, says Peter Pearse, but that there won't be enough wood of the right kind. “We are probably planting enough trees today to keep up with the current rates of harvesting and denudation by fire,"’ says Pearse, who's best known for heading a 1976 royal commission into. the B.C. forest industry. “*But over the next couple of decades, a much more urgent issue is the rate at which we are harvesting the remainder of old growth, especially on the coast. It’s on the coast that we have, on the horizon, a difficult period of adjustment. What we've got to go through a transition from an old-growth economy to one based on managed second growth.”’ VAST RESOURCES More than one-quarter of British Columbia’s 948,000 square kilometres is covered by commercially viable forests, an area about five times the size of Nova Scotia. From those forests every year, B.C. forest companies harvest about 35 per cent of the entire world’s supply of softwood lumber, including fir, hemlock, cedar, spruce and pine. Old-growth timber — those towering trees that firms r Mother Nature, left on her own, would provide. Mike Apsey, president of the B.C. industry’s major lobby group, the Council of Forest Industries, is blunt in explaining the turnaround from the depth of the recession in 1981, when companies like MacMillan Bloedel were losing $30 million a month. MARKETS STRONG “It's primarily an improvement in our markets, both in volume and value,’’ says Apsey, a former provincial deputy minister of forests. ‘Thank God we do have strong markets or else there would have been blood on the floor. Forestry companies are now much leaner than in the late 1970s, when a boom preceded the recession. Between 1980 and 1983, MacMillan Bloedel slashed its staff to 15,000 from 25,000 — the layoffs spread equally between hourly and salaried workers. Cuts at other awrwreny 6 ae ashy: forestry companies were equally severe. The big profits that have made forest companies the darlings of the stock market this year haven't escaped the notice of the industry’s unions. Jack Munro, the profane and aggressive leader of the International Woodworkers of America, says ‘forest workers want ‘‘their fair share.’’ SUGGESTS BONUS Glen Ferguson, vice-president of finance for MacMillan Bloedel, says companies recognize that unions are entitled to a certain share of the profits. “The time is now for them to hit us for a wage increase,’’ Ferguson said. ‘‘I think the thing for us to do is to say, ‘Yes, but let's try to do it a different way this time — let’s have a signing bonus.’ ”’ The unions have rejected bonuses for the very reason that companies push them: they are onetime of harvesting called 'urgent issue’ were tiny seedlings about the time Columbus discovered America — is what has made British Columbia one of the leading softwood producers in the world. Tight growth rings and no knots make B.C old-growth lumber stronger and more reliable than Second-growth timber harvested in places like the southern United States. But that quality comes with a price. COSTS HIGH Much of the old-growth timber is located in the mountains and other inaccessible areas, making -har- vesting costs among the highest in the world. By contrast, states such as Georgia and. Alabama are relying more and more on plantation operations to raise southern pine. “One of the most rapidly burgeoning forest industries in the world is in the American South,"’ said Pearse. ‘‘They produce southern pine, which is comparable for use to second-growth Douglas fir, in about the third of the time we can produce As well, those southern states have the advantage of much lower harvesting costs and proximity to the densely populated northeastern United States. In making the transition to smaller second-growth timber, coastal B.C. mills will have to refit many of their facilities or build new ones to process the timber. On the positive side, much of the second-generation timber, now growing in areas already logged, will be much more accessible because logging roads are already in place. But perhaps the most critical factor is going to be world demand for the product, Pearse says. EXCESS SUPPLY “The supply of timber in the world is now exceeding demand and the real price of virtually commodities has been going down,” says Pearse. would be wrong to assume that the world is going to beat a path to our door to get at this stuff. Forest company executives say they are all too aware of Pearse’s point, though they don’t share his apprehensions. MacMillan Bloedel, the second largest forest products company in Canada, is already planning for the future. “We've worked on what we call the jaws of opportunity, where we had to get costs down in a very aggressive fashion and values up,"’ said Ray Smith, the company’s president. ‘If you do that, lo and behold, in the middle is a bigger (profit).”” To do this, the company found new ways to use the wood it was harvesting. In the late 1970s,-MacMillan Bloedel had about four cedar products; now it manufactures abdut 120. IN TRANSITION Some companies have already begun making the transition to mills that can handle smaller logs, such as the British Colum! Forest Products mill in Chem- ainus. ly the most dramatic innovation in using MacMillan Bloedel’s development of Parallam, a form of reconstituted lumber conceived in 1968. Parallam, which is three to five times stronger than ordinary lumber, is made by peeling logs to create veneer, which is then dried and screened to eliminate major strength-reducing defects. The sheets of veneer are then clipped together, coated with a waterproof adhesive and cured under Pressure. It can be made in lengths of up to 20 metres and up to 180 millimetres in thickness. The hope is that eventually MacMillan Bloedel and othet companies will be able to say waste is a thing of the past. Payments that do not improve wage scales over the long run. Under a U.S.-Canada softwood tariff agreement, U.S.-bound lumber faced a 15-per-cent export tax. As an alternative to the tax, the B.C. government raised the fees companies pay the province for harvesting timber on public land At the same time, the government made the forest companies pay the entire bill for reforestation, adding about $230 million last year to companies’ costs. DOLLAR WOES Adding to industry concerns is the rising Canadian dollar. ‘Forest companies are now much leaner than in the late 1970s' At 72 cents US, the dollar powered the industry out of the recession by making Canadian lumber one of the best buys in the world. At 80 cents or more, it acts like a brake, threatening to halt the industry’s joy-ride to even bigger profits. Every time the Canadian dollar rises by a penny relative to the U.S. dollar, the B.C. industry loses about $S0 million, just in converting back from U.S. dollars, the currency of trade. The United States is the industry's largest export customer, receiving 48 per cent of all wood-product shipments from British Columbia in 1986, the latest year for which figures are available. Charles Widman, a Vancouver-based forest consul- tant, estimates the industry’s income will be cut by more than $700 million this year if the Canadian dollar averages 80 cents U.S. That prompted industry executives to complain bitterly at their annual meetings last April about th Bank of Canada’s interest rate policy. They sa! focuses on dampening inflation in Central Canada at the expense of Western Canada’s export-reliant industries. Forestry executives generally support the proposed free trade deal, although they would be happier if it didn't include the softwood tariff the United States slapped on Canadian producers. CRITICS ATTACK Economic problems aren’t the only ones the industry faces these days. Environmentatists and native Indians have banded together to launch an unprecedented attack on the instustry’s forest practices. Their. campaigns against MacMillan Bloedel on Moresby Island in the Queen Charlottes and against B.C. Forest Products in the Stein Valley in southwestern British Columbia, among others, have focused much unwanted attention on forestry. The industry launched a multi-million-dollar public relations cam; n last year to counter the lobby by environmentalists and Indians. Ray Smith, MacMillan Bloedel’s lanky says the industry began its campaign — whi television commercials stressing his compan: ment to the environment — because ‘‘the industry's side of the story wasn’t being told.”” Smith says he, like the environmentalists, feels sad when stately 400-year-old trees are felled. “But they serve a magnificent purpose too.’