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.
