B.C. government must consider coastal forestry’s unique challenges

The Business in Vancouver article “Coastal Forestry Revitalization Plan Awaits Reality Check” (issue 1532; March 12–18) raises an important question about whether the provincial government’s revitalization plan will meet its stated objectives. As the largest lumber manufacturer and a significant forest manager on the B.C. coast, we have a unique perspective on the pending policy changes.

Western Forest Products operates seven manufacturing facilities representing about 50% of the coastal region’s sawmilling capacity, while we hold about 30% of the harvest rights. Since 2012, Western has invested more than $350 million in our business, including the largest investment in coastal sawmilling of any company in decades.

We remain hopeful that the government will take into consideration the unique challenges facing coastal manufacturers as they finalize their policy proposals. Coastal lumber manufacturers are forced to pay the highest duty costs of any region in Canada on the lumber we ship to the United States due to the high cost and value of our products. Coastal sawmills must also compete for logs with jurisdictions like Japan that offer massive subsidies to their forest products industries, allowing them to pay more for the B.C. logs they import. New government policies must recognize the uneven playing field faced by coastal sawmills and remanufacturers, and focus on supporting the industries’ competitive position so we can continue to provide products that meet the needs of our customers worldwide.

We believe a good place for government to start its policy implementation is with improving the B.C. coastal stumpage system. Stumpage is the fee charged to harvest timber from Crown land. Unlike the Interior system, which is driven by lumber prices, the coastal system is driven mostly by log prices, including the high price of export logs. The log prices included in the stumpage system are not representative of the logs consumed by coastal sawmills, resulting in higher stumpage costs for B.C. coastal lumber manufacturers.

The higher costs challenge sawmill economics and result in lower operating rates. Given the market challenges coastal lumber producers face, it is important for government to address cost issues. Adopting a lumber-based stumpage system on the coast is the right place to start.  

We remain fully committed to domestic manufacturing and support the provincial government’s stated objective to make more logs available to local sawmills and pulp mills. Much of the log exports on the B.C. coast are from private lands or from the provincial government’s own BC Timber Sales program. We recognize there is a place for log exports where harvesting or logistics costs make it impossible to economically deliver logs to domestic mills. However, as the province finalizes its log export policies, we suggest they look to other jurisdictions such as Washington state, which requires logs harvested through its state timber sales program to be milled domestically.

As referenced in the BIV story, the coast is very fortunate not to have suffered from an epidemic like the mountain pine beetle. While not immune to changing climate, coastal forests are not static but rather renewable, and harvesting on the coast has occurred for more than 100 years.

We have recently invested in lidar technology, which has allowed us to map individual trees and improve our understanding of the forest. We are using this knowledge to catalogue big trees and to protect them for the future. This knowledge also allows us to plan for future mill capital investments aligned with the changing log profile. Currently, about 50% of our mill capacity is capable of consuming smaller, second-growth logs. We continue to adapt our mills to the log profile that supports the sustainable allowable annual cut.

A competitive coastal industry that continues to benefit thousands of B.C. families is our goal. We will continue to work with government to meet our aligned objectives, but this requires creating business-hosting conditions and an operating environment that keeps the industry sustainable. It is imperative that we avoid unintended consequences from policies that add even more costs or restrict supply of B.C. lumber products to our global customers. •

Don Demens is president and CEO of Western Forest Products.