Logging issues need leaders’ attention

With a blur of candidates seeking B.C.’s political top job following Gordon Campbell’s decision to step down as premier, there’s a risk that government commitments and log-harvest sector priorities can become lost in the scramble. We would be negligent if we didn’t remind the CILA’s members and other newsletter readers of the issues and concerns that are of vital importance to our sector.

Liberal leadership candidates also need to know about them when they seek support from the tens of thousands of logging contractors, independent log-haulers, machinery, parts and service suppliers and their families and employees. Here are the big ones all candidates should be prepared to answer when asked:

Forest Service Providers Protection Act:

Almost three years ago, this government committed to replacing the old Woodworker Lien Act with stronger legislation to give contractors and subcontractors a better way to collect money owed them by their customers (often employers). Through lengthy negotiations contractors agreed to a lower-priority lien process on condition that forest companies set up a fund big enough to cover contractor losses if a large forest company became insolvent. Government came through last spring with a new Act, and although there have been many discussions since, we still don’t have a fund set up and this must be resolved soon.

Trust distributions being taxed:

When government passed the Forest Revitalization Act in 2003 and took back 20% of forest companies’ licence volume, many contractors also lost replaceable contract volume. Government paid compensation in both cases, with contractors under the understanding that trust fund compensation payments would not be taxed. However, Canada Revenue treated the payments as income. We know the province has been trying to help resolve this, and it may be resolved in the near future.

Provincial carbon tax:

What should be a flow-through tax to the end user (forest company) has generally landed on contractors and truckers, costing millions each logging season and undermining their competitiveness with Alberta contractors who don’t pay carbon tax. It’s a big issue in the northeast, and leadership candidates should be prepared to tell our sector what they’ll do about it.

New work opportunities:

Whether it’s clearing timber from the Site C hydro dam basin or working in mining, pipeline or road construction, there’s a strong feeling across the north that B.C. companies should get first opportunity for the work over out-of-province contractors. It’s a question of competitiveness and costs such as the carbon tax: How can government create opportunities for B.C. businesses without getting tangled in protectionist debates?

Popping Balloons... setting the record straight

The carbon tax on fuel is an expensive sore point with loggers and truckers alike. Some forest companies allow for it in rates, others do not.
When asked whether his forest company would recognize the carbon tax in logging and trucking rates, a manager said no – that the tax is ‘revenue neutral.’
To the government, yes, but not to the harvest sector.
When it introduced the carbon tax, government said the revenue would go to creating some tax breaks for industry and reduced income taxes for B.C. residents – it would be revenue neutral.
Loggers and truckers pay that tax and have no way of getting it back through rebates, so it’s a cost of doing business that should be covered in the rates they’re paid.

What's Happening to Rates?

Since February/March, the number of logging contractors who have approached the CILA in need of help to resolve rate stand-offs has been staggering – as many in five months as in the previous five years!
Why?
I think these rate stand-offs show more desperation than malicious planning by forest companies. Their managers are quick to point out that they’ve been losing money (or not making as much) for the past two years, and have to cut costs.
In a few situations they’ve tackled the mill worker unions and gained wage rollbacks, but mostly they find it easier to cut logging and trucking rates.
Until this spring, contractors were not in the habit of working together or sharing much information.
But, faced with no opportunity to negotiate, take-it-or-leave-it rate offers, threats of no work unless the contract is signed, and pressure to bid for the work, some contractors banded together to share information and develop strategies for rate and amount-of-work negotiations.
It’s a competitive business with no guarantees. Getting a logging or trucking rate that covers costs and provides some profit is not a slam-dunk; some contractors always willing to accept less money, undermining the effort.
Some risk all and bid too low, undermining their futures.
Supply and demand work against contractors now; there’s more logging capacity than there is work, although that will change.
Meanwhile, how do you cope? What are your rates now, compared with three years ago? Are you staying in the business?
What does the future look like to you?
To respond, hit the “comments” link below – and no, we won’t print your name.
Roy Nagel