SOURCE: Globe and Mail; Wednesday, April 6, 2005
The fate of Canada's forests has always been determined by the balance of power between the forces of industrialization and conservation.
For most of our history, the industrialists ruled the roost. We chopped our trees -- or rather, we allowed a handful of big companies to do so -- with alacrity so long as the exercise provided jobs and export income. Pleadings for preservation were like cries in the wilderness.
If there was a turning point -- a moment when the environmentalists moved from the margins to the mainstream and when sustainability became a collective concern -- it probably came in the late 1980s in British Columbia.
For months, the province fixated on the fate of Canada's tallest tree, a 94-metre Sitka spruce in Vancouver Island's Carmanah Valley. By 1990, MacMillan Bloedel, then the province's largest forest company, had badly lost the public relations battle and British Columbia declared most of the valley off limits to loggers.
It would take Quebeckers another decade before they would make sustainable forest management a political hot potato. The turning point came in 1999, when a popular folk singer named Richard Desjardins produced and narrated a devastating documentary, L'erreur boréale, the title a play on the term aurora borealis, or northern lights. The film, which chronicled the systemic overharvesting of trees in Mr. Desjardins' native Abitibi region, made the rounds of the Montreal festival circuit and permeated the collective consciousness. "Horror borealis" became the environmentalists' battle cry.
Jean Charest's Liberals heard them loud and clear while campaigning in 2003 and promised a top-to-root review of forest management practices once elected. The result of that promise -- the creation of a provincial commission chaired by former Hydro-Québec head Guy Coulombe that tabled a damning report in December -- will change Quebec's forest industry for good. And for the good.
Unfortunately, the situation will first get much worse for the forest companies -- and especially for the 245 Quebec communities that depend primarily on them -- before it gets better.
At the end of March, the Charest government passed legislation implementing the Coulombe commission's principal recommendation -- an immediate, 20-per-cent reduction in the estimated sustainable yield of Quebec's softwood forest that will translate into similar-sized cuts in companies' logging rights for the three years that began on April 1.
The axe comes just as Quebec's forest industry, which generates $15-billion in annual shipments and is responsible for at least 90,000 direct jobs, is showing the rot of decades of mismanagement. The fault is not entirely that of the industry. Successive provincial governments encouraged overexploitation of the forest with low stumpage fees -- the industry paid gross royalties of an underwhelming $390-million last year, even though that's a big improvement from $150-million a decade ago -- and incentives to keep inefficient, labour-intensive mills operating.
For decades, the promise of jobs in hard-pressed regions gave the industry the long end of the branch in bargaining with Quebec City. In fact, until 2001, the provincial government relied on data supplied by the companies to calculate the maximum sustainable yield, or the amount of trees that can be cut each year without sacrificing the forest's ability to regenerate (with the help of replanting) on a long-term basis. Needless to say, the industry did not err on the side of caution.
Years of overharvesting has meant that the diameter of trees cut today is substantially smaller than it was two or three decades ago.
Hence, it takes more trees to produce the same amount of lumber, paper and other wood products. This has made Quebec an increasingly expensive place to operate, despite relatively low stumpage.
With 20 per cent less wood to process in coming years, guess where the axe falls next? As it is, dozens of Quebec's saw mills are already operating at below 50 per cent of their capacity. And lofty lumber prices won't save them.
Although it produces 25 per cent of Canada's softwood lumber, and virtually all of its hardwood products, the Quebec forest industry is still primarily known as a paper maker. The province accounts for 45 per cent of Canada's newsprint production and Canada is the world's biggest supplier of newsprint.
Bowater, Kruger and Abitibi-Consolidated -- the biggest of the bunch and the biggest newsprint maker on the planet -- are household names in Quebec. Unfortunately, their names are not always uttered with affection. Indeed, Abitibi offers a case study of what has gone wrong in the province's forest industry.
In January, Abitibi finally announced the permanent shutdown of its Port-Alfred newsprint mill. There were days of local protests. But it shouldn't have been a surprise. The first of the mill's four paper-making machines was installed in the 1920s. How could a Model T be expected to outrace a Mustang GT?
Indeed, the average age and capacity of Abitibi's 20 newsprint-making machines in Quebec do not make it the envy of the industry.
Quebec, over all, is the newsprint-making jurisdiction with the oldest machines on the planet. In parts of the United States and Scandinavia, recently installed paper-making machines surpass 350,000 tonnes in capacity, compared with Abitibi's Quebec average of 130,000 tonnes. The bigger machines mean fewer fixed costs and less labour for the same amount of output.
The Quebec industry has no choice but to improve productivity. But replacing an old, low-capacity machine with a modern, high-output one, or one that uses recycled fibre, costs at least $500-million.
To its credit, Abitibi has just spent $210-million to switch its Alma, Que., mill from producing newsprint to a higher-grade alternative offset paper. Still, more than a quarter of the $385-million in capital expenditures Abitibi made in 2004 was related to the construction of its joint venture newsprint mill in China. Its Quebec operations are shrinking.
In January, in the face of the Coulombe report, a $219-million operating loss in 2004 and a crumbling share price, Abitibi CEO John Weaver said "new realities" in the North American newsprint market have forced the company to undertake a "strategic review" of all its operations.
Abitibi is not alone in its misery. The balance of power in Quebec's forest has shifted from the industrialists to the environmentalists. But it just might be what the industry needs to save itself from itself.
