Appleby, Softwood Lumber Dispute and his Solutions

Dave:

I noticed that you did not push Appleby to tell you what sectors and what actions should be taken. Especially when he calls my idea stupid.

My idea is not as stupid as one might think. Yes, there will be some pain, but I believe it will be short lived. Canada has the timber and lumber that the US market needs to survive and help fuel a housing boom, that will in turn help fuel economic growth through out their economy. We in Calgary see how our housing boom fuels growth in all sectors, including radio.

Yes, there was a judge in Seattle that decided the fate of the BSE situation, but the U.S. Department of Agriculture sent their lawyers with a vocal and public endorsement by the USDA Secretary, to help plead the case in Canada's favour. If Washington did not think our side's arguments were right, then they would not have shown up. When the layoffs started in the rust belt from the meat processing industry and started to get into the range of 10's of thousands, may have played a role in getting the message through to the President that the BSE issue affected more than just Montana, and actually crept into the vote heavy states that all need to win in.

Keep in mind, that there is a federal election of some sort in the USA every two years. That can be Senate, Congress, or Presidential. Throw in the state elections, you have a heavy need to do something for the local voters.

On the west coast of the USA, the saw mills have raw logs to satisfy about 40 to 60% of their capacity, and it is falling every years.

B.C. supplies the raw logs to the saw mills in the USA that supply the California, Colorado, and to a great extent Phoenix building markets.

If the supply of raw logs dries up, the prices of building rise. That was shown by the trade dispute over cedar shakes, and is shown in the cost of building now with the new tariffs.

Since 70-80% of the BC logging industry is owned by foreign interests, mainly American, you also have to wonder why they would encourage the USA to continue their Softwood fight, based on stumpage rates.

If the Canadian government stopped the shipping of raw logs to the USA, we would see a powerful message being sent to Washington DC, by way of Arizona, California, and Colorado, all large players in the election picture in Washington DC. The U.S. market needs dimensional lumber, especially to fuel any sort of housing boom, which also helps sell furnishings and appliances, as well as land development. They cannot get cheaper dimensional lumber than from Canada.

One of the issues at stake is that the lumber and logging industry in BC, is light-years ahead of the American industry in productivity and efficiency. We also have a larger supply of timber, that the USA does not have. None of the help the US federal government has given their industry has been applied to their productivity and efficiency issues, or the finding of new timber supplies. Hence the reason for even more exporting of raw logs to the USA, that is growing each year to levels above the period prior to the most recent softwood fight.

The cedar shake industry in BC found this to the same trend, even when they were hit by tariffs that are still there.

Alberta and Northeastern BC's, logging industry is probably harder hit due to the fact it is so much more expensive to ship raw logs from here to market in the USA.

Since pulp is created and made out of logs, close to the source, and is not considered a 'softwood,' it is not affected so much by the softwood fight as to market conditions.

If as your guest says, my idea is stupid, then he should at least have come up with a better proposal. What sectors would he pick, and what actions would he suggest we take, that will work?