Canfor's Oct. 25, 2024 financial report had the following information “Operational challenges, including limited access to economic fibre, weak lumber market conditions, rising operating costs, increased export tariffs to the United States ("US"), as well as various regulatory complexities has resulted in the difficult decision to permanently close its Plateau and Fort St. John operations.”
The central and Peace regions of B.C. are not currently profitable and have been contributing hundreds of millions of dollars in losses annually while over the same period their U.S., European operations showed positive earnings.
Ben Parfitt provided some details as to how this has come about in his article “BC Forest Companies See a Future. In the US Fast-growing southern forests, low labour costs and tax breaks are driving an exodus” 9 Oct 2024 The Tyee.
The author makes the case that it was the natural (older, mixed species and diverse) B.C. forests that have been logged for years that produced lumber of much superior quality compared to the fast growing mono cultured pine forests of the southern United States. While our diverse topography (coasts, mountains, valleys and boreal forests ) have provided unique forest ecosystems the rough topography resulted in higher than average costs in road building, operating and planting costs relative to provinces with flatter forest lands.
The tendency was for our companies to log the closest forests first with the more challenging forests often being the farthest from the processing facilities. Our reforestation practices lead to much less diverse forests than the primary ones because we often eliminated native species which were competing with the preferred conifers. In many cases the resulting forests were closer to plantations than the original multi storied and variety of species of the native ecosystems.
As the author points out B.C. is seriously disadvantaged relative to the U.S. South, where Canfor and others have invested millions of dollars. These southern forests occupy 130,000 square kilometres of pine plantations which were once highly diverse natural forests, many of which had been cleared away centuries prior to make way for cotton plantations tended by slaves and later sharecroppers.
When the region’s cotton production in the 1920s became uneconomical, these lands began to recolonize with native pine species, leading to a resurgence in logging activity. These pine plantations are “among the most intensely managed” on the planet. Heavy use of herbicides, insecticides and fertilizers has produced yields more than four times greater than in the 1950s and 1960s.
In just 12 to 15 years, the trees in these once sterile landscapes are thinned then chipped to make wood pulp or pellets. In many cases within 10 years or so, many of the remaining and now much larger trees are harvested for lumber production. In comparison, B.C. forest companies thought they could return to log their plantations in 80 years, but there are many trees in the province’s plantations that have been logged in half that time. Even with a logging regime of 40 years in B.C. it is twice as long as it takes a plantation in the U.S. to yield trees for lumber.
The U.S. South is predominantly a low-wage region with many local governments and long ago offered incentives to draw companies to invest there. And then there’s the issue of the powerful U.S. softwood lumber lobby, which has succeeded time and again in convincing the U.S. government to impose tariffs on Canadian lumber imports which convinced Canfor to shut down its Plateau and Fort St. John mills. It remains to be seen if Mr. Trump will follow through with his high tariffs. but we have survived them before and hopefully the increased prices of U.S. house construction will cause the millions of his supporters to force him to rethink his actions.
