BY BILL PHILLIPS
Secondary wood manufacturers should not be subject to softwood lumber tariffs.
That’s the assertion of one of the country’s largest secondary wood manufacturers, who fears the sector will become “collateral damage” in ongoing trade battle between Canada and the U.S.
The lumber coalition in the United States is claiming that timber rights are subsidized in Canada, primarily because stumpage rates aren’t high enough for their liking, and that it unfairly hurts the industry in the United States.
“We don’t have timber rights at all, nor do we get any subsidies at all, or handouts of any sort,” said John Brink, president and chief executive officer of the Brink Group of Companies, which operates Brink Forest Products in Prince George, Vanderhoof Specialty Wood Products in Vanderhoof, and Pleasant Valley Remanufacturing in Alberta. “If there was a duty applied of 20 per cent or 30 per cent, that would be devastating to companies like ourselves.”
Secondary wood producers generally don’t hold any timber licences, renewable or non-renewable. That means, says Brink, that his operations, like most secondary wood manufacturers, compete for raw material every day.
The raw materials utilized to produce finger-joint lumber, which Brink produces, are primarily either trim-ends or low-grade lumber produced in the primary sawmill production process. Both items are purchased in an open market that is accessible by the global economy. This is evidenced by the fact that a majority of low grade lumber is sold to the United States and China, he says. Furthermore, the price that is determined at point of sale is based on market prices (in U.S. dollars) printed in a weekly, industry accepted report by a U.S. based company, known as Random Lengths Publications Inc.
That means, says Brink, that the secondary wood industry is not subsidized. And yet, Brink’s finger-jointed studs will be hit with duties imposed by the U.S., unless the provincial and federal governments work to help secondary wood manufacturers.
“To apply a duty to (secondary wood manufacturers) would be a reverse subsidy, giving a reverse subsidy, giving an unfair advantage to American remanufacturers by penalizing us,” he said. “Our position is simply that we, as Canadians, should not allow, if the issue is alleged subsidized timber … if we are not the recipient of the subsidy, then we should not be become collateral damage in the negotiations.”
Brink says he employs close to 350 people in the region, so a blow to the secondary wood manufacturing sector will be a significant blow to the Prince George economy.
“The provincial government has to be fully aware of companies, like ourselves, that might get hurt in the process and would affect thousands and thousands of other jobs in the province,” he said.
Brink has been down this road before as the current softwood lumber talks are the fifth ones for him. In the 2006 softwood lumber negotiations, a duty of 15 per cent was levied. Brink lobbied, through the B.C. Council of Value Added Wood Processors, was able to negotiate “through sheer persistence” a special deal.
“We managed to get a duty applied to our inputs of lumber, not to our finished product,” he said.
For example, if the value of wood going into the mill was $100 and the finished product was worth $500, they would be taxed $15 on the $100 input rather than $75 on the $500 output for the same wood.
“The difference would be between being viable and not being viable,” he said. “Even in those negotiations (in 2006) Ottawa did not fully understand the importance of that particular element.”
Applying this ‘first mill’ duty is better than having a full duty imposed on secondary wood manufacturers, however, he feels that when negotiations actually get underway, Canada should be pressing to have secondary wood manufacturers exempt from softwood lumber duties.
Brink has stated his case to Prince George-Cariboo MP Todd Doherty and to negotiators in Ottawa. However, it remains to be seen whether negotiators will press for the exemption.