Losses Mount In British Columbia Forest Industry Asian Economic Crisis Adds To A Long List Of Troubles For Canadian Timber Companies

The militant anti-logging protests of a few years ago may seem like the good old days to British Columbia’s forest industry as it reels from a barrage of bad news.

Sawmills are closing, earnings are plummeting and thousands of workers face layoffs. Canada’s biggest forestry company, MacMillan Bloedel, has rung up four consecutive quarterly losses, and is considering a radical restructuring.

Forestry is British Columbia’s No. 1 industry, and its exports totaled more than $9 billion in 1996. But a big chunk of those exports go to Asia, where markets are in disarray.

“British Columbia is the clear loser from the Asian typhoon,” said the investment firm Nesbitt Burns this week.

Even if the Asian financial crisis eased, the province’s forestry firms face other serious problems. They contend that high provincial taxes, tough environmental rules and high fees for the right to log on public land have made logging in the province twice as expensive as elsewhere.

The province’s forest minister, David Zirnhelt, blames the crisis on the Asian downturn and says the government can’t do much to help.

“There’s no easy answer to it,” he said. “We’ve got to suffer through some of this and just make sure that the next time we’ve made the changes to be competitive.”

But the government did get deeply involved this fall in the northern mill city of Prince Rupert, spending nearly $180 million to save a pulp and paper firm, Skeena Cellulose, from collapse.

Critics say the government’s intervention was unfair to competing firms and may lead to requests for similar bailouts at other troubled companies.

“The Skeena bailout, while it does have merit in the short run, doesn’t do anything to deal with the long-term underlying structural problems that the industry faces,” said Clark Binkley, dean of forestry at the University of British Columbia.

Fletcher Challenge, a huge forestry company, said the bailout created false hope for workers who have been on strike for six months at three of its mills.

“It influences our employees to think there’s someone out there that will help them to avoid dealing with consequences,” said Fletcher Challenge executive Howard Burleigh.

Though the provincial government has proposed an ambitious plan to add 40,000 forestry jobs, it says forest companies should not expect a return the old days of huge profits.

Zirnhelt was annoyed recently when MacMillan Bloedel’s new president, Tom Stephens, said the business climate in British Columbia was unacceptable.

“What do they think this government is going to do?” Zirnhelt said. “Go back to rape and pillage and waste? We intend to make it the best business climate possible, but if you define business climate in terms of huge profits, those days are gone.”

Before the current economic crisis, the industry’s main headache came from environmentalists. Greenpeace attracted worldwide attention in 1993 when hundreds of protesters flocked to Vancouver island’s Clayoquot Sound to protest planned clear-cutting.

Greenpeace tried to mount a similar campaign last summer, but failed to rally strong public support. Zirnhelt denounced the group as “marginal” and “extreme,” and forestry workers took a page out of Greenpeace’s strategy book by blockading one of its ships at a Vancouver Island port. But the government made partial amends with the environmentalists in October by announcing creation of a huge protected area in the northern part of the province.