Softwood lumber duties threaten “renaissance” of Ontario forestry

May 2, 2017

By: TB Newswatch

The placing of duties on Canadian lumber entering the United States doesn’t come as a shock to those connected to the forestry sector, but it not being a surprise doesn’t take away the sting.

The tariff levied on Canadian exports of softwood lumber to the U.S. announced earlier this week by President Donald Trump was a major focus at the second day of the annual Northwestern Ontario Municipal Association conference on Thursday.

Jamie Lim, president and chief executive officer of the Ontario Forest Industries Association, said the move is the “same old, same old” tactic the United States has used throughout the 35 years of dispute in the industry.

“It wasn’t a surprise. Obviously everyone in the sector understood that there would be a determination coming but it doesn’t make it any easier,” Lim said.

“I know how these unlawful duties are going to impact 57,000 hard working men and women in every region of Ontario. It makes me kind of sick because I know these are real families and real people and the unknown and uncertainty isn’t a nice thing to live with.”

The first round of duties were levied by the U.S. Department of Commerce on Tuesday and will see five companies charged at rates ranging from 3.02 per cent to 24.12 per cent, with all other producers hit with a 19.88 per cent tariff. A second wave of duties is expected to be rolled out in June.

They will cause reverberations that will be felt beyond the immediate producers, Lim said.

“Not only is it sawmills but it’s the other mills that make other forest products using our residual value. It’s the harvesters, the construction workers that build and maintain roads,” Lim said. “This impacts the fabric of northern and rural Ontario.”

The effects are also expected to be felt south of the border. The National Association of Home Builders estimated the impact of the 19.88 per cent lumber tariff would cost nearly $500 million in lost wages for U.S. workers, about $350 million in potential taxes and other revenues from different levels of government and more than 8,000 full-time American jobs.

Lim called on the federal government to introduce a loan guarantee program to assist producers in offsetting the duties and keeping their mills operating. She said every previous softwood lumber tariff imposed by the U.S. has been ultimately overturned but in the meantime they undercut the bottom line of the industry.

The previous agreement expired in October 2015 and resulted in a prolonged stretch of free trade prior to the implementation of the duties.

Lim said the timing of sanctions could threaten the momentum that was being generated in the province by a resurging forest industry.

“The exciting thing for Ontario was that we were recovering. In the last couple of years, you had to have felt it here in Northern Ontario. Mills were reinvesting, mills were reopening. People were hiring. Harvesting was going up,” Lim said.

“The last couple of years after the recession have been so amazing because it’s been a true renaissance like we’re back. There was that kind of positivity in the air. This is news that we certainly didn’t need at this time.”

Roger Barber, Ontario woodlands general manager for Resolute Forest Products, said evidence of growth in the sector can be seen in Northern Ontario where the company has reopened a once shuttered sawmill in Ignace and built a new production facility in Atikokan. The company has also a Thunder Bay area sawmill on the Fort William First Nation that has been in operation for about 15 years.

These duties threaten the business relationship for the largest customers of lumber from those mills, Barber said.

“Being in Northwestern Ontario, really the U.S. market is our key market,” Barber said. “We’re far away from the big market in Ontario which is Toronto, so we do rely on the U.S. Though we sell some product into Toronto, the lion’s share goes to the U.S.”

Ignace mayor Lee Kennard said the sawmill, with about 80 workers, is the largest employer in his town.

“Everybody is concerned about what’s going to happen. Our mill has been operating now for approximately two-and-a-half years,” Kennard said. “We’re hoping it will keep on but that’s hard to say. It’s too soon.”

The reopening of the mill has already had an impact on Ignace, Kennard said.

“It’s brought the housing markets up, started to be able to see vehicles moving around in the mornings,” Kennard said. “It’s been a very positive change in the community.”

Barber said Resolute, which has been slapped with a 12.84 per cent tariff, has no immediate plans to change their operations in Northwestern Ontario.

“We are concerned about the additional costs that come with these kind of duties,” Barber said. “We’re working through it at this point in time and it’s a bit of a wait and see.”

The NOMA board has also drafted an emergency resolution, calling on the federal government to “vigorously oppose” the levy of duties on Canadian softwood lumber exports, ensure immediate and enhanced access to Employment Insurance benefits to “all direct and indirect workers who may be laid off as a result of the current softwood lumber dispute” and work with the Ontario government to develop a financial aid package “to assist individual forest sector communities in responding to the anticipated loss of employment and potential shut down of existing operating mills.”

By: TB Newswatch

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