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| Aid no miracle cure, says industry |
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2005/12/16
An $800-million federal aid package for Canada's struggling forestry industry will no doubt help New Brunswick's sector, but alternative measures might help more, says the provincial Forest Products Association.
"We need some action as quickly as possible," said Mark Arsenault, the association's new president.
Mr. Arsenault said wood supply must be stabilized, high energy costs must be lowered, property taxes must be frozen and more training must be established.
"There's a whole series of things that could be looked at," he said.
New Brunswick's forestry companies are wrestling with dropping pulp and paper prices, lower sawmill production, stiff international competition, the U.S. tariffs and a rising Canadian dollar. These factors have forced mill closures and hundreds of layoffs.
The demand for some kind of government aid package has grown ever louder.
Ottawa is answering with an $800-million aid package expected to be announced soon.
Insiders have said at least half of the proposed funds would be earmarked for loan guarantees, the rest for finding new export markets, research and development, technological upgrades, skills training, and energy and environmental initiatives.
Industry Minister David Emerson, a former forestry executive in British Columbia, said his government is "tidying up a few details."
"We've got a package in place. The precise composition of it is in play and that's part of the issue," he said, in Ottawa.
The package's composition is of particular in New Brunswick, since Atlantic Canada's forestry issues are differ from the rest of Canada because its companies are exempt from longstanding American softwood penalties.
It appears at least half the fund would not be tapped if the package stays in its current form, since there might be a reluctance on the part of Canada's banks to assume the risk of loan guarantees.
Ottawa is proposing money for loan insurance, which would act like a loan guarantee program except that banks - not the federal government - would retain the assets in case of loan default.
Yvon Poitras, the association's past president, said he doubts the insurance will persuade banks to open their wallets.
"No. The banks are not going to. I can tell you they're not going to do it," he said.
There is also a question about Atlantic Canada's participation in the package since Atlantic Canada's forestry issues are different from the rest of Canada because its companies are exempt from longstanding American softwood penalties.
Peter Mesheau, Minister of Business New Brunswick, said the feds must carve Atlantic Canada a special provision since its own softwood product already goes state-side without the punitive duties and tariffs.
If that means a provision for opting out, then it must be included in any package.
"I would just encourage Ottawa to be particularly sensitive to areas dealing possibly with softwood. If there is government intervention, federal or otherwise in some of these areas, it could conceivably be seen as subsidization by the Americans," he said.
Mr. Mesheau also warned that the forestry industry isn't strictly mills.
"We have to understand that we're using wood fibre to make rayon and all manner of goods. It's well beyond saw logs and dimensional lumber, two-by-fours. They have to use some caution here," he said.
Canada's transitioning forestry industry, including New Brunswick's own companies, should brace itself for big changes.
Gone are the days when companies could redirect profits to shareholder returns instead of capital investment in infrastructure. If forestry packages in Ontario and Quebec are any indication, New Brunswick's industry should expect tax incentives that encourage capital upgrades to mills and programs that promote research and development, and encourage more value-added and higher end products.
In Quebec, a $450-million package will boost reforestation programs, and improved tree cutting practices.
In Ontario, $330-million package will encourage forestry companies to expand and modernize.
Both provinces will also push re-training, which will translate into fewer employees who have more specialized skills.
Four New Brunswick ministers are preparing recommendations to help the industry. A committee comprised of Mr. Mesheau, Energy Minister Bruce Fitch, Natural Resources Minister Keith Ashfield and Finance Minister Jeannot Volp?will meet again next week before forwarding its suggestions to cabinet.
Of course neither the province nor the federal government can control the international pressures weighing down the industry.
"The factors affecting New Brunswick's forestry industry are really beyond government's control," Mr. Ashfield said.
Still, both levels are trying desperately to come up with something that will carry the industry back into the Mr. Black.
"It's a challenge, there's no question about it, to figure out what we can do," he said.
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| Source:http://canadaeast.com |
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