Forest Industry Faces Challenges

Resources | BCBusiness
UBC professor Harry Nelson addresses the Truck Loggers Association

Speakers at last week’s Truck Loggers Association conference cited aging infrastructure and succession challenges among challenges B.C’s forest industry must come to terms with

The infrastructure of B.C.’s forest industry faces many challenges, including aging machinery and workforce, and unrealistic rate structures. That’s the message of a report by UBC professor Harry Nelson entitled “Tired Iron: The State of the Harvesting Sector on the B.C. Coast.” Nelson was on hand at the annual Truck Loggers Association convention in Vancouver last week to elaborate on challenges faced by the province’s forest industry.

“The term ‘tired iron’ captures where the contractor sector is at today,” Nelson said at the convention. “Machinery is old. Companies have been running lean and mean for a long time. The work hasn’t been as steady as it could be, and it’s been hard to train and retain new workers.”

After a decade of difficulty, many in the industry are themselves “tired,” and ready to retire, he noted. But B.C.’s key resource sector faces a serious problem as long-time, successful businesses are having succession problems. Nelson is concerned that even in the face of current upturn in the industry, B.C. will lose its capacity to function competitively in the international marketplace.

Other panellists at last week’s conference pointed to the nuts and bolts of dealing with the difficulties of the “new era.” Gord Hubley, a business advisor with Meyers Norris Penny, reported on rates and returns for loggers and noted that businesses generally can expect 15 to 50 per cent return on investment. In the forest sector, ROI has been at or less than zero for years. In this context, it’s difficult to get financing for the new equipment and technology required to keep the sector competitive.

As RBC senior commercial account manager Ron Forster noted, working with industry clients in the context of historic sectoral instability can cause “heartburn for bankers.” While sound financial statements are critical, Forster emphasized that lenders working with the sector require also have to depend to some extent on “faith and forecasting.”

When asked whether he sees a new crop of loggers in his classrooms at UBC, Nelson said, “I definitely see people who are interested in forestry as a long-term career.” But he cautions newcomers to create a path that’s sustainable, not limited by the historically cyclical nature of the industry. He urges anyone venturing into the industry to take advantage of the existing sectoral knowledge.

Nelson advised those new to the industry to “find someone to be your mentor. There’s a lot of passion in this industry. A lot of willingness on the part of people to share their time and expertise. Take advantage of it.” Doing business in the forest industry’s “new era” means knowing the lessons learned from tough times, he said.