The Culmination of the Contractor Sustainability Review What is the Coast Forest Sector Revitalization Initiative? - Spring 2019
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[ INSIDE BC is Not in Business Without a Working Forest ]
www.tla.ca
Spring 2019
The Culmination
of the Contractor
Sustainability Review
What is the
Coast Forest Sector
Revitalization Initiative?
PM # 40010419
Spring 2019 Truck LoggerBC 1
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2 Truck LoggerBC Spring 2019
SPRING 2019 Volume 42 Number 1 www.tla.ca
CONTENTS
20
Columns & Departments Cover
7 TLA President's Message 34 Making it Work:
Forest Sector Job Loss—Check the Facts The TLA’s 76th Annual Convention &
8
Mike Richardson
TLA Executive Director's Message
Trade Show
Jennifer Kramer
A Moratorium on Harvesting
Old Growth is Not the Answer
David Elstone Features
10 Southern Interior Perspective
20 Forest Community: Terrace
Why Join a Professional Robin Brunet
Association? Advocacy
Todd Chamberlain
23 The Culmination of the Contractor
13 North West Perspective Sustainability Review
Jim Girvan
Increased Log Exports in the Northwest 27 A Common Vision for the Province
Are the Result of Mill Closures— Minister Doug Donaldson
Not the Cause 31 What is the Coast Forest Sector
Trevor Jobb
Revitalization Initiative?
14 Northern Interior Perspective Jim Girvan
An Industry in Transition 38 Will Forestry Benefit from Professional
Paul Schuetz Reliance Review?
17 Business Matters TLA Perspective
Business Practices for Sustainable Contractors 40 Working Relationships—Making it Work
Part Four—What Are Your Financial Robin Brunet
Statements Telling You? 42 Making it Work in New Zealand
Chris Duncan Paul Schuetz
18 Safety Report 44 BC is Not in Business Without a Working Forest
TLA Perspective
WorkSafeBC Forestry High Risk Strategy
Update for 2019 48 A Meeting with Minister Donaldson
Budd Phillips Jennifer Kramer
50 Is First Nations the Solution to Job Shortage?
Ian MacNeill
Cover Photo: Brian Dennehy
Spring 2019 Truck LoggerBC 3
The Truck Loggers Association Interior Logging Association
2019 Executive & Directors 2018-2019 Board of Directors
PresidentMike Richardson Chairman Randy Spence
Vice PresidentBill Nelson First Vice Chairman Len Gudeit
Past President Jacqui Beban Second Vice Chairman Ron Volansky
Executive DirectorDavid Elstone Past Chairman Reid Hedlund
Industrial DirectorsSig Kemmler Directors Guido Claudepierre
Dave McNaught Dennis Cook
Jen Norie John Drayton
Clint Parcher Randy Durante
Mark Ponting Matt Edmondson
Aaron Service Frank Etchart
Barry Simpson Shane Garner
Dorian Uzzell Scott Horovatin
Matt Wealick Lennard Joe
Associate Directors Tyson Lambert Jeff Kineshanko
Tim Lloyd Hedley Larsen
Brian Mulvihill Bill McDonald
Carl Sweet Tim Menning
Lawrence Van De Leur General Manager Wayne Lintott
Editorial Board Jacqui Beban Assistant Todd Chamberlain
Chris Duncan General Manager
David Elstone Administration Nancy Hesketh
Jennifer Kramer
Wayne Lintott Interior Logging Association
Brian Mulvihill 3204 - 39th Avenue
Mike Richardson Vernon, BC V1T 3C8
Dorian Uzzell Tel: 250.503.2199 Fax: 250.503.2250
E-mail: info@interiorlogging.org
Website: www.interiorlogging.org
SPRING 2019 / VOLUME 42 / NUMBER 1
Editor Jennifer Kramer
Editorial Consultant Jim Girvan
Contributing Writers Robin Brunet Trevor Jobb
Todd Chamberlain Jennifer Kramer
Doug Donaldson Ian MacNeill
Chris Duncan Budd Phillips
David Elstone Mike Richardson
Jim Girvan Paul Schuetz
TUG & BARGE
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Tel: 604.684.4291
Email: trucklogger@tla.ca
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Truck LoggerBC magazine is published four times a year by the
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Association. Its editorial content seeks to reflect issues facing
the industry and to provide readers with current information on
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E-mail: contact@tla.ca Website: www.tla.ca
4 Truck LoggerBC Spring 2019
from the Editorial Board DESK...
W elcome to the Spring 2019 issue of Truck LoggerBC.
This issue provides an overview of the “Making it
Work” themed sessions and exciting events from the TLA’s
In our ongoing effort to protect our working forests in
the shadows of ENGOs’ high-profile efforts to ban old
growth logging, the “BC is Not in Business Without a
76th Annual Convention & Trade Show held in January. Working Forest” article provides the TLA’s perspective
The convention summary article shares highlights on the false claims and concerns they have raised. The
through photographs including the Premier’s address, TLA also provides its perspective on the regulations of
session speakers, the silent and live auction, scholarship the new Professional Governance Act (Bill 49) and its po-
recipients, winners of the trade show booth, and an intro- tential impact on timber harvesting contractors.
duction of the 2019-2020 Board and new Directors. Terrace is the featured forest community in this issue;
We also include two articles that delve further into the the evolving city that intends to stay true to its forestry
two topics addressed by Premier Horgan and Minister roots. Business Matters takes a look at what your finan-
Donaldson: the conclusion of the Contractor Sustain- cial statements are telling you, and the Safety Report pro-
ability Review, including the impact of the Premier’s an- vides WorkSafeBC’s Forestry High Risk Strategy update
nouncement of the elimination of the fair market rate test, for 2019.
and the newly announced Coast Revitalization Initiative. As always, I trust you find this issue insightful and infor-
The “Working Relationships—Making it Work” article mative. If you have any feedback or comments, please con-
summarizes the panel’s insightful discussion about how tact our director of communications, Jennifer Kramer, at
they are overcoming their relationships between con- 604-684-4291 (extension 2) or by email at jennifer@tla.ca
tractors and major licensees, which is one of the big-
gest obstacles facing the forestry sector. The summary
of keynote speaker Dale Ewers’ presentation, “Making it
Work in New Zealand,” shares how innovative and stra-
tegic changes to his logging operations improved safety
statistics and productivity.
Dorian Uzzell
Editorial Board Chair
Do you have trade
apprentices on your crew?
TLA member employees who are training in the
trades to work in BC’s forest industry qualify for
each $1,000 scholarship.
Find out more at tla.ca/scholarships
| | | @truckloggerBC | www.tla.ca
Spring 2019 Truck LoggerBC 5
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6 Truck LoggerBC Spring 2019
Mike Richardson TLA President’s MESSAGE
Forest Sector Job Loss—Check the Facts
I t was another great year at the
TLA’s 76th Annual Convention &
Trade Show. Judging by the calibre of
to the TLA’s proposed solution for our
skilled labour shortage. While it’s too late
to be included in this year’s budget, we’re
and paper mills accounts for another
38 per cent of job loss and these im-
provements contribute significantly
speakers, the full room at each session, assured it will be considered in the fall. to BC’s ability to remain competitive
engaging question and answer periods, The Premier also publicly announced in the global marketplace.
robust conversations and networking, the new Coast Revitalization Initiative • Increased productivity in logging
and all of the great feedback I’ve heard (CRI) (page 31). I’m happy to hear the accounts for another 27 per cent of
from many of the more than 1,200 del- government is dedicated to rebuilding a job loss and the increased mechani-
egates who attended, this year was a re- strong and healthy coastal forest sector; zation within the industry has made
sounding success. however, it was somewhat disappointing it a lot safer.
Combined, these specific changes point
While it is true log exports have risen in BC since 2000 to the fact that 92 per cent of the Statistics
Canada reported job loss between 2000
and provide an easy target for the job loss rhetoric, it and 2015 in the BC forest industry were
is not the entire story. as a result of productivity improvement
or mill closures following a reduction in
The silent and live auction combined that their rationale for the CRI is based the AAC.
raised more than ever at over $150,000. primarily on log exports and the jobs On the other side of the coin, a mere 4
Thank you to the donors and bidders for lost in the forest industry over the past per cent of job loss can be attributed di-
their generous contributions. I’d also like 15 years, notionally suggesting that these rectly to an increase in log exports with
to take this opportunity to thank the TLA jobs could be recreated with policy change the balance lost in secondary manufac-
staff who worked tirelessly to ensure all aimed at a reduction in log exports and an turing. As such, we caution the Premier
three days were enjoyed by everyone. increase in domestic processing. that as the CRI is rolled out that realistic
At our AGM, we said good-bye to While it is true log exports have risen benchmarks for success are established.
three board members; George Lambert, in BC since 2000 and provide an easy In the same vein, we also caution the
Doug Sladey, and Adam Wunderlich, and target for the job loss rhetoric, it is not government on their old growth strategy.
I would like to thank them for dedicating the entire story. Over the past year, I have been amazed at
their time and knowledge to the board. Based on TLA analysis, yes, log ex- the amount of media coverage garnered
We also welcomed two new board mem- ports rose from 3 per cent of the provin- by environmentalists protesting old
bers, Tyson Lambert of T-Mar Industries cial harvest to 9 per cent over 15 years growth logging, especially by how much
and Jen Norie of VIH Helicopters Ltd. and contributed to some job loss, but the that has been reported is inaccurate and
This year’s convention theme, “Mak- bigger contributors to job loss were re- catastrophizing information. One cam-
ing it Work,” was the catalyst for each lated to other industry changes over the paigner stated, “it’ll never grow back.” In
session’s topic, including the Premier’s same period. fact, forestry is the only natural resource
address at the sold-out Leaders’ Lun- Putting industry changes together with that is renewable; trees will always grow
cheon. The highlight, of course, was the job loss statistics reported by Statis- back. Our fear is that the new old growth
the culmination of the Contractor Sus- tics Canada and the conclusion drawn is strategy will result in further reduced
tainability Review when the Premier much different than typically reported: AAC and more jobs lost. Our hope is the
announced the elimination of the fair • A reduced harvest, primarily on the government will do their part to protect
rate market test (page 23), which drew coast (down 34 per cent) following our working forests.
a standing ovation from the more than reductions to the AAC following re-
350 delegates who attended. I strongly duction of the working forest land Mike Richardson, President, TLA
believe this announcement will pave the base, was responsible for 10 per cent Tel: 250.203.2649
way towards a positive change for con- of the job loss. Email: mike@tsibass.ca
tractor sustainability and the forestry in- • The reduced AAC and lower harvest
dustry overall. resulted in mill closures accounting
As a long-time advocate for the train- for another 17 per cent of job loss.
ing tax credit, I was also very pleased • Increased productivity in wood
to hear the government’s commitment manufacturing at BC sawmills, pulp
Spring 2019 Truck LoggerBC 7
David Elstone TLA Executive Director’s MESSAGE
A Moratorium on Harvesting
Old Growth is not the Answer
I am pleased to report that the TLA
membership’s advocacy voice is re-
sulting in change. At the 76th Annual
growth timber harvesting. Notwith-
standing whether those signatures even
came from BC taxpayers and voters,
kayakers, and wildlife viewing that rely
on access to the “wild areas” by using
forest service roads, all of which are built
TLA Convention & Trade Show, the it made me pause to think about the by loggers harvesting old growth forests
Premier and Minister of Forests both fi- weight of those 20,000 voices in a prov- and subsequently maintained by the for-
nally revealed significant updates to the ince of four million. est industry for continued access.
Contractor Sustainability Review (page For any of the 140,000 contractors When we take a look at how far
23). With the announced elimination of or forest workers who read about it, reaching the reliance and impact of our
the fair market rate test and other sig-
nificant policy changes, hopefully log-
ging contractors will have a reasonable
The single best way to create jobs is to increase the
chance at achieving financial sustain- harvest, or at least keep the amount of working forest
ability in their businesses.
I’m also very pleased another top ad-
we have today.
vocacy issue was addressed by the Pre- I suspect they would question where forest resource has on people, economic
mier, who acknowledged the current those signatures came from given that activity, and well-paying jobs, we can
acute skilled labour shortage in the for- the majority of BC’s population reside appreciate how important it is to con-
est industry and announced his commit- in urban areas and generally have very tinue harvesting old growth.
ment to look at TLA proposed tax credit little connection or awareness of the It is simple. None of this would exist if
solutions to this critical problem. resource sector and its significance to it weren’t for a forest resource sector that
Additionally, government revealed its those smaller communities or the prov- includes harvesting old growth timber.
Coast Revitalization Initiative, which will ince as a whole. It’s time we start remembering where
bring changes to long-standing log ex- So, should the TLA submit its own our incomes come from. Where our ser-
port and post-harvest utilization policies. petition? I would suggest it’s not nec- vices come from. Our working forest needs
With the limited information available, I essary when you look at the evidence. protecting from the efforts of a few that
hope that those changes do not gener- Premier Horgan, Minister Donaldson don’t have our provinces well-being in their
ate unintended consequences. Assum- and Minister Heyman need to take into best interest.
ing these changes don’t actually result consideration how the impact of land As sustainable forest stewards of the
in a negative harvest response, contrac- use planning for old growth forsakes the public forest resource in this province,
tors could benefit by handling upwards livelihoods of families in rural commu- we actively conserve old growth timber.
of an additional two million cubic me- nities. A moratorium on harvesting old The Great Bear Rainforest Act was cre-
tres through utilization changes in the growth and a sole reliance on second ated for this exact purpose; Old Growth
Coastal region. However, as we have long harvest timber is not the answer. Management Areas were created for this
advocated, the real solution lies in the Jobs directly related to the forest in- purpose; and many more other forms of
underlying issue of consolidated tenure. dustry on the Coast alone represent al- forest reserves and retention were creat-
While these issues have a huge impact most 20,000 workers. If each worker has ed and maintained so we will never, ever
on the forest industry, if we don’t have a family of four, that equates to 80,000 run out of old growth timber.
forests to harvest these policy changes people who would directly be affected by The Sierra Club should not make the
will be moot. Our working forest has a moratorium on harvesting old growth. news for sending 20,000 letters, they should
been reduced by 34 per cent over the We also need to consider all of the make the news for threatening the financial
last 15 years. The single best way to cre- indirect jobs and businesses associated livelihoods of British Columbians.
ate jobs is to increase the harvest, or at with the industry that support our com-
least keep the amount of working forest munities; like grocery stores, restaurants, David Elstone, RPF, Executive Director, TLA
we have today. and hotels; and the teachers employed to Tel: 604.684.4291 ext. 1
In February, I was disheartened to teach our youth; and the nurses and doc- Email: david@tla.ca
learn the Sierra Club gained media at- tors keeping our population healthy.
tention after delivering 20,000 protest Often forgotten are the relationships
letters to the offices of Vancouver Island between the forest sector and backcoun-
MLAs calling for a moratorium on old try tourism for skiers, mountain bikers,
8 Truck LoggerBC Spring 2019
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Spring 2019 Truck LoggerBC 9
Todd Chamberlain Southern Interior PERSPECTIVE
Why Join a Professional
Association? Advocacy
S ince joining the Interior Logging
Association (ILA) just over a year
ago, I have travelled from Smithers to
3. The workforce is aging and no one
is entering the industry to take their
place.
I can also be reached at our office at
250-503-2199 or by e-mail at todd@
interiorlogging.org if you would like
Chetwynd, to Cranbrook and all points 4. Relationships with the majors are me to visit your worksite to discuss your
in between. During these trips I had weak and there seems to be a gener- concerns and how the ILA can advocate
the opportunity to meet with hundreds al lack of respect for the contracting for you.
of people representing over a hundred community and their role is often
contracting-related companies, ranging looked at as replaceable. Todd Chamberlain joined the Interior Logging
from individuals, to those who manage 5. Declining AACs in the Interior Association (ILA) in March of 2018. Previously,
companies with over 100 employees. Re- threaten everyone. he spent the past 25 years working in the
gardless of size, they all face the same is- 6. Bill 13 contracts and their value in Merritt area as a woodlands manager for a
sues and look to associations like ours to today’s market are questioned. major forest licensee, managed a forestry con-
assist them with their challenges. 7. We need to do a better job of pro- sulting firm for one of the local First Nations
One question that is often asked of me moting the benefits of our industry. communities and was the transportation
is “Why Join” and what does the ILA do 8. The two previous wildfire seasons manager for a large trucking company.
for its members? The answer is simple: will have long-lasting impacts; are Todd started in the forest industry in 1981,
advocacy. we any better equipped for 2019? graduated from Selkirk College in Castlegar
Advocacy is an act or process of sup- Of course, this is not a complete list of with a diploma in Forest Technology in
porting a cause or proposal. I can’t think the advocacy topics we deal with every 1985, and became a Registered Professional
of a better cause to support than the day, but we need to start somewhere. Technologist in 2005.
well-being of the forest industry and So, what has the ILA done this past He has worked in all regions of British
specifically the security of our contractor year? One only needs to look at the Con- Columbia and also in Alberta, Saskatchewan
members. To put things in a little more tractor Sustainability Review outcome. and the Northwest Territories.
context, the majority of rural communi- Premier Horgan’s announcement at the
ties in British Columbia are forest de- TLA’s 76th Annual Convention & Trade
pendent, thousands of jobs are directly Show regarding the CSR process is a
created through forestry and billions of great example of what the TLA, ILA and
dollars are generated for the provincial NWLA can achieve working together
economy. Contractors, however, are be- from an advocacy standpoint. While it
ing constantly pushed to the financial did not address all contractor issues, it is
brink and don’t have the time needed to a good start and collectively we need to
battle the issues that both directly and continue the battle and advocate on be-
indirectly affect their businesses. The as- half of all our members with the hope of
sociations do! shortening this list for 2019.
From my meetings over the past year, I would like to take this opportunity to
I have observed ILA members face the thank the TLA and its staff for their hos-
following issues: pitality at this year’s convention and I am
1. Contractors are still operating with looking forward to seeing them and the
rates comparable to those earned NWLA at our annual convention from
in 2008 when the industry suffered May 2 - 4 in Kamloops.
a downturn and they were asked by I look forward to continuing our ad-
their employers to take a rate cut to vocacy efforts both collectively and in-
help them out. dividually and being able to spend more
2. Despite recent record-breaking time this coming year with our member-
profits by the major licensees, log- ship as I continue to travel the Interior to
ging and hauling rates continue to meet existing and prospective members.
be cut back.
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Spring 2019 Truck LoggerBC 1112 Truck LoggerBC Spring 2019
Trevor Jobb North West PERSPECTIVE
Increased log exports in the
Northwest are the result of
mill closures—
not the cause
I n response to the Premier’s speech at
the TLA convention, the solutions to
maximizing value and jobs from our for-
(on average currently estimated at $80
per cubic metre for the timber profile
with all costs included) has resulted in
their own delivered log cost from their
own licences.
The ability to access international
ests in the Northwest are more complex previous wood products companies to markets is the most significant contrib-
than stating a simple solution of limiting either go broke or shut down their facili- uting factor related to the health of the
or reducing the opportunities for local ties. Simply put, they have not been able forest industry and sustainability of the
operators to access the international log to compete globally and have failed. That harvesting sector in the Northwest. To
markets. To be clear, the increase in log has left the harvesting sector to pick up support the harvesting sector and for-
exports in the Northwest is the result— the pieces. est licensees, we will need to adapt the
not the cause—of mill closures and the For too long the harvesting sector following changes through government
economic reality of operating a manufac- has been expected to supply logs to the policy and regulations.
turing plant here. domestic pulp mills and sawmills be- • Maximize access to log markets for
The ability to access both domestic and low the cost of production. To meet the the Northwest forest industry and
international log markets has sustained economic realities, we end up harvest- maximize value.
this region’s forest industry for the past ing less timber, high grading our forests, • Return Order in Council (OIC) to
18 years since the closure of both Skee- creating fewer jobs and reducing the the 35 per cent levels previously in
na Cellulose in 2001 and West Fraser’s economic contribution to the communi- place to ensure a level playing field in
Skeena Sawmills shortly thereafter fol- ties in which we live and work. Offering supply and price negotiations.
lowed by the permanent closure of the prices below the costs of production is • Establish OIC term for a rolling
Eurocan Pulp & Paper Co. At that time, not sustainable for the financial health of 5-year period to allow for investment
the northwest lost all domestic log mar- the industry. certainty, and for harvesting sector
kets. All that remained of the Northwest In addition, the majority of forest ten- and licensee market relationships.
forest industry were the logging and ures in the region are held by First Na- • Institute a fair market pricing sys-
road contractors, who had to adapt and tions, community forests, and woodlot tem that recognizes the unique
develop their own log markets abroad. owners. Each needs to make a profit to position of the forest industry log
This allowed them to continue to provide support their business. The main pur- quality and costs in the Northwest
jobs that supported small businesses and pose of the province’s support and cre- and the limited domestic market.
communities while at the same time pro- ation of these businesses is to provide The forest industry in the Northwest
viding a consistent and reliable log sup- value back to the communities. The value has had a tough go of it, but we have al-
ply to local small sawmillers. is based on creating employment, capac- ways proven to be resourceful and have
Combined, the regional harvesting ity, economic diversification, and wealth. survived many of the challenges that have
and small sawmiller sector directly em- The ability to create that wealth for First come our way. Provincial government
ploys well over 400 people. Local small Nations licensees is seen as critically im- recognition of the unique challenges of
mills have been able to source and com- portant in providing for the social and each region of this province should lead
pete for fibre from the harvesting sector cultural projects necessary for a compo- to development of policies and regula-
at competitive rates and at rates that at nent of the nation’s rebuilding process. tions that work to the benefit of all. From
the very least provide a reasonable rate Because the newly created forest licens- this we can build relationships that are
of return for the loggers. This contrasts ees are operated as profit centres and economically sustainable. For domestic
with large mills who because of their not cost centres as most major licensees sawmills that have a business plan based
volume demands, believe they can set operate, the average delivered log cost for on the real costs of log supply, this will
a price for logs that is, on average, be- our region of $80 per cubic metre does ensure continued access to logs. When
low the combined cost of road building, not include a rate of return that is needed logs move, everyone benefits.
logging and hauling. to meet the objectives of why those new
For domestic mills to expect to source licences were created in the first place. Trevor Jobb has worked in the BC forest
logs below the cost of production is a Needing to make a profit is a reality that industry for over 40 years and is the current
business model that is flawed. The high demonstrates why the cost of logs for president of the NWLA.
cost of delivering logs in the Northwest the larger mills will be higher than
Spring 2019 Truck LoggerBC 13Paul Schuetz Northern Interior PERSPECTIVE
An Industry in Transition
F orestry in the Interior has been in
a constant state of transition driven
by economic and environmental influ-
The end of the MPB epidemic has
not only resulted in a decline in AACs
throughout the Interior, it has also forced
steeper slopes and filling seats in
equipment sitting empty today.
The Contractor Sustainability Review
ences since the beginning. The current loggers to transition their harvesting identified transparency and communica-
factor driving a change in the way forest techniques. To operate successfully in tion as being necessary to forming pro-
licensees operate in the Central Interior response to the transition to steeper ter- ductive and long-lasting relationships
centres around a transition from salvag- rain and different species, contractors between licensees and contractors. As
ing relatively flat terrain forests devas- must acquire the expertise, equipment New Zealand logging contractor Dale
tated by the mountain pine beetle (MPB) and technology to safely and successfully Ewers explained during his presentation
to targeting forests on steeper slopes in- operate in substantially more challenging at the 76th Annual TLA Convention &
fested by spruce beetle and balsam bark terrain. More time must be spent train- Trade Show, forming good working rela-
beetle. These changes in operating focus ing, and more money has to be spent on tionships with licensees can prove to be
and species priorities are forcing logging equipment in order for contractors to profitable to both parties, and can greatly
contractors to either adapt or risk being stay competitive in their business. improve the safety of workers through
left out in the cold. To alleviate some of the negative im- innovations and advancements in the
Beginning in 2001, the BC Interior saw pacts of this transition, there are a num- way logging is done. This win-win situa-
a rapid increase in its Allowable Annual ber of strategies that can be implemented tion could be realized through long-term
Cut (AAC) in response to the MPB out- by logging contractors, licensees and agreements that would allow contractors
break. The goal was to salvage as much government so that everyone benefits to reinvest in their company without hav-
timber as possible while it was still mer- through the transition: ing to worry about whether their costs
chantable and restore affected areas to a 1. Contractors can form good working can be recovered over time.
productive state which would mitigate relationships with licensees, invest During this time of never-ending
the depth of the eventual AAC downfall. in new equipment and technology change, a move beyond the culture that
Concurrently, Interior sawmills and log- to handle the steeper ground and had forest companies squeezing contrac-
ging contractors made changes to their bigger trees, and train employees on tors for their last penny must start with
operations in order to handle the extra new technology to operate safely on government, licensees and contractors
volume provided to them through the tougher terrain. working together to make the transition
AAC uplifts. 2. Licensees can provide longer-term as smooth as possible.
By 2004, the AAC in the Prince George contracts, which would go a long way
TSA reached almost 15 million cubic to ensuring contractor sustainability Paul Schuetz has spent more than 20 years
metres—though the economic downturn and provide the financial security working in the Northern Interior forests with
starting in 2007 would only see about 70 necessary for logging companies to Industrial Forestry Service Ltd. His experience
per cent of this harvested. In 2011, the make investments in new equip- in timber cruising, road engineering and
AAC started to decline as a result of the ment. Harvesting rates should also crew management give him unique insights
subsistence in the MPB epidemic, and reflect contractors’ operating costs into contractor issues in the north. If you
the continued inability of the industry to associated with new training and have an issue you want to bring to the TLA,
harvest the AAC due to lack of sawmill- new equipment. Operational plan- call Paul at 250-564-4115.
ing capacity. ning of cutblocks and roads should
However, the AAC projected for 2022 be improved in the field, and strate-
and beyond will be less than half of the gies should be implemented that are
volume available to the forest industry in specific to the more challenging ter-
the mid-2000s. This reduction in timber rain, such as proposing landings in
supply will continue the trend in sawmill favour of roadside processing.
closures that commenced in 2008 with 3. The government’s recent commit-
the US housing collapse. These forecast ment announced by the Premier
sawmill closures will force contractors to to explore TLA proposed solutions
become more competitive when bidding to the skilled labour shortage (i.e.
on new contracts; require them to invest a training tax credit) will also go a
in new technology in order to operate on long way in helping contractors re-
the differing terrain, and in some cases, cover the cost of training employees
may require contractors to relocate. on new equipment for working on
14 Truck LoggerBC Spring 2019HARVESTING ON
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Spring 2019 Truck LoggerBC 1516 Truck LoggerBC Spring 2019
Chris Duncan Business MATTERS
Business Practices for
Sustainable Contractors
Part Four—What are your financial statements telling you?
I t can be tough for contractors to
find the time to fully analyse their
financial statements and understand the
Presenting a contractor’s income state-
ment in different ways can create some
insightful analysis. Ideally a contractor’s
management was able to generate on
sales regardless of financing.
story they are telling them about the income statement should be broken out Return on Assets (ROA)
present condition of their business or fu- into the direct costs of production and Return on assets is calculated as net
ture course. Besides the time involved, administration costs. Dividing the in- operating income divided by total assets.
another major factor is many contractors come statement components by produc- A higher percentage is more desirable.
do not have any training or experience in tion volume shows your financial perfor- ROA measures how profitable your as-
understanding financial statements. mance on a cubic metre basis. sets are. This is valuable when comparing
One way to get the most from your fi- This helps to determine your overall ROA between different projects or in-
nancial data is to meet with your accoun- profitability as well as profitability by vestments that your company is involved
tant on a regular basis and ensure you phase. It allows a contractor to focus on in or against an industry benchmark, as
are asking the right questions, including areas where they may be able to make it identifies which assets are generating
what the key things are that they look for more money by focusing on being more the most income. An example of the use-
when analysing your statements. efficient. It also allows a contractor to fulness of this measure is to compare the
compare their logging rate to their costs. ROA realized by operations versus other
Balance Sheet Shortfalls in any of these areas require investments. Realizing a low or declin-
Your balance sheet is a snapshot of immediate attention. ing ROA, would indicate to management
your assets and liabilities at the end of Key ratios to do with your income that it should assess whether the assets
each fiscal year. Despite being good to statement that lenders and owners may be put to better use elsewhere, such
see where you land at the end of each should focus on is the company’s op- as into new assets or operation to facili-
year, the value of that snapshot dimin- erating income over interest expense tate growth of the business, or into high-
ishes as time passes. By the time you and operating income over interest and er-yield investments.
meet to go over it with your accountant, principal portions of debt. Both are
depending on the collection of your ac- measures of the company’s ability to Conclusion
counts receivable, asset purchases, tak- make its debt payments and stay current These examples are just a fraction of
ing on new debt and cash outlays it may with their lenders. what your financials can tell you. Every
be completely irrelevant and you would contractor will have a different area they
be better off looking at a copy from your Profitability are interested in. It is good to ask others
internal accounting system. The other area a contractor should be in the industry what they focus on. By
Comparing your current assets to your focusing on is the profitability of their spending some time with your numbers
current liabilities helps to measure your business. This isn’t just the bottom line you can increase your profits.
ability to pay off short-term obligations. on the financial statements but how it
The higher the number, the better your relates to the revenue, costs, invested eq- Chris Duncan, CPA, CA, is a Business Advisor
ability to cover short-term debts. uity and assets of the business. with MNP’s Private Enterprise group who
Another key ratio to look at is your total specializes in real estate, construction and
liabilities over your total assets. This tells Earnings Before Interest, Tax, Depre- forestry businesses. Based in Duncan and
you how many of the company’s assets are ciation and Amortization (EBITDA) serving clients across Vancouver Island, Chris
financed with debt versus self financed. EBITDA measures profitability with- draws on his unique background to deliver
The lower the number the less reliant out the effects of financing or capital industry-specific advice to help business owners
your company is on third-party debt. assets against the prior year or industry stay in compliance, make informed decisions
Lenders review both ratios when mak- benchmarks, as it focuses on operating and achieve their goals. Chris can be reached at
ing a decision to lend to your business. profits. For example, when a company 250.748.3761 or chris.duncan@mnp.ca.
obtains financing to purchase new equip-
Income Statement ment it incurs higher interest and amor-
Your income statement is a report of tization costs and a lower net income
how your business did during the year. than a company which runs older assets,
Its relevance does not diminish over time even though these new assets might have
like the balance sheet. If a contractor is higher efficiency and capacity. Compar-
going to look at one statement in detail it ing EBITDA will allow companies to
should be the income statement. focus on the operating profitability that
Spring 2019 Truck LoggerBC 17Budd Phillips Safety REPORT
WorkSafeBC Forestry High Risk
Strategy Update for 2019
F orestry by its nature continues to be
a high-risk industry; its serious-in-
jury rate of 1.2 (per 100 workers) in 2017
BC. Although injury rates have declined
over the last decade, conditions are also
changing, including operations increas-
qualified supervisor ensuring the work-
er is appropriately assessing risks and
following established safe work proce-
was four times the provincial average. ingly moving into steeper terrain, equip- dures to reduce or eliminate them? Also,
That’s why WorkSafeBC’s 2018-20 For- ment advances are transforming how do the fallers and supervisors know
estry High Risk Strategy (FHRS) contin- some work gets done, new fallers are when to say stop or no to work that is
ues to target the highest-risk activities entering the workplace, and the estab- too risky?
in harvesting: manual tree falling, log lished workforce is getting older, with Officers will look at new faller train-
transportation, cable-yarding operations, an average age of 57. ing programs, falling practices includ-
mechanized harvesting including teth- In 2019, WorkSafeBC’s dedicated fall- ing cuts, danger-tree and windfall
ered-equipment operations, and silvi- ing team will focus their inspections management, unavoidable brushing
culture. The goal is simple: to reduce the on employers with new-faller train- practices, and roadside or skid-trail de-
serious-injury rate through inspections ing sites, a history of injuries, or re- bris hazards that have been created and
that may include consultation with work- peat compliance issues, supporting the left for the hand faller. They will sup-
ers and employers as well as education. development of effective, sustainable port these inspections with outreach to
health and safety programs. workers and employers and collabora-
Falling These inspections will also assess the tive problem-solving.
Manual tree falling had the highest level of qualified supervision of hand
serious-injury rate of any occupation in fallers questioning if the type and fre- Phase Congestion
forestry in 2017 at 6.6—making it, once quency of supervisory inspection reflect In 2019, the FHRS will add a survey
again, the single most hazardous job in the level of risk at the falling site? Is the tool that will assess how phase integration
75%* of log truck drivers
wear seatbelts.
What do your fellow drivers
know that you don’t?
BUCKLE UP.
LEARN MORE @ www.bcforestsafe.org/node/3279
(*self-reported in recent surveys of log truck drivers by the BCFSC.)
18 Truck LoggerBC Spring 2019is being managed, asking if the employers rate of 1.9, one of the highest-risk occu- Cable-Yarding
at the site understand key risks that can pations in forestry. For cable-yarding operations, where
occur, such as phase congestion. Serious injuries typically result from the most common mechanisms of in-
Congestion occurs when the phases of motor vehicle incidents and loading/ jury are slips and falls, being struck by
timber harvesting overlap, resulting in unloading activities, but WorkSafeBC logs, and congestion, officers will look
the overcrowding of work activities and has also seen a steady rise in muscu- at clearing the turn, yarding angles,
potentially significant risks to workers. loskeletal claims for shoulder and arm landing the log, and site planning and
Poor planning and scheduling, as well injuries related to throwing wrappers. layout. Cable yarding has, in fact, seen
as inadequate communication among Officers will inspect these operations an increase in injuries instead of the de-
workers, employers and contractors have for driving and road assessment; load- sired decrease, with a general injury rate
been identified as contributing factors. ing, off-loading and securing practices; of 8.3 in 2017 compared to 6.6 in 2016.
To help assess these risks, Work- maintenance work practices including Emergency response planning and
SafeBC has developed a tool that will lockout, access, and egress; cab guards; hearing protection continue to be pri-
be used by officers conducting logging and binder use and installation. orities for all phases of operation.
inspections in the coming months. A For detailed information on the parts
simple questionnaire will enable them Mechanized Equipment of the Occupational Health and Safety
to identify risks along with controls that With mechanized harvesting, the big- Regulation that prevention officers will
are critical to their mitigation. Officers gest risks come from maintenance work, focus on, employers should refer to the
will seek input from employers on how getting on and off machinery, equipment Forestry HRS Compliance Guide. It de-
to make the tool most effective, and ul- loss of stability, and congestion. Therefore scribes the relevant sections and guide-
timately make a version available to em- inspections will focus on maintenance lines for each harvesting activity.
ployers for their own use. work plans and lockout procedures, For further information on the FHRS,
three-point-contact procedures, steep- visit worksafebc.com and search on
Log Hauling slope assessment plans, safe operation of “Forestry High Risk Strategy.”
Log transportation has eclipsed manu- traction-assist and tethered equipment,
al falling when it comes to worker fatali- and site planning and layout. Budd Phillips is a Prevention Field Services
ties in the last two years, unfortunately, Manager for WorkSafeBC. He can be reached at
making log hauling, with a serious-injury budd.phillips@worksafebc.com.
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Spring 2019 Truck LoggerBC 19Forest Community: Terrace
By Robin Brunet
F or anyone tuning into YouTube
promotional videos or other social
media channels, Terrace is portrayed as
Forestry activity in the region also
provides opportunities for First Nations.
“Of the 22 licensees in this district, the
dense, low in pulp, and easily accessible.
Better still, according to the 2015 pro-
vincial government study Forest Invest-
a trendy destination for mountain bikers, largest tenure holder is Coast Tsimshian ment Opportunities in Northwest BC, a
skiers, kayakers, gourmands, art lovers— Resources with an annual cut of over significant level of second growth timber
essentially, people who love the finer 500,000 cubic metres,” says Danielle will be available for decades. “Specifi-
things in life. Myles, manager, economic development cally, 600,000 cubic metres per year can
But not represented in these promo- for Terrace. In addition, Kalum Ventures be harvested, and the sustainability rate
tions is forestry, the industry that gave (the Kitsumkalum First Nation) and Kit- has been calculated at 30 to 40 years,”
Terrace the economic wherewithal to selas First Nation have tenure and run says Myles.
evolve as a lifestyle destination. None- their own logging companies that strive The prospect of harvesting this wood
theless, forestry remains an enormous to hire community members and create a coincides with Skeena Sawmills in Feb-
source of pride for locals and civic flow of revenue for their nations. ruary opening its new pellet plant that
leaders—and something that will allow When Truck LoggerBC paid Terrace has a capacity to process 75,000 tonnes of
this city of 12,500 to continue to evolve a visit in February, Leclerc and Myles wood waste annually. “Currently, Skeena
in the future. were busy promoting their city not just can process logs up to a four inch top,
In fact, Mayor Carol Leclerc of Terrace as a service, education, and medical hub and it will be able to take smaller sizes in
laughs in astonishment when informed of the Kitimat-Stikine region (a distinc- pulp log grades when the pellet plant is
that some outdated websites portray her tion it has enjoyed for decades), or as fully operational,” says Myles.
hometown as a place where once-thriv- perfectly positioned to take advantage of The plant, Skeena BioEnergy, is part
ing mills are moribund and forestry is on the billions of dollars in major develop- of a $40 million retrofit for the sawmill,
the decline. “Nothing could be further ments occurring in LNG (thanks to the which produces 250,000 cubic metres
from the truth,” she replies, adding that announcement last year that the LNG of wood annually. It consists of one belt
while Skeena Cellulose's sawmill closure Canada/Royal Dutch Shell liquefied nat- dryer, two infeed lines, three pelletizers,
between 1997 and 2008 impacted the ural gas plant will finally be moving for- and one cooling tower, all of which will
regional economy, today as Skeena Saw- ward in nearby Kitimat); they were also produce pellets from residuals includ-
mills and under the leadership of presi- envisioning Terrace as being on the cusp ing planer shavings, sawdust, hog fuel,
dent and CEO Teddy Cui, it is one of the of a tremendous new wave of forestry- and bark. According to Skeena Saw-
major sawmills in BC producing hem- related activity. mills’ vice-president Roger Keery, it may
lock and balsam products for the Pacific Leclerc explains, “our positive outlook be possible for the plant to also receive
Rim and the North American markets. is partly due to the fact that the second feedstock from neighbouring sawmills
“And it’s a major employer for us, in ad- growth timber in the Coast Mountain or biomass harvesters, depending on the
dition to all sorts of specialty millers and Natural Resource District is now com- demonstrated capacity of the facility.
custom cutters thriving here.” ing available for harvest.” These second Myles and Leclerc are eager to cite
growth stands are less than 100 years old, other factors contributing to forestry’s
20 Truck LoggerBC Spring 2019Photo courtesy of City of Terrace, Aaron Whitfield Photography
promising future in their neck of the for Terrace, once known as the cedar pole several priority objectives, including
woods. The latter says, “we have a sec- capital of the world. However, no longer working with neighbouring First Na-
ondary manufacturing facility ready for will the city’s fortunes be tied exclusively tions and supporting a thriving down-
re-activation near the Skeena Sawmills, to the resource. One benefit of Skeena town. “Working with Kermodei Tourism
with two kilns on site and ample room Cellulose’s prolonged closure was that it to grow the number of visitors to this re-
for milling, warehousing, and loading. prompted the fast-tracking of economic gion and creating the Skeena Industrial
The kilns are critical, because one of the diversification, and the focus on forestry Development Park were also identified
challenges of our industry up here is that prospects notwithstanding, Leclerc and early on as priorities,” says Leclerc.
the wood is wetter than in other districts; Myles are equally hard at work expand- One of the most promising outcomes
the kilns would make it lighter and more ing other sectors such as tourism, on of these efforts is an influx of new blood
affordable to ship.” Reportedly, prospec- the strength of the region’s world-class to Terrace. “More and more young pro-
tive buyers have been lined up, and a sale fishing, exceptional downhill and back- fessionals in the 20 to 40 age bracket are
is expected in the near future. country skiing, white-water kayaking coming here to live,” she says. “This is
First Nations opportunities are also and rafting, and golfing. partly due to our affordability as well as
promising. “Kitsumkalum and Kitselas Terrace is also being promoted as the lifestyle, and our institutes of higher
are in advanced treaty negotiations, a the premier spot in Northwest BC to learning—the University of Northern
focus of which has been on identifying do business, and justifiably so: the city British Columbia and Coast Mountain
lands for future forestry operations,” is centrally located at the crossroads of College—play a huge role in fuelling this
says Myles. Highways 16, 37, and 113, and its close demographic.”
Yet another element driving the proximity to three deep water ports, rail As Terrace continues to evolve,
duo’s enthusiasm is the new 2,400-acre service, and a bustling airport allows it Leclerc, who was born and raised in
Skeena Industrial Development Park, a to take advantage of other industries in the city and whose husband was a log-
few minutes from Terrace’s downtown Kitimat-Stikine, foremost of which is the ging contractor until the 1990s, intends
core. “Our intention is that this park LNG Canada project, which, at $40 bil- to preside over the growth while staying
will support the growth of the forestry lion, is the largest private sector invest- true to the region’s forestry roots. “For
industry,” says Leclerc. “We’re putting ment in Canada’s history and will bring decades, people in our sector knew what
in roads and utilities, and there are op- in $23 billion in revenue over the next 40 newcomers are just discovering about
portunities for small and larger scale years (which in turn will be invested in us: that we’re a fantastic place to work
companies to lease or purchase land for healthcare, schools, childcare, and other and live,” she says. “And it’s all going to
manufacturing facilities.” key public services). get even better. We’re very much looking
If the second growth opportunities are Guiding this growth is the City of forward to the future.”
fully exploited, Skeena BioEnergy oper- Terrace Economic Development Strate-
ates as intended, and companies flock to gy (EDS), which built upon other plan-
the development park, it would in a sense ning documents and initiatives and
be a return to the glory days of forestry was put into effect four years ago with
Spring 2019 Truck LoggerBC 21FOR ALL SEASONS CANADIAN MADE FOR CANADIAN WEATHER 22 Truck LoggerBC Spring 2019
All photos: Brian Dennehy
THE Culmination of the Contractor
Sustainability Review
By Jim Girvan
T he results of the three-year Con-
tractor Sustainability Review
(CSR) process culminated at the TLA’s
changes that mark the conclusion of the
Contractor Sustainability Review pro-
cess. As you read these pending policy
Arbitration
When two parties enter into an arbi-
tration process it is an indication that
76th Annual Convention & Trade changes, keep in mind that they hope- the business relationship has faltered
Show with announcements made by fully will address what was identified in (e.g. a last resort to seek resolution). Un-
Premier John Horgan and Minister the CSR, which was a need to change ad- der the current Bill 13 process, arbitra-
Doug Donaldson. versarial relationships, to be replaced with tions are considered onerous, costly, and
During the Leaders’ Lunch, the Premier an- commercial relationships characterized by defective based on the TLA’s view that
nounced the elimination of the fair mar- transparency, accountability, and two-way the fair market rate test used by arbi-
ket rate test. In the “Executive Meeting communications of shared objectives and trators to resolve rate disputes is biased
with the Minister” panel, Minister Donald- collaboration. towards outcomes that favour licensees.
son outlined several pending changes It was the TLA’s view that the fair mar-
to the Timber Harvesting Contractor Rate Models ket rate test is one of the single largest
and Subcontractor regulation (otherwise A focus on the use of rate models as impediments to contractors achieving
known as Bill 13), rate data sharing, cut part of rate negotiations has become the sustainability simply because there is no
control letters, forest harvest planning central theme of the policy changes be- such thing as a fair market for timber
and best practices, many of which came ing made. harvesting services in BC.
from the 13 recommendations original- The Timber Harvesting Contractor As such it should be no surprise that
ly proposed in the CSR last spring. and Subcontractor regulation will be the Premier received a standing ovation
The resulting policy changes an- amended requiring the parties to jointly when he announced the elimination of
nounced at the convention were devel- develop rate models, which will include the fair market rate test in favour of an
oped during the last phase of the CSR factors that will influence the calculation approach that relies on rate models which
through a series of facilitated conversa- of the rate. Examples of such rate factors will be engrained in the regulation. This
tions by Dan Miller, former provincial that are currently typical of rate models is a significant change to the process that
Premier. Mr. Miller was tasked with in use are: equipment rates, productiv- the Ministry hopes will become standard
identifying where there was consen- ity estimates, labour cost, add-ons, over- practice for all contractors, not solely
sus among contractors and licensees head, profit/risk and total volume. just for the benefit of Bill 13 contractors.
on the recommendations and making The regulation will be amended It is the TLA’s view that no longer will
final recommendations to the Minister to allow the reassessment of rates in the majors be able to set rates based on
for implementation. recognition of changed circumstanc- comparables that often times were sim-
Paraphrasing the Minister’s speech and es that underlined the original rate ply not comparable to the setting under
the BC government’s news release, the model assumptions. consideration, but were said to be the
following describes the intended policy industry market rate. Looking forward,
Spring 2019 Truck LoggerBC 23You can also read
