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Forest industry analysts paint grim picture for B.C. investment future

Old growth restrictions threaten value added, truck loggers told
RBC Dominion Securities analyst Paul Quinn, Truck Loggers Association executive director Bob Brash and consultant Russ Taylor speak to delegates at the association’s virtual convention, Jan. 12, 2022. (TLA video)

B.C.’s forest industry is “becoming un-investable” as new restrictions on old-growth logging and a shift to direct government control of Crown lands take hold under sweeping reforms brought in by Premier John Horgan’s government, delegates to the Truck Loggers Association were told Wednesday.

Paul Quinn, a forest industry analyst at RBC Dominion Securities, spoke to a virtual panel discussion from Oregon, describing the continuing investment shift by B.C. companies to the U.S., Alberta and Ontario. He said B.C.’s major legislative changes passed in 2021 “transfer almost complete control to the government” after years of what had been known as results-based regulation in a tightly controlled industry.

“If that’s what we want, that’s what we’re going to get,” Quinn said Jan. 12. “Simply put, B.C. is becoming un-investable.”

Russ Taylor, now a consultant after moving from sales with Interfor to 28 years with International Wood Markets Group studying the U.S., Asia, Europe and Russia, warned that B.C.’s value added manufacturing has recovered from an earlier decline. But new restrictions on cedar and other old-growth timber mean reduced opportunities in a value-added business that has marginal returns.

“The vast majority of value added is dependent on old growth,” Taylor said.

He described the province’s focus on mass timber technology as “the flavour of the month,” estimating that lumber for that market can only support a couple of sawmills. He noted that Penticton-based Structurlam, B.C.’s leading mass timber company, has opened a manufacturing plant in Arkansas in partnership with Walmart to supply its new home office campus and grow the industry using that region’s southern pine.

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The B.C. government’s policy shift is to redistribute Crown harvest to more and smaller operations, and to transfer more of the forest resource to Indigenous communities with land rights. Taylor said B.C. is already a higher-cost market than other provinces and U.S. producers, and further wood supply restrictions can only force new investment to lower-cost jurisdictions.

Quinn said public companies he works with are already working effectively with Indigenous partners, but they are continuing to pay stumpage to the province while sharing revenues with first nations. He called for the B.C. government to “rip the Band-Aid off” and get on with transferring Crown timber revenue to Indigenous title holders, rather than expecting companies to invest with both costs added in an already uncompetitive wood cost structure.


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