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Premier Horgan’s NDP government is already ... ‘impacting many businesses by interrupting the supply chain -- and creating uncertainty’ ... says BC Liberal Forestry critic John Rustad

“BC’s forest industry is an industry in transition,” said Susan Yurkovich, President and CEO, of the BC Council of Forest Industries, last September.

 

“The industry is facing somewhat of a perfect storm – an array of market and operating challenges coming together at a time when we are also experiencing a significant structural shift in the availability and cost of fibre. These conditions are forcing difficult decisions, which are impacting workers and communities”, she continued.

 

Who knew, just a few short months later, that perfect storm, she spoke of, was to get even worse ... due to the devasting impacts of a worldwide pandemic?

 

In a media release Thursday morning Doug Donaldson’s Forest Ministry, announced the provincial government will be taking additional action to help support people, communities and forest companies dealing with challenges from the COVID-19 crisis.

 

However, BC Liberal Forestry Critic John Rustad is clearly concerned, as he indicated to me that, “Government needs to stop doing damage to BC's forest industry. (They) should be helping the industry get its feet under it. They should be driving down costs, and getting people back to work”.

 

Yesterday’s government announcement stated that changes to the Manufactured Forest Products Regulation (MFPR) will now be postponed until September 30th, while the coast-wide implementation of the variable fee-in-lieu of manufacture on log exports is being delayed until the end of the year.  Both were to have come into effect in three weeks (July 1st)

 

Although the NDP government says it remains committed -- to exploring opportunities to resolve long-standing fibre supply issues for smaller forest product manufacturing firms -- Rustad indicated that instead, Premier Horgan’s NDP government is already (negatively) ... impacting many businesses by interrupting the supply chain -- and creating uncertainty.

 

Globally, British Columbia’s forest industry is being hit particularly hard by the challenges associated with the ongoing COVID-19 crisis ... and the resulting market impacts. So, delaying the MFPR and fee-in-lieu, according to the government, will provide BC forest companies with more time to prepare for, and adjust, their business models to the upcoming regulatory changes.

 

Introduced in 2003, the Manufactured Forest Products Regulation defines the criteria that products must meet to be considered manufactured under the Forest Act. Under the current regulation, logs that are squared off up to a maximum dimension of 43 by 43 centimetres (17 by 17 inches) are categorized as a sawn-wood product.  These can then be exported without further manufacture.

 

When changes take place on September 30th, the amended regulation will change that maximum dimension (to be considered a sawn-wood product) to 30.5 by 30.5 centimetres (12 by 12 inches) – meaning further domestic processing of lumber will be required prior to being eligible for export.

 

However, according to Rustad, “The change, on piece size, will hurt many small manufacturers on the coast. Many small manufacturing facilities have set contracts with companies in Europe, Asia and the USA for products to meet certain specifications.”

 

Furthermore, he observed, “Even if they could raise the capital, acquire the equipment and find an industrial location to meet the new regulations, their clients are not looking for the new specifications.”

BC's coastal forest region

As to other additional steps the government is implementing? Regulation amendments will require that lumber made from Western red cedar or cypress (in the Coast area) be fully manufactured to be eligible for export. If not, the seller or exporter will have to obtain an exemption from the manufacturing requirement, and pay a new fee-in-lieu of manufacture, to the Province.

 

The statement from the Forest Ministry ended by stating ... the new variable rate fee will be dependent on the economics of the individual stands for harvest, set for the term of the cutting permit to provide cost certainty to forest licence holders.

 

But for the Liberals forestry critic, it seems whether in the time line originally planned -- or the new deferred dates -- forest ministry plans will simply add more problems to what the industry is already facing.

“The uncertainty and disruption this may cause is just another example of how this NDP government doesn't understand our forest sector and is putting their politics ahead of the well being of workers and the sector”, Rustad concluded

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  1. John TwiggJune 12, 2020 at 11:30 AM

    First place I heard about this in such clear terms was right here on Alan Forseth's blog; I also didn't see anything from the B.C. Liberals until now and here, nor did I see anything in a government news release nor in any MSM. It appears there is room for a more flexible transition.

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