Quebec Talks Turn-Around Plans
Industry and minister agree that consolidation must move forward quickly.
The Quebec Forest Industry Council (QFIC) AGM opened May 9 amidst a weak and feverish atmosphere. Current poor market conditions are without precedent in Quebec, the nation’s second largest lumber producer after BC, and have drawn sharp attention to a raft of structural problems facing the industry here, from fibre supply to government red tape, taxes and more (see in depth analysis from CWP Nov/Dec 2006). According to CIFQ president Guy Chevrette, this will mean the closure of one mill in four in Quebec as industry restructures to face the current competitive reality.
“If we do nothing,” the out-spoken industry advocate affirmed at the opening of the three-day event, “we’ll be closing four out of four in the end. With the current price of lumber, the strong dollar, and high operating costs, mills are now losing some $70 with each MBF sold.”
 Guy Chevrette, QIFC President
The current industry crisis in Quebec has resulted in the closure, temporary or indefinite, of 100 mills already, and the loss of 12,000 jobs over the past two years. In response, industry is now asking the government loud and clear to get moving with changes required for mid- and long-term survival. Topping the agenda is a call to simplify the transfer of AAC from one mill to the next, or one region to another, to allow industry to consolidate production in fewer, but larger, more modern mills. This has been a structural weakness of the Quebec industry for the past 20 years, but has come to the fore over the last decade as mills in the rest of the world continue to grow.
The brand new Minister of Wildlife and Natural Resources, Claude Béchard, seemed to realize the urgency of the matter, announcing a series of measures to take effect over the next eight months that he says will allow industry to take advantage of the market turn-around now predicted for some time late in 2008. Achieving regional consensus on merging operations is a priority, he admits. “It has to move forward – we need to see action on this front.” He stresses that by year-end, the province will see approval of major mill consolidations, allowing for the elimination of one mill out of every two in certain regions.
Another touchy subject is the province’s AAC, which was cut by 20% after the release of the Coulombe Report two years ago, and is still a topic of much debate. To put AAC decisions on more objective, scientific footing, the province is investing $15 million in a new Woodstock/Stanley based inventory system, which will be more complete and accurate than its predecessor. The minister also announced some aggressive silviculture programs, all of which could fairly be described as too little, too late. A start at least. Béchard also pledged to complete the province’s protected areas inventory, another step in creating a more certain business climate.
Biomass represents a new opportunity for Quebec’s forest industry, and Minister Béchard announced a program from Hydro Quebec, which will be calling for offers to create co-gen plants using forestry biomass by the end of 2007.
Regarding secondary and tertiary transformation, even if Quebec is a Canadian leader in terms of employees in this sector, the minister insists the industry must do more to increase its role in this sector. He promised that as with the case of sawmill upgrades and consolidation, the government would fast track all negotiations regarding such value-added projects. “We should aim at announcing good news on this front on average once per week for the next eight months,” he pledged.
He also swore to cut red tape in the province’s forestry regime, going as far as saying that Quebec could achieve savings of up to $2/m3 over 2006 costs by the end of 2007, just by allowing for a more flexible fibre flow and removing planning hurdles.
The new minister set just the right tone for the rest of the QFIC meeting, which aimed at getting to the heart of the crisis facing Quebec’s sawmillers. Themes included attracting and retaining the employees of the future; new products and markets for tomorrow; different forest management systems across Canada, and what Quebec can learn from each; and the industry’s future according to its current leaders. Delegates may at times have seemed in a state of shock in the face of seemingly overwhelming challenges, but they also were for the most part increasingly confident in their ability to react to these challenges, and with their vision for the future. That’s good. If the industry wants to turn the corner on its current doldrums, it will need to make a very sharp turn indeed.
 Guy Fortin is editor of Opérations forestières et de scierie, CWP’s sister publication serving the French Canadian market.
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