Forestry package skirts main issues: coalition

The provincial government’s package to assist the forest industry in Ontario has sidestepped the issues of energy and delivered wood costs, and will do little to improve competitiveness on the global market, the Ontario Forestry Coalition said last week.
“While I am pleased that our coalition efforts have put this issue on the government’s radar screen, it is clear that more work needs to be done,” said Greenstone Mayor Michael Power, who also is president of the Northwestern Ontario Municipal Association, which is a member of the OFC.
“Nothing that was announced today [Thursday] will bring about company-led investment in Ontario’s forest industry because we remain the highest cost jurisdiction in the world,” he added.
In a report commissioned by the Ministry of Natural Resources, the Minister’s Council on Forest Sector Competitiveness released earlier this year determined Ontario’s delivered wood cost is $55/cubic metre.
The global average is $35.
While the provincial government claims its package will reduce Ontario’s delivered wood cost by up to $2, the Ontario Forest Industries Association (OFIA) said it will reduce those costs by less than $1.
“It doesn’t seem like we’re competitive yet to me,” said Fort Frances Coun. Tannis Drysdale, who also sits on the NOMA board and who attended MNR minister David Ramsay’s announcement in Thunder Bay last Thursday.
The province’s forestry package included:
•$150 million over the next three years for a Forest Sector Prosperity Fund to leverage new capital investments, especially in the areas of energy conservation, co-generation, and improved fibre efficiency;
•up to a maximum of $28 million annually to maintain primary forest access roads to reduce delivered wood costs;
•$7.5 million in 2006/07 and $10 million for each of the next three years towards the Forest Resource Inventory to ensure the long-term sustainability of the wood supply; and
•$1 million per year beginning in 2006/07 for an Ontario Wood Promotion program to enhance value-added manufacturing.
“The goal of these measures is to address immediate competitiveness challenges faced by the Ontario forest sector, provide a positive climate for investment, and to strengthen the industry’s future through joint industry and government actions,” the MNR said in a press release.
“It’s a good first step, but it’s a small step,” Coun. Drysdale said of the package.
“What Natural Resources minister David Ramsay announced may help a couple of paper mills avoid closure and further layoffs, but it is a woefully inadequate response to the forest industry crisis the McGuinty government has created,” charged Ontario NDP leader and Kenora-Rainy River MPP Howard Hampton.
“We need to see significant movement on the high price of delivered wood costs,” said Thunder Bay Mayor Lynn Peterson, a member of the Minister’s Council on Forest Sector Competitiveness.
The Communications, Energy and Paperworkers Union also criticized the government’s package, calling it “pathetically anemic.”
“Their whole package comes nowhere near what is required to turn this industry around and save the tens of thousands of jobs which are at risk,” said Cec Makowski, the CEP’s Ontario Region vice-president.
“The McGuinty Liberals have done absolutely nothing while mills are closing and critical jobs are being lost—this shows they just don’t get it,” Ontario Progressive Conservative leader John Tory said in a press release.
“For an $18-billion industry employing 200,000 people, this is too little and way too late,” he added.
The Ontario Forestry Coalition—made up of NOMA, the Ontario Lumber Manufacturers’ Association, OFIA, the CEP, and the Nishnawbe-Aski Development Fund—had been lobbying for a prosperity fund similar to the $500-million one the auto industry recently received from the province.
“We asked for a considerably larger fund,” Coun. Drysdale said of the $150-million fund that was offered instead.
Besides doing little to reduced delivered wood costs, the package failed to address soaring hydro costs and the 50 percent fuel tax credit the coalition had asked for.
“The announcement is more tinkering than substantive, and until the Minister of Energy, Dwight Duncan, can find a solution to the accelerating energy costs, the forest industry will remain uncompetitive and in crisis,” argued Kenora Mayor David Canfield, who also sits on the Minister’s Council on Forest Sector Competitiveness.
“[Last Thursday’s] announcement doesn’t address the fundamental issue—hydro-electricity rates that will continue to skyrocket under the McGuinty government resulting in paper mills across the north shutting down, cutting jobs, and decimating communities,” Hampton agreed.
Hampton noted in a press release that Northern Ontario mills are paying $80 per megawatt for electricity that is produced locally for $10 per megawatt.
“It isn’t fair,” he remarked.
“We’re looking forward to Mr. Duncan’s announcement that Mr. Ramsay alluded to on how he plans to assist the industry in reducing energy costs,” Coun. Drysdale noted.
“No one knows when Mr. Duncan will notice Northern Ontario exists,” she replied when asked when that announcement would be made.
Last Thursday’s package is in addition to initiatives announced back in June when the Forest Sector Competitiveness Report was released.
Those initiatives included a $350-million loan guarantee program. But most industry reps scoffed at the program, arguing the industry already was in debt.
Even companies that may have wanted to take advantage of the program have been unable to do so because there has been no way of applying for the loan guarantees.
The MNR is expected to release more information on the program—and an application form—sometime this month.
“With the right public policy, we can return the province to its competitive position of three short years ago and keep successful companies here in Ontario,” said Jamie Lim, president and CEO of the OFIA.
“Without the right policy, we’ll continue to see an out-migration of industry, jobs, and prosperity,” she warned.
Coun. Drysdale said last Thursday’s package was regarded as “phase two” of the province’s efforts to support the forest industry, with phase one being the initiatives announced in June.
The province is calling on the federal government to be part of phase three.
“Together with northerners, we will work to make forestry a viable sector,” Premier Dalton McGuinty said in a press release. “We’re doing our part, and we’re urging the federal government to honour its own commitment to come forward with tangible financial support.”
“NOMA understands and acknowledges that that’s an important component in saving the industry,” Coun. Drysdale said of the need to include the federal government.
“The forest industry provides good jobs for northerners and supports the prosperity of the entire province, but the sector is facing some tough challenges,” McGuinty noted.
In its press release, the government acknowledged Ontario’s forest industry contributes about $3 billion to the provincial balance of trade annually, with annual sales of about $18 billion and exports of about $9 billion.
“The forest industry provides direct and indirect employment to over 200,000 people across the province.”
“NOMA, along with members of the Forest Industry Coalition, will continue to pressure the government until such time as the Ontario forest industry is competitive on the world market and that once again Ontario is a place to invest in,” Power pledged.
“Dalton McGuinty . . . promised that his government was committed to the ongoing success of the forest industry similar to the success of the automotive industry,” he added.
“We will keep him to his promise.”
The forest industry has seen a number of cuts in recent months. Back in July, Abitibi-Consolidated announced it would permanently close one of its paper machines in Kenora in October and shut down the second one indefinitely.
The company now is looking at the option of building a co-generation plant in Kenora to help deal with high energy costs.
As well, Tembec, Norampac, and Cascades all have announced layoffs and closures in the last two months.