Critics have decried log exports for years, but proponents say shipments to Asia are helping the coastal forestry sector stay afloat.
The total number of logs exported from B.C. increased 63% to 1.8 million cubic metres in the first four months of 2011 compared with the same period in 2010, according to BCStats.
Much of that wood has been shipped overseas to Asia where Chinese sawmillers slice western hemlock, cedar and fir into boards to feed that country’s burgeoning manufacturing sector.
Opponents have for years said the shipments are akin to exporting jobs, undercutting B.C.’s coastal sawmills.
But the Truck Loggers Association (TLA) said those exports make it viable for the province’s foresters to hike into the bush and harvest trees that otherwise would go untouched.
As a result, the entire stand of trees becomes economically viable, feeding sawmills with the fibre they need to manufacture lumber, which then create chips and wood waste that support pulp mills and biomass plants.
Dave Lewis, executive director of the TLA, said timber harvesting and delivery creates two jobs for every one job in a B.C. sawmill.
Given the sorry state of the forestry sector, none of those jobs would be created without log exports, he explained.
“More and more people are starting to understand that, regardless of their political stripes, they’re working right now because of log exports,” said Lewis.
The incentive to ship logs to foreign markets largely revolves around price.
A typical B.C. log sold on the export market can command $90 per cubic metre, while the same log could be sold to a mill in B.C. for $50.
Russ Taylor, president of Vancouver’s International WOOD Markets Group, said the Chinese are willing to pay a premium for B.C. logs because their labour costs are a fraction of B.C.’s.
“The reason why the Chinese are buying our logs and not our lumber is they can process our logs a lot cheaper than we can.”
Taylor added that the average sawmill in China is little more than a bandsaw that can be hauled in the back of a pickup truck.
The total capital cost of that mill? $10,000.
“When it comes to processing logs they have very old technology because they’re using [cheap] labour to offset technology,” Taylor said.
Lewis added that, in recent years, a lack of log exports has cost the province jobs.
Since 2005, 46 million cubic metres of timber has gone untouched because it’s cost more to harvest the wood than it could be sold for on the market, he said.
“That represents more than 2,000 direct jobs in timber harvesting and timber management annually,” said Lewis. “When indirect employment is factored in, more than 6,000 jobs per year were eliminated … by not exporting that timber.”
But some B.C. sawmills tell a different story.
Surrey’s Teal Jones Group said the run-up in log exports has starved the supply of logs to the domestic market. As a result, the company’s mill has had to take a significant amount of downtime this year, running two shifts even though customers are banging down the doors for more lumber.
“Our customer demand would have the ability to go to three or even four shifts, so there’s a significant amount of volume you could put through, which of course would create more employment,” said Teal Jones CFO Hanif Karmally. “There’s no question there’s an effect on employment.”
Lewis, on the other hand, said that as long as B.C. sawmills can pay the cost to harvest coastal timber, there should be no shortage of logs for local mills.
He pointed to the fact that B.C. sawmills have an annual capacity of approximately 16 million cubic metres.
Meantime, B.C.’s sustainable coastal harvest level is 24 million cubic metres, leaving some eight million cubic metres untouched.
But Karmally said that when exporters go into the forest they target the best-quality timber, leaving the sawmills with a less desirable product.
“So we’re supposed to take lumber from that fall down and sell to the same customers who are getting the better log,” said Karmally. “It doesn’t work; it’s a faulty argument.”
Although sawmills and export proponents disagree about how much exporting should be done, they do agree there is a time and place for it. The question is: how does the industry balance today’s jobs with the long-term value of a strong manufacturing sector?
Ric Slaco, vice-president and chief forester at Vancouver-based Interfor (TSX:IFP.A), believes his company is a perfect example of that balance.
Although Interfor’s coastal log sales volumes tripled in the year’s first quarter, the company remains focused on its lumber business and has embraced new value-added products and bioenergy projects to diversify its business model.
Balance and diversity, said Slaco, is the key to a strong coastal forestry sector.
“There’s a bunch of new things that I think collectively will represent a pretty bright future for the forest sector, but you’ve got to survive to get there and log exports, if it’s done in a reasoned and managed way, are a valuable tool for the province to have to keep the industry and jobs intact.”