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Sept. 20, 2017 – President Trump’s campaign to put "America First" may be backfiring on him where the lumber industry is concerned.

Lumber prices have surged and costs have increased for American buyers, while Canadian producers are benefitting from a profit boost.

At a time when the U.S. is dealing with the aftermath of Hurricanes Harvey and Irma, higher lumber prices are making re-building even more challenging for Americans who have lost their homes.

The U.S. Department of Commerce added preliminary countervailing duties on Canadian softwood lumber imports heading to the U.S. in April 2017. They ranged from three to 24 per cent across Canadian lumber companies and further increased in June.

Tensions between Canada and the U.S. have escalated with this new development.

Read the full story by Bloomberg.
Sept. 15, 2017 - Canada's Minister of Natural Resources, Jim Carr, and his provincial counterparts today renewed their commitment to strongly support and defend the Canadian forest industry.
Sept. 14, 2017 - The federal government is calling for proposals for funding innovative, first-in-kind technologies that will transform Canada's forest industry and bioeconomy.
Aug. 9, 2017 - Leaders from the Northwestern Ontario Municipal Association (NOMA), the Federation of Northern Ontario Municipalities (FONOM) and the Rural Ontario Municipal Association (ROMA) are expressing deep concerns with the proposed Ministry of Natural Resources and Forestry (MNRF) plans to post a draft Species at Risk (SAR) Guide to the Environmental Registry for 28 species.
Aug. 3, 2017 - The federal government has released its draft caribou protection and recovery plan and is now accepting written feedback. The public consultation period will close September 27. 
July 25, 2017 - B.C. Premier John Horgan is set to meet with U.S. Secretary of Commerce Wilbur Ross in Washington this week to discuss the softwood lumber issue.

Softwood lumber is B.C.'s largest export to the U.S. and Canadian forestry leaders say Horgan is playing an important role in working to resolve the dispute.

President and chief executive officer of the BC Council of Forest Industries Susan Yurkovich said Horgan is "very key on this file."

During his election campaign, Horgan promised to get involved in the softwood lumber dispute if elected.

Read the full story.
July 13, 2017 - In response to new polices that will significantly impact northern and rural Ontario, a coalition of Indigenous and municipal leaders, chambers of commerce, unions and the forest sector have come together to voice their concerns over a lack of meaningful consultation by the Ministry of Natural Resources and Forestry (MNRF).
July 5, 2017 - A researcher with C.D. Howe is recommending Canada move from a flat stumpage fee to an auction system and a tax in order to avoid future softwood lumber disputes with the U.S. 
June 16, 2017 - The Forest Products Association of Canada (FPAC) supports the Minister of Environment and Climate Change, the Honourable Catherine McKenna, and her government’s $2 billion dollars in federal funds over the next five years for the Low Carbon Economy Fund. Details are as follows:

  • An envelope of $1.4 billion will be available to support the leadership commitments from provinces and territories that they outlined in the Pan-Canadian Framework on Clean Growth and Climate Change.
  • The remainder of funds will be available for the implementation of the Pan-Canadian Framework and for projects submitted by provinces and territories, municipalities, Indigenous governments and organizations, businesses and both not-for-profit and for-profit organizations. Projects that best reduce GHG emissions and generate clean growth will be considered for funding.
“Canada’s forest products sector is a leader in the fight against climate change. We were the first major Canadian industry to launch a comprehensive plan to reduce carbon through our 30 X 30 Climate Change Challenge announced in May 2016,” said Derek Nighbor, chief executive officer of the Forest Products Association of Canada. “Through our work in Canada’s forests, at our mills and by the products we make we are a sector that alone can help the federal government achieve 13 per cent of it carbon reduction goal by 2030.”

“With most of our operations in rural and northern Canada, we know very well that there are challenges and opportunities facing our workers and our communities as we work together to address climate change. Today’s announcement by Minister McKenna provides a real opportunity for companies that are interested in investing and innovating to secure a lower carbon economy.” 
June 5, 2017 - The federal government announced on Thursday that it would provide close to $870 million to support Canada’s softwood lumber producers in the face of taxes imposed by the United States. Preliminary countervailing duties were applied on April 28.

Minister of Natural Resources Jim Carr, Minister of Foreign Affairs Chrystia Freeland and Minister of International Trade François-Philippe Champagne made the announcement in Ottawa.

"This action plan delivers on our pledge to take swift and reasonable action to defend our softwood lumber industry and charts a stronger future for the workers, families and communities that depend on it,” Minister Carr said. “We are prepared to take further action, including additional loan guarantees, to address changing market conditions."

The government’s softwood aid package will provide additional federal loans and the mentioned loan guarantees up to $500 million to forestry companies. It will also increase employment insurance for forestry workers who will lose their jobs as a result of the duties.

The U.S. Lumber Coalition expressed its dissatisfaction with the decision. Spokesperson Zoltan van Heyningen said the U.S. Commerce Department made the right decision by implementing anti-subsidy duties. “Canada continues to push back and refuses to play by the same set of rules,” he said in a statement. “We need a level playing field and must limit the flow of unfairly subsidized softwood shipments flooding the U.S. market, driving American lumber manufacturers out of business."

The U.S. Lumber Coalition claims that more than 350,000 American jobs would be threatened if softwood duties were not imposed on Canadian producers. The Coalition first filed its petition to the Commerce Department in November 2016.

In a contrast to the Coalition’s response, reactions to the news from Canadian forestry groups have exuded gratitude and optimism.

"The federal government has shown real leadership in protecting good resource jobs," said Jerry Dias, president of Canada’s largest private sector union Unifor National. "This is welcome news for dozens of communities that are already feeling the pain of unfair trade sanctions."

"This action is appropriate and recognizes the potential impact of these duties on forest communities, families, and the forest sector," said Paul Whittaker, co-chair of the Alberta Softwood Lumber Trade Council.

As a result of the preliminary duties in April, most Canadian softwood lumber producers were hit with a 19.88 per cent duty.

J.D. Irving, Resolute, Tolko, Canfor and West Fraser were the five exceptions that were investigated separately. Their duties range from three to 24 per cent respectively.

"The Federal Government's renewed support for innovation in the forest sector will deliver tangible benefits in the emerging bio-based economy and to Indigenous communities dependent on the sector,” said Pierre Lapointe, president and chief executive officer of FPInnovations.

According to Natural Resources Canada, Aboriginal people make up nearly five per cent of the total forestry workforce in Canada, compared to three per cent of the workforce in all other sectors. The government is investing an additional $10 million in the Indigenous Forestry Initiative with this aid announcement. In 2015, there were about 9,500 forestry jobs in Indigenous communities.


"This announcement will further develop markets for wood construction and de-risk innovative research of the next generation of technologies, processes and products thereby assuring the economic future of hundreds of communities and an environmentally sustainable forest sector,” Lapointe said.

Prime Minister Justin Trudeau tweeted the government’s announcement of its support writing, “We’re taking immediate action to support Canadian softwood lumber producers and workers.”


“We appreciate that the federal government is standing tall for Canadian forestry communities by launching a comprehensive package in the face of trade actions that we believe are without merit,” said Derek Nighbor, chief executive officer of the Forest Products Association of Canada. “These actions by the federal government are a critical step as we work to secure a strong forest sector of tomorrow.”

The forest industry accounted for $22 billion of Canada’s GDP in 2016. Most of Canada’s softwood lumber exports go to the U.S., with more than 50 per cent coming from B.C.

“This package is a prudent response that can provide both immediate support for workers and communities if required, along with enabling additional investments in longer-term opportunities for the sector,” said Susan Yurkovich, president of the BC Lumber Trade Council. “We particularly appreciate the investment in expanding markets for Canada’s high-quality forest products overseas which will help to further diversify our markets.”

Approximately 230,000 Canadians currently work in the country’s forestry sector. More than 600 mills produce softwood lumber in Canada.
May 30, 2017 - The federal government has indicated that it will be making an announcement that will be a firm and clear demonstration of its intent to support the companies, workers and communities affected by the current softwood lumber trade dispute and the related unjust U.S. tariffs on Canada’s softwood lumber exports.

The Ontario Forest Industries Association (OFIA) is looking forward to this announcement and is expecting that it will include a meaningful loan guarantee program that keeps Ontario’s advanced manufacturing sawmills open and 57,000 men and women working as the softwood lumber negotiations progress. 

OFIA has expressed disappointment in the past that, despite numerous meetings and discussions that have taken place with the federal government over the previous several months, there has been no confirmation of an effective loan guarantee program for the forest industry. Actions by the federal government related to this file have focused on adjustment provisions in anticipation of a bad agreement, as opposed to actions that will send clear signals to the U.S. that the Canadian federal government stands beside and behind its lumber industry and that it will not allow jobs to be lost to the bullying tactics of a protectionist U.S. administration. 

“By not providing loan guarantees to the forest sector, Canada will be subjecting the industry to immediately crippling duties and costly litigation, ignoring the federal government’s stated mandate of investing and growing our middle class” said Jamie Lim, president and chief executive officer of the OFIA. She continued, “anything short of an announcement on an effective loan guarantee program will be unacceptable and will put our competitive sawmills and our northern communities at risk.”

For months, OFIA’s members have been meeting with the federal ministers and officials and writing to Prime Minister Justin Trudeau asking that they take immediate action in support of Ontario’s forest sector. As of today, OFIA has yet to receive a meaningful or relevant response.

The announcement of a properly structured loan guarantee program is the first key step to this negotiation. It would not only provide the staying power to allow proper negotiations to take place, it would also send a message to the United States that Canada is not interested in repeating history on this file. Director of forest policy at the OFIA Ian Dunn stated, “providing loan guarantees will keep people working and will send a clear message to the U.S. administration that Canada is standing up for forestry. Workers in places like Hearst, White River, Terrace Bay, Kenora, Fort Frances and other single industry towns in the north need this recognition from the federal government.”

Lim expressed doubt that developing new markets, enhanced employment insurance, and retraining of forest workers would be a viable solution for the Ontario sawmill industry, “Ontario does not have easy or economically viable access to coastal shipping routes and our workers, who have finally seen a rebirth of their industry and a restoration of their livelihoods in many forestry dependent towns, want to stay in this industry. A program to retrain these workers for jobs that will not exist in small, northern Ontario communities would be misguided.”

Lim concluded, “we are not just hoping, we are expecting that any upcoming announcement will see the federal government deliver on its promise to leave no worker, region or family behind.”
May 26, 2017 – An American high purity cellulose company acquiring a Canadian forestry one, while a potentially new Softwood Lumber Agreement (SLA) looms overhead, has raised a few questions.

Jacksonville, Fla.-based Rayonier Advanced Materials (Rayonier) and Montreal, Que.-based Tembec announced their agreement for Rayonier to acquire Tembec on Thursday.

Speaking from Tembec headquarters in Montreal, Tembec’s chief executive officer James Lopez and Rayonier’s Paul Boynton stressed several times that Rayonier intends to continue all existing Tembec operations and perhaps invest in more.

Boynton also repeated that Rayonier intends to maintain a strong presence in Quebec, Ontario and France, where Tembec currently holds its operations.

The new joint company’s Canadian headquarters will be based in Montreal, while corporate headquarters will be in Jacksonville, Fla.

Choosing not to directly answer a question on whether the new joint company would stand up for Canadian lumber producers’ rights or side with the U.S. Lumber Coalition, Boynton stated only that the company’s best interests would be upheld in the event of a new lumber agreement.

On the topic of guaranteeing Canadian operations of Tembec with a potential SLA coming Boynton said, “We fully recognize there’s some optimization, but we’re going to work on that with both teams… To decide on the optimal structure,” he said. “We have U.S.-based assets, we are acquiring Canadian-based and French-based assets… Our challenge is how do we grow them.”

“We think it’s a very good model that you have here [that can be applied to Rayonier],” Boynton added.

The acquisition is not expected to affect the potential amount the company might pay for softwood lumber duties.

“Here’s the reality,” Lopez said. “Tembec is a public company now and most of our shareholders are U.S.-based now… What’s really important is Rayonier’s commitment to keeping headquarters here in Montreal… They’re going to invest a major amount of their cash flow into Canadian operations.”

Once the deal is closed, Lopez will step down and leave Boynton to lead the new hybrid company. “I think in a case like this it’s best to step down and move on to other things,” Lopez said.

As a combined company, revenue will total approximately US$2 billion.

“This is all about strategic and financial rationale… It’s really a good story… It’s hard to find anything in here you don’t like about it,” Boynton said.

Lopez said liquidity is important in regards to a potential SLA. Adding that the risk to the company this time around is significantly less than the last time a softwood lumber agreement went into effect in 2006 because of smaller lumber operations running today. “While the duties, I'm sure, will be an annoyance they will not affect this company’s ability to maintain a strong balance sheet and continue with capital,” Lopez said.

“It’s the tangible and intangible measures that made this thing a good fit,” Lopez said. “This makes my heart feel good.”

Addressing the curiosity surrounding a U.S. company buying a Canadian forest products manufacturer at such a pivotal time for the two countries’ trade relations, Lopez offered the example of the US$400 million-acquisition of Ontario-based Grant Forest Products by Atlanta-based Georgia-Pacific in 2010 to illustrate that a similar acquisition has been done before.

Employees on both sides were reassured that their best interests are being taken into account. Boynton said people will not lose their jobs adding, “that’s not our plan.” Lopez said more career opportunities are being created.

Shareholders are also expected to benefit with “the right to elect to receive either (i) C$4.05 in cash or (ii) 0.2302 of a share of Rayonier Advanced Materials common stock, for each Tembec common share,” according to a release.  

Boynton said he would like to continue acquisitions going forward in the packaging and forest products areas.

“We look forward to an exciting future ahead - the future is quite bright,” Boynton finished.
May 19, 2017 - The chances of arriving at a softwood lumber solution during NAFTA renegotiations this August are not high, an anonymous source told Reuters. 

"It's hard to imagine a deal being done that soon," the source said. | READ MORE 
May 5, 2017 - Despite not being surprised by the preliminary softwood lumber tariffs imposed by the U.S. last week, EACOM Timber Corporation’s president and chief executive officer Kevin Edgson is not any less concerned.

Edgson sat down with me outside the main room at the Ontario Natural Resources Forum in downtown Toronto; two days after President Trump made the preliminary tax announcement from Washington on April 24.

“We knew it was coming for a long time… It’s in the neighbourhood of what we expected,” Edgson said. “We were disappointed in terms of the retroactivity, especially because it seems that was manufactured as opposed to anything that was reasonable or expected.”

Montreal-based EACOM owns five sawmills in Ontario and two in Quebec. It also owns a remanufacturing facility in Val-d’Or, Que., and an engineered wood mill in Sault Ste. Marie, Ont. Acquiring the latter is one way Edgson says EACOM is expanding its market reach.

“The Sault Ste. Marie operation produces a product that isn’t covered under this duty, so that was really us investing in and widening our product scope,” Edgson said. “Outside of that what we’ve done is we’ve minimized the amount of capital that we’ve spent in the last two years to build up our balance sheet, which is really to ensure that we have the liquidity to be able to take the hit.”

Earlier in the day, Edgson sat down with Ontario Premier Kathleen Wynne to discuss industry concerns including partnerships with Aboriginal communities and exposing young people to the forestry industry, particularly young women. Softwood lumber was at the top of the list.

During the discussion, Wynne announced that Ontario would be providing an additional $20 million in funding for the construction and maintenance of forest access roads. 

Wynne said she discussed the preliminary duty situation with other premiers and is ready to work with them along with the federal government to find a solution.

“This has been a contentious file with the U.S. for years and we continue to go through a cycle,” she noted. “There is a real willingness to find common ground across the country in the best way that we can.”

“It’s clear that [U.S./Canada relations are] in a rougher, rockier patch than in the past,” Edgson told me. “I think, eventually, cooler heads will prevail. It is the largest trading relationship in the world. It is in the best interest of people on both sides of that to find solutions.”

Edgson said he is optimistic that ultimately, there will be a good relationship established between the two governments on the softwood lumber issue.

“When you look at our side of this dispute, it is an unjust accusation and therefore, what we need to do is take the higher road,” Edgson said. “We need to be calm in tone and response. What we need to do is defend ourselves with honesty and integrity and continue to believe in the process.”
April 28, 2017 - Monday’s announcement of preliminary softwood lumber duties on Canadian imports to the U.S. has raised tensions south of the border.

“These duties are unwarranted and this determination is completely without merit,” said president of the BC Lumber Trade Council Susan Yurkovich.

“Reaching a new agreement is in the best interest of producers and consumers on both sides of the border,” Yurkovich said from B.C. on Tuesday.

More than half of B.C.’s lumber exports currently go to the U.S. Yurkovich said the Canadian industry needs to focus on expanding its markets and consequently decreasing dependence on the U.S. market. “The Canadian industry has worked very hard over the last number of years to diversify our markets including moving a whole lot of our lumber into Asia,” she said.

The Asian expansion plans include China, the Philippines, Malaysia, Vietnam and also India.

‘Misguided effort’

Duncan Davies is president and chief executive officer of Vancouver-based lumber producer Interfor. He noted how counter-productive a trade dispute is when there are so many opportunities for Canada and the U.S. to work together. 

“The real loser in all of this is the U.S. home builder and U.S. consumer… That’s why we think this is such a misguided effort,” Davies said. “Log costs are actually significantly less in some regions of the U.S. than they are in Canada.”

Davies said Interfor was not surprised by the announcement, adding that the company is well-financed to deal with any tariffs. “I don’t see Interfor materially changing any of our practices as a result of these duties.”

He noted lumber prices in Canada have seen a rise by about 30 per cent in anticipation of the duties.

Davies said the U.S. is using this method to put pressure on Canada in its goal to find a long-term solution that will be more favourable to the U.S.

‘Compe24cfae7f84287c076a251ad29dd373a_XL.jpgletely unprecedented’

“It’s completely unprecedented what the U.S. Department of Commerce has done here,” Yurkovich said referring to the two periods the Commerce Department chose to compare in its investigation. “They’ve picked an arbitrary period to make the periods match what they wanted to find all along. It doesn’t make any sense and I will be very interested to see how they’ve come up with that calculation,” she said.

Yurkovich said government and councils are working together to put forward evidence in defense of the Canadian industry. “While we support reaching a new agreement we are also fully prepared to vigorously defend our workers and traders,” she said.

“This kind of action creates volatility,” Yurkovich said.

Solutions

Going forward Yurkovich said there is an initiative underway by federal Minister of Natural Resources Jim Carr along with other ministers across the country to “provide industry support during this adversity.”

“We’re not going to be rattled. We are resilient,” Yurkovich said. “We’re going to continue to fight this fight and we’re going to be successful.”
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