Forestry package mostly loan guarantees

The federal government released its $1.5-billion forestry aid package yesterday to a lukewarm response from the industry in Ontario.
The package, dubbed the Forest Industry Competitiveness Strategy, includes $215 million over five years to help companies access and implement transformative technologies.
“This will allow the Canadian forest industry, especially the pulp and paper industry, to enhance its competitive position, improve its environmental performance, and take advantage of the growing bio-economy,” Natural Resources Canada said in a press release yesterday.
The plan also includes $66.3 million to boost developing wood markets and $150 million for a National Forest Community Adjustment Fund, as well as help to develop economic diversification in communities dependent on the forest industry.
But the vast majority of the strategy’s funds—up to $800 million—have been earmarked for loan guarantees.
The Ontario government garnered little praise when it made a similar move back in June, offering $350 million in loan guarantees to the province’s forest industry.
“The financial package offering loan guarantees falls far short of offering any solution to improving a dismal operating climate,” the Ontario Forest Industries Association had said in June.
The loan guarantees will be of some assistance to forestry companies affected by the softwood lumber dispute.
“Certainly, the loan guarantees for the companies hurt by the illegal actions of the U.S. on softwood were a part of our discussions and the government has made a good beginning,” noted OFIA president and CEO Jamie Lim.
The latest federal package does offer some long-term help but will do little to reduce delivered wood costs, charged Kenora Mayor Dave Canfield.
“Funding for programs like the $215 million to boost competitiveness and the $90 million for product research can help in the long-term,” he noted.
“However, for Ontario, unless the cost of getting wood to the mill and the cost of electricity to run the mills becomes more competitive, there won’t be much of an industry left on which to build a future,” he warned.
“Globalization is challenging the industry across Canada, but what makes Ontario unique is that made-in-Ontario problems are making this province the choice for closures and that has to change,” said Thunder Bay Mayor Lynn Peterson.
The most recent closure was the announcement by Cascades Inc. on Tuesday that it would close it fine paper mill in Thunder Bay as of Jan. 21, 2006 at the latest.
Earlier this fall, the company had said it would shut down one paper machine, cutting 150 jobs.
The company cited reduced demand, increased price of raw material and energy, as well as the strong Canadian dollar as factors in its decision.