THUNDER BAY, ON ----  January 11, 2009 ---  For months now when driving down Water Street I see hundreds of empty rail cars waiting for a load that may never come. The fleet of rail cars is made for one purpose only, to transport softwood lumber. I still see the odd loaded car leaving the city, Abitibi-Bowater ships about two car loads of softwood lumber a day when they are running, but the city is full of closed lumber mills, and the region has many more. The industry is not in a cyclical down-turn but facing a fundamental economic shift. There have been warning signs over the last ten or more years. The cancer that is the “Softwood Lumber” agreement allowed American producers to maximize their production at the expense of Canadian operators. American producers moved to garner as much of a diminishing market as they could. Canadian producers responded by modernizing and streamlining their operations until they actually produced more lumber at a price that could compete with the softwood lumber tariffs. I have to admire the Canadian entrepreneurial spirit to overcome those hurdles.

When the sub-prime mortgage crisis developed into the housing crash in the States, it created a hurdle that most lumber companies could not jump. Canada’s forest industry has been forced to work together to remain competitive and stay alive. This can be best seen in our own area. The best wood for manufacturing lumber comes from the core of the tree, while the best wood chips for making pulp and paper come from the circumference of the tree. Lumber producers would cut as much select lumber from a tree as possible, and chip all the rest, producing ideal fibre for pulp and paper. Some mills even went an extra step and sold their sawdust and trimmings to particle board producers. The balance of the tree has traditionally been used for hog fuel to fire co-gen plants and boilers in pulp and paper operations. This system has been a model of efficiency that has created a vast amount of wealth for workers, government and industry for the 30 some years that I have been working in the forest industry. It has worked well until now.

Most industries can deal with significant issues one at a time. If faced with an event such as a high Canadian dollar, or high power rates, companies could devise a strategy to deal with the issue. Lately when there were so many issues to be dealt with companies only option was to cut back staff and wages and benefits since that was the only option available to them. When business gets to this stage there is not a lot of reserve left to handle additional shocks, and the company will end up closing, sometimes for good.

Along Thunder Bay’s waterfront two sawmills are as dead as the proverbial doornail add that to the three dead paper mills in the city and we can see that the recession has been with us for much longer than the much talked about auto crisis.

With the closure of so many lumber producers the integrated supply system has developed some holes. This has meant that the price of wood chips delivered to mills is amongst the highest cost fibre in the industry. With the closure of the fibre board mill in Atikokan there is one less place for sawmills to sell their sawdust. Even the tragic fire at Nipigon closed a plywood mill that used tree species not used by lumber and pulp and paper producers. By using all the forest resource in a cutting area there is less waste and more efficiency. With Nipigon out of the picture, there is one less revenue stream for the integrated forest industry.

As dire as it sounds, there is a solution to this mess. Create new revenue streams for our integrated industry! Much of this development will happen right here in Thunder Bay. What out side forces have taken from us, we can replace with new opportunities that collectively government and industry can control to our benefit. CRIBE, the Centre for Research in the Bio Economy is an initiative recently announced in Thunder Bay. The research will develop new forest products that can be made form our boreal forest. As each new product is added to the manufacturing stream, the costs of logging roads can be shared, whole tree utilization allows for maximum return for our forests. With new products we are not as restricted by softwood lumber agreements, high dollars, and power rates. Many of these closed companies will be able to restart on a limited basis because additional revenue streams will allow them to cover costs, make a profit, and pay fair wages.

The implementation of the “Softwood Lumber Agreement” spelled the writing on the wall for our local industry. It is clear that we will not get much help form the Americans or other players off our shores. The entire Bio forest products initiative will be Canada’s solution to this problem. One of the first products to be produced will be transportation fuel products. This could take the form of a synthetic diesel or gasoline replacement, or perhaps just products which can be added to conventional petroleum products to create a better more cost efficient fuel blend. Clearly more will happen for us sooner than later in pursuing bio development than we can hope for with trade agreements with our neighbours.

Each time I see one of these empty rail cars I think of it as someone’s salary for a year, if it were loaded with softwood. Since a rail car can make a return to Thunder Bay every two weeks you can say that each empty car might represent as many as 26 lost jobs and dreams for our community. There must be close to 1000 empty cars in our district, and it brings home the full impact of global and international trade factors that we cannot control. Collectively we will make a made in Canada solution for our problems.

If you lived in a First Nations community in our neck of the woods and you had 700 hundred people out of a thousand in school, you will be worried about the future of your children without the prospect of work. For First Nations, the development of the bio economy is urgent.

The forest industry has contributed mightily to provincial coffers for over one hundred years, second only to the auto industry. It is important to government that the forest industry re-invents itself. One of the tools they are using to make this come true is Lakehead University and Confederation College. Research done here will make our city a place of excellence when it comes to forestry.

A good solution to a tough problem will take some time. Too much time for some families who will need to move on, but I believe our children will once again see opportunity growing in our forests. Innovation will create a growth and development market environment, far different from the stagnant mature market environment that our companies must compete in now. It cannot come too soon.

Bert Rowson
For
LakeSuperiorNews.com