In an open letter to BC forest companies and licensees the WSCA is asking them to adopt prompt and regular payment protocols to reduce silviculture contractors’ and their employees’ exposure to the risk of going unpaid for completed contract silviculture work.

Payment Letter.doc

An open letter to all forest companies and silviculture contractors in B.C. from the Western Silvicultural Contractors’ Association.

9 March 2009

WSCA 2009 proposed payment protocol for silviculture contract work

At last month’s 2009 WSCA annual AGM and conference WSCA members discussed how to best ensure payment for completed silviculture work to contractors and their employees. With these uncertain times the matter was considered a pressing priority that needed to be addressed immediately.

As a result the WSCA is proposing that industry accept and adopt as soon as practicable a payment protocol structured around the straightforward practice of paying contractors 90% of planted trees, or other silviculture work completed, at average bid price, per tree or hectare, on a bi-weekly basis.

This system is used by many licensees already and has shown it can reduce their processing costs and expedite cash flow for contractors. The WSCA is proposing that the whole industry adopt this as a best practice for silviculture work payment including other activities besides tree planting, such as stand tending and site preparation. Accordingly, the WSCA is sending this open letter to all licensees proposing this invoicing and payment protocol for the 2009 silviculture field season.

The silviculture industry is characterized by a cost structure that is overwhelmingly tied to its labour force. Those employees must be paid every two weeks in accordance with employment standards law. These depressed economic times and tight credit dictate the need for consistent cash flow for silviculture contractors to meet their payrolls and instill confidence in an increasingly wary workforce to stay in the sector.

Prompt, regular payment to silviculture contractors is essential for the success of the 2009 field season.

In practice the proposed plan would look like this. Time lines and production rates for all silviculture contracts are worked out prior to start up in order for seedlings to be thawed or lifted. It is a simple process to adapt the seedling order schedule to match a logical flow of invoices and payment. Just prior to project commencement, prewritten bi-weekly invoices for the full contract period are submitted with realistic weekly production totals multiplied by contract average bid price and to be paid out at 90%.

This process enables a stable contract payable schedule as well as insuring the client has a 10% buffer to compensate for any variations in production or penalties. Payrolls are then met and contractors’ and workers’ exposure to insolvency is reduced. When all deliverables are received to the satisfaction of the client and the individual block calculations made and tallied, the final 10% owing is payable. A vigorous silviculture industry is essential for the long-term health of the forest industry. We will continue to offer a high quality, cost effective service through these dismal market conditions. But we need a matching commitment from licensees that we will be paid promptly for meeting our part in maintaining the public good on provincial lands.

Moreover, our workforce needs to know that, despite the doom and gloom in the forest industry, measures are in place to ensure that their small business employer will be able to meet their payroll obligations. With that we can all look forward to better times.

On behalf of the WSCA Board of Directors,

John Betts
Executive Director
Western Silviculture Contractors’ Association