Final Cut: View from the stump
By David Elstone
March 31, 2015 - I joined the Truck Loggers Association (TLA) in January as the new executive director after working for 10 years as a financial analyst for ERA Forest Products Research – an independent financial research shop located on the Sunshine Coast. As an analyst, I viewed the B.C. forest industry from 30,000 feet, as part of a broader global industry perspective following world markets and trade. In my new role, I’m standing on the stumps alongside B.C.’s coastal forest contractors. And, from my new ground level view, I can see the turbulence created by the challenges facing B.C.’s forest industry on a regional level.
The most serious challenge I see facing TLA members today is contractor sustainability. We need to ensure contactors can create jobs and make investments that are necessary for stable community economies, while at the same time ensuring the log supply to sawmills remains intact. It is clear the supply chain is at risk because, despite a market rebound in forest products over the last few years, the balance sheets of many contractors are unhealthy, in contrast to many of the licensees.
For any industry to flourish, the entire supply chain needs to be healthy. What we have now for the B.C. coastal forest industry is a supply chain where some links are strong and some are crumbling under severe strain.
No Logger, no logs
Such a situation is unsustainable. How can TLA members attract new workers to the industry when they cannot offer them the wages or job security provided by other natural resource sectors where their skills are also valued? Conversely, how can TLA members take on the time and expense required to train new workers to work productively and safely when contract rates are unsustainably low? You could say contractors are in the bight, between a falling tree and a cliff.
When the contracting community is unhealthy, it means rural community stability and the outlook for the entire forest industry is at risk, too. Since the recession, more than 25 B.C. contractors have sought insolvency protection. Each time that happens, the economic ripples are felt across the community. People in rural towns lose well-paying, local jobs and suppliers who lent money in good faith all lose out as well. The examples are numerous and the situation is getting worse.
Auctioning our future?
And it seems every month, more logging equipment is going to auction by those who can no longer see a positive future. In the winter issue of Truck Logger BC, the article “Tough Decisions Facing The Logging Sector” highlighted two contractors leaving the industry. Bryan Gregson of Copcan Contracting, based in Nanaimo, B.C., explained it this way, “We were constantly told our rates were too high but at the same time, the return on the capital we had invested in equipment was simply not there anymore.”
Bruce Jackson of Bruce Jackson Contracting, based in the southern B.C. Interior, talked of a similar situation. “Is there recognition for fuel costs, rising wages, parts or repairs? The answer is no. The industry standard rate is what you get. Take it or leave it.”
Many TLA businesses are multigenerational and have operated in the same area for decades as licensees come and go. We lose a vast knowledge base when a contractor leaves the industry. However, without a serious discussion on rate-related topics, we will lose the contractors needed to support the growing global demand for our forest products, which means this is not just a contractor issue, but one that threatens the entire industry and the communities they support.
David Elstone - David is the executive director of the Truck Loggers Association