Economy and Finance

The small town trap: Conflagration and collapse

July 20 marked six months since an explosion at Burns Lake's sawmill destroyed the town's major industry. In this first in a two-part series, Joel McKay travels to northern B.C. to gauge the impact of such disasters on the economy of single-industry towns

Tue Jul 31, 2012 12:01am PST

For more than a century, forestry, mining and railroad towns have risen and collapsed on the back of cyclical resource industries.

The tragedy at Burns Lake is the latest example of one such boom-and-bust town forced to grapple with the financial realities of being dependent on one major employer.

The Babine Forest Products mill, jointly owned by Oregon-based Hampton Affiliates and the Burns Lake Native Development Corp. (BLNDC), was the economic lifeblood of the community of 2,000.

The explosion at the mill in January this year left two people dead and another 19 injured. Some 250 mill workers were immediately unemployed, and another 800 in the region were affected, as the mill no longer needed logs from the bush or supplies from local businesses to keep it running.

A decades-old barge business that ferried logs back and forth across one of the region's many lakes was soon shuttered. Miles Fuller's logging business closed down the morning after the fire.

"My sole work was the mill, so basically it meant the end of the winter [logging season] for me, and I had to lay off two people. It was that simple," Fuller told BIV over a coffee in Burns Lake.

Although Fuller had never worked in the mill, like so many others in town he had been financially tied to it since it opened in the mid-1970s.

Ron Zayac, president of Tech North Solutions, a local IT company, said his company took a 10% to 20% revenue hit following the explosion.

"We stopped paying ourselves for a while," said Zayac.

Pinnacle Renewable Energy's new wood pellet mill was also affected – Babine was one of its major suppliers.

Looking for work

Fortunately, the current resource-sector boom in northern B.C. meant that companies such as Imperial Metals, West Fraser Timber, Thompson Creek Metals, Rio Tinto Alcan and Conifex Timber were desperately in need of tradespeople.

Thompson Creek, which recently completed a $600 million expansion at its Endako Mine near Fraser Lake, hired more than 30 employees from Babine.

Chris Peterson, who worked at Babine for 30 years, took a job as an electrician at Endako.

"It kind of helped me get along with the recovery process because I knew I had a job to go to and I didn't have to worry," said Peterson.

But not all of Babine's employees were so lucky.

"There were a lot of people there that that was their first job out of high school, they've been there all their lives and that's all they know," explained Miles Fuller, who, up until the explosion, ran a logging business that served Babine.

Al Gerow, president of the BLNDC, which represents six First Nations in the Lakes District, said his organization helped workers file their employment insurance applications to ensure they could pay the bills while they searched for work elsewhere.

Weekly breakfast meetings were also set up to help the workers recover from the explosion and share information.

Immediate challenges

Since the fire, nearly 150 of Babine's 250 workers have found jobs, although Endako has recently laid off some of the former Babine employees it hired.

Hampton has restarted the planer at the mill, allowing some employees to go back to work – but the company hasn't said whether it will rebuild the mill.

Gerow said the government support and new business opportunities (see sidebar on page 9) are great for the community, but a bigger challenge needs to be addressed.

"The number 1 challenge today is we need to secure a saw-log fibre supply for Babine Forest Products, and we need to secure it for at least a 15-year period in order for Hampton to have a business case to choose to rebuild the sawmill," Gerow said. "That's our first priority."

But that's easier said than done.

Burns Lake, it turns out, is ground zero for the mountain pine beetle epidemic, which has crippled the forest sector during the last decade, putting hundreds out of work as mills throughout the Interior have shut their doors.

Now Hampton is faced with the very real possibility that there might not be enough timber in the region to support a new mill.

Borrowing from the future

Bob Clark, who was the top forester in charge of managing B.C.'s response to the pine beetle epidemic, has now been hired by the province to lead response efforts in Burns Lake following the explosion.

Unless the province changes the way it allocates timber, there won't be enough to support a new mill, Clark told BIV.

The annual allowable cut (AAC) in the region will drop 75% to 500,000 cubic meters in the coming years.

The province is considering borrowing timber supply from future years to increase the AAC now, as well as allowing old growth management areas and wildlife connectivity corridors to be harvested to increase timber availability in the region.

Those suggestions, leaked via a draft government report from February, have environmentalists concerned about the impact on wildlife in the area.

Bell said changes to harvesting practices wouldn't mean huge clearcuts just to support a mill.

But an even bigger problem has emerged.

Any changes to harvesting regulations or land tenures in the region could negatively impact other harvesters in the Lakes District, of which West Fraser is the largest.

Both Clark and Bell said no company would be favoured over any other to justify rebuilding the mill.

Still, now that the province is considering changes to regulations in the Lakes District, companies throughout the north are asking the government to look at their districts as well, given that the pine beetle epidemic has stretched from Smithers to the Kootenays.

An International Wood Markets Group report from April pointed out that the annual timber harvest in B.C.'s interior would drop 33% to 40 million cubic metres by 2031 once the usable beetle-kill is harvested.

That will force more mill closures, increase unemployment and decrease provincial exports from ports in Vancouver and Prince Rupert.

That's not news to anyone in Burns Lake, said Gerow, who pointed out that locals have seen this coming for years.

But the explosion at Babine means the province has to deal with the timber supply issue sooner than originally thought, said Clark.

"This just brought the future screaming into the present in Burns Lake," Clark said.

Hollowed out

NDP forest critic Norm Macdonald blasted the government for hollowing out forest sector resources in recent years, saying it has made the problem worse than would otherwise have been.

"They have made cuts to inventory so they don't have the capacity to properly collect data … and that makes it pretty difficult to make informed decisions," Macdonald said.

Auditor General John Doyle pointed out in a February report that the government lacks reliable information about the state of B.C.'s forests and has no plan for what to do about it.

Jobs Minister Pat Bell, the province's former forests minister, said he's been addressing the situation for years.

Still, a special committee consisting of Liberal and NDP MLAs was established earlier this year to consider how to increase timber supply in regions affected by the mountain pine beetle.

The committee has been told to produce a report by August – a timeline that Macdonald said is too short to make properly informed recommendations.

Bell agreed that this type of report would normally take two to four years, but Hampton and Burns Lake can't wait that long for an answer.

"To be fair to the Burns Lake First Nations, the community and Hampton, we needed to have that dialogue over a shorter period of time," Bell said.

Strimbold was hoping to have an answer before May, and now the future of the town's major industry remains in limbo while the government tries to come up with enough timber to support a new mill without negatively affecting the environment or other forestry companies.

For Peterson, who has called Burns Lake home nearly his whole life, the future remains very uncertain.

"You're always wondering, is it going to get rebuilt?" Peterson said. "If it doesn't, what is Burns Lake going to look like?"

Help on the road to recovery

It'll still be a few more weeks before it's known whether the Babine mill will reopen. Jobs Minister Pat Bell made a statement on the fire's six-month anniversary July 20 but was unable to offer any more news to the waiting townspeople.

In order to alleviate some of the unemployment caused by the fire, however, the province is accelerating some infrastructure projects in the village. It's an attempt, said Bell earlier this year, to generate work in the region for the minimum two-year period that will lapse before a mill could be rebuilt.

The province has committed up to $55 million to build a new hospital for the village. Another $14.3 million in highway projects has been sped up, and Victoria has also agreed to spend $2.3 million to upgrade the town's recreation centre.

Vernon-based Aspenware, which makes compostable wood cutlery, is researching the possibility of setting up a plant to manufacture disposable plates in Burns Lake.

Brian McNaughton, Aspenware's vice-president forestry, said such a plant could create up to 100 jobs in the area if the company can get local support to log birch and aspen trees.

Tags: John Doyle, Pat Bell, exports, metal, energy, Thompson Creek Metals, First Nations, Burns Lake



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