(Editor's note: Susan Yurkovich's quote that the repair and remodelling growth in the U.S. was 46% has been corrected to four to six per cent).
Of all the business sectors in B.C. affected by this summer’s forest fires, one of the hardest hit is – for obvious reasons – the forestry sector.
In what government officials say was the worst forest fire season on record, fires have scorched 1.19 million hectares in B.C.
It’s still not known what the total economic impact will be, though it’s a given that the forestry sector will take a serious hit. In terms of actual damage and costs, however, it’s likely a fraction of what Fort McMurray experienced last year. Whereas the insurance claims for B.C.’s wildfires are estimated at $127 million, Fort McMurray’s totalled $3.7 billion, according to the Insurance Bureau of Canada.
Of the total area burned in B.C. this year, an estimated 53 million cubic metres of merchantable timber was lost – equivalent to one year of annual allowable cut – and a number of sawmills in the Cariboo region had to shut down, although no sawmills were lost to fire.
But will the economic fallout from natural disaster in B.C. be offset by the natural disasters that have ravaged the southern U.S.?
Hurricanes in the U.S. destroyed or damaged an estimated 227,000 homes, prompting the National Association of Home Builders (NAHB) to call for a “permanent solution” to the U.S.-Canada softwood lumber dispute, which has resulted in duties placed on Canadian lumber exports – duties that the association fears will only push lumber prices even higher when rebuilding begins.
“In the aftermath of the devastating storm, demand for softwood lumber is expected to increase dramatically as homebuilders and remodellers repair and replace housing in Houston and across Texas,” NAHB chairman Granger MacDonald said at the end of August.
“This crisis makes it more important than ever that the United States quickly achieve a lasting trade agreement regarding U.S. imports of Canadian softwood lumber.”
It is assumed that B.C. lumber producers will benefit from soaring demand and prices for Canadian lumber.
“The repair and remodelling side of the world” would experience increased sales, said Susan Yurkovich, CEO of the Council of Forest Industries. “That’s actually had pretty good growth – probably four to six per cent year-over-year growth before the hurricanes – so I think we will see a bit of an uptick.”
Russ Taylor, managing director for Forest Economic Advisors, isn’t so sure about that. Counterintuitive though it may sound, history shows that lumber demand actually falls after a hurricane, he said.
Typically there is a spike in demand for plywood, oriented strand board and some types of dimensional lumber in the wake of a hurricane, followed by a drop-off, he said.
“The evidence shows that after a hurricane, overall U.S. lumber demand drops – it doesn’t go up,” Taylor said. “It will take five years before you get most of those houses rebuilt. Many will not be rebuilt. People will move elsewhere. You may feel a ripple effect somewhere else.”
Kevin Mason, managing director for ERA Forest Products Research, agrees. Any increased demand for lumber will be modest and will take anywhere between six months and two years to be felt, he said.
“If you look at Katrina [in 2005], it took five years before we saw the housing stock kind of get back to where it had been pre-Katrina,” Mason said. “Repair and remodelling is going to be a bigger factor than new home construction.”
The most immediate concern for B.C.’s loggers and sawmill owners is getting back to work.
“Some of the contractors have been shut down since June, with no revenue coming in,” said Wayne Lintott, general manager of the Interior Logging Association. “They’ve maybe got a couple of machines out on fires, but as far as the log harvesting goes, they’ve been shut down since June.”
Even some working forests on the West Coast that were untouched by fire were closed to logging.
“Only about 35% to 40% of the entire contracting force on the B.C. coast was operating this summer because it was so dry,” said David Elstone, executive director of the Truck Loggers Association.
So while some loggers were still working throughout the fire season fighting fires, they weren’t falling trees for sawmills. When combined with a curtailment of logging that typically occurs in the Interior between February and March, it all adds up to a looming fibre shortage.
“There’s going to be a log supply shortage at mills as inventories are depleted,” Taylor said.
Not all the timber that was scorched is a writeoff. Some trees can still be turned into lumber, although it won’t do pulp mills much good, since they can’t use wood waste contaminated by charcoal.
Doug Donaldson, B.C.’s minister of forests, lands, natural resource operations and rural development, said last week that his government is working to speed up salvage operations.
“We’re in the process of assessing how much of that 53 million cubic metres of impacted wood is actually no longer merchantable,” Donaldson said. “It’s similar to the pine beetle situation. If it is merchantable, we want to get in there and get it cut and get it to the mills before it becomes too dry or not useful for the mills.
“Forestry staff are working closely with licensees as well and we’ll be issuing salvage licences and expediting cutting permits to help forest workers to get back to work as quickly as possible. We’re also prioritizing areas for reforestation. That’s a bit longer-term but we know we need to build the timber supply for mills and also to restore wildlife habitat.”
The B.C. government has either spent or earmarked more than $600 million on this year’s fires:
•$518 million to the BC Wildfire Service;
•$100 million to the Red Cross to assist in evacuations;
•$600,000 to the Cariboo Chilcotin, Thompson Okanagan and Kootenay Rockies tourism associations:
•$20 million (includes federal funding) to ranchers; and
•$6 million to repair Crown rangeland fences. •