B.C.’s forestry industry a vital, neglected economic force – Comment

April 7, 2015

By: Vancouver Sun

B.C.’s forestry sector may not be as sexy as a potential liquefied natural gas industry in the north or all the high-tech companies that have been moving to Vancouver, but it is time the provincial government started showing it some renewed love.

A report by the Business Council of B.C. touts the sector as highly productive and a great job generator — “one of the province’s dominant economic engines”.

But the council warns that the industry is about to experience a contraction, and faces a host of competitiveness challenges.

“Over the medium term, the aggregate size of B.C.’s forest industry will contract,” largely as a result of diminishing timber supplies caused by the pine beetle infestation. (By 2016, the critters will have munched through nearly 60 per cent of all the lodgepole pine in B.C.’s Interior.)

Communities will be buffeted “by consolidation and closure of certain facilities.”

And worryingly, “certain American jurisdictions have become increasingly attractive investment locations for some B.C. forest products companies.”

This, in part, is because of “unsettled native land claims, often cumbersome environmental regulations, complex and lengthy permitting processes, and rising operating costs.”

Add to that problematic stew, “punitive” municipal property taxation, a PST that forces companies to pay provincial sales tax on their business inputs, a B.C. carbon tax, and ongoing trade disputes over lumber with the Americans, and you can see why some nurturing by the provincial government may be needed.

But this is far from a has-been industrial sector, assert the report’s authors.

They are urging the Clark government to “focus on establishing a climate that supports renewed investment in the forest sector.”

It is true, the forests products enterprise has been shrinking as a share of the province’s total economic pie. It now represents 3.5 per cent of total output — down from five per cent in 1997.

But that is mainly because other industries have expanded as B.C.’s economy has grown more diverse and complex. A burgeoning tech industry today represents 7.6 per cent of GDP.

Still, B.C.’s forestry enterprise remains the largest in North America — as measured both in absolute dollar value and share of GDP.

Nearly 150,000 direct and indirect jobs in B.C. can be traced to the “forest products cluster” which pays healthy wages. Indeed the pulp industry provides compensation double the average for all B.C. industries, more than $100,000 a year.

The report notes, many of these jobs — along the coast and in the Interior — are proving invaluable for an increasing number of “younger households being pushed out of the Lower Mainland because of high housing costs or else are looking to live in communities where lower home costs mean a higher standard of living.”

And forest products are B.C.’s largest export commodity, reflecting nearly double what we export in metallic minerals and more than double our coal exports.

Even as the industry is being devastated by the pine beetle, conditions look promising on the forestry front.

Thanks are due to a resurgent U.S. housing industry and a lower Canadian dollar. Also, forestry is benefiting from new markets that have been forged in China and elsewhere in Asia.

For all the forestry sector’s challenges and benefits, city residents probably don’t spend much time thinking about it. They likely never even noticed that March 21 was International Day of Forests.

We tend to be so focused on housing costs and environmental debates about pipelines and oil tankers that this historic, high-value industry is taken somewhat for granted.

Which is risky because, if it is not a priority concern for taxpayers, often it can get neglected by politicians.

The province is blessed to be so endowed with so much forested area, featuring sky-high timbers — a notion brought home to me several years ago when I visited California and went to see the much-ballyhooed Giant Redwoods along the coast.

Frankly, to my eye, they looked a little puny.

By: Vancouver Sun

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