More mill closures imminent

Government MUST act now

TORONTO, July 29 /CNW/ - News that Abitibi Consolidated is drastically cutting operations at its Kenora mill did not come without warning and might have been avoided if the Ontario government had taken immediate steps to act on a report they themselves commissioned, the Ontario Forestry Coalition said today.

This week's announcement that one 90,000 tonne newsprint machine will be mothballed and a 150,000 tonne machined idled is a significant blow to the community. Kenora Mayor Dave Canfield notes that the mill employs 365 workers and affects hundreds more forestry related jobs in the region.

"On June 13 the government officially received a report it commissioned that warned of an escalating crisis in the forestry sector if immediate action was not taken. Similar warnings have been heard over the past several months and still nothing has been done," observes Jamie Lim, a member of the Forestry Coalition and President of the Ontario Forestry Industries Association.

"This mill is not shutting down because the forest sector is a sunset or dying industry, it's shutting down because of an uncompetitive business climate in Ontario. Our industries, our communities and our province cannot afford further delay. The government must act now," adds Lim noting the government's report found as many as twelve mills are in peril of closuring as the direct result of operating in one of the highest cost jurisdictions in the world.

Over 50 communities across Northern Ontario are largely dependent on the forestry sector and across Ontario over 500 wood products manufacturers in more than 200 communities could be impacted by the crisis.

President of the Northwestern Ontario Municipal Association (NOMA), Michael Power points out that when the auto sector and film industry sought assistance the government moved with lightning speed and he strongly urges a similar response for the forestry sector.

"The forestry sector in Ontario should be thriving, but a history of government cuts, downloading and bad circumstance has hurt our competitiveness and now threatens the forestry sector's very survival. Companies that could be investing in Ontario are closing completely or moving south of the border. Before it gets worse, now is the time for government, which has contributed to our problems, to be part of the solution," added Power who is also Mayor of the Community of Greenstone.

Noting the tremendous success the forestry sector built throughout the 1990s when sales doubled from $9 billion to $19 billion and direct employment leaped from 64,000 to 88,000 jobs, Mayor Power said, "Perhaps the thing that I find most troubling is that the Ontario government knows what needs to be done. It's right there in black and white in their own report. Either the government acts, or the industry dies, there is no two ways about it. We can be competitive and we can thrive, but that won't happen as long as government stays on the sidelines."

Forestry stakeholders have worked together with government to develop a plan that will restore the industry's ability to compete. Specifically, the coalition is asking the government to take immediate action on the following four key recommendations contained in the June 13 Minister's Council Report on Forest Sector Competitiveness:

- A 50% fuel tax credit on the Provincial portion of the tax, when hauling fibre from the forest to the mills;
- The Province to reassume 100% of the construction and maintenance of primary road and 50% of the costs of secondary forestry roads;
- A Business Climate competitiveness fund similar to the package offered to the Automotive sector; and
- A reliable energy supply at competitive prices.

"Our thoughts are with the Kenora mill workers and their families whose jobs are at risk with yesterday's announcement. The forestry sector - which directly employs more than 84,000 workers - can be turned around. The matter is in the hands of the Ontario Government. We hope they will act wisely - and quickly." adds Mayor Canfield.

The Ontario Forestry Coalition (OFC) is a partnership between industry, municipal organizations and aboriginal economic development funds that have joined together with a common purpose of promoting and enhancing the Ontario forestry sector's ability to continue to create jobs and economic prosperity in Ontario.

The Northwestern Ontario Municipal Association (NOMA) considers matters of general interest to the municipalities and to procure enactment of such legislation that may be of advantage to the municipalities in Northwestern Ontario. They take united action on all matters where; the rights of the municipalities may be affected; to advance the standards of municipal
government through education and discussion; and generally to promote their interests. The organization is governed by a 20 member Board of Directors. Sixteen of the members are elected officials and four are appointed officers of municipal corporations.

The Ontario Lumber Manufacturers' Association (OLMA) is an industrial trade association representing the interests of the Province's independently-operated, non-integrated sawmills in quality of production, public forest policy and in international trade. The sawmill members of the OLMA are significant fixtures in most of the 50-plus single industry towns of Northern Ontario, as employers, residents and community leaders. The sawmill industry is a notable employer of Ontario's native people, in all the aspects of access, harvest, forest renewal and lumber manufacturing.

The Ontario Forest Industries Association (OFIA) is the voice of 29 member companies responsible for the stewardship of 75-80 percent of the fibre on Ontario's Crown land managed for timber. The industry in Ontario has a $19 billion a year economic impact, employing 275,000 people directly and indirectly and paying taxes and stumpage fees in excess of $2.3 billion annually.

For further information: contact: Jamie Lim, OFIA, (416) 368-6188;
Mayor Dave Canfield, (807) 467-2018; Mayor Michael Power, (807) 854-1100

Ontario forestry industry asks for government help

By KAREN HOWLETT
Saturday, July 30, 2005 Page B5 / GLOBE AND MAIL

Ontario's struggling forest products industry is asking the provincial government for the same generous treatment that the auto sector has received, including $500-million in financial assistance.

An industry-led council notes that the government has showered the auto sector with $500-million in financial largesse. It says the forestry sector is equally deserving of help because it is just as integral to the province's prosperity.

The government needs to match the incentives that it has handed out to the auto sector to ensure that Ontario's forest sector continues to attract investment, Jamie Lim, president of the Ontario Forest Industries Association, said yesterday.

"It's in a downward spiral right now and it needs a solution," she said. "Everyone seems to understand auto and cars, but I'm not sure they understand the magnitude with which this industry contributes to the whole province."

Natural Resources Minister David Ramsay, who represents the riding of Timiskaming-Cochrane in northeastern Ontario, said in an interview yesterday that the industry is Northern Ontario's economic bedrock and the province's second-largest export product after autos.

"As a northerner, nobody has to make the argument to me that the forestry industry is very important to the economy of Northern Ontario and the province as a whole," he said.

Last month, his ministry announced up to $350-million in loan guarantees to stimulate new investment in the forestry sector. Mr. Ramsay said he expects to make further announcements in September in response to the council's report.

He appointed the council last year. In a report released last month, the council outlines the grim prospects facing the forestry industry.

It said 12 mills in Northern Ontario are at risk of closing, which would result in 7,500 job losses in the north and 13,000 indirect job losses elsewhere in the province.

"Ontario cannot afford to stand by and passively watch the primary forest industry and the communities it supports sink into decline," the report says.

As it turns out, this was no idle threat. Abitibi-Consolidated Inc. announced this week that it plans to shut one machine and stop its second one indefinitely at its newsprint plant in Kenora.

The fate of the second machine depends on the outcome of Abitibi's negotiations with the provincial government. Abitibi spokesman Denis Leclerc said the company wants the government to help it reduce production costs at the mill.

"We're not looking for any handouts or charity," Mr. Leclerc said.

Mr. Ramsay said all of the companies are in the same predicament of rising costs and falling revenue because of an oversupply of newsprint. He said his ministry is working with a number of industry players to help them reposition themselves to produce specialty coated paper and other products where demand is higher.

The council says the industry would use the $500-million in provincial funding to upgrade mills and harvesting equipment. It says Ontario should ask the federal government to match that contribution.

Beleaguered Tembec

Mill closing costs, softwood lumber duties bite into Tembec profit
By BERTRAND MAROTTE
Friday, July 29, 2005 Page B3 / GLOBE AND MAIL

MONTREAL -- Costs related to mill closings have deepened the third-quarter loss at beleaguered forest products giant Tembec Inc.

The company yesterday posted a loss of $142.5-million or $1.66 a share, compared with a loss of $12.6-million or 15 cents in the year earlier period.

Revenue slipped to $957.9-million from $1-billion.

Excluding extraordinary items -- an after-tax loss of $91.7-million on mill shutdowns as well as an after-tax loss of $16.8-million related to foreign exchange --the loss was $49.8-million or 58 cents a share, compared with a loss of $2.1-million or 3 cents a share.

Richard Kelertas, an analyst at Desjardins Securities, said in a note to clients yesterday that the loss of 58 cents a share was "well below consensus expectation of [a loss of 31 cents] and our forecast of [40 cents].

"With such a low level of profitability at this stage of the cycle, we believe Tembec faces tough challenges ahead that will not help the stock price in any way. Moreover, no significant earnings momentum is expected in the very near term with the seasonal weakness for market pulp."

Tembec's shares fell 10 cents to close at $3.64 on the Toronto Stock Exchange yesterday.

The Montreal-based lumber, pulp and paper producer said margins in the three business units "remain below normalized levels."

The company blamed softwood lumber export duties to the United States for the reduced lumber margins and said rising pulp and paper prices have been offset by the relatively weak U.S. dollar.

But Tembec president and chief executive officer Frank Dottori told analysts on a conference call he is confident an agreement can be struck to end the long-running Canada-U.S. fight over softwood lumber.

Tembec has incurred $292-million in U.S. lumber export duties since May, 2002. Mr. Dottori refused to say how much of that he believes the company could recoup if an agreement is reached.

"I'm rather bullish that there is a potential deal on the table that we can discuss," he said.

He also urged the Ontario government to find a speedy solution to the high energy costs in the province that are a key factor in decisions on mill shutdowns by forest products companies.

"We hope, we believe, the government is now starting to realize how serious the situation is. It isn't only Spruce Falls," he said, referring to Tembec's newsprint mill in Northern Ontario that has proven to be a significant drag on the company because of costly electricity.

The company said in a press release that prices for pulp have seen some seasonal weakening but are expected to strengthen in the second half of the year, while paper prices are also seen as firming up.

"The challenges faced by the industry are the strength of the Canadian dollar and rising chemical, energy and wood costs, particularly in Eastern Canada," the company said.

Mr. Dottori said Tembec is back on track after the recently announced closings of four mills in Eastern Canada.

Tembec said in May that it is closing three sawmills and one small paper mill, resulting in the loss of more than 450 jobs. The bulk of the layoffs were concentrated at two locations: a paper mill at St-Léonard-de-Portneuf, Que. and a saw mill at Mansfield-et-Pontefract, Que. (*)

Abitibi closures hit Nfld. hard

Wednesday, July 27, 2005 Updated at 2:49 PM EDT
Canadian Press

Stephenville — The closure of the Abitibi-Consolidated Inc. paper mill in Stephenville will strip the town of its largest employer, and deal a blow to western Newfoundland's fragile economy, the town's mayor says.

Residents of this community, population 8,000, were stunned Wednesday to learn that the region will lose 300 of its highest paying jobs.

Stephenville mayor Cecil Stein said the news from the Montreal-based forestry giant was worse than expected.

“We never anticipated that they would ever close this mill,” he said in an interview. “The bottom just dropped out of our town.”

Meanwhile, the company confirmed that it will move ahead with a previously announced plan to shut down one of two paper-making machines at its Grand Falls-Windsor operation in central Newfoundland.

The cuts are part of a wider restructuring plan that also will see the closure of a mill in Kenora, Ont., and the sale of a mill and woodlands in Fort William, Ont.

In Newfoundland, the shock in Stephenville and Grand Falls-Windsor was matched by anger in St. John's, where Premier Danny Williams said he was outraged by the company's decisions.

“Our government committed a significant amount of resources over the past year and a half to working with Abitibi in an effort to ensure it would have viable operations in Newfoundland and Labrador,” Mr. Williams said in a statement.

“The decisions the company have made today are going to have severe and tremendous impacts on two significant regions of our province.”

Mr. Williams said he made it clear to John Weaver, the company's president and CEO, that his Conservative government was prepared to take legal action against the company.

“I sent a message loud and clear to Mr. Weaver that we would explore every possible option in terms of what legal authority government may have over the company's water and chartered timber rights,” Mr. Williams said.

The premier warned that if the paper machine in Grand Falls-Windsor is shut down, existing legislation would be used to strip the company of its timber licences — a threat Mr. Williams has made in recent months.

Mr. Williams said his government rejected a company proposal that called for joint development of two hydroelectric projects on the Exploits River in central Newfoundland, a project worth at least $300-million.

The proposal amounted to a ransom note because the province would have to assume most of the risks even though the company would not guarantee it would keep the two mills open, Williams said.

“We will work to the eleventh hour to see what can be done to have both of these mills remain in operation,” he said. “However, I also want to be very clear that this government will not be held ransom by the company.”

The company said it had cut costs to deal with a $43-million second-quarter loss, caused by rising energy and fibre costs.

Workers at the Stephenville plant heard of the impending closure from the local media, only to have it confirmed later by their supervisors.

“We're just sitting around here now discussing the options,” Brian Power, who's worked at the plant for 25 years, said from the plant's lunchroom.

“There's the possibility of having to move away because it's the main industry in this whole town and this whole town is going to be greatly affected.”

The mayor said the closure in October would have a huge impact the businesses that provide services for the plant.

But Mr. Stein sounded a defiant note, saying that the town would survive even though it would be losing hundreds of taxpayers.

“Most are still young enough that they will have to go away because they won't be able to take a pension package,” he said.

The mayor said the fight to save the mill wasn't over and that local and provincial officials would look for a new operator to run what he calls “a solid plant.”

Indeed, the mayor's resolve isn't without foundation for a town that has suffered a number of economic blows in the past, including the 1966 closure of a sprawling U.S. air base that once employed 1,200 civilians.

The mill, described as the backbone of the town's economy, was opened in 1973 by Labrador Linerboard Ltd., with financial backing from Joey Smallwood's Liberal government and Javelin Corp.

For the next four years, the money-losing mill made cardboard from spruce trees cut in Labrador.

It was closed in 1977, but Abitibi Consolidated purchased the mill in 1981 for newsprint production.(*)

Abitibi mill in Kenora shuts down

Abitibi announces shutdowns as forestry slump drags on
Joins Domtar and Norske in reporting results that fail to meet expectations

By BERTRAND MAROTTE / GLOBE AND MAIL
Thursday, July 28, 2005 Page B1

MONTREAL -- The crisis in Canada's forest sector is deepening as key players in one of the country's most important industries struggle to cope with a seemingly endless downturn and a fiercely competitive global market by slashing more jobs and cutting production.

Montreal-based Abitibi-Consolidated Inc. said yesterday it is reducing its work force by 655 employees as it shuts a mill in Stephenville, Nfld., and at least one machine at its plant in Kenora, Ont.

A second machine will be shut down for an indefinite period at Kenora, causing a total reduction of 284,000 tonnes of newsprint capacity.

Debt-heavy Abitibi announced this latest round of cuts as it and two other major companies in the sector disclosed worse-than-expected results against a backdrop of continued woes. Financial analysts warned of more challenges ahead.

"No one is to blame," Abitibi chief executive officer John Weaver said in a conference call about the Stephenville closing. "It's just the economics of the business."

The facilities at Stephenville are considered efficient and the work force productive, but Mr. Weaver said high energy and raw fibre costs are behind the decision after talks with the Newfoundland government fell through.

A nasty mix of factors -- including the high Canadian dollar that reduces export profits, soaring wood fibre prices in Eastern Canada, a shrinking North American newsprint market amid the growing popularity of the Internet, and high energy prices in Ontario -- have combined to bedevil the industry, which is largely missing out on the long-running commodities rally.

Veteran industry observer and consultant James Rowland said he has not seen such tough times since the early 1980s.

"With these mill closures, small-town Canada is taking a helluva hit," he said. "I suspect there is more of this to come."

Abitibi posted a second-quarter loss of $43-million or 9 cents a share, compared with a loss of $79-million or 18 cents a year earlier.

Excluding special items, the second-quarter loss was $26-million or 6 cents a share, compared with a loss of $22-million or 5 cents. Analysts had been expecting a loss of 3 cents.

Revenue increased slightly to $1.48-billion from $1.44-billion a year earlier.

Abitibi shares rose 16 cents to close at $6.12 on the Toronto Stock Exchange yesterday.

Two other major forest product companies joined the parade of disappointing results yesterday.

Domtar Inc., also based in Montreal, reported second-quarter profit of $2-million or 1 cent a share, compared with a loss of $1-million or 1 cent a year earlier.

The analysts' consensus estimate was for a profit of 4 cents.

Revenue slipped to $1.29-billion from $1.35-billion.

Although the company reported higher pulp and paper prices and continued cost cutting, it said that was offset by the higher loonie and greater costs for raw materials and energy.

The maker of office and commercial printing paper also faces stiff competition from lower-cost producers in places such as South Korea and Indonesia.

Norske Skog Canada Ltd. of Vancouver posted a second-quarter loss of 11 cents -- excluding extraordinary items -- compared with a loss of 6 cents a year earlier. The analysts' estimate was for a loss of 6 cents.

Company management warned that the worldwide pulp market is sluggish and newsprint consumption continued to decline in the quarter.

More bad news is expected today as Tembec Inc. -- Canada's third largest integrated forest products company -- reports third-quarter results.

"Until we see some changes in the way Tembec deals with the upcoming downturn in commodity prices, we are concerned that the company will not be able to cope with rapidly falling profitability and shrinking liquidity," analyst Richard Kelertas of Desjardins Securities said in a note to clients yesterday.

Mr. Kelertas said Tembec must take the "necessary steps to close or offload non-performing assets (and we realize this is easier said than done) and sell non-core assets for much needed cash and debt repayment . . ."

Stephen Atkinson, an analyst with BMO Nesbitt Burns Inc., said forest product companies in the west are having an easier time of it than their Eastern counterparts because they face far fewer restrictions on what they can do to in terms of shutting mills or consolidating mills.

***

Industry in turmoil

The Abitibi paper mill in Stephenville, Nfld., became a flashpoint yesterday for the upheaval facing the forestry sector in Canada. The loss of 300 of the top-paying jobs in a community of just 8,000 comes as the pulp and paper sector cuts capacity to deal with weak markets and large company debt loads.

The companies

Raw material costs are up, energy prices have soared (especially in Ontario) and weak market demand continues to strain profits.

The small towns

While large companies can absorb the cost of mill shutdowns and write-downs, small towns face a huge impact in losing a major employer.

The politics

Companies have turned up pressure on government for breaks on energy costs, while politicians threaten retribution if mills are closed. (*)

A butterfly map of America's green space

By Madeline Bodin | Contributor to The Christian Science Monitor

They arrive in wooden drawers with glass tops and in glassine envelopes - sometimes by the truckload. Last year, 333,000 butterfly and moth specimens were sent to the Florida Museum of Natural History in Gainesville.

But where once the delicate specimens were catalogued and, sometimes, displayed, they're now playing a new role: nature's telltale.

Butterflies are good environmental indicators, biologists say. Tracking the types and numbers of butterfly species across time and space can provide early warnings when something is amiss. That's why Jacqueline Miller, cocurator of the museum's McGuire Center for Lepidoptera and Biodiversity, is using its more than 3.5 million specimens to create a detailed national butterfly database.

If it succeeds, the United States will have in place a biological gauge to measure everything from the health of prairies to changing weather patterns. It will also be following in the footsteps of Canada and Mexico, which already have butterfly databases.

"People think these are dusty old things," Dr. Miller says. "But there is a lot of information locked in these collections."

For example, many butterfly species rely on one family of plants for survival. Often, these plants are found only in a particular habitat (such as prairie or tropical rain forest), and in a certain temperature range. So by tracking the butterfly population in a certain area, scientist can tell, for example, that the tall-grass prairie is quickly disappearing from a broad swath of North America. Or that the long-term weather patterns in an area have shifted over several decades.

Now Miller works weekends adding information from the McGuire Center collection into her database.

The Mexican and Canadian databases include the date and location of where the butterfly was observed or collected. They have already answered such questions as how much of the vital habitat for endangered Canadian butterflies is already protected in national parks. (Answer: very little.) The reasons the US lags behind its North American neighbors in tracking butterflies are as complex as international politics and as simple as money and logistics.

While Miller won't need cooperation from many other collections in the US to make her national butterfly database comprehensive, the amount of time and energy needed for data entry is daunting.

Canada's database contains about a half-million records, says J. Donald LaFontaine, a research scientist at the Canadian National Collection of Insects at Agriculture and Agri-Food Canada in Ottawa. The US specimens in the McGuire collection may be twice that number. The center's butterfly and moth collection is the second largest in the world. Only the Natural History Museum in London has more.

Miller plans to donate her time, and can count on dozens of colleagues and students to help enter data, but she says it will still take $250,000 to $400,000 to get the project off the ground. Miller applied to the National Science Foundation (NSF) for funding in years past, but was rejected.

In Mexico, the federal government contributed much of the funding for its database, as well as for databases of mammals and birds. The project is an effort to comply with the Convention on Biological Diversity, known as the Rio Convention. The treaty mandates the creation of a worldwide biodiversity database.

The Canadian effort was also motivated by the Rio Convention, says Mr. LaFontaine. The Canadian government seeded the butterfly database as the pilot project for a nationwide biodiversity database, which is linked to the global database. "My guess is if we had to go through our equivalent of the NSF, we would still be waiting," says LaFontaine.

Although the US has not ratified the Rio Convention, some federal agencies are working to improve access to biological information about butterflies. The US Geological Survey's National Biological Information Infrastructure (NBII) recently took over hosting a 10-year-old attempt to get nationwide butterfly information on the Internet. Currently, the project's website (www.npwrc.usgs.gov/resource/distr/lepid/bflyusa/bflyusa.htm) is more of an electronic book than a database. Hyperlinks take users from page to page. Maps of butterfly ranges are by county and are static. The website was last updated two years ago.

Revamped by an NBII team in Bozeman, Mont., a new version will feature maps that reflect the latest records, and will be easier to update. The new site is expected to debut in September.

The founders of the project, called Butterflies of North America, would like to add features similar to the Mexican and Canadian databases, reports Kelly Lotts, the science content specialist at the NBII's Bozeman location, but adding those features will take money that isn't available now.

Miller plans to resume her quest for funding this winter. Meanwhile, she is diligently entering data on the collection's butterflies from northern Mexico. Backed by the same sources funding the rest of the Mexican database, her work will become part of the center's database as well as being added to Mexico's.

"We've tended not to sell our programs as well as we should," Miller says. She suspects that marketing, a concept almost alien to butterfly scientists, is needed. "We need to make everyone think about how important these species are to our lives."(*)

Less talk, more action (07/05)

By KELLY LOUISEIZE and IAN ROSS

A forestry stakeholders group might not have achieved total consensus on what ails Northern Ontario’s struggling forestry sector, but almost all agree Queen’s Park needs to act quickly to come to the industry’s aid.


The Minister’s Council on Forest Sector Competitiveness, a cross-section of industry, First Nations, labour, environmental and municipal leaders, publicly released their report June 13 with 26 recommendations on how to strengthen and diversify this resource-based economy.

Most say Natural Resources Minister David Ramsay’s pledge to deliver $350 million in government loan guarantees is not the answer.

Marvin Pupeza, a Communications, Energy and Paperworkers (CEP) Union national rep, felt the minister’s response to the council’s report was long
on rhetoric, but short on details.

His union wants a province-wide audit of the wood supply because of the ongoing conflict between government and industry over how much commercially viable fibre is available.

The CEP, which represents 5,000 forestry workers in northwestern Ontario, organized a rally of 600 placard-waving members to greet Ramsay in Thunder Bay June 13.

Pupeza was disappointed Ramsay made no mention of an audit in his remarks to the membership.

He says the loan program does nothing to deliver immediate relief to an indebted industry. Neither does it address the core problems of high electricity rates and wood delivery costs.

“Unless those two issues are addressed, why would anyone put money into a sinking ship?”

He calls for the government to take immediate action to ensure the forestry sector’s survival and stability.

Industry has ‘maybe weeks’ to live: CEP “This industry does not have months, it’s got maybe weeks.”

The Ontario Forest Industries Association says there are 12 mills in Northern Ontario at risk of closure. That could result in up to 7,500 direct layoffs and the eventual loss of 20,000 indirect jobs across the province.

About 2,200 jobs have been lost in the region due to mill shutdowns over the past two years.

Many northwestern Ontario workers are concerned about Ramsay’s support for a proposed $235-million Oriented Strand Board (OSB) plant to be built by Kruger Inc. in Greenstone by 2007. They say it may threaten the hardwood supply for Buchanan Northern Hardwoods and other area mills.

Pupeza says Queen’s Park’s focus must be on saving existing mills, not helping create new mega-mills.

“The political will has to be there and identify that there is a crisis in the Ontario forest industry.”

Less adversarial dynamic needed

For logging contractors like Geoff Meakin, a co-author of the report, a more streamlined and less adversarial regulatory relationship with the MNR would allow harvesters to go about their work more efficiently.

“We are not two separate identities,” says the president of Meakin Forest Enterprises in Sault Ste. Marie. “We need (the MNR) to be more conciliatory towards the forest industry and realize it is their bread and butter as much as it is ours.”

Transportation issues are paramount to Meakin, who says the cost to haul logs from the bush to the mill has sky-rocketed in the last three years to $55 per cubic metre.

While access roads and bridges in Crown forests are built to government standards, it’s the industry that is paying the full price of their construction and maintenance.

As recommended, Meakin would like to see Queen’s Park pick up 100 percent of primary road costs, and about half the cost associated with secondary access roads.

Brian Nicks, Domtar’s director of sustainable forest management in Nairn Centre, concurs that the government needs to become involved in sharing costs for road-building.

Logging roads open up the backcountry of Northern Ontario and are often used by prospectors, trappers, sportsmen and outdoor enthusiasts.

One short-term solution being recommended is to institute a 50-percent rebate on the provincial fuel tax for off-road hauling.

“The companies built and maintain those roads at their own expense, so it’s hardly a rationale for charging us a provincial fuel tax on that portion of the haul,” says Nicks.

The off-highway portion can be documented with GPS systems, audited, and the tax rebate can result in millions of dollars in savings for companies.

Many companies have reduced credit ratings

Nicks, a 28-year professional forester who helped draft the report, says the government’s initial response “doesn’t address industry’s needs head on.

“Loan guarantees are fine, but many of our companies have had (their) credit ratings reduced and we have fairly high debt-to-equity ratios. Borrowing more money isn’t necessarily a good thing right now.”

He adds any direct government investment must be carefully considered lest they be construed as a subsidy subject to U.S. countervailing duties.

To tackle high electricity costs, Nicks suggests exploring the NDP-supported concept of regional or local energy markets to capitalize on the low-cost generation of hydroelectricity.

Northern Ontario production gets pooled in the Ontario-wide grid, he says and, when combined with more expensively produced forms of power, like nuclear, the prices escalate.

“As long as (our) industry is part of a broader pool, we have to compete with other industries and domestic users for the available supply and we don’t get a break.”

Nicks says there appears to be no short-term fix for installing cheap additional capacity. But the government must re-define the market in some way so industry can take advantage of lower generation costs.

Ontario investment into co-generation projects would help, he says. Domtar has had a biomass wood waste project on the books for a number of years.

Capital dollars would help

Nicks says in Scandinavian countries, governments contribute 35 percent capital grants toward co-generation facilities that burn forest slash and bark. “There are opportunities there just beyond the margins of economics that, with capital assistance, we’d be over the hurdle.”

On the forest inventory end, Nicks says there are regional shortages and problems with old forest management data in some areas, but he believes Ontario’s forest management planning system is sound and, generally speaking, the fibre is available.

The Pic River First Nation is one of two Aboriginal groups serving on the council. The band says the Ministry of Natural Resources and the industry are not addressing some basic rights promised their community years ago.

The community’s economic development officer, Byron LeClair, says in 1994, the Ministry of Environment established Declaration Order 71, which et out terms and conditions for the Ministry of Natural Resources to enter into negotiations to identify and implement ways to achieve equal participation with First Nations through benefits and licensing.

“That has not happened.”

The band chose not to be a signatory to the minister’s report, along with the Industrial Wood and Allied Workers of Canada.

Often lauded by Queen’s Park as “the poster child for Aboriginal economic development”, LeClair says, Pic River’s voice has not been heard when it comes to participating in the White River Forest Management Unit.

He wants 50,000 cubic metres of hardwood that was promised to them 10 years ago and is ready to urge the community to exercise their constitutional rights and harvest the resource, since the band has been refused a licence too many times to count.

“If the Ministry (of Natural Resources) wants...to stick their head in the sand, then they are not addressing the real issues.”

Forester Jim Miller, general manager of Clergue Forest Management in Sault Ste. Marie, encourages more flexible government regulations based on a company’s track record of compliance.

If a company has a clean record and performs work according to Ministry standard, more preferential treatment towards renewal of their Sustainable Forest Licences should be given.

“If people are not doing what they’re supposed to be doing, ultimately there are some consequences.”

Sue Prodaniuk, a Bowater Inc. spokesperson, agrees Ramsay’s promise of Ontario-backed loans doesn’t do anything to address the company’s more immediate needs.

“We’re looking for actions that will increase our competitiveness in this marketplace,” namely reducing direct costs in energy and wood delivery costs in transporting fibre from the forest to the mill.

The Thunder Bay pulp and paper producer doesn’t release any operating information, but Prodaniuk says the cost is “significant.”

Prodaniuk says Bowater, which placed a representative on the council, is satisfied with all the recommendations and is looking forward to their implementation.

“The report is very comprehensive,” says Prodaniuk, “with good recommendations that, once acted upon, this industry will be on road to recovery.”

http://www.mnr.gov.on.ca/MNR/csb/news/2005/jun13nr_05.html