West Coast mills in general, including those in the Cowichan Valley, will not be as hard hit as some by American tariffs, as the sector has worked hard to diversify their markets. (Citizen file)

West Coast mills in general, including those in the Cowichan Valley, will not be as hard hit as some by American tariffs, as the sector has worked hard to diversify their markets. (Citizen file)

Local forestry industry warily eyes American tariffs

Layoffs feared, but many confident lumber market less reliant on American sales

Time will tell if forestry workers in the Cowichan Valley will see layoffs after the American decision this week to impose heavy tariffs on Canadian softwood lumber exports, according to a local union official.

Brian Butler, president of United Steelworkers Local 1-1937, which represents hundreds of unionized forestry workers in the Valley and the region, said lumber tariffs are always a concern for the industry.

“Obviously, the companies are not going to sell their lumber if they are going to lose money,” he said.

“We’re hoping there’s going to be an early solution to this. We have some seasoned negotiators but we have a different administration in the U.S., so we just don’t know when this will be resolved.”

But Butler said the coastal industry has been preparing for American tariffs for some time and has been actively diversifying into other markets around the globe, so they are less reliant than in the past on American markets.

“Many of the mills on the Island, including Western Forest Product’s sawmill in Cowichan Bay, which currently has a large market in China, are now selling in other markets around the world,” he said.

“But these new tariffs could still become difficult for some of the companies and their workers.”

The U.S. announced this week that it was going to impose tariffs of up to 24 per cent on Canadian softwood after American President Donald Trump decided that the Canadian industry is unfairly subsidized by Ottawa, which he claims is hurting the American industry.

The trade of softwood lumber and disagreements between the two countries started back in the 1980s, and the last agreement expired two years ago.

In spite of the softwood concerns, Catalyst Paper, which owns and operates the pulp and paper mill in Crofton, has recently received some good news from the U.S. Department of Commerce.

The DOC has determined that Catalyst received a “negligible amount of subsidies” from the province or Ottawa during the time period that was reviewed by the department.

That means, going forward, Catalyst will be excluded from any American countervailing duty on its supercalendered paper.

“We are pleased with the result, which confirms the DOC’s preliminary finding in November that Catalyst did not receive any material subsidies from the province or the federal governments,” said Joe Nemeth, Catalyst’s president and CEO.

Western Forest Products, the largest lumber producer on B.C.’s coast, operates four sawmills in or near the Valley, including ones in Cowichan Bay, Ladysmith, Chemainus and Saltair.

A WFP official said on April 25 that the company has no statement at this time on the issue of American tariffs as it is focused on the death of three of WFP’s employees in an accident on northern Vancouver Island earlier this week.

But Don Demens, WFP’s chief executive officer, said in February that the company was “not happy” about the possibility of the imposition of heavy American tariffs, but he’s confident WFP can deal with it.

Demens said at the time that WFP has a strong balance sheet, has significantly diversified its markets so there’s less reliance on the U.S., and has invested millions of dollars into sawmill operations to ensure they are efficient and competitive.

After the last softwood lumber agreement was finalized in 2006, WFP received $124 million in refunded softwood lumber duties it had paid to transport lumber to the U.S., which was used to help pay down WFP’s debt by a significant margin.

Susan Yurkovich, president of the BC Lumber Trade Council, said the duties are “unwarranted”.

“American demand for lumber exceeds what the U.S. lumber industry currently produces,” said Yurkovich.

“And, with housing and construction starts on the rise, demand for lumber is expected to continue to grow in the years ahead. The fact is, Canadian lumber imports don’t pose a threat to the U.S. lumber industry. There is enough North American demand to grow the U.S. industry while also allowing Canada to supply its U.S. customers as we have been doing for decades.”