The closure of Canfor's mills in northern BC is another episode of the Canada-US lumber dispute, and another blow to forestry communities.
Here’s yet another blow to the struggling forest industry in British Columbia — and to hundreds of forest workers in the province’s north — with two more sawmills preparing to close.
Canfor Corp. is set to pull the plug later this year on its Plateau mill at Vanderhoof and its Fort St. John operation, affecting about 500 workers in total.
The company cites weak markets, limited timber supply, and regulatory issues, and now, a final blow of “punitive U.S. tariffs” on imports of B.C. and Canadian softwood.
Those tariffs have gone up from 7.99 percent to 14.54 percent, benefiting the U.S. forest sector, but also hitting U.S. house-builders and home-buyers as well as B.C. and Canada.
But that 14.54 percent is an “all-others” rate; Canfor itself has actually been paying 16.58 percent in combined duties.
And the company said punitive U.S. tariffs “are expected to double again next year.”
Forest commentator David Elstone of the Spar Tree Group, a registered professional forester, says: “Doubling the current duties would suggest that B.C. lumber producers could be facing duties of ~30 percent a year from now. If conditions as described by Canfor continue, and should 30 percent duties become reality, it is plausible that most sawmills in B.C. will be challenged to continue operating.”
Announcing the closures, Canfor CEO Don Kayne said: "We are devastated by the decline in our province's foundational forest industry, and we recognize the impact these closures will have on our employees and their families, as well as our First Nation partners, contractors, suppliers, communities, and customers.”
Vanderhoof mayor Kevin Moutray said: “Obviously, 260 direct jobs (lost), plus contractors, is a huge blow to families. And from the municipal taxation side, it’s almost $900,000 (in) taxes that we’ll be missing from the budget.”
Canfor also announced that “due to persistent weak lumber markets,” it will reduce production at its southern U.S. operations.
Canfor said of its B.C. business: “In recent years, increasing regulatory complexity, high operating costs, and the inability to reliably access economically viable timber to support our manufacturing facilities have resulted in hundreds of millions of dollars of losses in our B.C. operations.”
David Elstone added: “Since the NDP came to power as the provincial government in 2017, some 30 sawmills in the province have been impacted by indefinite or permanent closures. These closures represent an estimated reduction of 35 percent of B.C.’s sawmilling capacity.”
He also noted: “British Columbia cannot negotiate an international trade agreement like a softwood lumber deal by itself, but it can certainly change course on the regulatory and cost fronts.
“My recommendation is to immediately take action by setting up an emergency task force to begin addressing the issues directly (regardless of the election). Without a doubt, more closures are expected before the end of this year.”
It being a provincial election year, B.C.’s forest minister, Bruce Ralston, was quick to put out a news release after the Canfor closures were announced: “We will continue to fight unfair duties and stand up for forestry workers.”
But all B.C. can do about the tariffs is protest to the U.S. ambassador (which Premier David Eby had already done) and ask Ottawa to negotiate with the U.S. and/or challenge the U.S. on the tariffs.
All Ottawa has said is: “We will always fight for the best interest of Canadians and continue to use all available avenues to vigorously defend the workers, businesses, and communities who rely on softwood lumber for their livelihoods.”
The dispute has been ongoing since the early 1980s, with the Americans insisting that the Canadian lumber industry is unfairly subsidized by federal and provincial governments.
The U.S. position is that the prices paid by forest companies to harvest timber on Crown land in Canada (through ‘stumpage’ fees) are set by governments, and not through the competitive marketplace — which is the norm in the U.S., where most forest land is privately owned. In B.C., which is the major Canadian exporter of softwood, 95 percent of forests are publicly owned.
The U.S. claims that the Canadian system amounts to an unfair subsidy and is thus subject to tariffs to offset the subsidy and bring the price of the commodity back up to market rates.
Those tariffs have already cost Canadian producers $10 billion since 2017 and have caused thousands of job losses in Canada.
The B.C. Council of Forest Industries (COFI) followed up Canfor’s announcements with a three-point election-year message to B.C. politicians and candidates:
- Stabilize and Increase Economic Fibre Supply: The current allowable Annual Cut (AAC) is approximately 60 million cubic meters. However, in 2023, the actual harvest fell to 35 million cubic meters and could be as low as 30 million cubic meters this year. Setting a target for a consistently available level of harvest is essential to sustain a viable forest sector, keep primary and value-added mills operating, and preserve jobs and community stability.
- Advance New Agreements with First Nations: Co-development of a more equitable and transparent forest revenue framework will ensure meaningful benefits are shared with First Nations. New approaches to First Nations stewardship, forest tenure, treaty, and equity and investment will support economic reconciliation and build stronger partnerships with Indigenous communities.
- Accelerate Innovative Forest Management: Embracing new approaches to forest management and expediting land use planning can support wildfire mitigation, biodiversity conservation, and climate adaptation, while providing a reliable supply of fibre to the industry.
Later, the Tsay Keh Dene Nation announced that it has purchased a forestry harvest license from Canfor that allows for an annual allowable cut of 432,072 cubic meters of timber. It’s in the Mackenzie Timber Supply Area in northeast B.C.
COFI also issued a report saying the province’s forest industry “is poised to play an important role in providing affordable, climate-friendly housing.”
But, it added: “The challenge is to realize this potential.”
And it noted: “Many companies perceive the current uncertainty in B.C. fibre supply as an acute risk.”
Its recommendations included the following:
- “First, to keep B.C.’s mass timber supply chain on a growth trajectory, creating a provincial knowledge ‘hub’ could further develop familiarity among supply chain players. Expanding B.C.’s market ‘pull’ programs beyond our borders — possibly by partnering with similar programs in other jurisdictions — would help the industry reach efficiencies of scale faster.
- “Next, stabilizing B.C.’s timber supply and creating a predictable policy environment will attract the investment needed for the growth of the wood products manufacturing sector in B.C.
- “Finally, building relationships throughout the supply chain can both help stabilize the fibre supply (i.e., through accelerating the land use planning process) and help connect different players within the forest products supply chain.”
On timber supply, regulatory issues, and agreements with First Nations, over to the B.C. government.
And on the 40 years of U.S. tariffs on our softwood, over to Ottawa.