Roy Nagel is general manager of the Central Interior Logging Association. The following are some of his concerns facing log haulers in the B.C. interior.

Canfor-Slocan merger planned

Canfor has signed an agreement to acquire all of the shares of Slocan Forest Products Ltd. in a share exchange transaction – in effect, a takeover.

The deal is subject to the following conditions:

Approval by shareholders of both companies;

Compliance with the B.C. Forest Act.

B.C. Supreme Court approval under the federal Competition Act.

The deal, worth $630 million, is expected to close by the end of March.

The combined company will be the largest spruce/pine/fir lumber manufacturer in the world, with annual sales topping $3 billion.

The lumber production capacity of its current mills will exceed 5.2 billion board feet.

Slocan CEO Jim Shepherd will be appointed president and CEO of Canfor next April, and current Canfor CEO David Emerson will provide transitional advice during the merger process.

What are the possible impacts?

Without going too far with speculation or prematurely judging the deal, here are a couple of big questions that will have to be addressed by Canfor, government, the logging industry and communities in the coming weeks:

How will such concentration of mill ownership in the central part of the province affect the way rates for logging and trucking are established, and the way logging and hauling work is assigned or allocated?

The same question applies to providers of equipment and supplies – what changes in purchasing processes will they encounter?

What will the impact on Timber Sales program be? With one very large corporate buyer dominating the region, can government expect to get “market value” pricing for Crown timber that flows through the program? That question is crucial to reaching a lumber export agreement with the U.S.

Communities have some very obvious concerns about the influence one large company could have in the region. Will the local mill expand or close, or will it stay the same? If things change, when? What happens to the town’s contractor base – will there be more logging and hauling work, or less?

Where to from here?

Everybody needs to talk. Some of that has already happened – there’s no way Canfor and Slocan would announce the plan unless it made government aware of it first, and received some sense that the deal wouldn’t be stomped on.

Moving forward, here’s the big question from the logging point of view: Can Canfor and the government put enough assurances of fairness and stability in front of the logging industry to anchor our investments and keep efficient, price-wary logging/trucking contractors from bailing?

High on the list: More logging volume, expressed in cubic metres, on longer term contracts; a better process to work out logging and trucking rates, and a means to resolve rate or amount-of-work disagreements without destroying business relationships.

We all want greater operating efficiency, whether we’re sawmillers or loggers and truckers – because more efficiency should mean better profits.

If we can’t build better processes that promote both efficiency and stability, we all lose.

Light wood conversions a problem

Despite increased logging and hauling volumes this year, loggers and truckers are still struggling with several cost and operational issues.

Besides downward pressure on rates, the move to more cut-to-length operations, Stumpage Bingo and other concerns, the issue of dry wood and conversion rates is becoming a bigger problem by the month.

The CILA is working with loggers and truckers around the region – individually and in groups – on all of these issues, and we’re also gathering information on the dry wood/conversion concerns we’ve been hearing.

For loggers, the issue is whether the conversion rate accurately ensures the contractor is paid for the actual number of cubic metres harvested, when payment is made on the weight of log loads across mill scales.

There are ways to verify that conversion rates offered by mills are accurate, and we’re working on building a system to achieve that for our members.

The problem on the trucking side is more severe.

Even if the conversion rate is correct, they’re still paid on the basis of delivered log weight – and if the logs are light, as is the case with beetle wood, the trucker can’t get enough logs on the trailer within the legal limits of length, width and height to get maximum weight and a larger paycheque.

Truckers are paid about 10 to 15 per cent less for each load now than they were two or three years ago, but there are just as many logs in the bunks.

The answer isn’t wider bunks or higher/longer loads – those moves increase costs to the trucker and can compromise safety. Mills should be paying both truckers and loggers for the cubic metres of logs they produce and deliver, as was the case 10 years or so ago.

In plain English, the cubic metres are on the trucks – but the truckers, and to some degree the loggers – aren’t being paid for all of them. They do, however, bear the cost of the logging and hauling.

Log exports mean life to many B.C. towns

The battle over log exports from B.C. continues to heat up, with the provincial government responding to criticism by looking at options ranging from some sort of export changes to an outright ban to reduce the flow – which is less than six per cent of all timber cut in B.C.

Forests Minister Mike de Jong is right when he says log exports are a sign of a sick forest economy, but banning or slowing log exports won’t bring the patient back to health. Instead, it will spread more malaise to about 2,000 forest workers on the Coast, in the Northwest and on Vancouver Island who were working this past year thanks to the opportunity to harvest and export logs.

One of the arguments about log exports is that we’re exporting jobs. Skeena MLA Roger Harris is much closer to the truth when he says log exports aren’t to blame for mill shutdowns – the economics of running those mills is the problem.

Reducing or ending log exports won’t get those mills running again – but it will surely put even more people in those troubled areas of the province out of work.

– Roy Nagel is general manager of the Central Interior Logging Association. CILA represents logging and trucking contractors in the Central Interior of B.C. For more information on CILA, visit www.cila.bc.ca or call 250-562-3368.