Province ignoring industry in crisis: Hampton

“The forest industry in Ontario is in crisis. Action is urgently required to prevent predictable and irreversible consequences for communities, businesses, and workers.”
This is the opening paragraph to the Final Report from the Minister’s Council on Forest Sector Competitiveness, a report commissioned by Natural Resources minister David Ramsay back in November and released to the public Monday in Thunder Bay.
But despite the urgent tone of the report, Kenora-Rainy River MPP and Ontario NDP leader Howard Hampton said the McGuinty government is not taking the report seriously.
“As for the McGuinty government’s response, I would say, frankly, the response is insulting,” Hampton remarked.
Ramsay announced Monday the government would provide up to $350 million in loan guarantees “to stimulate new investment in value-added manufacturing, improve energy efficiency, and make better use of wood fibre.”
While Hampton acknowledged many mills do need technological and environmental investments, he stressed loan guarantees are not the way to go.
“Forest industry companies are drowning in debt. They want less debt, not more debt,” he argued.
“The auto sector, casinos, and the film and TV industry got investment strategies, not loan guarantees,” he added. “Why are northern forest industry communities being treated differently?”
“The financial package offering loan guarantees falls far short of offering any solution to improving a dismal operating climate,” the Ontario Forest Industries Association said in a press release issued Monday.
“We’re asking for nothing less than what has been done for the auto agriculture and film industry sectors,” noted Jamie Lim, president and CEO of the OFIA.
The forest industry is the second-largest in Ontario, behind the automotive industry.
“The forest industry is important to all of Ontario, not just the northwest,” said Michael Power, president of the Northern Ontario Municipal Association (NOMA).
“We need the government to change the climate in which Ontario’s forest industries operate,” Lim said.
“After this announcement, the weather is the same—our industry still can’t compete, and, under current conditions, there is no incentive to invest in the forest sector,” he stressed.
“They need a thoughtful investment strategy from the provincial and federal governments,” Hampton said.
Among the forest council’s recommendations is a call for a reduction in the cost of electricity.
“Rising energy costs are killing forestry operations for which electricity is more than a third of operating costs,” its report noted.
“The province must remove barriers to creation of new supply, including co-generation, and create the conditions for a reliable energy supply at reasonable prices,” it added.
Ramsay did not present any plan for hydro rates.
In addition to the $350 million in loan guarantees, he pledged to streamline the approvals for forestry activities, pursue the amalgamation of forest management units, and move to multi-party shareholder Sustainable Forest Licences.
“We will be reviewing and analyzing the report further and will respond with an action plan in the very near future,” Ramsay said. “It is clear that some of the council’s proposals will require further study or the involvement of other parties.”
Hampton said the situation is dire, and the current list of promises will not help.
“I think we are going to see some paper mill closures and some shutdown of paper machines this summer or this fall,” he warned. “It’s going to involve the loss of thousands of jobs across Northern Ontario—jobs that we cannot afford to lose.”
The forest council’s report identified five mills considered at a high risk of closing, with another seven identified as at-risk.
“The loss of these production facilities would reduce employment in the north by 7,500 direct jobs and 17,500 indirect and induced jobs,” the report said.
“Southern Ontario would lose an additional 13,000 indirect jobs,” it noted.
“While it is not likely that all 12 mills would permanently close in the near term, it is clear that without changed circumstances, some portion of the 12 will be lost,” it added.
If the five high-risk mills were to close, it would mean an annual revenue loss of $160 million to the federal government, $100 million to the Ontario government, and $22 million to municipal governments.
“The economy of Northwestern Ontario cannot afford the loss of any of these 12 mills,” Power stressed. “It’s our lifeblood.”
Hampton said the mill in Kenora, as well as the Cascade and Abitibi mills in Thunder Bay, are “in a very tough place.”
“The McGuinty government is actually making things worse by increasing the debt load and by jacking up hydro rates,” he charged.
It only costs about one cent per Kilowatt hour to produce electricity at hydro dams on the Winnipeg, English, or Nipigon Rivers, Hampton noted.
“The McGuinty government is forcing paper mills and pulp mills to pay seven cents per Kilowatt hour for that electricity,” he said.
Meanwhile, paper mills in Manitoba, Quebec, and British Columbia pay from three-3.5 cents per Kilowatt hour and ones in Michigan, Wisconsin, and Minnesota pay four-five cents.
“The McGuinty government’s policy of jacking up hydroelectricity rates is really putting our pulp and paper mills in a very uncompetitive situation,” Hampton said.
He also said he will continue to campaign for an investment strategy in the forest industry throughout the summer.
Other recommendations made by the forest council include:
•the appointing of a Chief Forester for Ontario, an independent position reporting to the minister of natural resources, with the responsibility of auditing projected and actual wood supply, and carrying out a review of the forest inventory;
•the formation of a committee, made up of senior members of labour organizations and senior managers of forest industry firms, to facilitate high-level discussions;
•the creation of a Business Climate Competitiveness Fund to support modernization of facilities, “green” energy alternatives, and worker and driver training;
•that the forest industry be made eligible for a fuel tax credit amounting to 50 percent of the provincial fuel taxes paid when hauling fibre from the forest to the mill; and
•that the provincial government “assume its proportional share of the costs of building and maintaining the public access road network in provincial Crown forests,” including 100 percent of primary road costs and 50 percent of secondary road costs.
The Council on Forest Sector Competitiveness, made up of 17 municipal, union, First Nation, and forest industry reps, made a total of 26 recommendations in all.