Speakers outline woes facing forest industry

Politicians, industry leaders, and private citizens expressed their desire to work together to solve the problems facing the forest industry in Ontario during a public meeting here last night.
Six speakers addressed a crowd of nearly 150 people in the auditorium at the Memorial Sports Centre to discuss the past, present, and future of the forestry sector, and why it is asking for help from the provincial government.
Coun. Tannis Drysdale, who helped organize the meeting, opened it by outlining the major events in the forest industry over the last year, including the creation of the Minister of Natural Resources Council on Forest Sector Competitiveness last November, the release of that council’s report back in June, and the government’s proposed course of action.
“For the last 20 years, the forestry sector has demonstrated its ability to create jobs and prosperity throughout Ontario,” Coun. Drysdale said.
When the industry began to cry for help last year, the Minister’s Council set to work and came up with a report containing 26 recommendations to ensure a secure future for it.
The government’s response was to offer $350 million in loan guarantees.
“Loan guarantees are what the government gives you when the banks won’t give you any money,” explained John Harrison, manager of the Abitibi-Consolidated mill here and one of the speakers at last night’s meeting.
“The last thing we need right now is more debt, believe me.”
“The offer will not resolve the problems facing the industry,” Coun. Drysdale noted.
As a result of government inaction, the Ontario Forestry Coalition was formed, including the Northwestern Ontario Municipal Association, the Ontario Lumber Manufacturers’ Association, the Ontario Forest Industries Association, and the Nishnawbe-Aski Development Fund.
The coalition is focusing on four main issues it wants the province to address:
•a 50 percent fuel tax credit on the provincial portion of the tax when hauling fibre from the forest to the mills;
•a reliable supply of energy at reasonable prices;
•that the government assume 100 percent of the construction and maintenance costs of primary logging roads, and 50 percent of the costs of secondary forestry roads; and
•a business climate competitiveness fund similar to the one offered to the automotive sector.
The coalition made its demands heard at the recent Association of Municipalities of Ontario meeting in Toronto last month, Coun. Drysdale noted.
After meeting with NOMA representatives and other coalition members, Premier Dalton McGuinty agreed to put a package together for the forest industry in Ontario.
“Since our meeting in August, we have heard nothing from the government,” Coun. Drysdale said.
For this reason, she stressed it is important that the community mobilizes to make sure the issue isn’t forgotten.
Postcards addressed to the premier, demanding the government take action, were made available to those on hand at the meeting. The signed cards were collected at the end of the evening to be sent to Queen’s Park.
The speakers, meanwhile, discussed various aspects of the forest industry.
Harrison talked about the industry on a global level. While many mills in Ontario ship their product to the United States, so do companies in China, Brazil, and Sweden—meaning local mills must compete on a global scale.
In addition, there has been a downward trend in consumption of newsprint and uncoated free sheet since about 2000. More recently, the weak U.S. dollar has cut into profits, as well.
“Ontario wood prices are among the highest in the world,” Harrison said. While the world average cost for a cubic metre of wood is $35, that same amount costs $55 in Ontario.
All this, coupled with the rising costs of energy, fuel, and chemicals, means it is becoming increasingly difficult for mills to stay in business.
“The historic profitability of the mill [here] is steadily declining,” Harrison warned. “We expect to be unprofitable in our kraft mill here this year.”
But this does not spell doom for the local mill.
“There is a road map for recovery,” Harrison said, citing the Minister’s Council report. “It contains key recommendations that could put us back on the road to profitability.
“But the government is not going to take action unless they hear support from the public,” he stressed. “We need your help to get the right business climate in Ontario to be sure we can be prosperous in the future.”
Former mayor Glenn Witherspoon then said a few words on behalf of the Town of Fort Frances as Mayor Dan Onichuk was not in attendance at last night’s meeting.
Thunder Bay-Rainy River MP Ken Boshcoff also was unable to attend last night. He is in Indonesia this week with Fisheries and Oceans minister Geoff Regan at the APEC Ocean Ministers’ Meeting.
“When the auto industry coughs, every premier brings a Kleenex. They certainly don’t do that for this industry,” Witherspoon noted.
Gary Rogozinski, president of the Fort Frances Chamber of Commerce, presented a picture of what would happen to the town should the mill here close.
The mill employs about 700 people directly, he noted. If the average household is made up of three people (according to the 2001 census), then the closure would affect 2,100 people directly, or about 25 percent of the town’s population.
The mill employs another 100 wood-processing contractors as well as other staff, including security personnel, which would drive that percentage up to 30.
In terms of dollars, the mill pays out $56 million every year in wages and benefits. Assuming 50 percent of those wages are spent in the community, that’s an infusion of more than $27 million into the local economy annually.
About 60 percent of mill employees have spouses who work, earning an average of $35,000/year, and a total of $7,350,000 spent in the community.
In addition, the mill pays about $4.5 million a year to local vendors, $2.9 million on taxes, sewer, and water, a $1.5 million subsidy for three megawatts of power, and $800,000 for gas and diesel.
Rogozinski pointed out since the mill maintains the local logging roads, which often are used by tourist outfitters, hunters, and others, those roads would become unusable after five-10 years if the mill were to close.
Abitibi-Consolidated alone maintains 1,100 km of road.
It is difficult to estimate the financial impact the loss of those roads would have, but it could cause a drop in tourism, Rogozinski warned.
Altogether, if the Fort Frances mill were to close tomorrow, and assuming all its employees and their families would leave the area to find work elsewhere, it would amount to an annual loss of more than $71 million for the town’s economy.
“That’s a conservative number,” Rogozinski said, noting it likely would be closer to $100 million in a more detailed analysis.
Mark Alderson, manager of the Ainsworth OSB mill in Barwick, said he wanted to be present at last night’s meeting here to point out that the problems in the forestry sector affect the oriented strand board industry as well as pulp and paper mills.
“We’ve been drastically affected by wood costs in the last year-and-a-half,” he said. “It’s very important to the whole area.”
The final speaker of the evening was Ontario NDP leader and local MPP Howard Hampton. He brought along a handout for those on hand outlining the hydro costs for mills in different provinces across Canada.
A paper mill in Ontario using 30 million kWh/month will pay about $2.2 million in hydro—almost double what a mill in Quebec would pay for the same amount of hydro and more than double what one in British Columbia or Manitoba would pay.
As a result, many companies have stopped making investments in their mills in Ontario because they are less profitable while they make investments in their ones in Quebec, B.C., and Manitoba.
That will have dire consequences for Ontario mills in the long-term, Hampton warned.
“You may not be shut down today or next year, but you become less and less competitive over a four- or five-year period,” he said. “That’s where virtually every paper mill in Ontario is now.”
A less competitive mill also is more likely to see layoffs and shutdowns.
“When the market is down, mills in Ontario will take the down time,” Hampton said, noting the mill in Kenora has been shut down for six weeks or two months at a time during periods of low profitability.
He also suggested the mill in Fort Frances could begin to see similar “down time” if the province’s policies don’t change soon.
While the forest industry struggles, the provincial and federal governments have been providing investment packages to the auto, film and television, casino, and aerospace sectors, Hampton said.
“The government can’t come to Northern Ontario and say, ‘Not for you.’ That’s not fair,” he argued.
Following the speakers, the floor was opened to comments and questions from the audience. A few people came forward, including some current and retired mill employees.
Most were in agreement with the panel of speakers, and expressed hope that they could successfully lobby the provincial government together for a positive outcome.