Survey snippet 14: Contractors talk

Maria Church
November 22, 2018
By
The 2018 CFI Contractor Survey gave respondents a chance to add their own thoughts to the conversation around logger sustainability. Here’s a sample of what they had to say. There are common sentiments around logging rates, government intervention, and other financial challenges.

“We are getting paid the same price for wood as my father did 20 years ago. Costs have risen, quality operators are few and far between.”

“Location of wood only continues to go further and further away from all of our resources and purchasers/mills still do not recognize the costs of doing business in such remote areas are significantly higher. We are never compensated for this and it truly can break a very sustainable company.”

“Can we help transition older employees to different jobs or retirement?”

“We need new entrants into the industry. Our workforce is aging with no replacements in sight.”

“Largest challenges we face are attracting and keeping quality employees and being able to pay fair and competitive wages. The rate per m3 has not been keeping up with the cost of inflation/living and it gets more difficult every year to stay competitive and successful. Rates need to be realigned. Can't always rely on just trying to move more volume to make more money. If you don't make any money moving 50,000 m3 a year you probably won't make any moving 100,000 m3.”

“Eliminate the monopoly and collusion behaviours of licensees and the dictated rates they so-call negotiate with contractors. We've been underplayed for years and it is unacceptable to abuse a public resource like the way it has been by major licensees.”

“I would like to see all mills follow a rate model that keeps the contractors whole in what they get paid per cubic meter and hourly rates for the road building equipment.”

“In Alberta there is a huge push for green energy under the current NDP government. There is very little consideration for forestry/biomass to be a part of that. Forestry is missing out on a large opportunity. The mills should be getting involved in the ‘green’ movement. Forestry has potential to develop new markets for waste wood. It takes bigger companies to get it going though. A small contractor doesn't have the cash or the wood supply to develop green energy.”

“In my 35+ years of being a logging contractor I have seen many changes. 1) The contractors have gotten a lot bigger and some not by choice. This growth I feel has changed the way the mills view the contractor in such a way that it appears they are a large, successful business without taking the risks, investment and exposure into consideration when negotiating rates. 2) The mills’ rate negotiators are being trained by upper management in negotiating tactics that, in some cases, end up in a take it or leave it scenario for the contractor that has all his risk with one or two mills. 3) I strongly believe there needs to be some government accountability put on the mills to ensure they are being fair in the compensation being paid to contractors. 4) I don't believe the shareholders of the mills would continue to participate as a shareholder if the profit margins were comparable to the average logging contractor profit margins.”

“Manufactures (forestry sales companies) need to be scrutinized on the cost of parts. This is a significant expense and definitely affects the health of a forestry contractor.  Parts most often need to be purchased from equipment dealers and the prices are far and beyond a fair profit margin.”

“The general public's view on forestry is negative towards forest operations.”

“We are a private contractor only, buying stumpage and land for harvesting of different types. We have no interest in being a logging contractor for industry (mills) as I see too much control over contractor rates and financial returns. This industry has always been cyclical and industry harvesting and trucking rates are structured to get mills through downturns. It seems opportunities for contractors to be included in the market highs is not there which excludes them from reasonable ROI.”

“We need a way to have logging rates consider the whole business. Rates must include days lost to weather and moving. All machines required to do the job must be put in for full cost. Equipment rates need to include replacement cost.”

“I don't really enjoy anything about the business anymore. Years of being underplayed by major licensees with the risk, stress and hard work have really taken a toll on me as well as a lot of other contractors.”

“I feel the suppliers should be the ones forced to adapt with the changes in economy.  The contractor is always expected to improve their operations in order to compensate for the inflated prices on machinery, services, parts, insurance, etc. It is the contractor with ‘all the skin in the game’ and the return on investment is marginal at best. We don't expect to be billionaires but do expect a satisfactory return given the amount invested and the risk involved.”

“There is an ever increasing burden of conforming to bureaucratic policies from government, taxes, safety regulations.”

“When lumber is low we starve. When lumber is high we barely have any profit. I have been in the logging industry as a contractor for 17 years and it is not worth what I have put in. I have given it all.”

“Removal of market-based rate clause in Bill 13 regulations. Loggers that are left are very efficient but still not being paid a fair market rate to allow a good profit margin. Mills and licensees have diluted and manipulated the fair market rate and left contractors no choice but to work under their conditions and terms. Loggers will not get more profitable any other way other than for logging rates to increase.”

“Contractors need government support to secure reasonable logging rates so we can pay our employees a fair wage as well.”



Missed last week's survey snippet? Find a collection of reports published to date here. Look for more news from the CFI 2018 Contractor Survey in our enews over the coming weeks, with a final digital report in December and a summary in the November/December print issue. Be sure to subscribe to our free enews to get all the latest industry news.

The survey was conducted in June 2018 by independent research firm Bramm & Associates, generating over 275 replies to a detailed list of questions. Respondents were distributed according to the geographic breakdown of the forest industry, with 40 per cent in Western Canada, 25 per cent in Quebec, and the rest found in Ontario, Atlantic Canada, and central Canada. Within B.C. responses were split between the BC coast and Interior. Many thanks to our sponsors for making the research possible – Hultdins and Tigercat.

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