Truck LoggerBC, Summer 2017 - Volume 40, Number 2

Structuring Your Contracting Business ]

www.tla.ca

[ INSIDE

The

Impact

Summer 2017

of Softwood Lumber on Small Forestry Firms

AAC Reductions: Who Pays the Price and Who’s Got Your Back?

PM # 40010419

Three Parties, One Province: Hearing All The Perspectives On Forestry

Summer 2017 Truck LoggerBC 1

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CONTENTS

SUMMER 2017 Volume 40 Number 2 www.tla.ca Photo: Tree Frog Creative courtesy of Western Canadian Timber Products

38

Columns & Departments 7

8

President’s Message

What Forestry Needs: A Level Playing Field, Streamlined Safety and Heartfelt Pride Jacqui Beban

Executive Director’s Message

Local & Grassroots: The TLA’s On-The-Ground Perspective on BC Politics David Elstone

10 Interior Logging Association’s Message

Interior Update: Conference Success and Contractor Sustainability Advocacy Wayne Lintott

13 North West Loggers Association’s Message

Working Together: Government, Advocacy, and Technology Ken Houlden

15 Market Report

The Impact of Softwood Lumber on Small Forestry Firms Harry Nelson

16 Safety Report

Sharing the Load: Streamlining Safety Program Administration Sandra Bishop

19 Business Matters

Structuring Your Contracting Business Part One: Introduction to Common Structure Issues Chris Duncan

Cover Photo: Tree Frog Creative courtesy of Western Canadian Timber Products

20 Legal Report

Cut Control Statements: The Contractor Scorecard Stephen Ross

Cover 38 AAC Reductions: Who Pays the Price & Who’s Got Your Back TLA Editorial

Features 21 ILA Conference & Trade Show Review Brenda Martin

24 The Jay Treaty: Challenging First Nations’ Right to Trade in North America Ian MacNeill

28 Old Fashioned Conversation: Forestry Communities Reach Out To Industry Sandra Bishop

33 Three Parties, One Province: Hearing All the Perspectives on Forestry TLA Editorial

43 Understanding the Challenges Loggers Face: Abbott Begins Review TLA Editorial

46 Nine-Axle Trucks: Where Does This Road Lead?

Robin Brunet

49 Why Forestry? Heavy Duty Mechanics Explain Pieta Wooley

Summer 2017 Truck LoggerBC 3

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The Truck Loggers Association 2017 Executive & Directors

Forestry Management and Marketing

Interior Logging Association 2017-2018 Board of Directors

Chairman Randy Spence Jacqui Beban Mike Richardson First Vice Chairman Len Gudeit Past Chairman Reid Hedlund Don Banasky Directors Lee Callow David Elstone Guido Claudepierre Howie McKamey Dennis Cook Dave McNaught John Drayton Bill Nelson Randy Durante Clint Parcher Matt Edmondson Mark Ponting Frank Etchart Aaron Service Shane Garner Barry Simpson Scott Horovatin Doug Sladey Jeff Kineshanko Dorian Uzzell Hedley Larsen Matt Wealick Bill McDonald Adam Wunderlich Tim Menning Associate Directors George Lambert Ron Volansky Tim Lloyd General Manager Wayne Lintott Brian Mulvihill Administration Nancy Hesketh Carl Sweet Lawrence Van De Leur Editorial Board Jacqui Beban Interior Logging Association 3204 - 39th Avenue Chris Duncan Vernon, BC V1T 3C8 Wayne Lintott Tel: 250.503.2199 Fax: 250.503.2250 Brian Mulvihill E-mail: info@interiorlogging.org Ken Houlden Website: www.interiorlogging.org Matt Wealick

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SUMMER 2017 / VOLUME 40 / NUMBER 2 Editor Brenda Martin Contributing Writers Jacqui Beban

Sandra Bishop Robin Brunet Chris Duncan David Elstone Ken Houlden

TUG & BARGE

Wayne Lintott Ian MacNeill Harry Nelson Stephen Ross Pieta Wooley

For editorial information, please contact the Truck Loggers Association: Tel: 604.684.4291 Email: trucklogger@tla.ca For advertising, please contact Advertising In Print: Tel: 604.681.1811 Email: info@advertisinginprint.com Truck LoggerBC magazine is published four times a year by the Truck Loggers Association, with content and support from the Interior Logging Association and the North West Loggers Association. Its editorial content seeks to reflect issues facing the industry and to provide readers with current information on BC’s forest industry. All rights reserved.

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4 Truck LoggerBC Summer 2017

The Truck Loggers Association Suite 725-815 West Hastings Street Vancouver, BC V6C 1B4 E-mail: contact@tla.ca

Tel: 604.684.4291 Fax: 604.684.7134 Website: www.tla.ca

from the Editorial Board DESK...

A

s summer kicks into high gear, this issue brings you lots to think about. So whether you’re logging or fishing this month, take a moment to sit down and read Truck LoggerBC. The four reports at the front of the magazine address a real range of important topics. Business Matters is the first in a four-part series about how to structure your business to minimize your risk. The Safety Report talks about how we can take safety to the next level by streamlining our administration. The Market Report digs into how the softwood lumber dispute will affect the ‘little guy’—both sawmills and contractors. Finally, the Legal Report explains how not having access to the information in cut control letters is negatively impacting logging contractors. From business structure and administration to federal and provincial government negotiations, there’s something for everyone here.

I’m looking forward to reading, “The Jay Treaty: Challenging First Nations’ Right to Trade in North America.”

This is an interesting piece of history that I’ve used personally and I’m interested to hear if there are other ways First Nations in Canada can use the Jay Treaty to our benefit.

From a contractor perspective, we have three great articles. “Understanding the Challenges Loggers Face: Abbott Begins Review” gives an update on the Contractor Sustainability Review and outlines the next stage in the process.

“AAC Reductions: Who Pays The Price & Who’s Got Your Back” looks at the latest AAC reductions that have come

out to the Great Bear Rainforest and reviews how government has dealt with AAC reductions in the past. “NineAxle Trucks: Where Does This Road Lead?” gives the latest update on the push to get nine-axle trucks hauling logs in the Interior. Each of these articles gives contractors and the industry as a whole some real food for thought.

We continue to see communities and the forest industry reaching out to each other and having better conversations about the forest resource. “Old Fashioned Conversation: Forestry Communities Reach Out To Industry” highlights four different ways BC’s coastal communities have reached out to the forest industry and how the forest industry has responded in an open and helpful way.

Finally, I encourage everyone to read the review of the ILA’s 59th Conference & Trade Show and check out the great photos. The TLA board looks forward to going every year and this year was no exception. It was a great event and I thank Wayne and Nancy for all the work they do to make it a success!

These are just the highlights, so please take time to look through the whole magazine. If you have any questions, please contact Brenda Martin, Director of Communications, at brenda@tla.ca or 604.684.4291 ext. 2.

Ts’ayweyi:lesteleq (Matt Wealick, MA, RPF) Editorial Board Chair

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Jacqui Beban

TLA President’s MESSAGE

What Forestry Needs: A Level Playing Field, Streamlined Safety and Heartfelt Pride

T

here are some shifts on the horizon for forestry, many of them exciting and some of them worrisome.

Here are three shifts I want to outline for you today as the TLA President.

Contractor Sustainability & Relationship Building

In May, the TLA Board of Directors traveled again to Vernon to support the ILA and its 59th Annual Conference & Trade Show. Due to the timing of the election, Minister Thomson was unable to join us in Vernon this year. However, both Boards along with Ken Houlden, General Manager of the NWLA, had a chance to sit down with George Abbott and his team and discuss the Contractor Sustainability Review that began this spring and will be completed by the end of 2017. The Review is the result of two years of strong advocacy work—we must level the playing field between contractors and licensees. I know George got an earful at the meeting regarding the many issues we face in the contracting world.

What struck me most in our meeting between southern Interior and coastal contractors was—despite the different operating areas—most of our issues were the same. This is a provincial issue and contractors across the province should be interested in what the Contractor Sustainability Review is trying to accomplish. Working together to improve the relationships between contractors and licensees will build a stronger forest industry for everyone.

Putting On-The-Ground Safety First

Safety is always at the forefront of our minds as we go to work. As we discuss in the article, “Sharing the Load: Streamlining Safety Program Administration” on page 16, contractors answer to many masters. Bill C45 has had an impact on safety programs in every business and I see a widening gap between legal versus on-the-ground safety. Doing proper due diligence does create onerous paperwork.

However, it is a real and valid part of any safety program. That said, does the paperwork and administration of multiple programs increase the safety of the people on-the-ground at its current level?

Does it help us build a culture of safety within the industry? Read the article and see what you think. But I think it’s time to streamline safety programs so we can achieve the same or better levels of safety with far less administrative duplication.

On a different safety front, an article in the Winter 2017 issue of Truck LoggerBC hit close to home for me. “Urban vs Rural: Addressing The Emergency Transportation Gap” highlighted the lack of helicopter emergency medical services available to the forest industry in BC and drew readers’ attention to a new report issued by Roger Harris, the BC Forest Safety Council Ombudsman, earlier this year. Our workers deserve to have access to timely helicopter evacuation when they are injured because that first hour after an injury is critically important to their recovery. Our system is not functioning at the level it needs to be and our workers deserve better. There are a lot of interested parties and a real appetite for change at the moment. The TLA is putting this issue at the top of our advocacy list and we hope to see real change in the not too distant future.

Heartfelt Pride In Our Work

Despite the challenges the industry faces, I’ve seen a resurgence of pride in forestry workers on the Island and it is great to see.

I see it in real life and also on social media. Forestry workers are posting videos of themselves on the job on Facebook and Instagram. It’s good to see pride in our industry coming back; it was lost for a long time.

Occasionally though, environmental groups turn our posts around and use a video of someone logging as evidence of the ‘destruction of our forests.’ While that’s irritating, I think it’s important to continue to get positive forestry messages out there

on the internet. Just keep other organizations in mind when you post and make sure every video shows you meeting (or exceeding) safety and environmental standards. Also, please consider any social media policies at your workplace. And while I’m on the topic, please reach out and follow the TLA on Facebook, Twitter and Instagram (@truckloggerBC). We share the latest news relevant to contractors as well as job postings and cool photos!

Talking about sharing positive local forestry stories, I also encourage you to check out the Forestry Friendly Communities website (forestryfriendly.com).

This website has been up and running since January and it’s sharing positive forestry stories from Vancouver Island and the Sunshine Coast. Check out the videos—you might recognize someone!

Looking To The Future

Finally, as we settle into some political uncertainty, we need to remember that the forest industry isn’t made up of faceless corporations. The people who work in forestry are you, me and our neighbours. You all work hard and are skilled at what you do. Every business that works in the forest industry, including the large licensees, hires local workers and supports local businesses. Regardless of the size of your company, we all depend on having a strong and stable working forest.

So politicians (new and old) take note, TLA members and their employees are the economic backbone of our rural communities. Our small- and medium-sized business owners take pride in handing out well earned paycheques. There’s satisfaction in knowing that your business allows people to earn a living for themselves and their families. Please become aware of our perspectives, because without a working forest, we won’t be able to provide those paycheques and create the employment that supports rural BC. Jacqui Beban, President, TLA Tel: 250.951.1410 Email: jacquibeban@gmail.com

Summer 2017 Truck LoggerBC 7

David Elstone

TLA Executive Director’s MESSAGE

Local & Grassroots: The TLA’s On-The-Ground Perspective on BC Politics

T

he BC forest industry is in the throes of a softwood lumber dispute which will have far-reaching impacts. At the time of printing, we’re layering on a potential change in leadership from the BC Liberals and a unique and untested NDP/Green alliance. These circumstances put forestry’s uncertainty factor at its highest in many decades. As any business person will confirm, uncertainty is a particularly non-productive state to be in.

Investors of all shapes and sizes, including TLA members who operate small- and medium-sized businesses reliant on the forest industry, always attempt to formulate a sense of certainty before pulling the trigger on their investments.

Those investment dollars are typically spent to upgrade, develop, build or become more competitive. Unfortunately, with rising uncertainty, those investment expenditures may slow or worse—be put on hold until clarity on forest policy and regulation is achieved.

That is where the Truck Loggers Association fits in. TLA members are the local contractors and suppliers that provide well-paying jobs throughout British Columbia and reinvest their earnings back into their businesses, their suppliers and their communities. Timber harvesting contractors log over 90 per cent of the trees harvested each year in BC. They are the economic backbone of rural communities in this province.

It’s clear to me that the TLA’s local, grassroots voice is very distinct from many other organizations that are directly influenced by broad international interests—we have no international shareholders, members or fundraisers.

The TLA answers only to our members who live and work in BC and they have a deeply vested interest in the success of the people of British Columbia and the sustainability of the forest sector as a whole. The TLA is also non-partisan and we work with all governing and opposition political parties to build a healthy

8 Truck LoggerBC Summer 2017

forestry industry and ensure that those working in the forest resource share in its prosperity.

So, how does the TLA and its members see that happening?

Contractor Sustainability Review

First and foremost, the current Contractor Sustainability Review is a key initiative for all logging contractors in the province. The Review is the culmination of two years of advocacy work.

There is a dire need to level the playing field between the thousands of contractors and the few forest tenure holders that control the resource and retain their services. Simply put, the business relationship between these parties has deteriorated to the point of being broken. The Review is broad in scope and important for the health of the entire forest industry including its workers and the communities that rely on it. We believe it’s important that any new forest industry policy should be put on hold until after we know the outcomes of the independent Contractor Sustainability Review overseen by George Abbott.

Training Tax Credit

Another critical issue is finding the future generation of trained workers to run the industry. The average age of timber harvesting workers is over fifty.

To learn all the skills of a logger, one must develop them on-the-job. That is why there is a proposed Truck Loggers tax credit for training new and existing workers on-the-job. The idea is rather than creating a bureaucracy around training, have those that know best how to deliver the training do so on-the-job, in a safe, effective and efficient manner.

The TLA believes this training model will be vital to the success of the timber harvesting sector going forward.

Protecting the Working Forest

Having a forest to go work in is fundamental. We must preserve the working

forest from continued cries for protection if we want investment in the industry to continue. There is a direct correlation between the working forest and the jobs. The less area we have to harvest, the less jobs and government revenue the forest resource will generate.

Promoting our Sustainable Forest Practices

British Columbia employs some of the best forest practices in the world supported by highly trained forest professionals regulated by the Association of BC Forest Professionals. Our industry meets stringent forest practices regulations and is subject to oversight from an arms-length organization, the Forest Practices Board. Most of our forests also have third-party verification of sustainable forest management by various forest management certifying bodies and we have developed higher level management plans and land use plans that tell us where to harvest and where to set aside areas for ecosystem conservation and preservation. But perhaps most importantly, there is a dedicated group of people, the forest workers, whose ethic and respect for their workplace outshines any form of regulation or environmental standard.

The forest resource is still the top natural resource revenue generator for this province. While taxes are a far larger source of income, we need to recognize that the tax base is supported by employment and businesses reliant on our forest resource. Continued uncertainty will begin to erode our industry’s ability to be competitive in a global market place. The TLA is here to provide a voice and balanced perspective that will help make our province a success.

David Elstone, RPF, Executive Director, TLA Tel: 604.684.4291 ext. 1 Email: david@tla.ca

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Wayne Lintott

Interior Logging Association’s MESSAGE

Interior Update: Conference Success and Contractor Sustainability Advocacy

A

long with the ILA Board of Directors and staff, I would first like to start out by thanking Reid Hedlund for his many years of service as Chairman of the ILA Board of Directors. Reid held the Chairman position at the ILA since 2007 and his knowledge of the industry and help with committee representation has been greatly appreciated. Reid’s input as Chairman over the last decade played a large part in the ILA’s current success. Reid will now take on the responsibilities of Past Chairman and we look forward to his contributions in this role. I also want to congratulate Randy Spence our new Chairman of the ILA Board and Len Gudeit our new First Vice Chairman. A thank you must also go out to Ed Smith who has filled every role. He’s been a Director, First and Second Vice Chairman, Chairman and Past Chairman over his 29 years with the ILA. Ed has retired from the timber harvesting industry and we wish him and his wife Vicki all the best in their future business ventures.

The ILA’s 59th Conference & Trade Show was a big success again this year.

Our theme was “Women Working in the Forest Harvesting Industry” and our luncheon guest speaker Melinda Morben, Manager of Operational Logistics for Island Timberlands held everybody’s attention during her presentation about supporting diversity and acceptance in the workplace. Several guests went up to congratulate Melinda after her presentation. Finning’s Crystal Kealey said, “She is extremely engaging and has a great sense of humour.” Heather Press, Manager, Talent for Tolko Industries commented that “Melinda brought an authentic, thought provoking first-hand perspective of being a woman working in a male dominated industry. She used humour and personal experience to get her points across and left the audience with practical ideas as takeaways.” I thank Melinda for making the time to speak to us in Vernon. Her luncheon speech was well received and very relevant in a time

where the industry is seeking people to fill jobs as baby boomers retire.

Finally, I would like to thank all those who participated in our 59th Annual Conference & Trade Show. Without your continued support and contributions we would not be successful year over year as we are.

Contractor Sustainability

Photo: Kari Silbaugh Photography

Again this year, the ILA board was pleased to host a joint meeting with the TLA and NWLA Boards. In the past, this has been a great opportunity for all three associations to discuss the challenges facing the timber harvesting sector of the forest industry. The main topic of concern continues to be contractor sustainability. The validity of this concern was confirmed by a review of PNL Consulting’s Forest Sector Contractor Economic Sustainability Report

by Aaron Sinclair, Principal of PNL. We also had the privilege of a meeting with George Abbott, President of Circle Square Solutions, who is the independent facilitator hired by government to conduct the Contractor Sustainability Review. George also held meetings on Friday with 14 different southern Interior logging contractors to discuss their concerns around contactor sustainability and challenges facing the timber harvesting sector.

ILA Scholarship Deadline

Finally, here’s a reminder that ILA scholarship applications are due by the end of July. The ILA offers $5,000 worth of scholarship funding: $2,000 for forestry, $1,000 for business administration, $1,000 for trades and $1,000 for a general scholarship. For more information or to apply, please go to our website www.interiorlogging.org.

The ILA’s 59th Conference & Trade Show was a big success again this year. Read all about it and check out the photos on page 21.

10 Truck LoggerBC Summer 2017

Summer 2017 Truck LoggerBC 11

12 Truck LoggerBC Summer 2017

Ken Houlden

North West Loggers Association’s MESSAGE

Working Together: Government, Advocacy and Technology

I

t took a while but the provincial election results were eventually confirmed. It will be interesting to see if the three parties holding seats in Victoria can keep this province rolling.

Time for them to put on their big girl and big boy pants, tackle the issues and not get bogged down haggling. One issue we’re facing that affects not only BC but all of Canada is the softwood lumber dispute with the US and the infliction of duties. British Columbia’s politicians need to present a united front on the issue and resist using it to beat each other up. A strong stance is needed to put the issue to rest.

As previously reported, government involvement in the Contractor Sustainability Review was announced at the TLA’s Annual Convention & Trade Show this past winter. It is our hope that with the election behind us the review remains a top priority. I have a lot of confidence in George Abbott’s ability to take the Review to the next stage and expect some of our local contractors will be contacted by him for interviews.

Locally, Ellis Ross was the successful candidate for the Liberals. In our meetings with Mr. Ross prior to the election, the NWLA stressed our support for LNG projects. The vast amount of equipment and manpower required for the development of the LNG industry has been and will be a substantial boost for Northwest contractors, suppliers, workers, retailers and the service industry. A relatively small natural gas pipeline has been supplying the Northwest for decades. Over that time, local contractors and workers have supplied services when major maintenance or upgrades were needed.

It is hard to gauge the contribution this pipeline has made to the Northwest economy over the decades but I am sure it is substantial.

Another issue brought forward was the low-grade fibre basket in the area.

In the past, there have been a number of international players looking for oppor-

tunities in this area, such as pellet manufacture and bio-energy. The NWLA encourages Mr. Ross to keep these possibilities top of mind. We want him to bring these topics to the table—and keep them on the table—in Victoria. If the entire timber profile is not being utilized, the result is a wounded forest industry limping along, trying to survive.

It was with a great deal of interest I noted timber moving from west to east this winter. That has not been a common occurrence in the past. I would suspect the continuing changes in Interior weather and the effects bug kill has had on Interior timber supplies may be partly, if not totally, responsible for this opportunity. For market loggers and

Small sawmills are agile and adaptive in reacting to market changes and make a largely unrecognized contribution to the local economy.

One sector of the forest industry I want kept in the spotlight is the small sawmilling sector. These mills represent about 30 per cent of the sawmill jobs in the area. They are agile and adaptive in reacting to market changes and make a largely unrecognized contribution to the local economy.

When government contemplates policy changes the possible effects on this sector need to be considered.

When I started out in the log hauling industry, five-axle trucks were the norm. Over the past 35 to 40 years the axle count has continually increased.

More articulation points and more experience are now required to operate the hauling units. Licensees have been working to have nine-axle units accepted by government. It used to be left to the hauling contractor to determine the axle configuration that best suited the terrain and timber in the area. That is not always the case now. Some licensees require haulers to adopt a certain configuration, forcing them to invest in new equipment. Who gets the economic benefit for the investment? Is the contractor in a financial position to make the investment?

Is the proposed configuration actually the best for the area? Does the change devalue current equipment? All these issues must be considered when contemplating this change.

licensees in the area, I hope the trend continues. More diverse markets tend to improve the value of timber as well as improve utilization.

In this issue of the magazine the article, “Sharing the Load: Streamlining Safety Program Administration” on page 16 should draw your attention. I don’t believe the true cost of satisfying the safety requirements of the various entities such as WorkSafeBC, BC Forest Safety Council and numerous licensee requirements is fully compensated for in current rates.

The man-hours required to satisfy the requirements add up when you consider how many different safety programs have to be followed. You also have to follow all the changes in the policies and incorporate them into your own program.

Streamlining safety programs and requirements has the potential to save time and improve safety systems.

Finally, I would like to thank Wayne Lintott and the Interior Logging Association for hosting me at their convention in Vernon this spring. It was a superb convention and I would encourage NWLA members to plan their visits to the Interior around the time of the ILA convention next year.

Summer 2017 Truck LoggerBC 13

14 Truck LoggerBC Summer 2017

Harry Nelson

Market REPORT

The Impact of Softwood Lumber on Small Forestry Firms

E

leven years after the previous softwood lumber dispute ended in a negotiated agreement, the BC forest sector is back at the table. While some of the emerging details of the current negotiation differ this time around, much of the playbook looks the same. At the time of writing, countervailing duties have been established, with additional anti-dumping duties to be announced on June 23.

Though the game is familiar, the field has changed: There are now fewer small sawmills and contractors operating in the province and several First Nations now hold forest tenures. What impact might a new softwood lumber agreement have on these players? Past experiences can offer some insights into how the dispute may unfold and the implications for small forestry businesses across the coast and the Interior.

As with the previous softwood lumber agreement, forestry businesses in the Interior will likely bear the brunt of the impact due to dependence on the US softwood lumber market. In the months leading up to the US announcement of countervailing duties, US lumber prices rose in anticipation, which will help to cushion the impact. Over the longer term, however, US prices will fall again as markets adjust, with offshore imports of lumber and US production filling some of the gap in supply to US consumers. A similar run-up and adjustment occurred during the previous softwood lumber dispute.

The effect of combined duties and lower lumber prices will translate into lower log values for softwood lumber log grades and reduced returns for companies involved in harvesting and selling timber.

Anticipated reductions in the allowable annual cut (AAC) due to lingering effects of the mountain pine beetle will keep log

supply tight. In the short term, this will help offset downward pressure on prices for those with timber to sell into the market. Those without tenure will face lower lumber prices and a smaller market while paying relatively higher prices for logs.

The effects of duties will also play out differently among firms of different sizes.

While most licensees will be slapped with retroactive duties, the three major licensees in the Interior will not, which will put them at an advantage as they attempt to compete for logs. Furthermore, if large firms under scrutiny for anti-dumping respond as they did the last time, they will attempt to increase volumes to reduce their per unit cost, increasing competition for logs. Contractors for major licensees will also be under pressure to reduce costs, even as they scramble to expand their procurement areas to find enough logs. All parts of the supply chain will be squeezed, with the smallest firms under the greatest pressure despite having less capacity to pay duties and fewer options to consolidate operations and cut costs.

Firms on the coast will be shielded somewhat by their diverse geographic and product markets, including log exports.

Logs that would otherwise have been milled into lumber for the US market may instead be exported to avoid duties. This shift to favour log exports over manufacturing could be strengthened if higher lumber prices in the US pull back high-quality logs that would otherwise have been exported from Washington and Oregon to Asia. This may lead to an uptick in demand for logs from BC and boost prices as overseas markets look to make up for a reduction in exports from Pacific Northwest states.

Firms dependent on red cedar, a highvalue coastal species, have already raised prices in the short term to pass on the

impact of duties. However, over the longer term, buyers will become less willing to pay these higher prices; as buyers eventually turn towards other products demand will erode. In the meantime, the limited supply of cedar means little benefit to small firms that use cedar and rely on the market although suppliers of cedar will see some small benefits short term. Over time, duties create an incentive to move value-added processing (especially cedar products) across the border to avoid the extra duties, similar to what happened during the last dispute.

Longer term, this is likely to lead to a decrease in higher-grade log values that could reduce harvest levels as marginal stands become uneconomic to harvest.

As in the Interior, the result will be margins that are squeezed for contractors due to lower harvest revenues while operating costs remain unchanged.

In short, the overall effect of the dispute will be to reduce market opportunities for lumber producers that will ripple through to their suppliers (contractors and timber suppliers, including smaller First Nations licensees and those looking to establish or grow their business, many of them First Nations). While negative impacts can be expected throughout the sector, smaller forestry businesses will be hit the hardest.

Over the next few years, absent a satisfactory resolution to the dispute or policy response to the distortions created by it, we are likely to see further consolidation within the industry and a less diversified industry—a continuation of trends that followed the last dispute.

Harry Nelson, PhD, Assistant Professor, Forest Resource Management Department, UBC

The Market Report is brought to you by:

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Email: Bryce@bwlog.ca Summer 2017 Truck LoggerBC 15

Sandra Bishop

Safety REPORT

Sharing the Load: Streamlining Safety Program Administration In antiquity Homer warned us: “If you serve too many masters, you’ll soon suffer.”

I

n today’s contracting world, this couldn’t be truer. Not only are contractors faced with serving several masters when it comes to the management of safety programs, they’re also faced with the challenges of an increasingly competitive business environment where efficiencies can mean victory.

“We know ‘safety is good business,’” says David Elstone, TLA Executive Director. “But there are indeed costs when it comes to delivering solid safety programs and likewise there are ways to be efficient and effective within that business process.”

As company owners, contractors operate their own safety programs and meet the requirements of the BC Forest Safety Council’s SAFE Companies

16 Truck LoggerBC Summer 2017

program and WorkSafeBC’s regulations.

They also must comply with the safety programs run by each licensee they work for. The result is an increasingly heavy administrative burden that is taking a toll on contractors and supervisors.

ters when it comes to safety. However, pushing paperwork does not necessarily improve on-the-ground safety nor is it best for business efficiency.” (For more information on the burden felt by supervisors, read “Stress & Strain: The Chang-

Now we need to look at what we’ve achieved in safety and figure out how we can take it to the next level by finding efficiencies.

“We need to find ways to make safety management effective and efficient, not only to achieve its intentions of providing a safe workplace and an efficient business, but to ease the huge burden on supervisors,” says Elstone. “Today’s contractor is trying to appease several mas-

ing Role of the Harvesting Supervisor” in the Spring 2017 issue of Truck LoggerBC.) The TLA worries the situation could lead to safety management burnout and worse—to a loss of respect for safety.

“Jumping through unnecessary hoops may satisfy some lawyers’ concerns over

due diligence, but it does not always raise the quality of safety for the boots on the ground,” he adds.

Doug Sladey couldn’t agree more.

He’s been operating Sladey Timber on the Sunshine Coast for nearly 47 years.

“We all agree safety is our number one concern,” he emphasizes. “You want to make sure everyone in our industry gets home safe at night and you don’t have any accidents. But the reality is safety program administration now costs a fortune to run.”

A significant part of the challenge facing contractors is the requirement to satisfy due diligence of their employer.

No two licensees are alike when it comes to safety documentation standards.

Wahkash Contracting is a 90-employee stump-to-dump timber harvesting and road building operation on northern Vancouver Island. President and Partner Dorian Uzzell explains, “Each licensee’s safety program has its own set of similar but different requirements—TimberWest is different than Interfor and Western is different than both of them.”

BC Forest Safety Council Director of SAFE Companies Cherie Whelan has

been traveling the province in a series of SAFE Companies town hall meetings, listening to industry and hearing about safety concerns. She understands there are inconsistencies and duplication amongst licensee requirements that are increasing the administrative burden for contractors and that streamlining is a much needed solution. In fact, coastal licensees have asked the BC Forest Safety Council to look at ways to make safety administration more easily shared between themselves and contractors.

“Organically, we’re trying to define what is needed to reduce the administrative burden by reducing duplication for contractors,” said Whelan.

Whelan is carefully examining the situation and analyzing the best way to use technology “to build a system where we can more readily access and leverage information that comes in from SAFE Companies audits.” She says progress is being made. While planning is in the preliminary stages, she foresees technology coming to the rescue as early as next year.

In the meantime, timber harvesting contractors’ safety paperwork piles continue to grow and the value proposition

contractors offer often seems disregarded in the bidding process. “We shouldn’t manage for minimums, but some contractors can get frustrated when they operate at a higher level on the safety management spectrum than others and it’s not recognized by their customers.

It creates an interesting dynamic when bidding on work,” reflects Elstone.

Everyone agrees great gains have been made in safety over the last 14 years. Now we need to look at what we’ve achieved and figure out how we can take it to the next level by finding efficiencies. “The kind of safety programs we have now didn’t exist 30 years ago,” says Elstone.

“So understandably there’s going to be some growing pains as we learn what works and what doesn’t from a business perspective. At the end of the day, we’re all held to the same law. We need to make sure what we’re doing is elevating the level of safety on the ground and is the best use of our safety dollars.”

Emergency response plans save lives Practice your ERP today.

Every minute counts.

Don’t wait for a real emergency to find out if your response plan works. View the emergency response plan video at worksafebc.com/health-safety.

Summer 2017 Truck LoggerBC 17

18 Truck LoggerBC Summer 2017

Business MATTERS

Chris Duncan

Structuring Your Contracting Business

Part One: Introduction to Common Structure Issues

M

any factors can influence the success of your business—not least of which is the legal structure of the business itself. Using the wrong structure for your situation can have far-reaching tax consequences. So as your enterprise grows and becomes more successful, it becomes increasingly important to update your business structure.

I have seen many situations where the corporate structure for a business or a group of companies has become extremely messy and puts the business owner at a distinct disadvantage. This is especially common for businesses that are in the growth or maturity phase. Very often the business has come through a period of rapid change and growth and has started to generate excess funds, accumulate significant business assets or acquire additional business lines.

While these are all good things on the surface, they can start to cause problems if the business is not structured correctly.

Fortunately, it is possible to reorganize your corporation to fix some of the common problems and take maximum advantage of tax planning opportunities. However, there is no one-sizefits-all solution; you must consider the specifics of your situation before determining the optimal business structure.

Over the next three parts of this series, we will look at a case scenario example from several different perspectives.

Case Scenario Example: Introducing Jim

Jim is the sole shareholder of HoldCo, and HoldCo is the sole shareholder of JimCo. In addition to the shares of JimCo, HoldCo holds shares of RealCo that holds rental properties.

Through Jim’s hard work, JimCo has been extremely successful over the past number of years. JimCo now holds significant equipment and has paid off most of the equipment financing. JimCo also holds an investment portfolio of $1,000,000 and shares of a trucking

business (TruckCo). It is expected that JimCo and TruckCo will continue to accumulate excess cash of $500,000 a year for the next few years.

Jim is married to Sarah and they have two children who are in university. Sarah does administrative work for JimCo one day a week and is paid a small salary from JimCo. Sarah has no other source of income. Jim and Sarah’s children have no sources of income and at this point neither has expressed an interest to become involved in the JimCo or TruckCo businesses. Jim currently has no plans to retire or to sell, but realizes that at some point he will need to step away from the businesses.

one offer to buy either of his operating companies (JimCo or TruckCo). This is a large tax exemption that could allow him to sell and have more money to retire with, should he structure things differently.

Both JimCo and TruckCo are generating excess cash, yet there is no method of removing the funds from the corporate group without subjecting them to personal tax. Without other means to remove funds, Jim is subject to the highest personal tax rates for income over $202,801 annually.

Under the current structure, there is no means of splitting income with Jim’s

Using a diagram, Jim’s structure looks like this:

Common Problems Caused

by Inappropriate Structures

Are there concerns with Jim’s group of companies? Absolutely. It appears that as Jim’s businesses have grown, various updates were made to his business structure that make little sense when you look at the big picture.

Jim’s current structure leaves him open to a lot of different kinds of risk. With his current structure, Jim has many possible tax issues, succession and exit plan issues and other miscellaneous risks associated with creditors and estate planning.

In the next three issues, we will delve deeper into these different angles and discuss the issues with the structure relating to each of them.

Tax Issues Jim has no means of utilizing his Capital Gains Exemption (CGE) should some-

family members other than through the payment of a salary. By income splitting with his wife, they could lower the family’s overall tax burden annually.

(Continued to page 26)

Summer 2017 Truck LoggerBC 19

Stephen Ross

Legal REPORT

Cut Control Statements: The Contractor Scorecard

I

n a time of crisis in the sustainability of many contract logging operations in this province, contractors require as much information as possible to efficiently prepare for and perform their ongoing contractual obligations to their licence holders.

They need to know what their work commitments will be under their contracts, both short term and long term, to plan their capital expenditures, maintain their cash flow, and finance their operations.

Pursuant to the Timber Harvesting Contract and Subcontract Regulation (“the Regulation”), the amount of work entitlement of replaceable Bill 13 contractors must be expressed as a specified percentage of the total amount of timber processed by their licence holders in their licence areas on an annual basis. But work flow in the logging industry is not constant, so the Regulation provides licence holders with the flexibility of “compliance over time” in the allocation of a different amount of work from that specified in the contract for bona fide business and operational reasons. As a result, at any given time during an operating year, or even during a multi-year amount of work compliance period, the contractor does not know whether it has received its full amount of work entitlement, nor how much work it will receive in the future.

This makes operational planning very difficult for contractors and verification of their entitlement virtually impossible.

As a part of its administration of the logging operations of licence holders, the Ministry of Forests, Lands, and Natural Resource Operations delivers cut control statements to them pertaining to their harvesting of timber under their licences on a periodic or annual basis.

Those statements contain such information as the annual allowable cut of the licence, the adjusted, billed, and unbilled volumes of timber harvested, the overcut from the last period, the total waste volume (of critical importance to a contractor since the higher the average applied to the licence, the lower the amount of work available to the contractor), and

20 Truck LoggerBC Summer 2017

the percentage harvest of the cut control period and total cut control number.

Such information would permit contractors to know where they stand, whether they have received their adjusted amount of work entitlement, and what they must do to prepare for their future operations, including how much work they will receive and what quality of timber it will be.

However, the Ministry and licence holders will not release those cut control

contractor can commence an amount of work dispute and request an arbitrator to compel the disclosure of that information by the licence holder, but that process is expensive and time consuming, and does not assist the contractor in conducting its ongoing operations.

The information contained in the cut control statements is necessary for the Ministry to ensure that licence holders are complying with their obligations under their licences. Similarly, some of

Information in the cut control letters would permit contractors to know where they stand. statements to the affected contractors because they say those statements contain confidential information regarding the licence holders’ operations, including overcut positions and harvest volumes. Some licence holders also prefer not to disclose how much timber they are harvesting in any given year for proprietary economic and financial reasons.

The Forest Act in section 136 prohibits a person employed by the Ministry from releasing or divulging specified timber harvesting, pricing, costing, and sales information without the consent of the reporting licence holders, unless the information cannot be identified with the person who submitted it. Most of that information, other than the volume of timber harvested, is not included in the cut control statements which a contractor requires to verify its receipt of its amount of work entitlement, and to plan for its future work, both financially and operationally.

The contractor has no other means of obtaining the information vitally important to maintaining sustainable operations, and to quantifying and enforcing its amount of work contractual rights. The Regulation sets out how the contractor’s amount of work entitlement is to be determined, but provides no way for the contractor to obtain disclosure of the information necessary to quantify that amount of work entitlement. The

the information contained in those statements (such as the licence AAC, adjusted volume, and waste volume) is necessary for contractors to ensure that licence holders are complying with their amount of work obligations under the Regulation and to facilitate the performance by contractors of their obligations under their logging agreements with the licence holders. Contractors cannot negotiate terms in those agreements compelling licence holders to disclose that information because logging agreements are not negotiated between them on a level playing field. The purpose of the Regulation is to level that playing field.

It is in the interests of both parties of long-term replaceable logging agreements to exchange information that reasonably facilitates the pursuit of their mutual goals. If licence holders will not voluntarily disclose to contractors, on a confidential basis, the timber harvesting information that contractors reasonably require to quantify their amount of work entitlement and to perform their obligations in a sustainable manner, then they should be compelled to do so by an appropriate amendment to the Forest Act and addition to the Regulation.

Stephen Ross is a forestry lawyer who consults and contributes to industry publications. He can be reached at steveross4375@gmail.com.

ILA Conference & Trade Show Review

By Brenda Martin Photo: Kari Silbaugh Photography

T

he ILA’s 59th Annual Conference and Trade Show was a resounding success again this year! The conference theme, “Women Working in the Forest Harvesting Industry” looked at the labour shortage the forest industry is facing and one way of addressing it—working to attract and hire more women. The Conference also hosted four safety sessions and, in addition to the ILA conference events, the indoor trade show and the spectacular outdoor equipment show made it an event not to be missed!

On Thursday, before the event started, the ILA was pleased to host the Truck Loggers Association (TLA) Board and the ILA and TLA Directors sat down together to discuss the challenges they face. Both Boards also sat down together with George Abbott to discuss the ongoing Contractor Sustainability Review.

(For more information on this, turn to page 43.) Once again, TLA and ILA Board members found they had many overlapping challenges despite operating in different areas of the province.

The conference officially kicked off on Thursday evening with the Meet & Greet event which gave delegates a chance to catch up with people they hadn’t seen in a while and do some networking. Once again, the smorgasbord of appetizers and snacks was delicious! This was also the first opportunity to check out the impressive silent auction. Organized by Canadian Women in Timber, the auction offered a wide selection of items.

There really was something for everyone.

Friday morning brought the opening of the indoor and outdoor tradeshow exhibits at Kal Tire Place. This year brought another great turnout of equipment in the outdoor show. “I’m pleased with the response we had from our outdoor equipment exhibitors again this year,” said Wayne Lintott, General Manager of the ILA. “I know it takes time and money for these guys to bring the equipment in and set it up. But these equipment shows are part of our history and it’s great to see ours thriving.”

This year, due to the timing of the election, Minister Thomson was unable to attend the ILA’s traditional Minister of Forests Luncheon. However, Melinda

(Left to right) Wayne Lintott, General Manager, ILA; Reid Hedlund, Past Chairman, ILA; Melinda Morben, Operational Logistics Manager, Island Timberlands; Randy Spence, Chairman, ILA; Akbal Mund, Mayor of Vernon Morben, Manager of Operational Logistics for Island Timberlands, more than made up for his absence with her excellent presentation, “Diversity in the Workplace.” Her presentation focused on supporting diversity and acceptance in the workplace through understanding and valuing the skills and perspectives women bring to the forest industry.“Melinda brought an authentic, thought provoking first-hand perspective of being a woman working in a male dominated industry. She used humour and personal experience to get her points across and left the audience with practical ideas as takeaways,” said Heather Press, Manager,Talent for Tolko Industries.

Friday night the Dinner & Dance kicked off at 6:00 pm. The food was delicious and there was heaps of it! New this year, the band Easy Fix played a great line-up and there were lots of people up on the dance floor all night long.

The silent auction run by the Canadian Women in Timber also closed on Friday night raising $7,170 of which $3,162 was donated to Canadian Women in Timber to support their forestry education program.

The trade show ran all day Saturday attracting the public and engaging people in conversation about forestry. The forest industry doesn’t always do a great job of reaching out to the public. This

annual trade show with both its indoor and outdoor exhibits is an opportunity not just for industry to network but also for industry to reach out and talk to community members about forestry.

Over Friday and Saturday, the BC Forest Safety Council (BCFSC) offered four sessions on different aspects of industry safety. Here’s information on two of them courtesy of the BC Forest Safety Council.

For more information, read the BCFSC’s June 2017 issue of Forest Safety News.

“What is Up with this BS – Being Safe!”

Eldeen Pozniak, of Pozniak Safety Associates Inc., reminded participants that until we recognize that we all have a unique definition of “safety”, we will never be on the same page as to what safety means. Using terms “family” and “good times” she emphasized that for each person in the room, their personal definition of the word was unique, depending on everyone’s unique life experiences and life stage. Further, the meanings differ for the same person too depending on their age. Her point being that until we all work to a shared, defined definition of what safety is—and isn’t—we all have a different mental image—based on our own values, experiences, age and employment—when we think about safety, and what safety means.

Summer 2017 Truck LoggerBC 21

All photos: Kari Silbaugh Photography

“Prevention Enforcement and Recovery”

Kathleen Werstiuk is a Wildfire Risk Manager for the Ministry of Forests, Lands and Natural Resource Operations’ BC Wildfire Service. She is responsible

22 Truck LoggerBC Summer 2017

for provincial risk, recovery and enforcement/prevention business areas, including policy, fire origin and cause investigations, opportunities to be heard and freedom of information requests. As a certified risk manager and chartered

insurance professional, Kathleen had an important message for all forestry operators, landowners and licensees that is best summed up as “know your insurance coverage and understand how the cost recovery process works” so that you

are not surprised to find out that you are on the hook for wildfire suppression and damage costs after the fact.

Overall, the ILA 59th Conference and Trade Show and the Interior Safety

Conference were rousing successes.

“I’d like to thank Nancy Hesketh for all her hard work in planning this event, the ILA board for their support and the BC Forest Safety Council for providing the four safety sessions this year,” said

Lintott. “And I’d like to thank everyone who attended and helped make the ILA’s 59th Conference & Trade Show such a success!”

Summer 2017 Truck LoggerBC 23

Photo: iStock

The Jay Treaty: Challenging First Nations’ Right to Trade in North America

By Ian MacNeill

I

s it possible that a 200-year-old treaty between Britain and the United States could open the door for First Nations in British Columbia to export logs and lumber to First Nations buyers in the US without being subject to duties or the limitations of international trade barriers, such as countervailing duties currently being imposed by the US on Canadian lumber imports?

The Treaty of Amity, Commerce, and Navigation, Between His Britannic Majesty and the United States of America, more commonly known as the Jay Treaty after US negotiator John Jay, was signed in London, England in 1794. The primary objective was to more normalize relations between the two powers after their messy divorce, a.k.a. the American Revolutionary War (1775–1783). Among other things the treaty sought to start the process of determining where the boundary should be drawn between the United States and what was to become Canada.

24 Truck LoggerBC Summer 2017

On the understanding that this as-yetto-be-determined line in the sand would cut through traditional Aboriginal lands and trade routes the treaty contained an interesting clause. Article III stated that “Indians dwelling on either side of the said boundary line” have the right “freely to pass and repass, by land or inland navigation into the respective territories and countries of the two parties on the continent of America... and freely carry on trade and commerce with each other.”

What’s more, they were entitled to carry on this commerce without paying “any impost or duty whatever.”

It’s the bit about carrying on trade and commerce with each other that’s got registered professional forester, First Nations strategic advisor and TLA Director Matt Wealick thinking. Although Canada never ratified the treaty and has been reluctant to honour it, the United States did sign it and has honoured it, at least with respect to the passing back

and forth part. For generations First Nations in Canada have been able to live and work in the US; Wealick used his status to get a Green Card in 1999 so he could play pro hockey in Texas for the El Paso Buzzards. He reasons now that if the US is obligated to honour the immigration bit it should also be obligated to honour the trade bit. “I’m proof that they support the Jay Treaty with respect to immigration, and assuming they can’t pick and choose which pieces to support, and that the other part of it is free trade, First Nations in BC should be allowed to bring goods into the States without paying duties.”

So what now, load up the truck and head for the border?

Not so fast.

There are a number of ducks that need to be lined up first—not the least of which is finding First Nations partners south of the border willing to play ball—and then there are the legal issues

that would have to be cleared up, says Angeline Nyce, a First Nations lawyer who is also a registered professional forester. These can turn into quite a laundry list and could include, but are not restricted to: is the Jay Treaty in fact a treaty, if it is, is it enforceable in the sense that you can take specific promises and enforce them, and if so, in what jurisdiction? Remember, Canada never did ratify. Even if you can establish that there is a “right” to free trade between First Nations in Canada and the US, the question could then become, is it possible to justifiably limit that right by enforcing regulations applying to duties and levies if the exercise of those rights had the potential to do “harm” to affected parties? Expect the US Lumber Coalition to have an opinion on this one.

“I’m skeptical in the sense that on the Canadian side of the border the way the law is now the courts don’t consider it as an enforceable treaty in terms of

whether it provides an open right to trade,” says Nyce. The way “the law is now” is based on several attempts by First Nations to test it in the past. In the 1950s Louis Francis, a Mohawk from Akwesasne, a nation that straddles the Quebec-New York border, was charged duty on a used washing machine he attempted to bring into Canada. The case went all the way to the Supreme Court before getting tossed on a technicality.

Fast forward to 1988 when Akwesasne Grand Chief Mike Mitchell along with various other grand chiefs and 400 Mohawks walked across the International Bridge from the US to Canada bringing with them various goods for community use and as gifts for other First Nations.

Grand Chief Mitchell was charged with violations of the Customs Act and after 13 years of wrangling the Supreme Court ruled in 2001 that the aboriginal right claimed had not been established.

As a result, duties could be imposed

and ordered Chief Mitchell to pony up $361.64. According to the newspaper First Nations Drum, a bitterly disappointed Chief Mitchell, “who grew up watching customs agents confiscating goods at the checkpoint near his home, “just lost faith in the Canadian system.”

So, does that mean park the truck and hang up the keys?

Not at all, says Nyce. First Nations seeking access to trading rights can and should use the promises made in the Jay Treaty as part of their arguments. “You can at least say, way back when, promises were made, and this is foundational to the law and the way it has developed.

Start from that point and work forward to Section 35 of the Canadian Constitution Act (recognizing Aboriginal and treaty rights), and then try and prove what that means in terms of our rights to harvest trees and trade and sell them.”

Obviously legal decisions in Canada do not carry the weight of law in the

Summer 2017 Truck LoggerBC 25

United States. In that case the promises made in the Jay Treaty could be used to plead a case for allowing First Nations in Canada to obtain “exemptions” from restrictions and duties. Considering the hard-nosed attitude of the US Lumber Coalition that may seem like a hard sell, but Gary Bull, head of Forest Resources Management at UBC, says there’s reason for optimism. A few years ago Professor Bull invited the US Lumber Coalition and various other players to engage in a dialogue at the university, and while not much changed on an official level, US coalition members did say that “if there is anything we are sympathetic to, it is community forests and First Nations.” One could infer from this that the Americans would at least be open to discussion.

In any event, Professor Bull says that the proposition is worth testing if only because of the way in which it could potentially advance tenure reform in BC, a system he describes as completely dysfunctional.

“If we’re going to have a solution for a lot of the forest land base in Canada we’re going to have to involve Aboriginal communities in finding a joint solution,” says Bull. “If that becomes the vehicle for moving material across the border, and it gives Aboriginals a fair share of the business partnership, then it’s a sensible thing to do.”

Potential industry partners for First Nations looking to advance cross-border trading are also paying attention.

“It’s definitely an interesting prospect,” says John Iacoviello, forestry and timber development manager at Probyn Log. “Hopefully we’ll hear more about it.”

Dusty old document that it may be, the Jay Treaty nevertheless illustrates recognition on the part of the treaty signatories that First Nations had, and should continue to have, the right and ability to travel and trade in their traditional territories, and that that right should not be infringed.

(Continued from page 19) Succession and Exit Plan Given that JimCo holds the shares of TruckCo, there are complications that will arise should Jim want Holdco to sell the shares of JimCo. If Jim’s children decide that they would like to be involved in any of Jim’s businesses, there is currently no means of allowing them to share in the future growth of JimCo. By restructuring Jim could be able to uncomplicate the sale of JimCo while keeping TruckCo or he could bring in means to allow the children to share in future growth as they learn to run the business.

Creditor Risk Given the nature of Jim’s businesses, there is significant exposure to creditors. Should an accident occur in JimCo, creditors can make a claim against any of the assets of JimCo. Estate Planning Currently no estate planning work has been done to attempt to minimize Jim and Sarah’s estate tax should they both die. All the value in the corporate group currently attributes to Jim and as the value of the group grows, the estate tax liability to Jim and Sarah grows.

In Conclusion

As you can see from the above case scenario, inappropriately structuring the business can result in significant tax and business issues. It’s important to discuss your individual circumstances with a professional who can guide you and help you effectively plan for a business structure. However, over the next few issues I’ll show you how Jim can update his business structure to address his tax issues, plan to exit, protect his assets, and plan his estate effectively.

Stay tuned for Part Two: Tax-based structures where we will talk about ways Jim can update his structure to be more tax friendly.

JACQUI BEBAN VP Logging C 250.951.1410

F 778.441.1191

T 778.441.1190

E jacqui@beban.bc.ca

#204 – 321 Wallace Street Nanaimo, BC V9R 5B6

26 Truck LoggerBC Summer 2017

Chris Duncan, CPA, CA, is a Business Advisor with MNP’s Private Enterprise group who specializes in real estate, construction and forestry businesses. Working out of the Duncan office and serving clients across Vancouver Island, Chris draws on his unique background to deliver industry-specific advice to help business owners stay in compliance, make informed decisions and achieve their goals. Chris can be reached at 250.748.3761 or chris.duncan@mnp.ca

TM

Summer 2017 Truck LoggerBC 27

Photo: iStock

Old Fashioned Conversation: Forestry Communities Reach Out To Industry

By Sandra Bishop

T

he forests are all around them, “our backdrop” one mayor says when describing the movement local governments are leading to learn more about forestry, how the industry operates and its economic impacts.

Some say it began when the TLA welcomed Campbell River, Port McNeill, Port Hardy and Port Alberni, along with Powell River and Gibsons as associate members in 2016. (Sayward just joined in early 2017). Campbell River Mayor Andy Adams says communities recognized the TLA’s leadership and saw this as an opportunity to “work together with the Minister and the entire forest sector on how to ensure there is a viable, sustainable forest sector in our region.”

Further demonstrating its own leadership at this time, Campbell River struck a Forestry Task Force “to enhance the sustainability of the forest sector and to support existing and new businesses.”

Since then, the TLA and the Union of BC Municipalities (UBCM) independently released survey results that

28 Truck LoggerBC Summer 2017

pointed out gaps in communication and community engagement.

The TLA’s research found that community leaders are frequently unsure of the province’s efforts to improve forest practices and policies, and even when they are aware they often have difficulty being heard. The TLA is committed to fostering dialogue on the critical issues that face communities and threaten the sustainability of the timber harvesting sector.

“Our fortunes go hand in hand,” says David Elstone, TLA Executive Director. “And we believe these voices should be heard.”

And so do others. Reaction has been swift and communities are reaching out to the coastal forest industry because they know the value of dialogue and are seeking an informed, balanced approach to forestry in their communities: • In March the Regional District of Nanaimo (RDN) held “Skog Dag” at Harmac in Nanaimo to give lo-

cal government a better understanding of the forest industry’s economic impact on the RDN. • In April the Association of Vancouver Island and Coastal Communities (AVICC) signed a landmark Memorandum of Understanding with Coast Forest Products Association to further strengthen the close ties between industry and communities.

• At AVICC’s annual convention Port McNeill harnessed the opportunity to pass a resolution to create a panel focused on the management and preservation of oldgrowth forests.

• AVICC’s convention, hosted by Campbell River, included a forestry workshop for delegates to support communication between community leaders and the industry and increase understanding about how the industry operates.

Skog Dag

Skog Dag is a Swedish term that means ‘forest day’ or a ‘day in the woods.’ The event was organized by Bob Rogers, a director of the Regional District of Nanaimo and retired registered professional forester, who wanted to present the facts.

The RDN’s strategic plan focuses on supporting traditional industries as well as new ones, and Rogers is committed to finding the right balance and supporting industries that provide jobs and support communities and regional economies.

Forty per cent of the regional economies on BC’s coast rely on forestry.

“I was concerned about the awareness of local government representatives with regard to the impact of the sector, of the forest economy where we live and where we’re elected by the citizens we represent as local government.”

With the support of the Board and the forest sector, Rogers brought together RDN directors and staff, including the member municipalities it represents—

Nanaimo, Lantzville, Parksville and Qualicum. It also included industry representatives from large and small companies across all aspects of the industry from planning through harvesting to transportation and manufacturing, including associations and the Ministry of Forests, Lands and Natural Resource Operations.

“I thought it would be beneficial to have the forest sector come and talk about the impact of the sector on the RDN. It just brought all these parts together and gave everybody a chance to have a twoway dialogue and look at the forest sector from different perspectives.”

Rogers recalls how the presenters illustrated their interconnectedness, showing how the success or failure of each of them had a domino effect on the others, and how forest industry transactions impact the business community in the RDN. “Each presenter had a list of about 200 to 300 suppliers they access in their operations, businesses located in our communities. The whole sector

is a big employer but it also supports the business community in a huge way.

Local governments are providing services in the way of planning parks and recreation, water, sewer, solid waste removal, fire protection and such. The forest sector, in a large part through employment and taxation, allows us to fund the services we provide to our communities.”

Rogers says local government knew forestry matters, but Skog Dag illustrated “why it matters and how much it matters.”

Ian Thorpe agrees. He’s a retired teacher and school administrator of 35 years and serves as vice chair of the RDN. Prior to Skog Dag, he held “a basic understanding that forestry has always been one of the mainstays of our economy” but didn’t have a lot of specific knowledge about how far reaching the industry is. Thorpe says he came away getting much more out of the day than expected because “it went beyond forest practices and stewardship to look at the economic impact of

Summer 2017 Truck LoggerBC 29

harvesting and log transportation—tug boats and logging truck drivers, things I had never really thought of as being directly impacted by forestry.”

Rogers adds, “Forestry’s importance is central to our government deliberations. It was a great lead-up to the AVICC workshop.”

Forestry Memorandum of Understanding (MOU)

The MOU between AVICC and Coast Forest Products Association is a significant milestone. It further defines the partnership between the forest sector and coastal communities by strengthening two-way engagement with respect to planning and operations at the local level and collaboration on forest policies where there is mutual agreement.

“Forestry affects us all,” comments Barbara Price, (past) President, AVICC, which has a membership of 53 local governments. “There is a real interest for our membership in what happens in our forests and certainly there was a very strong feeling [from the UBCM survey] that there was a disconnect.”

30 Truck LoggerBC Summer 2017

Price notes that the MOU is an important starting point for mapping a path forward. “We don’t want it to be just a dusty document. It’s all well and good to say we agree to communicate better and work together but unless you define this, it becomes meaningless…What’s understandable to a professional forester may not be understandable to a member of Council.”

Coast Forest Products Association and its 18 member companies provide more than 38,000 well-paying jobs to people that support families and communities throughout the coast. It is committed to aligning “the interests of both associations’ members to work together to deliver on the benefits of ongoing management of coastal BC’s sustainable, renewable forest resources.”

At the heart of all local government is decision-making. “I think the more we communicate, the better the outcome,” Price explains. “It doesn’t mean we’ll always agree, but once we understand where our differences are, usually you can come to solutions.”

Port McNeill Resolution

Port McNeill Mayor Shirley Ackland said “Hallelujah!” when she saw the MOU. “It was very close to the resolution that Port McNeill moved, which talks about the need for and the importance of open communication between forestry communities, large forest companies and First Nations,” Ackland explains.

The resolution, passed at AVICC, supports the formation of an advisory group consisting of First Nations groups, local government representatives from forest communities, as well as industry and environmental representatives to focus on the management and preservation of old-growth forests.

Ackland hopes the resolution will broaden the dialogue about plans in her community and fully consider the impacts of decisions that impact Port McNeill, where 80 per cent of jobs are reliant on the forest industry.

“A balance between healthy forests and healthy communities is essential and achievable,” the mayor emphasizes.

“I firmly believe the more people involved in the decisions made, the better the decision. It’s hugely important that all those voices are at the table.”

Photo: Courtesy of the Town of Port McNeill

• PATENTED

OVER CENTRE CAM

Mayor Shirley Ackland’s resolution at AVICC stressed the importance of open communications between forestry communities, large forest companies and First Nations.

AVICC Forestry Workshop

As leader of Campbell River’s Forestry Task Force, Councillor Charlie Cornfield helped plan a forestry workshop for AVICC’s April convention, which Campbell River hosted this year.

It was his mission “to provide factual, unbiased information to help communities stay up-to-date and make better informed decisions.” It just so happens that the Forestry Task Force’s Communications Sub-committee is also working on this for the City of Campbell River. The AVICC forestry workshop was a natural extension, an opportunity for the north Island to provide a forum for community leaders to learn about how forestry is practised in coastal BC and how other communities participate within the forest industry.

Joe Stanhope of the Regional District of Nanaimo facilitated the AVICC workshop on Forestry Management.

“The panel was very diverse and provided a good cross-section of perspectives,” he emphasizes. It included representatives from the First Nations Forestry Council, UBCM’s Economic Development Committee, The Association of BC Forest Professionals and the Ministry of Forests, Lands and Natural Resource Operations.

“Participants went away with a better understanding of the forest industry, the definition of old-growth and what’s involved in forest policy regulations and decision-making,” remarks Cornfield. “Government went away with an increased awareness of the importance of having communities involved.”

Rogers says everyone wins when improved communication leads to increased understanding. “I’d recommend to any community in BC to do something similar to Skog Dag for elected officials in those areas where the impact of forestry might not be so obvious. By increasing knowledge you give both elected officials and staff an awareness of how critical the forest sector is to the community’s ability to provide services.”

In the end, “we all have a vested interest in the sustainability of the coastal forest industry and our communities,” concludes Mayor Adams.

Elstone couldn’t agree more. The inclusion of local governments in the TLA membership has strengthened engagement and is leading to new approaches towards communication.

“We’re all stronger for it,” he affirms.

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Three Parties, One Province: Hearing All The Perspectives On Forestry

TLA Editorial

As we settle into the results of the last election and figure out how the government will move forward, it is important to reach out to all three parties to understand their perspectives on BC’s forest industry.

Photo: Courtesy of the BC Liberals

For example, since we first started work in China 14 years ago, exports there have grown 2,000 per cent. We’re working on duplicating that strategy in India. We’ve quadrupled softwood exports there in just three years. Our Minister of Forests, Lands, and Natural Resource Operations Steve Thomson has done an incredible job identifying and creating new opportunities overseas— both opening doors, and selling them.

Premier Christy Clark, BC Liberals

As the forest industry continues to work to ensure global competitiveness, what do you think you can do to help us achieve that?

It’s about building a competitive industry at home, while also opening new markets for our products, building on our track record of growing new markets, particularly in Asia.

Given forestry is the economic backbone of BC’s rural communities, how do you think your government can support forestry in BC? Forestry isn’t just the economic backbone of BC’s rural communities—with over 60,000 jobs in 140 communities; it’s the backbone and founding industry of our entire province.

Photo: Courtesy of the NDP

As this new minority government forms, what is your focus for the forest industry outside of seeking a resolution to the softwood lumber dispute?

We’re focused on the Forest Sector Competitiveness Agenda we released last August. The agenda has three goals: healthy, resilient forests; globally competitive and diverse industry; stable communities and First Nations.

This is our road map for the future. It recognizes challenges such as declining timber supply, and the ongoing uncertainty with the United States, while also identifying opportunities and ways to capitalize on them, especially around technology and innovation.

As always, we are also focused on diversifying our markets. We have achieved success opening up the Chinese market for BC wood, and are also making inroads into India.

As the working forest land base in BC continues to shrink as a result of environmental protection, how can we ensure a strong and sustainable forest industry in BC? Healthy forests are necessary to ensure a strong, sustainable forest industry for now and the future. In addition to supporting jobs, forests are also important for wildlife and recreation, that’s why in addition to programs such as Forests for Tomorrow, we’ve invested $235 million in the Forest Enhancement Society of BC over the last two years to restore damaged forests, improve wildlife habitat and reduce wildfire risk.

Environmental protection will continue to be an integral part of sustainable forest management. Working with the industry, our government has been piloting co-location reserves, since old growth management areas often serve as wildlife habitat areas for certain species.

BC forest companies can be proud of their environmental record, with more land certified to independent sustainable forest management standards than anywhere else in the world.

It starts with supporting forest-dependent communities. We’ve already invested more than $1 billion to help prepare for economic transition for those suffering from the effects of the mountain pine beetle.

That includes the $100 million Rural Dividend designed to help rural communities diversify their economies, which has already helped more than 300 local governments, First Nations and community groups.

We also invested $185 million in the Northern Development Initiative Trust to help northern communities diversify their economies. In just the last 11 years, it has invested in more than 2,300 projects that have leveraged other funding to bring $1.3 billion in new investment to central and northern BC.

John Horgan, NDP

As this new minority government forms, what is your party’s focus for the forest industry outside of seeking a resolution to the softwood lumber dispute?

My focus throughout government is on creating and maintaining good-paying, stable jobs for British Columbians, fixing the services people rely on and making life more affordable for families.

Summer 2017 Truck LoggerBC 33

As the forest industry continues to work to ensure global competitiveness, what does your party think you can do to help us achieve that?

If we want the world to use our products we need to lead the way. Unlike Christy Clark and the BC Liberals we will require the use of BC wood in public projects to help kickstart our engineered wood industry and create jobs in local communities. We will also invest in research into new BC wood products and new processes to help us get the most jobs out of our forests. And we will work with industry players to market BC wood products to the world.

As the working forest land base in BC continues to shrink as a result of environmental protection, how can we ensure a strong and sustainable forest industry in BC?

34 Truck LoggerBC Summer 2017

We have to get better at using BC logs to create BC jobs. The Ontario forest industry creates five jobs for every one job created in BC. Instead of shipping raw logs overseas while local mills struggle to access fibre we’re going to focus on ensuring BC wood employs people in BC communities. And unlike Christy Clark and the BC Liberals, who put people’s jobs at risk with 16 years neglect of forest health, we will put people to work replanting and restoring our forests for the future.

Given forestry is the economic backbone of BC’s rural communities, how do you think your government can support forestry in BC? We’re going to create jobs for people in forestry by using BC wood to meet the needs of BC families and communities. We’ve committed making life more affordable and addressing the housing crisis by building 114,000 new homes for BC families. Every one of those homes will utilize BC wood and engineered wood products. We will also showcase BC wood to the world when we build new and upgraded schools and hospitals across the province. By creating a mar-

ket for innovative BC wood products at home, we will give the industry a stable base from which to expand their businesses and sell these products globally.

Photo: Courtesy of the Green Party

More than 30,000 jobs have been lost in forestry under Christy Clark and the BC Liberals. Those were family supporting jobs. Those were community supporting jobs. Restoring those jobs and putting our forests back to work for British Columbians is a high priority.

Andrew Weaver, Green

As this new minority government forms, what is your party’s focus for the forest industry outside of seeking a resolution to the softwood lumber dispute?

BC’s renewable resources are one of its greatest strengths. We will work to seize the economic opportunities that our natural resources afford us in order to support individuals and communities across BC. We will do this through promoting efficiency, value-added and intrinsic benefits, by promoting their stewardship and sustainable use.

In the past two decades, 100 sawmills have closed and over 40,000 direct forestry sector jobs have been lost. As an MLA and leader of the BC Green Caucus, my priority is to optimize the value of BC’s forests for British Columbians, to support the industry in a way that keeps its jobs and its value in BC. We are focused on maximizing the value of our forests and keeping the value in BC. We will support resource-dependent rural communities to ensure they are benefitting first and foremost from the forestry sector.

As the forest industry continues to work to ensure global competitiveness, what does your party think you can do to help us achieve that?

The BC Green Party supports policies to encourage innovation and market dif-

ferentiation for BC forestry companies.

For example, our platform proposed creating a Forestry Opportunities Panel that would identify opportunities for promoting innovation, value-added production, independent regional operations and indigenous enterprises.

We will also support policies that identify new markets for BC forestry products and work co-operatively with the federal government and industry to secure fair, stable and beneficial trade agreements. By building on our strengths, like our highly educated and skilled workforce, in addition to our renewable resources, we can create a resilient forestry sector that thrives internationally.

As the working forest land base in BC continues to shrink as a result of environmental protection, how can we ensure a strong and sustainable forest industry in BC? We are committed to the responsible management of our forests and the long-term viability of our forestry sector. Environmental protection is crucial to ensure that the forestry sector is sustainable, so that the people of British

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Columbia can benefit from the forestry sector for generations to come. By supporting the industry in ways that maximize value and minimize waste, we can ensure that a healthy environment and a strong economy go hand-in-hand.

Given forestry is the economic backbone of BC’s rural communities, how do you think your government can support forestry in BC? Forestry is critical in sustaining rural communities across BC, as well as our economy as a whole. Though we are not in government, we will work from our position to ensure resilient forests and sustainable forestry, maximizing the value from our forests and ensuring their sustainable long-term management. We will work to maximize the economic contribution of forest fibre, especially for local communities and First Nations.

We will support smaller, BC-based companies in obtaining forestry tenures and encouraging value-added aspects of the industry. We will also support small, rural resource-dependent communities by building skills and capacity and promoting economic diversification. In our platform, we also

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proposed removing PST on purchases of machinery and equipment for the modernization, upgrading and investment in sawmills and value-added wood processing. In government, we will propose innovative solutions like these to encourage keeping the value of BC’s forestry industry in BC where it belongs.

ment and we know communication is always important.

It’s clear all three parties value the forest industry and understand it is the top natural resource revenue generator for this province. They also recognize that the tax base—both rural and urban—is supported by employment and businesses reliant on our forest resource.

However, some of BC’s MLAs may not know as much about forestry as they would like to. That’s where the Truck Loggers Association can help.

TLA members are the local contractors and suppliers that provide wellpaying jobs throughout British Colum-

The Magazine of the Coast

DV E R T I S E M E N T P R O O F These responses are mostly platform summaries that remind us where each party stands. The TLA doesn’t agree with everything that was stated.

That said, we understand that good debate often comes out of disagree-

roof the ad below very carefully and email or fax back ny changes or your approval to run the ad as is.

bia and reinvest their earnings back into their businesses, their suppliers and their communities. The TLA and its members have a deeply vested interest in the success of the province and the sustainability of the forest sector.

The TLA is also non-partisan and will work with all governing and opposition political parties to build a healthy forestry industry and ensure that those working in the forest resource share in its prosperity.

Thank you!

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Photo: Tree Frog Creative courtesy of Western Canadian Timber Products

AAC Reductions: Who Pays the Price & Who’s Got Your Back

By TLA Editorial

W

hen people start talking about AAC reductions, the discussion turns almost immediately to the mountain pine beetle and the BC Interior. The story is known all too well now.

The beetle hit in the late 90s and it exploded by early 2000. The AAC in many Interior Timber Supply Areas (TSAs) was increased to salvage the dead timber while it had value and then as the dead timber came to the end of its economic life, the AACs have now started falling.

38 Truck LoggerBC Summer 2017

However, this up and down trend in the AAC ensures the sustainability of the resource while at the same time ensuring that damaged timber is used. And despite media reports touting the shock and awe of those unfamiliar with the industry, those in the industry all knew it was coming many years in advance.

Since the beetle epidemic peaked in 2004, forecasts for eventual reductions to the AAC and the inevitable closures of mills that comes with a reduced wood supply, have been forecasted by many.

Despite this understanding, however, for communities, forest workers and contractors, the impact of AAC reductions is immediate and at times devastating.

When an AAC is reduced by the province’s Chief Forester, it is then up to the Minister of Forests, Lands and Natural Resource Operations to apportion the new AAC amongst the various licence types within the TSA. Guidelines are provided for this process.1

Traditionally, when an AAC is reduced, the replaceable tenure holders all share in a proportional AAC reduction to ensure the allocated AAC does not exceed the total AAC. While this approach is an option, not all AAC reductions are done proportionately as the AAC is reduced. As is seen in the guidelines, other facts may be considered including: Innovative Forest Practices Agreements, future or expected commitments to First Nations licences, the potential to create replaceable licences

from those currently designated as nonreplaceable, or uncommitted volume that may be used to lessen the impacts of the reductions.

In each TSA, therefore, it is important for contractors to understand that when apportionment decisions are made following an AAC reduction, the specific licence you may operate on may be affected more (or less) than the proportionate AAC reduction indicated.

Not all AAC reductions in BC, however, follow uplifts in the AAC meant to

address the devastation that Mother Nature brought on our forests. It is in those areas where the impact on workers and contractors can be more immediate as it is less predictable than with the beetle.

The case in point is the Great Bear Rainforest (GBR). This area of the BC coast was officially recognized by the BC’s government in February 2016, when it announced an agreement to permanently protect 85 per cent of the oldgrowth forested area within its boundaries from logging. The forest was also

Summer 2017 Truck LoggerBC 39

admitted to the Queen’s Commonwealth Canopy in September of the same year.

The agreement came after almost 15 years of negotiations between stakeholders that began in the late 90s. While the global significance of the agreement cannot be understated and the certainty that it brought to those forestry related businesses that still operate there is beneficial, the local impact the agreement had on workers often goes unnoticed.

But unlike the impacts of the beetle in the BC Interior, the reduction of the AAC in the GBR resulted from a policy decision as opposed to a forest sustainability decision. This distinction is important.

While the BC Interior AACs are reduced to ensure the sustainability of the forests following the devastation caused by the beetle, the AAC reductions in the GBR followed elimination of large areas of the working forest from contributing to the AAC, together with the adoption of ecosystem-based management on the remaining land base. The latter were policy decisions made by the province in order to appease the environmental non-governmental organizations that made coastal BC their target.

It is these policy decisions, however, that have the potential to most significantly impact workers since they can be immediate and unforeseen. On the positive side, however, AAC reductions based upon policy decisions tend to be tied to government mitigation efforts, as was seen with the Coast Sustainability Trust (CST).

The CST was established in 2002 by the BC government to mitigate the adverse impacts arising from Land and Resource Management Plan land use planning decisions in the Central Coast, North Coast, Queen Charlotte Islands and Haida Gwaii. Large portions of the CST “specified area” eventually were designated as the Great Bear Rainforest.

Essentially, the CST was established when the industry and environmentalists agreed to negotiate the future of the central coast. When they started, the harvest levels were deferred indefinitely and many workers lost jobs and contractors lost contracts.

The government set up the CST recognizing that whatever the outcome of the stakeholder discussions was, the result would be the permanent dis-

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placement of workers and contractors through reduction of AAC. However, the government also recognized it would take years for final decisions to be made, so rather than making workers and contractors wait for mitigation of their losses, they dealt with them right away via the CST, thereby allowing them to move along.

The original CST started with $35,000,000, of which $25,000,000 was allocated to a Worker and Contractor Mitigation Account, and $10,000,000 to a Matching Funds Account. About $3 million was eventually paid to workers, and $11 million to Bill 13 contractors who lost their investments.

The original CST had a five-year term.

However, many of the claims from workers and contractors were not dealt with in that time frame and so a second trust (CST II) was established to ensure that some contractors and employees were not missed because of the delayed timelines.

Once the loss of work resulting from reduced AACs by contractors and workers were dealt with, the remaining funds within the CST were allocated to two separate trust accounts and two sub-trusts to

allow for continued economic diversification within the area by other means.

The CST template for worker and contractor mitigation was also used in two other key areas where AAC reductions resulted from similar policy decisions.

The first followed the establishment of the Nisga’a Treaty that resulted in an AAC reduction following removal of the Nisga’a settlement lands from affected TSAs. While the government specifically denied any legal obligation to provide compensation to contractors affected by this First Nation Final Agreement, it was prepared, as a matter of policy, to consider the potential of providing redress for certain claims of contractors directly impacted by the Nisga’a Final Agreement (which it did).

The second, and most well known mitigation framework, followed the introduction of the BC Forest Revitalization Act and establishment of the related BC Forest Revitalization Trust (BCFRT). Again, as a matter of policy, the government recognized that in order to implement the restructure of the AAC that saw the establishment of BC Timber Sales, expansion of woodlots,

community forests and an increase in First Nations held tenures across the province, that those who lost work, both employees and contractors would be compensated (which they were).

Fast forward to 2017—the Great Bear Rainforest Management Act (GBRMA) was announced and additional reductions in the AAC for the area were implemented. This included elimination of the north and central coast, Kingcome and Strathcona TSAs which were replaced by the Great Bear North, Great Bear South and North Island TSAs. In aggregate, the GBRMA and the changes to these TSAs resulted in a net reduction of over 593,000 cubic metres or fully 17 per cent of the pre-GBR AAC. The subsequent AAC apportionment decision, made in March of this year, then allocated the new AAC within each new TSA to specific licences.

In all three TSAs, several new replaceable tenures were created and awarded to various First Nations entities who can now more fully participate in the industry by having long-term replaceable tenures in their control. For many of the existing major tenure holders, however,

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AACs were reduced and that is where remaining contractors in the GBR felt some pain through loss of work.

Depending on the licence, AAC reductions were between 0 and 83 per cent of the pre-GBR apportioned AAC and these reductions flowed through to those contractors who held replaceable contracts.

However, given the government’s history of accommodating those who suffered losses following forest policy decisions like the Great Bear Rainforest Management Act, we trust that compensation for lost Bill 13 contracts will be forthcoming.

If you are a contractor who was impacted by the latest GBR decision, make sure the TLA is aware so that we might advocate on your behalf. Reach out to David Elstone, TLA Executive Director, at david@tla.ca. https://www.for.gov.bc.ca/hth/timber-tenures/ apportionment/index.htm

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Standing Tall & Strong for 75 Years Next year is the TLA’s 75th anniversary and we’ll be celebrating all year long!

Suppliers & Advertisers: Here are three ways you can join in the anniversary celebrations • Sponsor the TLA Convention & Trade Show • Buy special commemorative advertising in the Winter 2018 issue of Truck LoggerBC • Participate in the celebratory summer equipment show To sponsor the convention or participate in the equipment show, contact Monica Sayers at monica@tla.ca or 604.684.4291 ext. 5 To purchase commemorative advertising at a special celebratory rate in Truck LoggerBC, contact Wing-Yee Kwong at wingyeekwong@advertisinginprint.com or 604.681.1811

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42 Truck LoggerBC Summer 2017

Understanding the Challenges Loggers Face: Abbott Begins Review

By TLA Editorial

Photo: Tree Frog Creative courtesy of Western Canadian Timber Products

W

hen Premier Clark announced her government’s contractor sustainability review for BC’s timber harvesting contractors at the Truck Logger Association’s 74th Annual Convention and Trade Show, David Elstone, TLA Executive Director noted that “This was the most significant announcement to affect timber harvesting contractors across the province in almost 20 years.”

Following through on Premier Christy Clark’s commitment, the provincial government then announced that George Abbott, along with his partners at Circle Square Solutions, would act as the independent facilitator overseeing the Contractor Sustainability Review process.

The first phase of the review will be an economic and financial assessment of the contracting sector to develop baseline information related to their overall financial health and to identify economic drivers that may impact their wellbeing within the sector. Work on this phase was completed in April by PNL Consulting Inc. of Prince George.

With the economic status of contractors complete, it will be followed up by a facilitated process to define issues (i.e. why contractor sustainability has become such an issue) and potential actions that all parties can support to improve competitiveness and the financial well-being of both contractors and licensees. This process will be led

by Abbott and will include extensive interviews with contractors and licensees from across the province.

George Abbott is a former politician and cabinet minister for the province of British Columbia. Abbott was a BC Liberal Party Member of the Legislative Assembly of British Columbia representing the riding of Shuswap beginning in 1996.

Abbott has had a long and distinguished career in politics and public service, serving in many ministerial positions. Abbott served as Minister of Aboriginal Relations and Reconciliation and government deputy house leader, Minister of Health, Minister of Community, Aboriginal and Women’s Services and Minister of Sustainable Resource

Management. Abbott was appointed Minister of Education until his resignation on November 25, 2010.

During his term in the Ministry of Sustainable Resource Management, Abbott worked with industry, environmental, and First Nations groups to complete the Great Bear Rainforest agreement.

“George Abbott’s experience working with the forest industry through developing the Great Bear Rainforest agreement means he has the on-the-ground experience needed to facilitate the Contractor Sustainability Review,” said Jacqui Beban, TLA President.

At the time of writing, the results of the economic review of the financial status of BC’s logging and road-building contractors were complete and in the hands of Abbott. The financial trends supporting the review are based on 122 contractor companies who harvest an estimated 26 per cent of the average provincial harvest. These companies provided 597 year-end financial statements from 2011 through 2016 for use in the PNL report.

Summer 2017 Truck LoggerBC 43

Image: PNL Consulting Inc.

The boards of the TLA, ILA and representation from the NWLA met with Abbott and Assistant Deputy Minister Dave Petersen (who is spearheading the project for government) at the recent ILA conference and trade show to review the financial report and to discuss next steps.

Petersen commented that the government goal was to allow Abbott to identify why contractors are doing poorly from a financial perspective and then work with all industry stakeholders to find solutions. The timeline for Abbott’s report is targeted for the end of the year.

So, what is next? Given their financial position, it is unlikely that contractors will be able to sustain the next industry downturn (which may already be upon us as duties are assessed and imposed on BC lumber shipments to the US) like most did during the 2009 recession. That is because prior to 2009, contractors were in better financial shape and had the equity and financial reserves to support the industry through the downturn. This time, given contractors have continued to experience steady decline in their financial positions since the recession, the

Coastal Area Boundary

31 Contractors 3 10.2M m m3 40.9% harvest

North / South Areas Boundary

48 Contractors m3 5.0M m3 23.6% harvest 36 Contractors m3 3.4M m3 13.0% harvest

This map shows the number of contractors who contributed to the PNL report, how many million cubic metres those contractors log and what percentage of the overall harvest it makes up.

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entire industry may be at risk of widespread contractor failure or exodus.

For Abbott, the task will be to understand why the contractors are doing so poorly. Why they can’t attract skilled workers. Why it is difficult to secure financing. Why they have difficulty working with many tenure holders. Why, in the face of record breaking profits being reported by the majors, they are still fundamentally unsustainable. Then Abbott will make recommendations on what can be done to improve the overall scenario. And to be clear, this is not just about rates. Many contractors want to talk to Abbott about the conditions they are required to work under.

So, if it is not about the rates, what else could change that would allow contractors to do better financially, while at the same time ensuring the overall competitiveness of the industry? The examples are many and include operational issues, regulatory constraints and legislative roadblocks that prevent contractors from maintaining a sustainable financial future.

On the operational side topics generally related to the inability of contractors to do their work without interference

from the majors they work for. Examples included lack of acknowledgement of impacts from delays in operations (such as getting timely permits), phase congestion that reduced contractor production, fundamental disagreements on things like cycle times and a general lack of recognition for the costs of equipment and logging on steep slopes.

themselves, again preferring to share with Abbott alone.

If you are a contractor and you have ideas on how to make your and/or the industries’ financial performance and competitiveness better, we encourage you to meet with George Abbott. All discussions with Abbott and his team are in strict confidence and no issues

If it’s not about the rates, what else could change that would allow contractors to do better financially?

On the regulatory front, the Bill 13 arbitration process topped the list along with cut block waste and scaling issues related to stratum design that penalized some contractor’s deliveries.

On the legislative side, frustration about the use of a standard industry rate and consolidation of tenures were both top of mind for contractors.

It was not hard to find contractors willing to share their concerns and solutions with us, but they all wanted to remain anonymous, preferring to speak directly to Abbott about their ideas. As for solutions, most contractors also preferred to keep them to

or ideas will be attributed to any single contractor. The TLA or ILA can make arrangements for you to meet with him, just contact David Elstone, TLA Executive Director, at david@tla.ca or 604.740.2814 or Wayne Lintott, ILA General Manager, at wayne@interiorlogging.org or 250.503.2199 or Ken Houlden, NWLA General Manager, at houlden@telus.net or 250.635.0240.

Summer 2017 Truck LoggerBC 45

Nine-Axle Trucks: Where Does This Road Lead?

By Robin Brunet

urrently, four nine-axle trailers are being used on three routes in the Vanderhoof-Fort St. James area. Those who build and drive the trucks are bullish about their greater implementation.

“The nine-axle configuration is nothing new: the original trucks introduced over 20 years ago are still operating trouble-free,” says Jim Bowman, manufacturer for FreFlyt, a leading manufacturer of logging trailers and light equipment in Vanderhoof.

George Funk, owner of Blue Valley Enterprises Ltd., adds, “Understandably there has been a lot of analysis pertaining to safety and feasibility, and my company has undergone audits in order to obtain letters of approval for operation.” Funk hauls about 300,000 cubic metres of wood annually for Canfor-Plateau and purchased his first nine-axle rig from FreFlyt a year ago.

(He purchased a second truck in December of 2016.) “Frankly, I haven’t experienced any negatives about the nine-axle configuration.”

Buzz about the rigs has been building ever since FPInnovations, major licensees, Ministry of Transportation and Infrastructure (MOTI), Commercial Vehicle Safety and Enforcement (CVSE), Ministry of Forests, Lands and Natural Resource Operations, the BC Forest Safety Council, and other parties got together four years ago to research, test, evaluate, review, and approve engineering and performance studies, in order to help shape the best implementation of both tridem and tandem drive nine-axle log trucks in BC. Dustin Meierhofer, Director of Transportation at the BC Forest Safety Council, says the research and review process has included “assessment of the dynamic performance of the vehicle in terms of stability, handling, and steering. Predicted handling at highway speeds, rollover threshold, off-tracking and other key dynamic responses were analyzed against safe and accepted performance ranges, and it was ultimately determined that nine-axle B-trains would be well suited for safe use on certain BC highway and resource road routes.” Tracking the performance of the vehicles over

46 Truck LoggerBC Summer 2017

Map courtesy of Canfor

C

Note: This map is current as of June 16, 2017. time will be important in determining if the analysis is accurate.

All this said, when online news in February reported that the BC government believes as many as 800 nine-axle trailers could be incorporated into logging operations in the province, with a savings of up to $40 million dollars in transportation costs for the forestry sector, concerns were voiced.

For example, one reader of a February 9th 250 News report stated, “I wouldn’t drive one around here. I know my limit: 71 tons is doable in good conditions, but we don’t always have good conditions.

The kinetic energy of a longer, heavier load will make pulling hills much harder, which will be a huge safety concern.”

Another reader stated, “Roads are battered and huge ruts [have been] made in

some places due to heavy loads; what is going to happen now?”

And another remarked, “This change to our law will enable big companies to make more profits; this one seems to directly cost taxpayers and have an impact on the safety on our roads.”

Not all feedback was negative, but the cumulative opinions are enough to demonstrate that the ongoing study of the feasibility of nine-axle truck use in BC is accompanied by considerable controversy.

At the time of printing, three routes and surrounding forest service roads have been approved by Victoria—in the Fort St. James and Vanderhoof areas (see map on page 46). Additional designated routes in BC are under review for approval by MOTI, and Meierhofer says, “As safety is critical to maintaining operational efficiency and competitiveness, this will continue to be a key area of focus going forward in evaluating other routes.” But he adds that the bid to open more routes is “seen as excellent opportunity for the BC log hauling sector to match similar developments in other jurisdictions, and to help ensure that our global JB BenProg Ad Nov2012-OUTLINED.pdf competitiveness is enhanced.”

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1

David Elstone, Executive Director of the Truck Loggers Association, echoes the sentiments of many contractors when he says, “The nine-axle debate reminds me of the steep slope logging debate: contractors are being asked to retool before we have all the answers.”

Elstone goes on to note, “The proposed configurations appear to offer some potential, but will contractors share in the gains? I can’t help but look at this issue from the contractor’s perspective. Are contractors once again being asked to rotate equipment adding new capital costs? Who is really benefitting and who is taking on the risk? I realize that the letters of authorization will be issued for five years moving forward. However, as use is not ingrained in regulation, if authorization is rescinded, who will bear that cost? From my perspective, it looks like the risk is once again sitting with the contractors.”

Other concerns voiced by contractors include: Will the roads the nineaxle trucks are approved for be more expensive to build and maintain and who will shoulder costs? And, should 12-11-08 2:48those PM an accident occur down the road, will

government’s approval of nine-axle usage be revoked, thus leaving contractors with trucks they can’t drive?

For his part, Funk addresses another concern: The expense of the rigs. “Nineaxle haulers aren’t cost prohibitive: about $135,000 compared to $110,000 for an eight-axle,” he says. “I’m expecting a payback on my two trucks in only two years, so for Blue Valley the money spent is a no-brainer.”

Both Funk and Bowman are confident that the process of approving wider use of the nine-axles will speed up in the foreseeable future. “Infrastructure is expanding, and the configuration is a proven asset to the industry,” says Funk.

“Transportation makes up a significant portion of delivered wood costs,” said Michael Armstrong, VP Policy & Operations for the BC Council of Forest Industries. “The nine-axle configuration has the potential to reduce transportation costs, which supports the goal of maintaining forest sector competitiveness for BC. This technology was developed here in BC at FPInnovations, and is really applicable for long, flat hauls, rather than steep slopes or tight switchbacks. This development has truly been a team effort

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between industry, FPInnovations, and the provincial government.”

Bowman offers this by way of conclusion, “It’s especially beneficial to longer

hauls, since you can carry four 16-foot bundles instead of three. Plus, in my opinion the nine-axle is safer than other configurations: better braking, and no

rocking or rolling due to a better centre of gravity. “I think it won’t be long before we see a lot of these rigs on the roads.”

Driving For Safety: Nine-Axle Truck Configuration Panel

BC Forest Safety Council hosted a panel during the Canada North Resources Expo in June. The purpose of the panel session was to have the most informed people that have been working on the project share information and answer questions. Here are some of the highlights from the panel.

• The nine-axle configuration is eight feet longer with nearly identical turning radius and higher braking power per ton. It also tracks better than quad trailers.

• There will be fewer trucks on the road because nine-axle trucks will haul more logs per load.

• FPInnovations has found a 5% reduction in pavement impact; nine-axle trucks are hauling more weight, but less weight per axle. The 5% reduction in road impact was a CVSE requirement addressed by FPInnovations in trailer design and is a key point in the debate on the impacts to roads.

• Bridges are going to be the biggest hurdle moving forward. Should the forest industry pay for all that infrastructure upgrade as they aren’t the only people who use the bridges? We’re still looking for solutions to this challenge.

• Nine-axle configurations are an opportunity for technological advancement but they’ll never be able to be used everywhere.

• The question of investment risk by truck owners was brought up. All the panelists agreed that the early indications were that there would be no reason to remove the current letters of authorization (LOAs) that have been issued or not issue more of them. Moving forward, LOAs will be issued for five-year periods.

Moderator: Marty Hiemstra, Lo-Bar Log Transport Panelists: Seamus Parker, FPInnovations; George Funk, Blue Valley Enterprises; Tom Hoffman, Tolko; Val Hunsaker, Commercial Vehicle Safety and Enforcement (CVSE)

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Adam Lavigne,

Squamish Mills Ltd., Squamish “I’m here to fix the equipment and just get the job done. I’m here to fix what’s broken.”

Squamish is an idyllic place to live, and Lavigne makes the most of it. You can find him, when the 23-year-old is not working, riding his Honda CR250 dirt bike up the Upper Squamish Valley

Why Forestry?

Heavy Duty Mechanics Explain

By Pieta Wooley

Photos: Courtesy of Squamish Mills Ltd.

eavy duty mechanics can work anywhere. They’re in demand in oil and gas, in mining and in shops serving other industries all over the world. Paycheques elsewhere can be bigger. But the men profiled here have discovered that for the lifestyle, nothing beats the coastal forest industry.

“We have a labour shortage unfolding every day in the forest industry,” says Dave McNaught, TLA Director and Chair of the Education Committee. “So it’s good to see young people choosing forestry so they can live where they work and be a part of their communities.”

Each year, the Truck Loggers Association, through the Education Committee, offers scholarships to apprentices who work for TLA member companies and plan to make their career in the coastal forest industry. “We are proud to welcome new workers to the industry and help them offset some of their training and living expenses by sponsoring five annual $1,000 scholarships,” says McNaught.

We caught up with recent scholarship winners to find out why they choose to work in the woods and were inspired by what we discovered. This group of young men started out as roughnecks, cattle ranchers and computer techs. Yet all of them, because of their love of the woods and their drive to work hard, chose heavy duty mechanic apprenticeships in the wilds of BC’s rainforest.

and into the Elaho—one of the most stunning landscapes in the province. Or hiking the Squamish Chief.

Heavy duty mechanics, he said, allows him to live and work in the town he loves.

And forestry runs in his blood.

His father is a faller, and his grandfather owned his own logging company.

“I like to stay local,” he said, noting that he started cleaning

Summer 2017 Truck LoggerBC 49

Thanks to Edgewater Holdings and Wadlegger Logging for their recent purchases.

50 Truck LoggerBC Summer 2017

Photo: Courtesy of Accurate Appraisals and Marine Surveys

Photo: Courtesy of Mount Sicker Services

Jeffrey Aitken up in shops when he was just 13. “And I like that I’m always working on something different.”

Zachary Iwasyk,

Mount Sicker Services, Duncan “There are not a lot of jobs where you drive 40 kilometres up a mountainside to get to work. Your office window is much nicer when it’s this far away from any other cars.”

Beater cars, lawnmowers and motorcycles. Starting when he was about 10 years old, you could find Iwasyk in his backyard with a wrench, learning to fix it by just getting in there and fixing stuff.

His first car, a 1992 Chevy Tracker, was a Frankenstein-like combination of four different vehicles.

He’s a natural heavy duty mechanic, in other words. Now, he applies his tinkering instincts together with his apprenticeship training to wheel loaders, debarking machines, steep slope harvesters and boats.

“You’re never just sitting there,” said Iwasyk, 22, mentioning that he works between 50 and 70 hours a week—so a passion for mechanics is essential to the job. “Everything is a puzzle to figure out, and when you do, you feel good. There’s not a lot of us, so we work hard so everyone else can get on with their day.”

Wood runs in his blood: both Iwasyk’s grandfathers and his dad worked in sawmills on Vancouver Island. Could he make more money elsewhere? Probably.

But he wouldn’t be home at the end of his workday, and he craves the forest.

In fact, he’s currently inventing a landscape-specific four-wheel drive machine: it starts with a Suzuki Samurai, but he swapped out the engine and is upgrading the suspension so he can explore and camp in the more remote areas of the Island.

Jeffrey Aitken,

Accurate Appraisals and Marine Surveys, Cobble Hill “I like the whole culture around BC logging. As British Columbians, one of our main industries is forestry. You can take a lot of pride in being a beneficial part of that. If you’re skilled, you might as well help out at home.”

Both his grandfathers were mechanics. And his father is a registered professional forester—a silviculturalist. So you’d think heavy duty mechanics would have been his obvious choice from the beginning. But like so many BC boys, the big-money roughneck life lured Aitken to Alberta shortly after finishing high school. For him, it was clearly a job and not a career. The paycheques were great, but being away from his young nephews and his parents for weeks at a time was not.

After years in the patch, he came home to the Cowichan Valley and reconnected with an old soccer pal’s dad, Allen Waugh—who happens to own Accurate Appraisals. A couple of weeks lat-

er, he offered Aitken an apprenticeship and a chance at a real career—based on Aitken’s work ethic.

“I like the weather, and I like being closer to home,” said Aitken, 30, explaining why he chooses to apply his heavy duty mechanics training to (Continued to page 53)

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forestry, rather than oil and gas. With more than enough work hours completed towards his apprenticeship, he just has seven more weeks of school and the Red Seal exam left to go.

His favourite machine to work on?

The Madill 3800 Log Loader. “You can tell it was built by mechanics rather than engineers. The lay-out is smart, everything is easy to get at. And it’s a strong, robust machine.”

ship, and just has two years of schooling left before writing his Red Seal.

Logging, Short notes, is fast-paced compared to agriculture. At Fearless Log Salvage, he works under another mechanic to maintain a fleet of self-loading logging trucks and other machines. He’s still constantly surprised by the machines, which can go nearly anywhere in the woods.

“I do miss my cows sometimes,” he said, “But working out of the shop truck on logging roads around Campbell River, I see elk, deer and bear. My favourite part about my job is how much of the island I get to see and enjoy, and seeing the wildlife.”

Photo: Courtesy of Fearless Log Salvage

(Continued from page 51)

Mitchell Short,

Fearless Log Salvage, Campbell River “Working on logging machinery out on the block, you don’t always have the right part or tool. So you have to get creative to keep it running.”

Growing up on a ranch near Vanderhoof, Short spent his early years “chasing cows and cutting hay.” He’d planned to take over the family business after getting a trade—his dad expected him to bring in a needed skill and mechanical ability was needed. While training, an-

Dylan Wood,

Holbrook Dyson Logging, Campbell River other family member showed him pictures of the coastal forest. The farm boy’s life changed.

“The chance to live and work here every day? It’s too good to give up,” said Short, 23, who has finished all of the required work hours for his apprentice-

“I had a desk job, but I figured out I can’t sit at a desk. I get tired and lethargic. I couldn’t sleep right. Doing a labour job, you can keep going all day.”

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Dylan Wood

Photo: Courtesy of Holbrook Dyson Logging

Even though Wood helped out at his dad’s contracting business since he was barely a teen, he thought he would try something different. Three years after Grade 12, with a Mechanical Engineering Technology certificate in hand, he began a career in computer-based modelling—designing parts that would then be manufactured elsewhere. Soon, he found that sitting for long days didn’t agree with him.

Now 28, he walks into his family business in coveralls and boots, ready to conquer whatever the day (and his boss) has in store for him. Welding something that’s cracked? He’s happy to. Replacing parts? No problem.

Yarders, dozers, rock trucks, pick-ups—these are his puzzles, and he uses his body and mind to solve them in the shop and out in the woods.

“Knowing the area through work helps me find the best spots for camping and dirt biking,” Dylan added, noting the additional benefits of getting out from behind a desk. He has already written his Red Seal and is just completing hours to finish his apprenticeship.

Tyler Sheppe,

Island Pacific Equipment, Chemainus “I’m never in a shop. I never know what I’m going to come across next. I’ve got to think, got to be prepared. Got to use my mind about what’s going to be thrown at me. I like it.”

While there is a labour shortage in the forest industry that many are working to address, these men clearly love their work and the West Coast. If forestry can attract more people like this, the industry will be in good hands.

If you know someone considering their career options or a heavy duty mechanic apprentice working for a TLA member company, show them this article and recommend the forest industry as a great career. The TLA still has Trade Scholarships available for this fiscal year ending September 30, 2017 and will have another batch available in October. For more information or to apply, visit our website, www.tla.ca/scholarships.

54 Truck LoggerBC Summer 2017

Photo: Courtesy of Island Pacific Equipment

At just 19 and already two years in to his four-year apprenticeship, Sheppe is a shining example of what’s possible when BC’s Industry Training Authority partners with a school district. At Kwalikum Secondary School, his guidance counsellor suggested he spend Grade 12 in the dual-credit program at Vancouver Island University, earning his first year apprenticeship while finishing high school.

“Thirty people applied and four got picked, including me,” said Sheppe.

“I was a hard worker at school, and by then, I already had lots of my classes done.”

Hard work is Sheppe’s personal brand. He started at age 10 counting change and doing odd jobs for Quality Foods. He’s also scooped ice cream for Coombs Country Market, worked on a commercial fishing boat, and helped out in a welding shop. As a fifth generation logger, he says, diligence runs in the family.

He also plays hard, fishing for halibut and salmon in Nootka Sound every chance he gets.

“I’m not concerned [about the cyclical nature of the forest sector] because I’m good at what I do and I’m super hard-working. Of course it’s always at the back of my mind what’s going to happen. But good workers don’t look for work. The work finds them.”

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