WSCA 2008 BC Silviculture Strategic Summit and planting forecasts for 2010

As many of you know sowing requests for the 2009 planting season indicate one of the lowest annual planting programs in two decades. Our estimate comes in at under 200 million seedlings total including projections for a very meagre ’09 summer plant.

WSCA forecasts provincial planting program to drop to 150 million seedlings in 2010!

Save 2009.pdf

Western Silvicultural Contractors’ Association

5 August 2008

To BC Forestry Contractors and Nurseries:

RE: WSCA 2008 BC Silviculture Strategic Summit and planting forecasts for 2010

The WSCA 2008 Silviculture Strategic Summit will be held:

DATE: Wed August 27, 2008

TIME: 8:00 am to 5:00 pm

PLACE: Ramada Inn (Kamloops)

555 West Columbia Street
Kamloops, BC V2C 1K7 Canada
Tel: 250.374.0358 Fax: 250.374.0691
Web: ramadainn.kamloops.com
Email: ramada.kam@shawbiz.ca

Please make your reservations now to take advantage of the special room rate of $117.00.

There is no registration fee for this meeting. WSCA members and non-members can attend. However, please advise us of your intentions so we can plan accordingly. RSVP.

WSCA forecasts provincial planting program to drop to 150 million seedlings in 2010

Preparing for this year’s critical WSCA silviculture sector strategic summit we have used the harvest billing system to predict the likely demand for sowing request for 2009 and the subsequent planting program for 2010. Our conclusion is that the steep decline in industry and government reforestation work will continue into 2010 dropping to 150 million seedlings that year. This amounts to about a 40 per cent decline in the provincial planting program over the next two years with the 2009 planting season estimated to be under 200 million seedlings. This year the number planted is estimated at 250 million. (See our attached report for more of the details.)

So what does this mean for our sector? Are we headed into a “last man standing” scenario similar to what the panel makers and dimension lumber sector did when they saw the boom going out of the US housing market? Some of them kept up production, flooded the market, lowered prices even more and drove themselves out of business. The consequences of that behaviour are still playing out particularly among some medium-sized producers. Are we doomed as a sector to repeat the same mistakes and suffer the same predictable fate?

Let’s not forget that these mills had far larger margins to buffer the commodity market cycles than many on the silviculture service side do. And we are looking ahead at two of the worst years for growing and planting seedlings in two decades. With this in mind anyone who intends to stay in business through the next few years has a stake in how all of us collectively behave. It seems logical and necessary then for the industry to try and make sense of the future and seek some strategies to mitigate what looks like a potentially ruinous run. Broadly stated that is the purpose of this year’s Summit and I would think that figuring out how to stay in business over the next few years should be a strong enough incentive for most of us to attend this meeting.

Interestingly, not all the news is bad. Looking ahead three to five years it is possible to see a dramatic shift back towards a robust silviculture sector. It won’t be the same sector. In fact it might even be better, if not just more interesting. The province’s green house gas initiative, the potential funding streams through carbon credits, the possible redistribution of tenure, new emerging industries based on bio energy and the startling possibility that properly stewarding forests might be seen as an inherently valuable if not profitable enterprise on its own all present a sunny horizon for those of us prepared and preserved to appreciate it.

Nevertheless some skeptics will dismiss any attempt today by this industry to cooperate in its best collective interest as a fallacy that will be exposed at the first tender opening. And no doubt some low bidding will happen in the future. But this need not be the round of ruinous competition that the old supply and demand market dynamics would dictate. If enough of us have the wit to appreciate that beyond self-preservation we have a larger obligation to preserve the overall fitness of our sector it might just temper the worst tendencies we are capable of in the market. I think that as a sector that competes as fiercely for work as we do it is commendable that a good majority of the players have consistently demonstrated they are willing to overcome their grudges and mutual skepticism to work constructively together, even just to share information, as we have seen from the previous Summits. As a result both previous Summits had a beneficial effect on the market. This Summit then is once again an appeal to everyone’s better nature and I am hoping to see a strong turn out from across our industry.

Over the next few weeks we will be doing our best to reach silviculture sector businesses across B.C. We want to discuss with each of you, as much as time and practicality will allow, your take on the future of the industry, your part in it and what you think are the main things we need to do collectively to stay in business. We will also use this opportunity to outline the work the WSCA is involved in to drive more silviculture work into the market particularly for 2010 as well as some of the long term strategies we have been lobbying for. The results of this exercise will set the final agenda for the Summit. If you want to contact us on your own email Dave Humphries at awakeone@telus.net to arrange a call.

Here are some issues that have come up so far based on conversations with contractors:

What can be done to get industry back in the habit of keeping current with their silviculture obligations? There is considerable statistical and circumstantial evidence that many companies are deferring silvicultural obligations or moving to less reliable regeneration strategies. These short term tactics, though legal, but not biologically sound, not only have a depressing effect on our sector, they may also have long term effects on the future abundance and diversity of our forests. Should the appraisal system be set up to withhold licensee accrual of silviculture costs until they have actually practiced some convincing silviculture? The move to results-based forestry was predicated on a quid pro quo: government would get out of telling foresters what to do in exchange for more efficient, effective and innovative forestry on their part. So far what we have seen is more quid than quo.

What can be done to address the exposure of contractors to client bankruptcies? For the most part the forfeiture of the forest license is seen by the Crown as a sufficient bond to ensure silvicultural obligations are met. The guarantee is that the silviculture obligation passes on to the next recipient. But this does little to protect unpaid firms that have provided services or products to reforest for a license holder who goes under, as we have seen. Nor does it do anything for the resource when the license is held up in tortuous legal procedures. Can a system of silviculture deposits or bonds be put in place to ensure that contractors don’t end up paying for managing and restoring the Crown’s resource when license holders go out of business? What can be done to ensure the resource isn’t degraded while courts or other processes sort out the bankruptcy and transfer of the license?

The silviculture planting sector has just recovered from a decade of not keeping up with the cost of living, particularly in terms of wages for employees and profits to owners. What will be the effects of the projected down turns on our ability to recruit and retain quality workers? How many contractors are prepared to stick out at least two more years of reduced work?

Are contractors prepared to hunker down and accept lower volumes of work as the sector shrinks as opposed to an internecine bidding war over market share and volume?

The province is offering $26-million in employment bridging work to beleaguered forest communities over the next three years. This work will involve reforestation, fuel management, trail building and stand tending; activities typically done by silviculture workers. Is this just another make-work exercise similar to the NDPs past programs where one group of forest workers, the silviculture sector, will have their work transferred to another group of forest workers, laid off lumber and harvest workers disguised as a social program? Or is it an opportunity for forestry contractors to ally with communities and help design and deliver projects to keep their own crews and other workers busy doing meaningful forestry work?

What needs to be done to move government beyond its modest “measured approach” that will not see the Forest For Tomorrow program plant more than 400,000 hectares over the next 20 years?

What is the WSCA doing behind the scenes to improve the outlook for planting in 2010 and beyond?

Why aren’t the millions of dollars being built up as carbon credits being used to restore the environmental disaster of the mountain pine beetle plague?

Is the promise of bio-energy just more talk or is there a real opportunity for those who see it? What effect would a robust bio-energy sector have on the silviculture sector?

Will the talk of tenure reform create opportunities for forest stewardship contracts? Could today’s silviculture contractors undertake these kinds of stewardship contracts and what would they look like?

What opportunities for silviculture partnerships are there with First Nations? They have land, more political leverage than us and a strong incentive to see an active MPB restoration program.

In many cases licensees continue to pressure service and seedling providers for lower prices and other concessions. Some have argued that their programs are reduced due to the downturn experienced by their company. But an examination of their harvest billing records show their description of the situation is not consistent with their actual harvesting. In two cases examined so far, the WSCA has found the licensee’s harvest volume actually had increased over the last year or at least remained at previous levels. In other words the planting levels could have at least remained the same or higher rather than lower as the company foresters were insisting. Should we be examining this possible trend more extensively? What is going on?

JOHN

John Betts
Executive Director
Western Silvicultural Contractors’ Association
Ph: 250-229-4380