- Convention buzzwords: challenges, volatility, change, value-added, relationships, Indigenous, partnerships, diversity, climate, carbon, communities, everyone, recovery, collaboration, mass timber, pandemic, resilient, lumpy.
- “Transitioning to high value over high volume production will be a key element of a revitalized B.C. forest industry. The shift to value-added will help people by creating sustainable forestry jobs across B.C. We need to get more from less. Our government wants to make sure fibre is getting to manufacturers who can add more value and create more jobs as a result.”
– Hon. Katrine Conroy, Minister of Forests, Lands, Natural Resource Operations and Rural Development
- “I want my grandchildren to be able to find family-supporting work in the forest sector if that’s what they choose. But I also want them to be able to go for a hike to see old growth in the forest, not in a history book.”
– Hon. Katrine Conroy
- “This tension between President Biden’s goals of achieving a strong rebound for Americans, the American middle class, American workers, American jobs – and the price of lumber and the supply of lumber – is coming to a head.”
– Kirsten Hillman, Ambassador of Canada to the United States
- “I think that we will find that the pressure will mount for the American side to want to return to the negotiating table. To be clear however, neither the administration nor the lumber coalition have signaled an interest in doing so yet.”
– Kirsten Hillman
- “The Rights of Indigenous Peoples Act, Nov. 2019 speaks to our sovereignty, our ability to self-determination, and speaks to recognition that Indigenous rights are human rights. The declaration doesn’t give First Nations more rights nor does it recognize that United Nations give us more rights, rather it recognizes what already exists.”
– Terry Teegee, BC Regional Chief
- “We can have a whole conference on this issue of free, prior, and informed consent. But what I need to really make clear is no government has a veto. There is this fearmongering that this act gives First Nations a veto which isn’t the case. Rather it creates that space where all governments can make a decision.”
– Terry Teegee
- “Things have changed, there’s been a real reckoning here over the last year with this pandemic. Industry must change.”
– Terry Teegee
- “The old way of doing business in our territory wasn’t working. I can recall back in 1992 we only had two workers in the forest industry and today I’m proud to say we probably have up to about 20 people that are benefiting from forest activity in our territory. I’m very happy that we found two organizations that were willing to work with us to create the change necessary..”
– Robert J. Dennis Sr., Chief Councillor, Huu-ay-aht First Nations
- “‘Everything is One’ – an integrated resource management plan.”
– Robert J. Dennis Sr.
- “To reach this point you need a few things.. but first and foremost, you need to have a relationship based on respect and trust. Most importantly, we were all willing to listen.”
– Don Demens, President & CEO, Western Forest Products
- “Where business can participate in reconciliation is on the moving forward part. We can participate by creating our own relationships.. long-lasting partnerships rather than short term transactional agreements.”
– Don Demens
- “Success to me is really following through on what we collectively set out to achieve and building that relationship.”
– Brian Butler, President, United Steelworkers 1-1937
- “What does reconciliation mean to you?”
– Moderator Shannon Janzen, Vice President & Chief Forester, Western Forest Products
- “Even when demand and prices rebounded it was always against the backdrop and an overhang of a devastating pandemic impacting many lives. Not everything was equal, it’s been very lumpy. It was really a 6 or 7 year cycle all condensed into one year.”
– Ray Ferris, President & CEO, West Fraser
- “We need to keep in context that the BC industry took more downtime than any other region in North America. When demand stopped for a period of time, half the curtailments in the industry in North America came from BC – simply devastating to our employees and the communities that we operate in. We learned again as we did in 2019 that BC is not as well-positioned as we need to be.”
– Ray Ferris
- “A year ago we had reduced our production significantly to try to deal with what we may be facing. We were preparing for the worst. We were running at about 30% of production in BC, 50% in the US South, and about 80% at our mills in Sweden.”
– Don Kayne, President & CEO, Canfor Corporation
- “I don’t mind telling you I’m tired of hearing the word unprecedented.”
– Ray Ferris
- “One thing for certain about trying to project prices is you’re going to be wrong.”
– Don Kayne
- “Wood is one of nature’s perfect materials. It’s renewable, it grows with the power of the sun, and it captures carbon as it grows. And then we convert these trees into useful long-lived products like lumber. And then we replant and the cycle starts again. BC is in an extraordinary position as the demand for wood continues to grow as a solution for climate change.”
– Jeff Zweig, President & CEO, Mosaic Forest Management
- “Most of the large iconic trees in BC, not all of them but most of them in unique ecosystems, are already conserved in parks. That’s a result of 30 years of old growth strategy refinement and special designations on top of that including the Great Bear Rainforest. I think everyone shares the objective to achieve long term ecosystem health. There aren’t many jurisdictions around the world that have as much parkland as BC or are as tightly regulated.”
– Jeff Zweig
- “Before we make changes to the way in which we manage old growth forest in BC, we need to understand what the socioeconomic impacts will be. Undoubtedly, undoubtedly we can do better. But let’s just be very considerate about how we do it, particularly during a pandemic.”
– Jeff Zweig
- “I have heard repeatedly if we want to build a value-added marketplace we need to make sure to cultivate that right here at home. An essential part of our approach to the industry is to make sure we do focus on that value-added marketplace and we stop chasing every stick to get it out as quickly as we can.”
– Hon. John Horgan Premier of British Columbia
- “Two years ago I wrote to CEO’s in the industry outlining our vision for the industry. I wrote that letter because the growing shortage of fibre following the one-two punches of successive wildfire seasons and the end of the beetle kill made it imperative we do something about the declining fibre basket and too many people chasing too few trees. And I encouraged CEO’s to work with leaders from labour, from communities and from Indigenous Nations to find a way forward to show leadership on the land base with all of the partners. And I acknowledge there were many challenges to that initiative and I was more hopeful than perhaps I should have been. Of course there have been some B2B tenure sales and arrangements with Indigenous Nations have happened, but you’ll all be aware of course that there’s progress yet to happen and I’m disappointed about that.”
– Hon. John Horgan
- “So to bring about the change, government will have to step in I believe to make the appropriate incentives to get the job done. And just an aside to our American friends, incentives do not mean subsidies, incentives mean we’re making the transition as a community to make sure we take full advantage of the bounty that belongs to all of us.”
– Hon. John Horgan
- “Those who do have tenure and do not want to share it, well we’ll have to step in and ensure there’s fair compensation as we move to a more equitable distribution of access to forest products so that we can continue to have the diversity that we all want to see.”
– Hon. John Horgan
Recipe Highlights for lumber trader’s survival. A delectable turkey side dish of current lumber market opinion. Mix a peck of prudence with an abundance of caution. Stir in a pinch of patience. Flavor to pain tolerance. Mask temptation to taste before allowing adequate cooling. Stand back and stand by. Happy Canadian Thanksgiving!
Issues concerned with the cross-border softwood dispute remain among critical questions facing BC’s lumber industry. A sellout crowd of 225 at yesterday’s annual North American Wholesale Lumber Association (NAWLA) Vancouver Regional meeting heard updates on Canada’s litigation efforts to “vigorously defend the industry” through five separate challenges. A hearing scheduled next Tuesday on the challenge regarding injury is considered to be the most critical of three challenges with NAFTA, all deemed to be significantly more important than two challenges with the WTO ( “a retaliation mechanism”). Colin Barker, Director Softwood Lumber Division, Global Affairs Canada update report confirming dormant cross-border softwood negotiations echoed remarks by US ambassador David MacNaughton at the COFI Convention April 4th.
Provincial government perspectives were shared by Jennifer Burleigh, Director of the Trade and Export Policy Branch with the BC Ministry of Forests, Lands, Natural Resource Operations and Rural Development. On the heels of Minister of Forests Doug Donaldson’s “new model of forest management” discussion at the COFI Convention, she reiterated this provincial government’s “very different approach”. Burleigh noted both Donaldson and Premier John Horgan’s “strong passion for forestry” citing the Coast Revitalization initiative and the recently announced Interior process as examples. Softwood lumber meetings with the National Association of Home Builders (NAHB) were tempered by acknowledgement of “no public interest” in the U.S.
COFI President and CEO Susan Yurkovich expanded on four challenges in BC’s forest sector today, specifically access to 1) fibre, 2) capital, 3) markets 4) talent. In accessing fibre, she noted increasing constraints on the timber harvesting land base. “We need to find a way to preserve the timber harvesting land base.” Yurkovich also expressed frustration with the punitive softwood lumber duties in the face of a lumber supply shortfall in the US: the lumber supply gap (“delta”) estimated at 14 billion FBM cannot be filled by domestic production.
Andy Rielly, President, Rielly Lumber Inc., and Chairman, Independent Wood Processors (IWPABC), and Executive Board Member, Western Red Cedar Lumber Association, fired up the audience which included majority of IWPABC’s 58 member companies. With an eye to SLA negotiations, Rielly emphasized the influential role of associations (“you don’t need an agent until you need an agent”). He highlighted the “double-whammy” facing the value-added sector: 1) re-manners are independent, non-tenured, non-subsidy companies and 2) the punitive application of the AD/CVD on the selling/border price instead of the first mill price. The association is advocating for a negotiated settlement “sooner rather than later” under a transferable quota-based system, with allocation of quota not based solely on historical shipment volumes (“new jobs here in BC are not coming from the primary”).
1. Convention buzzwords: innovation, inclusion, sharing, partnerships, relationship, certainty, predictability, capacity (ability), conservation, caribou
2. “A new model of forest management.”
– Doug Donaldson, Minister of Forests, Lands, Natural Resource Operations & Rural Development
3. “China-U.S. negotiations are only a small subset of the larger tensions.”
– Robert Johnston, Managing Director, Global Energy & Natural Resources, Eurasia Group
4. “India and Southeast Asia will become more important for Canada’s forest sector than China.”
– Robert Johnston
5. “There are very few world leaders that are fierce defenders of globalization.”
– Robert Johnston on the “G-Zero World”
6. “Shareholders are having a stronger influence than governments on climate action – it’s very tough to get climate policy in a context of populism.” – Robert Johnston
7. “Where do we get growth from in the Canadian economy when the drivers are cooling? Productivity innovation.”
– Jock Finlayson, Executive Vice President and Chief Policy Officer, Business Council of B.C.
8. “We’re in a low interest environment for as long as the eye can see. How will policy makers respond next time we move into a recession world?”
– Jock Finlayson
9. “We have seen a dramatic decrease in consumption.”
– Chris McIver, Vice President, Sales & Marketing, West Fraser
10. “The use of wood in appearance applications is growing.”
– Don McGregor, Vice President of Sales & Wholesale Supply, Western Forest Products
11. “There were 487 mass timber projects in 2018. In 2013 there were five.”
– Bart Bender, Senior Vice President, Sales & Marketing, Interfor
12. “It’s always easy to get a deal if you’re prepared to get a bad deal. This is not a good time, we’ll have to wait until the circumstances are right.”
– David MacNaughton, Ambassador of Canada to the United States
13. “Consumer groups have very little political clout (in the U.S.). I’ve been very surprised in observing this fact.”
– David MacNaughton
14. “Nothing unites Republicans and Democrats more than unfair trade with China.”
– David MacNaughton
15. “The U.S. sells more goods to Canada than China, Japan, and Great Britain combined.”
– David MacNaughton
16. “Our relationships with the U.S. are strong and deep.”
– David MacNaughton
17. “The data lake is turning into the data swamp. Everything we do is about clarifying the complex.”
– Charles Lavigne, CEO & Co-Founder, LlamaZOO
18. “How to build relationships with Indigenous communities? Go in without an agenda.”
– JP Gladu, President & CEO, Canadian Council for Aboriginal Business
19. “(On caribou recovery) there will be active engagement with communities (this week) and natural resource sector parties.”
– Beth MacNeil, Assistant Deputy Minister, Canadian Forest Service
20. “Under the previous government, forestry was an engine that was allowed to take over. The status quo is not acceptable. There are high expectations for the industry to make changes.”
– John Allan, Deputy Minister, Ministry of Forests, Lands, Natural Resource Operations & Rural Development
21. “We all know what the problem is in the Interior; we have too much capacity and too few trees.”
– John Allan
22. “There is desire on the public’s part to regain some control of forestry and the management of old growth on Vancouver Island.”
– John Allan
23. “We’ve lived up to our commitments (caribou recovery) but we’ve been a bit late coming to the communities.”
– John Allan
24. “I am shocked and disappointed by what is happening this week (in Chetwynd). Without consultation, how are we going to get through these cycles? It discourages future investment in B.C.”
– Ted Seraphim, President & CEO, West Fraser
25. “I hope he (Horgan) talks about our industry in such a way that it attracts young people.”
– Ted Seraphim
26. “Government to government relationship is key in China. China values relationships even moreso. We can’t get complacent, we need to refocus, continue these trade missions to get the message to the Asian markets.”
– Don Kayne, President & CEO, Canfor
27. “The biggest driver is wood costs. B.C. has the highest wood costs in North America. With B.C. as our base, we needed to expand, grow our diversification in Europe and the U.S. South.”
– Don Kayne
28. “Next year, the forest products industry is expected to have 7300 openings. Youth are the future of forestry, embrace them. Offer opportunity, growth, reasonable pay. Promote economic stability, work life balance, and social consciousness. Create a respectful and enjoyable workplace. If I identify and prove that there’s a better way to do something, will I be encouraged to pursue it?”
– Fiona McDonald, Communications Specialist, Conifex Timber Inc.
29. “The problem with just posting a job is you skip the first two steps of the marketing funnel (Awareness and Interest, before Desire and Action). Get out in front of prospects rather than waiting for the prospect to come to you.”
– Quinn Miller, Energy Engineer, West Fraser
30. “How to motivate young professionals? Engage new perspectives and break down barriers. Encourage mentorship and knowledge sharing. Support through continued learning and education.”
– Ethan Griffin, Production Superintendent, Interfor
31. When we talk about reconciliation we need to reconcile our relationship. Consent does not mean veto. Consent is shared decision-making. We have to get to a place where we can make decisions together. The fibre basket is shrinking, the AAC is coming down everywhere. How do you want this arrangement? How do you want to access that fibre?”
– Terry Teegee, Regional Chief, B.C. Assembly of First Nations
33. “It’s not about a final agreement. It’s about relationship, moving forward together.”
– Celeste Haldane, Chief Commissioner, B.C. Treaty Commission
34. “It always amazes me how often I get asked the question ‘What’s the best way to start a relationship?’ Pick up the phone. There’s something that intimidates people about having that conversation.”
– Doug Caul, Deputy Minister, Ministry of Indigenous Relations and Reconciliation
35. “At the Youth Outland Employment Camp (OYEP) West, Indigenous youth build confidence, establish networks, learn how to work both independently and as a group, and develop a keen understanding of workplace expectations.” See: 2018 OYEP sponsorsOYEP StatsOYEP West – 2019 Partnership Package
Derek Orr, Business Development Manager, Carrier Lumber
36. “The forest industry is the most innovative sector in our economy.”
– John Horgan, Premier of B.C.
37. “A negotiated settlement (SLA) would have been preferable, but that’s not possible.”
– John Horgan
38. “(On coastal forest revitalization) we’re not going to just take down our forests to move them down to other jurisdictions where they can extract the value.”
– John Horgan
39. “The situation in the Interior is deteriorating but there are opportunities. We’ll approach it TSA by TSA. How do we add value, not how do we allocate timber supply. It’s about how do we take our dwindling fibre basket and maximize the value. The process is evolving but it is not prescriptive; if I prescribed a solution it would be inadequate.”
– John Horgan
40. “I always talk about value-added and (the big producers) say ‘we can smell the incense when you start talking that way.. we need markets!”
– John Horgan
41. “More high value, less high volume. I’m going to give you the incentives you need to transition between high volume and high value. These are opportunities, not obligations. It’s on you to take this challenge.”
– John Horgan
Where, oh where has the market gone? This is the mournful lament intoned on lumber trading floors spooked well in advance of Hallowe’en this year.
Conditions testing the resilience of experienced traders are drawing comparisons with the global financial crisis and US housing market collapse of a decade ago. Today’s geopolitical landscape seems besieged with instability amid crises, including international trade concerns, rising interest rates, financial market volatility, and looming US elections.
Seasoned traders seek to offer reassurance and calm aimed at validating longstanding customer-supplier relationships. While financial analysts scramble to make sense of conditions in the face of seemingly disparate economic data, it seems timely to explore tips for dealing with the biggest lumber market meltdown in history.
Google has advice for handling times like these. One link offering “28 positive things you can do when business is slow” suggests a slow period is just another name for opportunity: “ask for help, take some down time, take a course, take up a hobby, network, develop new offerings, rethink your business model and processes, strengthen important relationships, write, teach, volunteer, exercise, study another industry.” Some guys have even been known to enthusiastically take up coaching – not one – but two girls’ soccer teams.
Another column suggested eating lots of leafy green vegetables to keep your cognitive abilities sharp and on high alert. Even so, we’re told Canada’s legalized cannabis should not be seen as a tool for alleviating anxiety in current market milieu.
Where, oh where has the market gone?
Like a saucer of yesterday’s beer.
I don’t wanna be short,
I don’t wanna be long,
In fact Duthie, I don’t even wanna be here.
– Ernie Harder, singing live at the 1995 British Columbia Wholesale Lumber Association Roast honoring Duthie Welsford, BCWLA Lumberman of the Year (recording below)
Breaking up is hard to do. Certain market segment’s love affair with record high lumber prices appears to be over.
Image Source: finfiz.com
Is the lumber market ripe for picking? Who knows. Unfortunately this week’s picking readiness signalled by my backyard apple tree’s bumper crop offers little guidance. Unlike apples dropping from a tree, falling lumber prices can’t be sure of where ground level support intervenes.
Wait for a couple of apples to fall from the tree. Apple trees naturally drop their apples when they are ripe in order to self-seed and reproduce. Watch for an apple or two to drop from the tree to determine if they are ready to pick.
When your apples are ripe, they should be fairly easy to pick from the tree with a simple upward twist of the apple. Try to avoid picking an apple by pulling the fruit straight down and tugging.
If otherwise healthy fruits begin to fall off the tree, they are probably beginning to get a little too ripe and should probably be harvested as soon as possible.
Now if only Google could offer up unambiguous harvest-time signals for lumber inventory managers.
We’re in for a heat wave. Wildfires threaten our woods, with B.C. Interior areas contemplating evacuation alert notices. It’s a stress-inducing situation that has even lumber traders wondering how to keep cool. Uniting in nudity is suggested as a solution by some. We read of a Newcastle, UK based marketing company who once decided to have a naked Friday, “to boost team spirit and improve employee morale.” Business psychologist David Taylor called it “the most extreme technique” he’s ever used. After a week of counselling and office activities aimed at building courage, most of the co-workers agreed to strip down to work in the buff for a day in an effort to boost production (and probably for a chance to be on TV). The ‘naked event’ is said to have turned around the company’s fortunes.
We’re told that Canada’s first and largest legal, clothing-optional beach, Vancouver’s Wreck Beach, is so crowded this week, there’s a lot of jostling going on to find room to park your fanny pack. It’s reported that at Wreck Beach, named among the world’s top 10 nude beaches, the atmosphere is very stress free. “When you shed your clothes, you shed the stress. It also helps you keep cool”. With lumber prices continuing to peel off this week, it may have some traders dedicated to serving supplier and customer needs from behind office desks wondering.
Harderblog recently caught up with reload operator extraordinaire Guillaume Pelletier, Vice President, RCP Transit Inc.
Dakeryn Industries has enjoyed a strong working partnership with RCP Transit since 1995.
1) How have Electronic Logging Devices (ELDs) impacted truck capacity at RCP Transit?
Right now, we’re handling the same volume as we were doing before the ELD – but differently. Drivers can’t lose time anywhere, they’re running like crazy! As soon as they move the truck, the clock starts; they have 14 hours to complete their day (11 hours of driving + three hours work/on-duty). It’s changing the way they’re driving.
2) Changing in what ways?
Before ELD, drivers could stop to eat, take a shower, do maintenance – now they need to sleep 10 hours in a row! I never sleep 10 hours! I used to have 9 out of 10 drivers sleeping in their truck – now I have three out of 12. And we need to pay extra. Truckers are leaving the reload earlier in the morning, deliver by noon, p-up their log and come back home by 17:00/18:00. My mechanic needs to work overnight or on the weekend. I need more trailers since we don’t have anyone to load at night anymore. I had to hire an extra local driver only to deliver all the back hauls. It’s costing big money.
3) In the face of the ELD mandate, what is RCP Transit doing to be a “U.S. truck shipper of choice”?
We have changed the way we dispatch – it’s hard to explain. Overall, improved communication with customers. Our hours of service for truckers have been fully optimized. It’s more work on the dispatch side, but we have good partnerships in place.
4) How about freight rates?
We’ve been running with the same freight rates out of both our reload locations in Coaticook, Quebec and Island Pond, Vermont, for almost five years. But last week we announced higher freight rates effective June 1st. We probably should have increased rates six months ago, but our goal was to run with the existing rates at least through Q1 to accurately determine what was needed. We want to stay as competitive as possible to continue to grow the business – but waiting until now to raise rates has cost us significantly more then I was expecting! With our trucking company, we were probably short $80,000 for the first three months of the year. We were expecting to handle 20% less loads per week, but that never happened. So we’re handling the same number of loads, but driver salaries are up 20%, our insurance costs are up 30%, and fuel is going totally crazy! Unfortunately those expenses are out of our control.
5) Any shipping relief in sight?
There are fewer truck drivers every year. People are desperate for trucks! Right now there is such a shortage of trucks, people are calling us non-stop everyday. You wouldn’t believe it! We cover one out of every five loads we’re offered. It’s not easy refusing business everyday. The worst part is I am losing my broker. And prices continue to climb. For example, Montreal to Plainfield, CT a truckload of steel pays around $2000.00. How can we compete with that?
Related: America doesn’t have enough truckers