Crisis in paper industry transforming Interior communities

Campbell River, Powell River and Port Alberni used to be engines of the BC economy, fuelled by pulp and paper. But as I report in my column this month in Business in Vancouver, fundamental changes in the paper industry are slashing local workforces. The impact on Vancouver? Hard to say, but we can’t all work at Pixar.

Downturn in forest sector making permanent changes in BC economy

May 4, 2010

“I’ve never had that happen in my life,” says veteran union negotiator Jim Britton, and he hopes it never does again.
Last month Britton, speaking for seven locals of the Communications, Energy and Paperworkers, sat down in front of negotiators for troubled Catalyst Paper to offer union concessions of about 15 per cent nearly two and half years before the current agreement expires.
Catalyst’s reaction?
“Is that it?”
The exchange highlights the dramatic changes in the forest sector that are reshaping the BC economy.
Catalyst was looking for cuts in the order of 40 per cent, the company told stunned union representatives, because “we need to be more competitive.”
Without that kind of cut, says Catalyst, mills that it has closed or cut production in Powell River, Campbell River, Crofton and Port Alberni may be doomed.
(Although the Campbell River mill is closed, reduced operations continue at the three other locations. Catalyst restarted a second line at Crofton late in March to exploit improving market conditions.)
Catalysts’s aggressive cost-cutting campaign, which has also sparked confrontations with its host municipalities over property taxes, has the goal of slashing labour costs to $40 an hour, including vacations and benefits, from $62 to $65 an hour.
CEP’s affected locals – and the communities where its members work – are already reeling from the loss of production. In Campbell River alone, 225 workers (63 percent of the workforce) have already taken severance packages.
But Britton notes that even if workers agree to “gut the contract” to Catalyst’s liking, there is no firm guarantee of the mill’s future.
Although pulp operations in the province are enjoying a modest recovery, global paper prices remain depressed by flagging demand and new supplies of low-cost production.
The union’s proposal was a good-faith effort to get the company on its feet, Britton said, without destroying contract conditions the union has spent generations to establish.
Although the current agreement, only two years old, has another two and a half years to run, CEP offered to give up 10 percent on wages and forego two future increases for a total saving of more than 15 per cent.
No deal.
“The forest sector in Canada has lost more jobs in BC alones than Ontario’s auto sector,” Britton points out, “but no one seems to care.”
The massive outpouring of aid to prop up ailing automakers has not been available to forest communities, which are withering away far from the media centres of Eastern Canada.
For BC, the future likely holds a permanent reduction in economic benefits to local communities, if the industry revives at all.
Rising new industries like natural gas production and run-of-the-river power are capital-intensive with modest work forces. They will never replace the economic impact of resource industries like forestry and fishing.
Nor do jobs in the rising service sectors, like tourism, pack the economic clout of the old standbys.
No matter how hard unions like the CEP try to find ways to manage costs, the responsibility for future economic development in BC’s Interior looks bleak indeed.
If Catalyst resumes production in Campbell River with a shriveled work force generating 60 per cent of its historic earnings, it will be the turn of local businesses and community leaders to consider their economic future and ask, “is that it?”