Value Added: What Does It Mean For Forestry? ]
Contractor Sustainability: A Personal Perspective Setting The Record Straight: Understanding Forest Industry Job Loss
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Investment Is Key To Global Competitiveness
Fall 2017 Truck LoggerBC 1
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FALL 2017 Volume 40 Number 3 www.tla.ca Photo: Brenda Martin
Cover 22 Contractor Sustainability: A Personal Perspective Graham Lasure
Columns & Departments 7 8
Making Sense of a Difficult Situation
26 Value Added: What Does it Mean for Forestry? Pieta Woolley
30 Work Share Agreements: Keeping Businesses Secure in Uncertain Times Robin Brunet
32 Setting the Record Straight: Understanding Forest Industry Job Loss TLA Editorial
Executive Director’s Message
36 BIV’s Top 100 Companies: Contractors and Shareholders Need Each Other
38 Taking the Risk Out of Conversion: Ensuring You Get Paid for What You Deliver
Healthy Logging Contractors Mean More Jobs for BC
10 Interior Logging Association’s Message
Contractor Sustainability and ILA’s 60th Annual Conference Wayne Lintott
13 North West Loggers Association’s Message
Northwest Update: Contractor Sustainability, Softwood and Mill Upgrades Ken Houlden
14 Market Report
Investment is Key to Global Competitiveness Rick Jeffery
16 Safety Report
Safety in the Forest Sector: What First Nations Licensees Need to Know Sandra Bishop
19 Business Matters
Structuring Your Contracting Business Part Two: Effects of Proposed New Tax Rules Chris Duncan
20 Legal Report
Private Sector Contracts: When a New Government Changes the Playing Field
42 When is a Cubic Metre Not a Cubic Metre? Aaron Sinclair
47 Helicopter Medical Rescue in BC: Fixing What’s Broken Ian MacNeill
52 Forestry Impacts: Understanding the United Nations Declaration on the Rights of Indigenous Peoples Ian MacNeill
54 $75,000 to Celebrate 75 Years: Contractors Support Forestry Education TLA Editorial
56 What’s Old is New Again: On-the-Ground Training for Loggers Pieta Woolley
57 Contractors: Avoid Unnecessary Costs in Case of Wildfires with the Right Insurance Coverage Peter Pringle
58 WorkSafeBC Forestry High Risk Strategy Update for 2017 Budd Phillips
62 21st Annual Golf Tournament
Cover Photo: Courtesy of W.D. Moore Logging
Fall 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: email@example.com Ken Houlden Website: www.interiorlogging.org Matt Wealick
President Vice President Past President Executive Director Industrial Directors
Proven 30 year track record of maximizing timber values Experienced, qualiďŹ ed staff including 14 Forest Professionals Development capital at attractive rates Strong customer base in domestic and export markets
Accurate market price forecasting Detailed planning and budgeting process to ensure performance Assisting First Nations develop successful forestry businesses for over 10 years
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T: 250-287-0143 E: firstname.lastname@example.org
FALL 2017 / VOLUME 40 / NUMBER 3 Editor Brenda Martin Contributing Writers Jacqui Beban
Sandra Bishop Robin Brunet Chris Duncan David Elstone Ken Houlden Rick Jeffery Graham Lasure
TUG & BARGE
Wayne Lintott Ian MacNeill Budd Phillips Peter Pringle Aaron Sinclair Jeff Waatainen Pieta Woolley
For editorial information, please contact the Truck Loggers Association: Tel: 604.684.4291 Email: email@example.com For advertising, please contact Advertising In Print: Tel: 604.681.1811 Email: firstname.lastname@example.org 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 BCâ€™s forest industry. All rights reserved.
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4 Truck LoggerBC Fall 2017
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from the Editorial Board DESK...
irst let me say I’m sad to hear the news that W.D. Moore Logging is getting out of the industry. It’s a sad testament to the times we are living in. You can learn more about the situation by reading Graham Lasure’s article on page 22. On a happier note, this issue of Truck LoggerBC is packed with information. To start, we look at both ends of the supply chain. There are two articles that dig into how loggers are paid and what a cubic metre really is when you look how it’s measured. This is an important analysis for loggers no matter how you’re paid—by the cubic metre or the tonne. On the other end of the chain, we have an article looking at what the term value added actually means. We know it’s a popular term at election time, but what does it mean on-the-ground for forestry? Then, pulling back to a broader perspective that affects the entire supply chain, another article asks, “Where did the forestry jobs go?” We’ve lost just over 45,000 jobs since 2000. This article digs into what caused this job loss and if there is anything we can do to get them back. From a First Nations perspective, I’m particularly interested in the article about the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and how it could be applied to BC’s forest industry.
These are exciting times for First Nations to get involved in the forest industry. However, we also have a cautionary note in this issue. Our Safety Report looks at how Bill C-45 has changed how liability is treated by the courts and I think many small First Nations licensees are not provided the necessary information to know how much risk they are taking on when they become a tenure holder. In this issue we also follow up again on the issue of HEMS (helicopter-based emergency medical service) in BC and how BC is lagging behind the rest of the world. British Columbians living, working and playing in remote locations need and deserve a better system. This article gives some clears steps toward finding a solution. Finally, the TLA’s 75th anniversary is just around the corner! This issue gives you all the details for the 75th Annual TLA Convention & Trade Show. I hope to see many of you in Victoria this January!
Ts’ayweyi:lesteleq (Matt Wealick, MA, RPF) Editorial Board Chair
Show Your Pride In Forestry! Post a photo of your sticker on your truck, laptop, yarder, etc! Tag it: #forestryfeedsmyfamily
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TLA President’s MESSAGE
Making Sense of a Difficult Situation
struggled to write this report because I needed to talk about two very different things that, in my mind, completely contradicted each other. First, I’d just heard that W.D. Moore Logging was closing its doors. Founded in 1928, this company spanned three generations and was the heart of Winter Harbour, a small town on the northwest coast of Vancouver Island. I’ve know the family for a long time and served on the TLA board with Graham Lasure, the third generation to run W.D. Moore Logging. As an owner of a multi-generational logging company myself, this hit me really hard. I worry for the community of Winter Harbour. Timber harvesting contractors are the economic backbone of BC’s rural communities. They live and work in them and give back to the community in so many ways. I know Graham’s family graded the road, ran the solid waste facilities and helped out with machines and gravel for new developments—they went above and beyond what most companies do. More than that though, they were a part of the fabric of Winter Harbour’s community and history. Graham and his family are the kind of people we need more of in our communities—not less of. Several times recently, I’ve talked to people about the high costs and tight margins in timber harvesting. Anyone not in the industry immediately assumes we’re cutting corners in safety and environmental protection to make ends meet. Reputable and well-established companies will not sacrifice safety programs and environmental protection to make ends meets. What is sacrificed again and again are the profits. Contractors take on high-risk and high-capital investments and they deserve a fair return. Second, I’d recently signed-off on the TLA’s new “Forestry Feeds My Family” bumper sticker that was mailed out
with every issue of this magazine. I love this sticker and there was overwhelming support for its creation from both the TLA board and our working committees. This enthusiasm for the bum-
The TLA is celebrating its 75th anniversary next year and we’ll still be here 75 years from now. Currently, contractors are struggling to be sustainable and many have left the industry exhausted.
Why are we doing this? Because forestry feeds our families today and we need it to feed our families tomorrow too. per stickers shows me there is still lots of pride among loggers for the work we do and the jobs we create. We’re running a social media contest this fall encouraging people to show us where they stuck their sticker and I anticipate a strong response! So how do I reconcile these two things? A three-generation logging contractor closes its doors and a contractor-led association produces a bumper sticker proudly stating they feed their families with forestry dollars? I think it speaks to the industry’s history and our resiliency. Many people think of the mills and licensees as “the industry.” What often gets missed are the forest workers who don’t report to a big office, or fixed location like a mill, and spend most of their time in the bush. But these forest workers are out there busting their asses to ensure the licensees and the mills have the logs they need so we in fact have an industry. They are the heart and soul of our industry.
But we’re still looking for solutions and we’re finding them. Why are we doing this? Because forestry feeds our families today and we need it to feed our families tomorrow too. Finally, I couldn’t end this report without mentioning the terrible circumstances in the Interior. I thank all the fire fighters who worked hard and long to get the wildfires under control and protect Interior cities and towns. Our hearts go out to the communities, families and loggers affected by this year’s devastating fire season. Looking forward, TLA will watch closely how these fires have impacted short- and long-term fibre supply and what that means for independent logging contractors in the Interior. Jacqui Beban, President, TLA Tel: 250.951.1410 Email: email@example.com
TLA Bumper Sticker Print FNL.pdf 1 8/29/2017 11:44:31 AM
Fall 2017 Truck LoggerBC 7
TLA Executive Director’s MESSAGE
Healthy Logging Contractors Mean More Jobs for BC
arching orders have been issued to the new government’s ministers by Premier Horgan through his mandate letters. These letters—especially the one sent to Doug Donaldson, Minister of Forests, Lands, Natural Resource Operations and Rural Development—will affect TLA members and independent timber harvesting contractors across the province. The following are Minister Donaldson’s mandate letter priorities paired with the TLA’s perspective on the issues. I hope by adding our members’ voice, we will be able to give the government some insight into the needs of timber harvesting contractors. After all, without contractors there is no forest industry in this province. Protect and create jobs by fighting for a fair deal for BC wood products in softwood lumber negotiations with the United States. • We support the Minister in seeking a fair softwood lumber deal that we hope benefits both the supply chain and the forest industry dependent communities in this province, and not just the interests of a few large forest product producers. Work with communities and industry to develop a fair, lasting strategy to create more jobs by processing more logs in BC and to renew our forests by expanding investments in reforestation. • Our coastal forests currently support 36,000 jobs (direct & indirect) through timber harvesting and manufacturing forest products while a wide range of products are also sold to international markets. With this in mind, we support looking at ways to increase the number of local jobs generated by our forests, which may or may not include processing more logs in BC. • Protecting the working forest and ensuring timber harvesters can maximize opportunities to harvest the allowable annual cut (AAC) is the primary means to creating more jobs.
8 Truck LoggerBC Fall 2017
• By maximizing the current undercut of the AAC, this government could create 4,000 more jobs in our local coastal communities by accessing four million more cubic metres of unharvested timber annually. • There are also ways to increase employment within our forest resource other than just processing more logs. Significant employment could be created by contractors working to mitigate wildfire impacts around Interior communities by implementing existing fuel management prescriptions. This would also offset future timber supply losses due to wildfire. • Over the next decade, our industry will need to fill at least 4,700 jobs on BC’s coast. Creation of a training tax credit would incentivize contractors to hire and train new workers on-the-job while ensuring the forestry worker skill set is handed down to the next generation. Expand our innovative wood-products sector by addressing regulatory and capital barriers hampering the growth of engineered wood production and work with other ministers to ensure public projects prioritize the use of BC wood. • Increasing engineered wood production may allow us to recover fibre currently left behind in our harvesting operations by creating value for fibre we haven’t used in the past. • Continuing to promote the use of BC forest products in public projects to improve our society’s understanding and appreciation of the forest industry responsible for those forest products. Work with the Minister of Indigenous Relations, First Nations and communities to modernize land-use planning and sustainably manage BC’s ecosystems, rivers, lakes, watersheds, forests and old growth. • The TLA strives to build mutually beneficial First Nations partnerships by acknowledging First Nations rights and title and engaging First Nations leadership and their communities.
• Provincial forests are managed by registered professionals through a paradigm of professional reliance. Forest professionals are stewards of the forest resource and are just as legally accountable for their actions as doctors or lawyers in their respective professions. Not only are our forests professionally managed, there is an arm’s length oversight body—the Forest Practices Board—that provides guidance and critiques of operations as well as serving as a mechanism for investigating concerns expressed by the public. • Furthermore, a majority of BC forests are managed under various sustainable forest management certifications which include independent third-party verification. Our new provincial government’s priorities listed above focus on accessing the potential prosperity of our forest resource and creating jobs. We want our forests to provide jobs while being managed in a sustainable way. While the financial statements from BC’s publicly traded forest products producers convey strong prosperity with record earnings, they conceal a painful contradiction. Contractors and the communities they live and work within are not seeing the current prosperity one might think exists if you just read the financial headlines. Contractors are leaving the forest industry today. (See the article about W.D. Moore Logging closing on page 22.) In the last 24 months, we have seen two incidences where communities were dramatically impacted by the influence of a single forest tenure holder. There are some 52,000 jobs created by the forest resource industry in BC and tens of thousands more indirectly supported. All these jobs rely on independent timber harvesting contractors because they harvest 90 per cent or more of the timber in this province. So as the new government works hard to address their priorities and create the prosperity we both believe exists in the forest industry, the TLA also asks Premier Horgan and his ministers to address the current imbalance in prosperity in our forests. David Elstone, RPF, Executive Director, TLA Tel: 604.684.4291 ext. 1 Email: firstname.lastname@example.org
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Interior Logging Association’s MESSAGE
Contractor Sustainability and ILA’s 60th Annual Conference
ontractor sustainability still remains at the top of the Interior Logging Association’s list of concerns. We are pleased to advise that individual private meetings between contractors and the independent facilitator George Abbott have been held in Vernon, Castlegar and Prince George over the summer. More than 100 meetings have been held to-date covering concerns facing independent timber harvesting contactors and log haulers. Abbott has also held meetings in Nanaimo, Courtenay, Campbell River and Vancouver with coastal timber harvesting contractors. If you are interested in attending future meetings with George Abbott please contact Wayne Lintott at the Interior Logging Association at 250.503.2199. Save the dates! The Interior Logging Association’s 60th Annual Conference & Trade Show will be held May 3, 4 & 5, 2018. Where will it be held? Kamloops, BC. The inside and outside displays will be located at the Tk’emlúps te Secwépemc Powwow Grounds just off the Yellowhead Highway. The powwow grounds give us a very large space for
outside displays, a large area for the inside displays and ample parking.
Contractor sustainability still remains at the top of the ILA’s list of concerns. We will be using the Colombo Lodge Centre for all evening events, lunches, meetings and the ILA Annual General Meeting. We have negotiated rooms, rates with the Coast Kamloops Hotel and Conference Centre (250.828.6660) and the Sandman Signature Kamloops Hotel (250.377.7263). When you book your rooms, ask for the ILA room rate. More information will be posted on our website, www.interiorlogging.org and registration packages will be mailed out in January 2018. Have we had an interesting spring and summer? You bet we have. With the provincial government election, flooding and forest fires, it was an interesting few months and more is still to come as we move into the fall. Some local contractors have been shut down since early July for fear of starting forest fires. At the time of writing, mills are hold-
The ILA’s 60th Annual Conference & Trade Show is moving to Kamloops for 2018! 10 Truck LoggerBC Fall 2017
ing average log inventories but are concerned that contractors may lose two to
three weeks of production volume this season and in some cases more. Finally, we are pleased to announce the winners of the Interior Logging Association’s 2016 - 2017 scholarships. • Forestry: $2,000 Tamara Nicol, Coldstream, BC • Member: $1,000 Casey Harrison, Nelson, BC • Trades: $1,000 Shane Meadahl, Lumby, BC • Associate: $1,000 Brogan Houston, Coldsteam, BC
Fall 2017 Truck LoggerBC 11
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12 Truck LoggerBC Fall 2017
North West Loggers Association’s MESSAGE
Northwest Update: Contractor Sustainability, Softwood and Mill Upgrades
t appears the provincial government has stabilized somewhat and is moving into the role of governing. With the number of issues and tasks to be dealt with, there is no time to waste. On the forefront is softwood lumber. A strong and unified stance will be required to achieve balance in the dispute. British Columbia and its forest industry have a huge stake in the negotiations as do communities and workers. I’m not holding my breath; but, wouldn’t it be something if the issue were to be put to rest permanently? The dispute has been going on almost as long as I have been involved in the forest industry. In the meantime, I hope lumber manufacturers are putting maximum energy into new markets and that government continues to support those efforts. Reducing BC’s reliance on the US lumber market is the strongest negotiating position the government can achieve. Another issue inherited by the new government is the Contractor Sustainability Review. The TLA, ILA, and the NWLA worked hard to get the issue on the table and I truly hope the newly formed government recognizes the importance the Review has for contractors and their suppliers, rural communities and the province as a whole. Without a stable and profitable contractor base the entire forest industry and the communities they operate in are impacted. Contractors becoming insolvent or just opting to leave the forest industry is a trend that must be reversed. Communities and suppliers have a voice in this province and I would encourage them to use it and support this effort. A substantial amount of effort has already been invested in the initiative and it would be a waste not to bring it to completion and to act on the results. On a very positive note, Skeena Sawmills recently announced that $10 million of the funds I mentioned in my Truck LoggerBC Fall 2016 message will
be invested in a small log line. I have no doubt this particular upgrade will provide a good return. BC’s northwest has substantial second growth inventories and that supply is constantly growing, as forests naturally do. Substantial future investments in the mill are also in the planning stages. The timber profile in the northwest is currently being studied to help determine the most ef-
facilities. To get value-added and secondary manufacturing off the ground that obstacle must be overcome. The extended and devastating fire season in the Interior this year was on a scale not witnessed before in BC. At the time of writing this article it still rages on. We all hope the beast is brought under control soon. The emotional and financial impacts are
BC’s northwest has substantial second growth inventories and that supply is constantly growing, as forests naturally do. fective use of capital before making final investment decisions. These investments are great news for northwestern BC. Over the past several years, the area has seen closures, insolvencies and the flight of capital. Let’s hope these investments pay off for Skeena Sawmills and spawn more positive news for the area. I would like to see more forest companies in the province follow suit and invest in our industry so we can be more globally competitive and secure our place in global markets. One of the topics addressed in this issue is the value-added aspect of the forest industry. The term value added means different things to different people. However, one component of the value-added sector I am certain about is its ability to increase the value of the products we produce—that is a win-win for our economy. Several years ago, the government of the day pushed hard to get real results from the value-added sector. The results were mixed but largely unsuccessful. One of the reasons for its lackluster performance was lack of participation and commitment from the major players in the industry. To a large degree, secondary and value-added manufacturing rely on supply from primary manufacturers. Unfortunately, the primary manufacturers of the day were uninterested in supporting these smaller
immeasurable. Ranchers, farmers, loggers, all other resource industries, the communities, and the people in those communities must pick up the pieces and do the best they can to recover. Our thanks go out to all the dedicated professionals involved in trying to bring the wildfire situation under control. We saw help come from all over the province, across Canada and, in fact, the world came to assist with the efforts to bring things under control. It is worth noting that a large number of the people assisting in the effort left their homes and families to come to the Interior to fight these fires and provide the support needed for such a massive effort. The one positive note that can possibly be made is these people will rebuild their lives and the forest and grasslands will regenerate to provide for future generations.
Fall 2017 Truck LoggerBC 13
Investment is Key to Global Competitiveness
n the coast of British Columbia, tens of thousands of women, men and children rely on the health and survival of British Columbia’s coastal forest industry, which, in turn, relies on the industry’s ability to compete in rapidly shifting global markets. In order for forestry companies to successfully compete in these markets, both investment and a regulatory environment which supports credible policies, strong institutions and a stable and a predictable investment climate are needed. In terms of global competitiveness, investment and political/regulatory climate are interrelated; specifically, investment is highly dependent on stable, predictable access to fibre and reliant on contractual agreements. One of the biggest challenges we face in the British Columbian coastal forest sector is a growing reputation by investors as a jurisdiction where doing business can be unpredictable, slow and cost prohibitive in comparison to other jurisdictions. This piece addresses the role investment plays in influencing global competitiveness for the coastal forestry context of BC by defining what a competitive industry looks like, examining its importance to British Columbians and the world and, most of all, the steps we need to take today to ensure its realization.
Defining a Competitive Coastal Forest Industry
A competitive coastal forest industry in BC is reliant upon the exports of goods and services—and inward investment to innovate and meet emerging market demand. Its products include climate-friendly building materials from healthy, sustainable, renewable forests produced by an industry that adheres to some of the strictest environmental standards in the world and provides good, living-wage jobs to its employees. A globally competitive coastal forest industry is integrated, fostering efficient, working relationships with partners in numerous sectors. This supply chain in-
14 Truck LoggerBC Fall 2017
cludes forest contractors, suppliers such as nurseries, heavy equipment manufacturers and mills that manufacture lumber, pulp and paper and bio-energy. It utilizes the skills and expertise of scientists, academics and economists, statisticians, accountants, insurance experts and many others. It requires solid, mutually-beneficial, respectful partnerships with Indigenous communities and close ties to the people and businesses in non-Indigenous communities that support and rely on the health of coastal forestry for their jobs.
Why a Globally Competitive Coastal Forest Industry Matters
Companies and investors choose where they operate and invest in the world. A healthy, globally competitive coastal forest industry in BC which practises sustainable forest management, provides British Columbians with good jobs and supports a strong provincial economy can be an attractive jurisdiction. Coastal BC forestry companies are known worldwide as leaders in sustainable forest management that produce some of the most environmentally friendly forest products on the planet. The companies adhere to strict government legislation and regulation by third party certification bodies. The worldleading Great Bear Rainforest Agreement of 2016 signed by industry, government, Indigenous peoples and environmental groups is but one example of this level of collaboration and commitment to forest stewardship in BC. The overseas customers of coastal BC forestry companies recognize the high value of the logs, lumber, pulp and paper and other forest products that come from the coast of BC. They know that these products are sourced from sustainably-managed forests. In this way, coastal forest products from BC can raise the environmental standard of all forest products on the world market. From an economic perspective, forestry is a backbone industry for the British
Columbian economy. In a time where there are fewer than ever full-time, living-wage jobs, forestry provides good, middle-class supporting jobs to about 40,000 women and men year-round at an average salary of $40 per hour. From a revenue standpoint, the industry provides about $400 million to the provincial government in taxes and fees every year. This is money that governments use to fund public services and address social needs. Our ability to sustain healthcare and child care services, education, expanded transit and environmental protection ultimately depends on business investment, jobs and entrepreneurial activity that generate revenue in sectors such as coastal forestry.
The Steps Needed for a Globally Competitive Industry
In order to maintain a highly-integrated industry that provides good jobs, revenue to the province and global leadership in sustainability, it is vital that investment certainty in BC is robust. Our current trajectory threatens to make it too costly and risky to invest in BC— however a collaborative, solutions-oriented approach by industry and government to building and maintaining good policy can change our course. First, coastal forest companies must be able to trade with their international customers under fair agreements that allow for an even playing field with their competitors in other countries. This includes resolving the softwood lumber agreement with the US in a way which recognizes the uniqueness and high value of lumber products from the BC coast. Second, companies must be able to sustainably access the full forest profile in a stable and predictable way. This means that they need to access a broad value range of timber to meet both the product needs of their customers overseas as well as supply BC manufacturers here at (Continued to page 59)
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Fall 2017 Truck LoggerBC 15
Safety in the Forest Sector: What First Nations Licensees Need to Know
s more and more First Nations are allocated tenure and have the opportunity to share in the benefit of British Columbia’s forest industry, there is good news and bad news emerging. The good news is the growing proliferation of First Nations tenures demonstrates First Nations’ strong interest in participating in the forest sector. The bad news is often First Nations are unaware of the risk (in other words, legal liability) that is attached to this responsibility when it comes to safety. TLA Board member Matt Wealick, MA, RPF, is a consultant for First Nations and for 10 years built Ts’elxweyeqw Forestry Ltd. from the ground up. “Since time immemorial” his ancestors lived in the Chilliwack Valley and he is honoured to have the opportunity to promote First Nations’ values and their relation to natural resources in his dayto-day operations in the Fraser Valley.
16 Truck LoggerBC Fall 2017
However, Wealick has also voiced some serious concerns. “First Nations have a responsibility to be aware of their liability when it comes to safety. The allocation of a licence is a benefit to the band for accommodation of First Nations’ rights and title. However, there are millions of dollars of liability attached to this benefit in terms of safety and many First Nations don’t understand the risk.” Wealick estimates 80 per cent of small First Nations licensees operating in the Fraser TSA (timber supply area) fall into this category. That means of the more than 30 First Nations, with approximately 250,000 cubic metres of AAC in the Valley, about two dozen don’t have a full understanding of the criminal liability that the federal government’s Bill C-45 introduced. Bill C-45 was created “as a result of the 1992 Westray coal mining disaster
in Nova Scotia where 26 miners were killed after methane gas ignited causing an explosion… adding Sections 22.1 and 22.2 to the Criminal Code imposing criminal liability on organizations and its representatives for negligence (22.1) and other offences (22.2),” states the Canadian Centre for Occupational Health and Safety website. For First Nations licensees “organizations and its representatives” could mean chiefs, councilors and band administrators, etc. Corby Lamb, President of Capacity Forest Management, believes in the First Nations’ holistic approach to resource management and specializes solely in managing First Nations forestry. “It’s in our contract that we will have ‘care and control’ of the worksite. As the managers we are responsible for safety with the caveat that our First Nations clients know—because we educate them if they don’t know—that they hold
the bag in the long run as the licensee if we have some sort of failing.” According to these experts, it’s imperative that an agreement is in place between the licensee and management company that clearly addresses the responsibilities of safety. Capacity Forest Management has “had a gamut of incidents over the years from contractor fatalities to stubbed toes, so we are very cognizant that a prime contractor agreement is in place, because no one wants to go through a serious incident or the follow-up investigation. I always say it’s like they’re checking your tonsils through the soles of your feet in a fatality investigation.” In the end, WorkSafeBC will have to be confident that all the paperwork was in place and up-to-date and the safety procedures were adhered to in every way. “Our contract states categorically that our clients basically transfer liability on to us as much as they can. All of our First Nations companies are SAFE Certified as are the ones we contract and subcontract to,” states Lamb. Bear Safety Services Ltd.’s Bjarne Nielsen is a safety consultant who spent 25 years in the forest industry
and 18 years as a prevention officer for WorkSafeBC. He works to make sure safety programs meet all the regulatory requirements of The Workers Compensation Act and Occupational Health and Safety Regulation. “A common error not only among First Nations licensees, but amongst all licence holders is assigning a prime contractor designation to a company that is not qualified,” Nielsen points out. “Some licensees don’t fully understand that the prime contractor has to be qualified. If they’re not, they can become qualified but again, there’s an education component needed.” Nielsen adds, “Owners must ensure the prime contractor they designate has a significant level of experience and training specific to the types of operations the prime contractor will be overseeing.” The OH&S Regulation defines qualified as: “Being knowledgeable about the work, the hazards involved and the means to control the hazards through education, training, experience or a combination thereof.” Clearly, it’s a complicated situation. As Lamb explained, contract language can deflect some liability to an outside
management company. However, First Nations licensees must recognize there is still a legal requirement for the top person in the organization awarded the licence to demonstrate due diligence in the safety of all those operating below them. So what is the solution as First Nations’ participation increases in all aspects of the forestry economy? Everyone agrees it begins with education. But that’s where the clarity ends. Who’s responsible for that education? One says it falls to government; the other says “that’s a fine line.” First Nations have been told what to do by government too much in the past. “The TLA has done some First Nations education at its past conventions that has helped,” recalls Lamb. “Certainly, there’s room for a lot more.” There is consensus about this though: Raising awareness about the need for increased understanding of safety can only be good for the whole industry!
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.
Fall 2017 Truck LoggerBC 17
18 Truck LoggerBC Fall 2017
Structuring Your Contracting Business
Part Two: Effects of Proposed New Tax Rules
y now, you have most likely heard the news: there are big tax changes in the works in Ottawa. The Department of Finance has been working on changes that target tax strategies employed by private Canadian corporations. On July 18, 2017, they released proposed changes to the following three areas: income sprinkling, capital gains deductions and passive investment within a private corporation.
Case Scenario Example: Implications to Jim
How does this affect Jim, our contractor described in the Summer 2017 issue? In the past, Jim could restructure his business to split income with family members and reduce the family’s tax burden. With these proposed rules, he
mum of capital gains on the disposition of qualified small business corporation shares from taxation. There are new limitations on the ability to access the capital gain deduction of qualified small business corporation shares for dispositions after 2017. These include: • The capital gains deduction will no longer be available to minors. If the individual held the shares while they were a minor, any portion of the capital gain accruing during that time is not eligible. Photo: iStock
Many contracting businesses involve the entire family in the ownership of the corporation, either directly or through a trust. This has many benefits, both from a tax perspective and for the longterm succession of the business. The proposed changes significantly expand the rules surrounding income splitting among family members, reducing the benefits of this practice.
basis in the activities of the business to avoid the tax on split income. They will be allowed a prescribed return on any assets contributed.
Tax on Split Income (TOSI)
Previously, this concept was often called the ‘kiddie-tax’ as it resulted in a high tax rate on minors receiving dividends from private companies. In addition to minors, the TOSI is now proposed to apply to any related persons, including spouses, adult children, siblings, parents, in-laws and extended family. The draft legislation also proposes to expand the definition of what is included as split income.
Reasonability of Income
For the income to not be subject to TOSI, it must be considered reasonable in the circumstances. It cannot exceed what would be paid to an arm’s length person for the same activities, considering the following: • Work performed • Capital contributed • Risk assumed Where an individual between ages 1824 receives income from a business for labour, they must be actively engaged on a regular, continuous and substantial
would only be able to pay reasonable amounts to family members based on the new criteria. For Sarah, Jim’s wife, who is already receiving a small salary for administrative work, Jim may not be able to pay any additional amounts if she has no other capital contributed to the business. For his two kids in university, he will be limited to paying them for actual labour performed in the business. Overall, Jim will need to have a higher personal income to get the same amount out of his company without splitting income. This will mean an increase to his personal tax bill each year.
Capital Gains Deduction
The capital gains deduction allows entrepreneurs to shelter a lifetime maxi-
• If the taxable capital gain is considered split income under the new TOSI rules, it will not be sheltered and could be taxed as high rate income. • If a personal trust holds the shares, any capital gain accruing while the shares were held by the trust will not be eligible for capital gains deduction.
Case Scenario Example: Implications to Jim
Jim will still be able to utilize his personal Capital Gains Exemption (CGE) should someone offer to buy either of his operating company’s shares (if he structures his business correctly). However, he will run into issues trying to use (Continued to page 61)
Fall 2017 Truck LoggerBC 19
Private Sector Contracts: When A New Government Changes the Playing Field
20 Truck LoggerBC Fall 2017
services provided under the contract, including changes necessary to comply with requirements imposed by government. If the contractor does not wish to accept the required changes, it is permitted to terminate the contract without any liability to the tenure holder. If the contractor accepts the changes (as is more likely the case under a Bill 13 contract), then either party is permitted to require a rate review that can lead to an arbitrated resolution, if necessary, to ensure that the rate appropriately accounts for the implications of the change in policy.
lar provisions to address these risks. If not, then a contracting party at risk on account of a particular change in government policy might take the position that the contract includes an “implied term” that addresses the change in policy (perhaps, for example, that the parties will adjust rates to account for substantial changes to operating conditions that result from unforeseen changes in government policy). Or a contracting party might take the position that the change in government policy is so substantial and beyond the range of risks the parties would
Similarly, under Section 22 of the Regulation, a Bill 13 contract must address “events beyond control” of the parties (commonly referred to as events of “force majeure”) modelled on the standard provision included in Schedule 13 of the Regulation. Under this provision, a tenure holder is not liable to the contractor for a failure to provide the amount of work required under the contract, and the contractor is not liable for a failure to perform the amount of work allocated to the contractor under the contract, if the event that leads to the failure is beyond the reasonable control of the tenure holder or the contractor, as the case may be. Such events specifically include “changes in law.” While Bill 13 contracts are lawfully required to include provisions that address risks associated with changes in government policy (among other things), any properly drafted services agreement or supply agreement should also have simi-
have contemplated so as to “frustrate” the contract and bring it to an end without further liability between the parties. The difficulty with reliance upon such “common law” or “judge-made law” is it evolves on a case-by-case basis. Consequently, there is a much higher degree of uncertainty than if the parties had simply reduced their intentions to writing. The contractual tools exist for contracting parties to protect themselves from unforeseen changes in government policy—they simply need to open the tool box and use them. Of course, the parties should ensure that they have a tool box—a well drafted and negotiated contract—in the first place.
ffective July 18, 2017, BC had its first change of governing parties in over 16 years and the NDP now has the opportunity to direct government policy for so long as it retains the support of the Green Party. This potential for policy change as a result of a new governing party raises concerns for those in the private sector who have ongoing contractual relationships created on the basis of expectations formed under pre-existing government policies. Changes in government policy could produce hardships or windfalls for those in pre-existing contractual relationships depending upon how the change shifts the playing field. In the forest industry, for example, previous changes in governing parties have brought about new timber harvesting regulations with cost implications for providers of logging services subject to pre-existing contracts and rates. The first point is that these changes can, and often do, occur without any change in governing party. For example, the enabling legislation for so-called “Bill 13 contracts” under the Timber Harvesting Contracting and Subcontracting Regulation (the “Regulation”) was brought into force during the last days of the last Social Credit government. Private sector actors who operate in highly regulated fields such as forestry should always remain mindful of the implications that potential changes to governmental policy may have for their contractual relationships (not just when there’s a change in governing party). The second point that follows is any properly drafted services or supply contract will manage the risk of changes in government policy, whether due to a change in governing party or otherwise. Some of the provisions that the Regulation lawfully requires in a Bill 13 contract provide a helpful illustration. Under Section 14 of the Regulation, a Bill 13 contract must include “flexibility to address change” modelled on a “standard provision” included in Schedule 5 of the Regulation. Under this provision, a tenure holder may require a contractor under a Bill 13 contract to make certain changes to timber harvesting
Jeff Waatainen is an associate with the Forestry Law Practice Group of DLA Piper (Canada) LLP, and has practised law in the BC forest industry for over 20 years. Jeff can be reached at 604.643.6482 or email@example.com.
FORESTRY? YEAH WE DO THAT TOO.
TOMORROWâ€™S EDGE TODAY
Fall 2017 Truck LoggerBC 21
Contractor Sustainability: A Personal Perspective
By Graham Lasure
y the time you read this our family business of three generations— and ninety years—will have left the forest industry. It was a sad decision to remove our investment as logging and road building contractors from Winter Harbour. However, it no longer made any business sense and had become a poor investment with a questionable future. Personally, I am tired of the struggle. Like any logger, I love a good challenge. But this has gone too far for too long. I am extremely sad to displace 25 employees, many who have made Winter Harbour their home for up to 40 years. When we leave, Winter Harbour will receive its next nail in the coffin. (The first nail being the changes to commercial fisheries in the early 90s.) What remains of Winter Harbour—the store and the public post office—are likely to close, except perhaps during the summer months. W.D. Moore Logging has also been integral in numer-
ous ways to Winter Harbour which is too small to have any financial, or other, resources. We grade the road, run the solid waste facilities and help out with machines and gravel for developments. I am worried and sad for the fate of another coastal town that our family, and many others, love and have been brought up in.
Our History: W.D. Moore Logging
The business was started by our grandfather, Albert Moore, along the shores of Quatsino Sound in about 1928. Reading through our old records, I saw many business cycles, good and bad, and learned that the licence ownership changed hands about three times. When I started working in the business, we were contracting to Rayonier Canada and there were approximately six different licensees harvesting public timber on Vancouver Island to contract for. Times were pretty good for us dur-
All photos: Courtesy of W.D. Moore Logging
A-frame yarding near Winter Harbour in the mid 1930s. 22 Truck LoggerBC Fall 2017
ing the 70s. Rayonier believed in investing for the future with contractors and within the communities they worked in and there were enough licensees to create a competitive bidding environment for logging contractors. The implementation of Bill 13 in 1991 was a milestone for logging contractors. It was designed to level the playing field and help everyone create and grow sustainable businesses. In the beginning, Bill 13 had a detrimental effect for W.D. Moore Logging. While it was being negotiated, our licensee at the time saw how it could have a negative affect for them. They became very aggressive in work and rate negotiations and we could never come to terms. In a nutshell, we sold back our contracts, which included everything from engineering to booming and towing, but they granted us back two Bill 13 contracts: yarding and loading, and road. After a few years of this, due to a num-
First generation: Albert Moore started logging on Quatsino Sound in 1928.
Second generation: Bill Moore was a TLA president and a lover of jazz music.
Third generation: Graham Lasure took over running the company in the late 80s.
ber of reasons—our rate and the low rates paid to new falling and hauling subcontractors which left us working with poor quality subcontractors—we were in financial distress. That is when I was asked to take control of the company business. I lowered costs; I improved efficiencies and production, even to the point of cancelling the fax line and getting rid of the rental phone sets. But I still could not make ends meet. That is when I got in touch with the TLA and I was schooled in the processes used to correctly set a sustainable rate. Despite this support from the TLA, I began negotiating my rates without much success. During that time, however, I was able to replace our key pieces of equipment by borrowing close to $2 million from a friendly finance company with nothing but the purchases to secure the loan. (At the time it was GE Capital, who I will forever be personally indebted to.) That kind of financing would be unheard of today. With new machinery running, we became much more efficient and I continued negotiating while barely being able to cover monthly payments. After three years, I managed to secure a rate, which I believed would be sustainable into the future as long as we could negotiate further increases as core costs such as fuel, labour
and machinery increased. Core costs increased drastically after that, especially fuel and labour, however, we eventually paid our loans and began to save some money for machine replacement. I also diversified our risk of working for a single customer and began bidding on BC Timber Sales. We were successful on several sales and that helped us build a safe level of financial stability. This also helped increase our annual cut which continued to shrink in TFL (tree farm license) 6. To date, if I am not mistaken, TFL 6 was owned by seven different licensees. With each change of hands came a mandated 5 per cent cut in AAC, which, over time, brought us from our start of 180,000 m3 down to our current level of 75,000 m3. But just when things were shaping up for us, the licensee began to have their own financial difficulties. The licence changed hands two more times, with each previous licensee going into bankruptcy and us losing cut each time. Of course, during each of these phases there was very little negotiating for sustainable rates as the licensees said “we can’t give you an increase as we aren’t profiting either.” Now in a time when licensees are showing record profits and 18 per cent ROE and contractors are lucky to get 5 per cent,
they are still unwilling to share the bounty of BC’s public resource. The public is better served by government auctioned timber though BC Timber Sales. The stumpage paid back to the public coffers is much higher than licensees pay, the investment stays local rather than being paid out in dividends, jobs stay in local communities, and everyone gets an equal chance to prosper from what is public timber. Since the downturn of 2008 and the license sales and amalgamations, we hung on but were slowly moving backwards as rates never kept up with inflation. I took another risk and bought out another contractor to bring our volumes up to a more sustainable level—in my opinion 125,000 m3. Things did not get a lot better; however, they did not get a lot worse either. Negotiating a truly sustainable rate—including enough for equipment replacement over time—became an unattainable goal for us. I have discussed this with many contractors and I hear the same story from them.
Why Logging Contractors Can’t Be Sustainable
The primary reason logging contractors can’t be sustainable is licensee amalgamation. This has resulted in a near monopoly of the public forest resource which has
Fall 2017 Truck LoggerBC 23
W.D. Moore Logging float camp in 1952; this is the largest float camp the company had before moving onto land. given them all the power in negotiations. Logging contractors do not have much choice in who to work for if we choose to stay in the industry. This amalgamation, and the power it has given licensees over many aspects of the industry, has been further enhanced by the changes in Bill 13 which now allow for a fair market rate determination. “Market rate” has now been interpreted across the industry to mean “lowest rate.” Many contractors are working at unsustainable rates without even knowing it, very much like I did in the beginning. I have met many contractors who think they are profiting, but their “profit” is just money that should be marked for future machine replacement. Another serious issue since implementation of the revised Bill 13, is our inability to refuse work without risking losing our contracts. This is a serious disadvantage to the contractor when we cannot come to an agreed upon rate because we are mandated to continue logging, despite the costs. Also, if we find other work because we cannot get licensee permits or are curtailed for other reasons beyond our control, we can be called back on short notice by the licensee and are obligated to respond despite the significant overhead costs of moving our operations. This is a high capital investment business with very high risk—fire, injury and
24 Truck LoggerBC Fall 2017
death, markets, regulatory change and lots of built-in non-negotiable additional costs such as environmental regulations and safety programs—compared to other industries. We deserve the chance to make a sustainable profit; after all, it is a public resource. W.D. Moore Logging has removed our investment from Winter Harbour and the BC forest industry for these reasons and because I don’t see things changing in the future.
Solutions For The Future
Though I’m not hopeful changes will be made, here’s what I think needs to happen to allow logging contractors to be sustainable. 1. Bill 13 needs to be revamped by defining market rates. Comparable rates cannot include businesses proven to be financially unviable by not paying their taxes, stumpage, pension plans or WCB and have gone bankrupt only to start again, with the same practices, under another entity. Market rate cannot be defined as the lowest rate. 2. Bill 13 contractors must have the right to refuse work without loss of contract if there is no agreed rate set or if they are called back with short notice after having been held from working beyond their control.
3. L icensees should not be allowed to bid on BC Timber Sales, including surrogate bidding, if they have not fully utilized their own allocated AAC. 4. The holding rule for BC Timber Sales needs to be policed. No one should be able to hold more then their allotment of sales including surrogate bidding. 5. Somehow, we must reallocate the tenures of BC back to multiple entities. We need the large licensees, but they should not be monopolistic. The current monopoly benefits only a very few and does not give maximum benefit to the public or the workers and is bad for the overall market. Monopolies are illegal in many developed nations. The USA currently has very little logging on public lands and it is all by competitive auction. This approach would also alleviate some of our softwood discussion. Time goes on and things change. Not always for the better. Good luck to all in the future. I will miss what was once an admirable and challenging career. Mostly I will miss the people who made this industry such a great place: logging contractors. I will leave you with a quote from one of the founding fathers of our industry, a great man with great foresight, H.R. MacMillan: It will be a sorry day for British Columbia when the Forest Industry here consists chiefly of a very few big companies, holding most of the good timber and good growing sites to the disadvantage and early extermination of the most hard working, virile, versatile, and ingenious element of our population—the independent market logger and the saw-mill man. Our forest industry will be healthier if it consists of an many independent units as can be supported.
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 firstname.lastname@example.org or 604.684.4291 ext. 5 To purchase commemorative advertising at a special celebratory rate in Truck LoggerBC, contact Wing-Yee Kwong at email@example.com or 604.681.1811
Look out for the 75th anniversary commemorative issue of Truck LoggerBC coming in January! www.tla.ca || @truckloggerBC Fall 2017 Truck LoggerBC 25
Value Added: What Does It Mean For Forestry?
By Pieta Woolley
alk down a flight of recentlybuilt stairs anywhere in North America, and you’re likely treading on Chinese-grown red oak, manufactured in China. But that’s changing. At a trade show a few years back, BW Creative Rail Systems’ President Rob Mitchell got to chatting with LNL Building Products Inc., a Georgia-based company that distributes value-added wood products to Home Depot. The distributor was having trouble with their stairs parts suppliers in Asia: the lead time was unpredictable and the quality was inconsistent. What could Mitchell do for them? “This is a good news story,” said Mitchell, who is also the chair of BC Wood. “We’ve brought business back to BC.”
Thanks to his company’s investment in technology and the highly skilled workers that run it, BW Creative can compete on price as well as quality internationally. Now, Home Depot’s interior stair spindles, railing and newel posts are made from BC-grown Western Hemlock—manufactured in Maple Ridge. What a coup for BC. Stories like these warm the hearts of policy makers—and they should. When anyone adds value to BC’s forests, the general view is it means more dollars and jobs stay in BC and this is often, but not always, true. That’s what Premier John Horgan was asking for in his July 2017 mandate-setting letter to Doug Donaldson, the new Minister of
Forests, Lands, Natural Resource Operations and Rural Development, when he specifically asked him to implement a “lasting strategy to create more jobs by processing more logs in BC.” Delve deeper into the political buzzword “value added,” though, and it becomes apparent how interconnected the successful wood manufacturing industry is to a thriving primary industry. And how swiftly changing the wood manufacturing sector is in terms of technology, trade, local buy-in, and innovation. Enhancing BC’s value-added sector is important—and so is respecting the supply chain that is so essential for its success.
What’s being made in BC with what you harvest? Meet four of BC Wood’s board members. Each owns a company that transforms local wood into products that are significantly more valuable than commodity lumber.
Structurlam www.structurlam.com Town: Pentiction Employees: 220
What we make: Glulam beams and cross-laminated timber for construction. We deliver an entire building. The 18-story wood frame building at UBC— Brock Commons—was entirely prefab-
Photo: Courtesy of Structurlam
Structurlam’s products were used in the new Telus Garden building in Vancouver. 26 Truck LoggerBC Fall 2017
ricated at our factory in Okanagan Falls. The wood we use: Our Glulam Plus beams are primarily interior Douglas fir. For our Crosslam panels we use regular SPF (spruce-fir-pine) from BC and Alberta.
Who better to explain that relationship than Peter Moonen, Canada’s timber representative to the United Nations, and advocate for wood use in buildings through his position at Wood WORKS! BC. “Every value-added producer that makes something out of wood needs to have someone cut down a tree,” Moonen said plainly. Internationally, he noted, BC’s added value starts with forest practices; Yale University has long recognized this province’s international excellence in forestry, and a large percentage of the world’s certified-sustainable wood is grown in BC. So the marketing advantage—the added value—for BC wood starts before it’s even milled, with foresters, fallers and yarders. Politically, Moonen notes, the primary sector is often pitted against the value-added sector. But inside the industry,
that narrative is just wrong. The two sectors form one continuum. One feeds the other. And realistically, he said, BC’s forests will always produce more timber than the manufacturing sector can absorb economically. So what is value added? Moonen pushes for a wide-ranging definition, from strategic log sorting to fine furniture making. He also notes that governments have a role in enhancing the value of BC’s wood products: choosing to buy local whenever possible, whether that’s glulam beams in an arena, or school desks. Buying local means the sector can grow. When someone says ‘value added,’ what may pop into your head is a very different image than Mitchell’s small, nimble and specialized factory. In BC, the once-ubiquitous 300-worker sawmill—as miniaturized in the historical
displays at the Royal BC Museum in Victoria—has been left in the sawdust of the new tech-based value-added industry. On average, BC’s 600 secondarysector wood businesses boast just 12 employees each (though of course that varies widely). About 12,500 direct employees manufacture with wood in BC and boast sales of $3.8 billion annually. “The term value added is a difficult one. It depends where you are on the value chain,” explained Brian Hawrysh, the CEO of the value-added industry association, BC Wood. “If you’re a forester, logging and log sorting is ‘value added.’ For BC Wood’s definition, ‘value added’ is products manufactured beyond basic lumber products.” BC Wood represents seven value-added subsectors: millwork, cabinets, furniture, prebuilt housing, engineered wood products, log home and timberframe,
What I wish people knew about the value-added sector: I don’t think people even understand what we’re talking about. There’s such a breadth of products within the value-added sector, from log home to furniture. And the quality. And I wish people understood that Stucturlam triples the value of the fibre. Why I’m proud to work with wood: I’ve spent my entire career growing and promoting wood. I was a forester originally, and ran BC Wood before Brian (Hawrysh). I am absolutely passionate about wood—the strength, beauty, and desirability of it.
What I wish people knew about the value-added sector: We are really concerned about the forest and the earth. Back in the 1980s, people thought of the industry as wasteful and greedy, as wanting to exploit the resource. In my view, and the people I know who run these businesses, we don’t think like that at all. Why I’m proud to work with wood: I’m very proud of being a British Columbian. I can really convey our geography and climate through wood, and I can share with the rest of the world this wonderful place we live in.
as much as we can in the factory. You get better quality control and exact pricing. Everything comes to the site and you just stick it together. You’d never know it was prefab. The siding, the windows are all custom. We do a lot of remote homes in Alaska, California and Hawaii. Our biggest market right now, though, is in BC. The wood we use: The majority is SPF (spruce-pine-fir) either from BC or Alberta. We use some Douglas fir too from BC, but sometimes we look in Washington and Oregon for certain grades or quality. What I wish people knew about the value-added sector: That making things locally makes such a huge impact on the community. Why I’m proud to work with wood: I’m a wood guy. I got a degree in foresty. I like woodworking. It’s my hobby. Also, you get to take someone’s plans they drew on a
Pacific Homes www.pacific-homes.com Towns: Cobble Hill and Creston Employees: 100 between the two plants What we make: Roof trusses and prefabricated homes. We’re like having a custom home-builder on site—except we do
Photo: Courtesy of Brent Comber
Brent Comber Original Designs www.brentcomber.com Town: North Vancouver Employees: 14 What we make: Furniture and sculpture. Primarily I’m interested in conveying a story about the Pacific Northwest. For example, if we make an alder cube, it’s really a story of what it feels like to be in the forest. I bundle the alder so you can peer down into the darkness and have that sense of wonderment, that feeling of being in a dark forest. The wood we use: Mostly indigenous material. I buy off-cuts from sawmills, veneer factories and log sorts, all within 100 km of the shop. I like to create value out of undervalued material.
Brent Comber designs and manufactures furniture, like this solid wood bench. Fall 2017 Truck LoggerBC 27
Photo: Courtesy of Pacific Homes
Pacific Homes builds prefabricated homes in their factory and assembles them on site. napkin and turn them into reality. It’s emotional. We’re not selling tresses. We’re selling someone their home.
BW Creative Wood Railings Systems www.bwcreativewood.com Town: Maple Ridge Employees: 80
What we make: Railings for both interiors and exteriors of single family and multifamily homes and sell them across North America and the UK. The wood we use: Mostly Pacific Photo: Courtesy of BW Creative Railing Systems
This interior stair railing is made from BC hemlock.
JACQUI BEBAN VP Logging C 250.951.1410
#204 – 321 Wallace Street Nanaimo, BC V9R 5B6
28 Truck LoggerBC Fall 2017
Coast Hemlock (indoors) and Western Red Cedar (outdoors), both from BC. What I wish people knew about the value-added sector: We not only add value to the wood, a natural and renewal resource, we add value to the hundreds of communities where we are located. Why I’m proud to work with wood: Once you’re in the wood industry, it’s truly in your blood. The look of wood. The smell of wood. You’re in it for life.
harvesting on one hand, and demanding more value-add on the other, despite the source of fibre for our domestic value add or tertiary manufacturing sector coming from sustainably managed local forests that my members harvests,” he said. “But value added is about a value chain. If you want to make value added greener, you have to make sure that all the processes you have to supply that fibre are in good shape too, or you can’t have that remanufacturing sector.” In other words, any government initiative to support the value-added sector should support the full continuum of BC’s value-added sector, including harvesting. And from the TLA’s perspective, understanding the dynamics of how our timber supply is controlled by a few and how the industry’s supply chain is at risk due to lack of contractor sustainability are important considerations when our new provincial government is trying to figure out ways to support further manufacturing of our local timber. If you want, it is taking a holistic view of how to provide solutions.
About as far away as you can get from the big sawmills of yore are the labs associated with FP Innovations, a research and development non-profit supported by both the major forest products producers and government. Here, scientists create Dreamworks-worthy futuristic technology, such as wood-based antimicrobial additives for food; wood-based replacements for petroleum in automotive foam; and cellulose nanocrystals. This tiny value-added wood technology can conduct electricity; carry the colour in make-up and paint; and may even replace human bones. Fostering a forest economy worth much more in both money and jobs is clearly very appetizing to the province. Before the May 2017 provincial election, then-premier Christy Clark’s government set in motion two important supports for these businesses. The first, released in September 2016, is the Value Added Sector Action Plan. It’s a simple 10-page document that outlines six strategies to “rebuild and improve the value-added subsector, and position it for the future.” Eight months after releasing this report, in April 2017, the Liberal government announced the Wood Secretariat—a key to meeting the BC government’s strategic goal of “maximizing value derived from the province’s forest resources and enhancing employment.”
Call 877.563.8899 or 250.563.8899 Prince George, BC www.prolenc.com
Any government initiative to support the valueadded sector should support the full continuum of BC’s value-added sector, including harvesting.
8’6” bunks highway - 83 metres payload -
Both Hawrysh and Mitchell are hopeful the commitments to the Value Added Sector Action Plan and the Wood Secretariat will continue under Premier John Horgan’s leadership. For British Columbians who work in the valueadded forest products sector, that’s good news indeed. But as David Elstone, the Executive Director of the Truck Loggers Association asserts, the value-added sector is only as healthy as the primary sector that supports it. “I find that often the public are quick to unintentionally disassociate timber harvesting from the value-add sector, thereby calling for less
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and reengineered wood products. The subsectors have recovered from the 2008 recession and are finding their 21st century niche in a globalized marketplace. “Globally, the biggest competition for our finished products comes from the United States, Europe and to a lesser extent Asian suppliers,” said Hawrysh. “BC companies compete successfully on not just the product itself but the services that are bundled around the product. Our manufacturers have to be nimble, customer focused, and flexible around quantity and design. You don’t need to order a container ship of product from them!”
Fall 2017 Truck LoggerBC 29
Work Share Agreements: Keeping Businesses Secure In Uncertain Times
By Robin Brunet
t face value, Natural Resources Canada’s inclusion of work sharing as part of its recently announced $605 million loan and loan guarantee package seems like a logical way to cushion the blow for forestry companies having to pay US tariffs on Canadian softwood exports. Indeed, work sharing agreements have proven successful in other sectors, specifically those in Alberta faced with laying off valuable employees due to the oil and gas downturn. “Work sharing enabled us to retain four of our administration team who we considered first class and didn’t want to lose,” says Tom Wilson, Chief Financial Officer for Heavy North, an Edmonton-based civil construction company. “Overall, the strategy is valuable to us, because like in the forest industry our work is cyclical and prone to slowdowns.” When Lynnel Kennedy, a bookkeeper for a small independent logging con-
30 Truck LoggerBC Fall 2017
tractor on Vancouver Island, heard about the latest work share initiative, she recalled how a similar program benefitted her in the 1990s, when she was a clerk for an automobile dealership. “Collectively we went from a five-day to a four-day work week and collected unemployment insurance for that fifth day, and although some people didn’t like it because they were paid only $60 instead of $100 under EI, I thought it was far better than having to find a new job in a tough market.”
skilled employees. How would the sharing of machine operating be achieved? Also, the potential for union conflicts could be huge.” Kennedy is hardly alone in her assessment. In Quebec, Resolute Forest Products has been an outspoken advocate for government action to combat the softwood tariffs, and yet company spokesman Karl Blackburn says of the $605 million package announced by Ottawa in June, “The work share component is simply not feasible, at least for us. It
Collectively we went from a five-day to a four-day work week...I thought it was far better than having to find a new job in a tough market. But Kennedy adds, “While no one in the BC forestry sector has yet taken advantage of the program to my knowledge, I’m not sure how feasible it would be in an industry so reliant on specialty
might benefit office employees, but not field staff. We prefer to focus on loan guarantees as the way to combat the tariffs, and we’ll be working closely with Ottawa to make that happen.”
Wilson, who supports the program, agrees. “While we retained our four administrative people, we had to lay off all of our field workers,” he says, adding that they have since been rehired. The Government of Canada website states that effective July 30, 2017 to March 28, 2020, work sharing “special measures” will be in effect for employers affected by the downturn in the forestry sector. These measures extend the duration of work sharing agreements by an additional 38 weeks, for a total of 76 weeks. The mandatory waiting period has also been waived so that employers with a recently expired agreement may immediately apply for a new agreement, without waiting between applications. Eligible applicants are businesses that have been directly or indirectly affected by the downturn in the forestry sector. In addition, eligibility applies if an individual has had a work share agreement that ended between October 30, 2016 and July 29, 2017; an agreement that will begin/end between July 30, 2017 and March 28, 2020; or will sign a new work sharing agreement between
July 30, 2017 and March 28, 2020 (with an agreement start date no later than March 29, 2020). Under the extended work share scheme, $10 million has been allocated to subsidize the wages of eligible workers. (By contrast, $80 million has been earmarked for those who prefer to upgrade skills and move to a different industry.) The human resources firm Jouta Performance Group believes if employees agree to a reduced work week, it could result in a 20 per cent instead of 40 per cent pay decrease or even less, with the cash savings available to reinvest in fortifying their company. “Recruiting and training costs are also avoided,” states a report on the topic. But despite the narrow parameters that work sharing seems to be confined to in the forestry sector, Brian Butler, President of United Steelworkers Local 1-1937, is supportive of the concept, “providing that under a collective agreement everyone with seniority agrees to the arrangement, otherwise you would have grievances.”
The USW itself took advantage of the program in 2009 when three locals merged to create 1-1937. “It allowed us to retain four office staff, and we participated in the program for about six months,” Butler recalls. Butler doesn’t rule out the possibility of work share being used in the field, “but it would have to be used by a relatively small company, maybe 15 people or less. It’s not out of the question, people don’t like to see their co-workers laid off and it can benefit operations, especially in light of the money and time that would have to be invested in retraining others to fill the position of those who are laid off and decide to go elsewhere.” However, for the time being at least, the potential of work share in BC remains to be determined. “The impacts of the US tariffs have not yet hit home, and the extent to which we rely on government support depends on the duration of the softwood dispute,” says Butler. “So far, all we can do is echo the sentiments of people in the forest industry by stating that the package announced by Ottawa is a good start.”
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Setting the Record Straight: Understanding Forest Industry Job Loss
he forest industry, like all Canadian natural resource sectors, has long had the distinction of providing good, family supporting jobs in rural communities around the province. According to Stats Canada, the British Columbia forest industry employed close to 100,000 persons in engineering and timber development, logging, sawmilling, pulp and paper and secondary manufacturing in 2000 together with the plethora of indirect jobs needed to support all aspects of the industry. However since that time, the North American economy has gone through two major recessions, including two massive dives in the US residential construction sectors, and it is still recovering today. Mill closures and job loss have occurred across the forest industry. The environmental community was quick to jump on the job loss statistics and use them as part of their anti-log export campaign. The media messages were: “log exports responsible for mill closures and provincial industry job loss” and “BC needs to get more jobs per cubic metre of harvest like they do in Ontario.” However, a more in-depth look at the reasons for the job loss and the changes to the industry that occurred over the same time period paints a much different picture.
BC’s Forestry Job Record
First, let’s get the BC job numbers correct. The following table shows the Stats Canada employment figures by sector for the years 2000 and 2015 within the BC forest industry. In aggregate, the forest industry lost some 45,000 jobs over the 15-year period.
Stats Canada Employment Data by Sector Forest and Logging Pulp and Paper Support for Forestry Wood Product Manufacture Total 32 Truck LoggerBC Fall 2017
2000 18,295 18,331 16,653 43,352 97,131
2015 12,396 8,417 4,603 26,377 51,793
Difference 5,899 10,414 12,050 16,975 45,338
32% 55% 72% 39% 47%
Log exports have risen in BC since 2000—from 3 per cent of the provincial harvest to 9 percent over 15 years—and they provide an easy target for the job loss rhetoric. However, a number of other significant changes have occurred with the industry that more clearly explain where the jobs went. From 2000 to 2015, the provincial harvest fell by 16 per cent as a result of working forest land base reductions on the coast caused by ongoing environmental campaigns. This provincial reduction happened despite an increased harvest in the Interior set to combat the mountain pine beetle. A reduced harvest leads to less jobs. Despite the many sawmill, pulp mill and manufacturing plant closures since 2000, capacity increases at remaining mills have kept provincial lumber production virtually the same over the period (down just 6 per cent since 2000). As a result, one cannot point to reduced lumber production as a significant contributor to job loss—at least from a provincial perspective. Over the last 17
years, the industry collectively increased its productivity by using technology to displace high-cost labour in an effort to keep BC’s wood products competitive in the global marketplace. Starting in 2001, the lumber industry accelerated its restructuring in the face of ongoing softwood lumber pressure which resulted in substantial productivity gains with labour in sawmills and wood preservation industry increasing two times faster than in the entire manufacturing sector1. (Labour productivity is defined here as the industry’s value added divided by total number of hours worked. Simply put, we learned to make more lumber with less people.) This same trend was also seen in the logging sector. The ongoing shift towards harvesting second growth combined with increased use of mechanical harvesting has led to the displacement of on-the-ground workers. (However, this shift has a silver lining: increased mechanical harvesting has improved the industry’s safety performance.) At the same time, the global shift to electronic media forced a significant reduction (59 per cent) in BC paper production (1.5 million tonnes) and 17 per cent reduction in BC pulp production (close to 1 million tonnes). Several mills closed as a result of these failing markets. When people stop buying the product we are making, we stop making it and the jobs go with it. Contrasting these industry changes over the past 15 years with the job loss statistics reported by Stats Canada and the conclusion drawn is much different than typically reported. • A reduced harvest, primarily on the coast, resulting from reductions to the working forest was responsible for 10 per cent of the job loss reported. • Increased productivity in wood manufacture at BC sawmills accounts for another 38 per cent of job loss. However, it also contributes significantly to BC’s ability to remain competitive in the global market. • Increased productivity in logging accounts for another 27 per cent of job loss. However, the increased mechanization within the industry has made it a lot safer. In aggregate, these specific changes point to the fact that 75 per cent of the Stats Canada reported job loss in BC
Fall 2017 Truck LoggerBC 33
Rationalizing Forest Industry Job Loss
Between 2000 and 2015
Reduced Harvest 10% Logging Productivity 27% Log Exports 4% was as a result of productivity improvement or a reduction in the harvest. On the other side of the coin, reduced manufacturing of pulp, paper, lumber and value-added products in BC, accounts for 22 per cent of job loss and 4 per cent of job loss can be attributed to an increase in log exports.
Manufacturing Productivity 38% Less Manufacture 22%
Why Can’t BC Be More Like Ontario?
Critics often point to the Ontario forest industry as the benchmark for value-added job creation in the forest industry. However, a review of the job statistics there reveal some interesting details about value added.
In Ontario, the 2014 harvest was just under 14 million cubic metres or about 20 per cent of BC’s harvest. However, Stats Canada reports just over 62,250 Ontario jobs were dependent on the forest industry in 2014. That suggests about 36 per cent more jobs per cubic metre of harvest in Ontario compared to BC. However, if we dig a little deeper it’s clear there are fundamental differences between the industries. Ontario has a large hardwood species harvest (species which do not grow in BC) that supports a more labour intensive wood products (furniture) manufacturing industry which accounts for approximately 10 per cent of their harvest and a large incremental portion of the job count. Logging employs 36 per cent more people per cubic metre of harvest in Ontario. To help explain this difference, take a look at the piece size of individual logs. Ontario logs are significantly smaller resulting in greater handling per cubic metre. Larger log piece sizes in BC make our sector inherently more efficient in the woods. Ontario pulp and paper production employs a whopping 687 per cent more
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34 Truck LoggerBC Fall 2017
people than we do per tonne of production in BC. However, the pulp & paper sector historically has been much larger in Ontario and Quebec. These mills are old institutions which typically require a higher amount of labour compared to more modern, efficient facilities. What these stats suggest is that unlike BC, Ontario has yet to radically improve the productivity of their mills and logging operations, a process that ensures the global competitiveness of the BC industry. As a result, Ontario remains more vulnerable to the ups and downs of markets and as we have seen more recently with the imposition of duties and tariffs—immediate impacts on sawmill operations not seen in BC. Ultimately, on paper Ontario has greater employment per cubic metre. However, when we consider the differences between the two provinces’ forest industries it’s clear it isn’t an apples-toapples comparison. BC’s forest industry is indeed different and, dare we say, more efficient at using its timber resource which is reflected in its employment-per-cubic-metre stat.
Job Growth Opportunities
Given the need to remain globally competitive, it is not likely that we are going to increase the BC job count in the woods or mills as we’ve had in the past. Despite the rhetoric, banning log ex-
harvesting the full coastal cut would yield an additional 22 per cent to the coastal workforce. Opportunity also lies in setting the stage for maximizing the allowable harvest, something the industry and government should all work
What these stats suggest is that unlike BC, Ontario has yet to radically improve the productivity of their mills and logging operations. ports won’t increase jobs. The export of some logs in BC allows for the harvest of a significant portion of the coastal working forest that might otherwise go unharvested as a result of high costs, which if banned, would eliminate those harvesting and stevedoring jobs. Banning log exports would reduce today’s jobs in the industry by close to 10 per cent. However, there are opportunities to increase jobs beyond the 4 per cent lost to log exports while at the same time maintain our global competitiveness. In 2016, the coastal industry alone undercut the allowable harvest by some 3.9 million cubic metres. Given today’s job statistics per cubic metre of harvest,
towards. Finally, we should look at the control of our public timber supply to ensure the efficient distribution of fibre to where it is needed at BC conversion facilities. Addressing these three issues will lead to more employment in BC. 1
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Fall 2017 Truck LoggerBC 35
BIV’s Top 100 Companies: Contractors and Shareholders Need Each Other
By Robin Brunet
t was good news for BC’s forest industry when Business in Vancouver (BIV) announced its Top 100 Public Companies list in June: no less than 13 of the 100 firms cited were forestry and forestry-related companies, either local or with substantial operations in the province. The forestry related companies named by BIV are: Finning International Inc.; Ritchie Bros. Auctioneers; West Fraser Timber Co. Ltd.; Canfor Corp.; Interfor; Taiga Building Products; Mercer Canada Ltd.; Western Forest Products; Canfor Pulp Products Inc.; CanWel Building Materials Group Ltd.; Conifex Timber Inc.; Fortress Paper Ltd.; and Acadian Timber Corp. But to insiders, the accolade went deeper than just industry recognition. Although the firms named by BIV are diverse, the licensees are united in one respect: their success is due to the hundreds of contractors who serve them. David Elstone, Executive Director of the Truck Loggers Association, says, “Canfor, Western Forest Products, and other licensees named by BIV depend on a timber harvesting contractor base. While we’re happy to see so many forest products producers make the list and report quarter after quarter of improved earnings, it’s painfully important to point out that the contracting community is not partaking in this upward trend.” According to BIV data, the forestry sector played a big role in the average total revenue of BC’s top 10 publicly owned companies increasing from $4.9 billion to $5.4 billion between 2012 and 2016. Forest products producers West Fraser and Canfor enjoyed “consistent profit and revenue growth.” In fact, the former’s profits jumped 213 percent between 2015 and 2016, and Canfor’s grew 122 percent in the same time frame. It’s no surprise to TLA members that the big licensees are posting substantial gains and success in an industry that has withstood so many challenges is cause for cheer. “But we also need to address imbalances within the sector if that success is to be sustained,” says Elstone.
36 Truck LoggerBC Fall 2017
He is referring to many of the province’s contractors, who collectively employ thousands of fallers, log haulers, and loggers, not seeing a return on their investments in equipment and employees that are necessary to maintain operations. This is in stark contrast to the rosy image conveyed by the earnings of their employers—clearly something is not right.
The focus isn’t exclusively on contract rates: elements such as regulatory constraints and legislative roadblocks impact the ability of a contractor to turn a fair profit, while the time it takes to lineup steady work and planning are two of many examples of operational issues. Elstone remarks, “All we can say at this point is that contractors and licensees have been meeting with Abbott, and
The licensees are united in one respect: their success is due to the hundreds of contractors who serve them. The situation has long been viewed by the TLA as untenable and is even more disturbing given the countervailing duties on Canadian softwood lumber exported to the US. It is widely believed that if the softwood dispute causes an industry downturn, many contractors won’t be able to survive it as they now have far less equity and financial reserves than they did prior to the advent of the 2009 recession. Recently, hope came in the form of the Contractor Sustainability Review led by George Abbott and his partners at Circle Square Solutions who are the independent facilitators overseeing the review process. So far in the Review process, PNL Consulting Inc. has completed a financial assessment of the contracting sector; it was based on input from 122 contractor companies who log about 26 per cent of the average provincial harvest, and it identified drivers that may impact their well-being. “George Abbott and his team are currently in the middle of meeting with contractors and licensees, listening to personal accounts of the issues that exist,” says Elstone. The facilitation process will be completed by the end of 2017, with the intent of determining why contractors are not able to be as successful as their employers, the tenure holders. Abbott will recommend what can be done to improve the situation, with remedies that can presumably be embraced by contractors and licensees while maintaining global competitiveness.
so far we’re satisfied with the process. What I hope is being achieved is a demonstration that a lack of returns in these small businesses is a symptom of broken relationships between them as the independent timber harvesting contractors, and the forest products producers that retain their services.” The TLA executive director, who has gone on record calling the sustainability review the most important development to the BC industry in the past 20 years, won’t describe his mindset as cautiously optimistic. Instead, and like so many of his colleagues, he is simply hoping for the best possible outcome: “The BIV Top 100 list is yet more proof that BC is still very much dependent on forestry; but given that contractors are the foundation of this industry, we must do whatever we can to ensure that they operate on an even playing field.” With a dose of sober realism he adds, “This process is, for some, their last chance. If the Review doesn’t result in practical changes, these contractors say they’re done with this industry.” If contractors continue to exit the business, that puts into question the continued success of the firms that the BIV’s article reports on.
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Taking the Risk out of Conversion: Ensuring You Get Paid for What You Deliver
n BC, the forest industry operates by the cubic metre. The AAC (allowable annual cut) allows for the harvest of a set number of cubic metres annually; companies are allocated a portion of those cubic metres via tenure; sawmill efficiency is measured in board feet per cubic metre of log processed and most logging rates are based upon a dollar per cubic metre of delivered wood. The measurement of cubic metres, however, is costly and to reduce costs in an effort to stay globally competitive, delivered logs are typi-
38 Truck LoggerBC Fall 2017
cally weighed (which is much less costly) and a small, statistically significant sample of the logs are then measured to determine cubic metres. These samples are then used to determine the conversion from weight to cubic metres for all loads not sampled. In the BC Interior, some loggers and many truckers are paid by the tonne, as opposed to the cubic metre. When a load of logs crosses the scale, the driver knows immediately what he is being paid. The same cannot be said for a contractor being paid by the cubic metre. When they deliver a load to a mill or
when they dump a bundle of logs in the water, they must wait for the conversion to take place to understand just how many cubic metres they delivered. The use of the weight scaling and sampling approach to the measurement of total cubic metres, which is being adopted more broadly on the coast, is a valid way to determine the volume harvested in large, stable populations of trees. This approach is therefore appropriate in its dominant use in the BC Interior where the species harvested are few and the weight to volume conversion is rather stable. It also has application to homoge-
neous populations of logs on the coast. However, adoption of weight scaling on the coast has resulted in a noticeable inequity between some loggers who deliver logs of the same stratums for weight scaling. Underlying this inequity is the reality that not all coastal logs of the same species and quality (i.e. the stratum) weigh the same amount based on their specific gravity and moisture content, both of which can be affected by where the trees grow and the time of year they are harvested. By broadly sampling the population of all loads delivered of the same stratum,
it is assumed that the variability in the weight to volume ratio are accounted for and for the entire stratum, the derivation of total cubic metres is reasonable. Frequently, however, there are winners and losers depending on the actual weight of the logs delivered by an individual contractor to a sample stratum that is large and potentially variable. The underlying issue for individual coastal contractors is that when scaling stratums are designed to address government requirements for accuracy, cut control and stumpage paymentsâ€”while at the same time attempting to gain
some efficiencies in the number of (costly) samples that are taken by creating large stratumsâ€”it is virtually impossible for an individual contractor to track which samples apply to the logs they have delivered, what the conversion to cubic metres is and whether or not it is reasonable given the logs they are delivering. As a result, they are unsure if they are being paid correctly for the logs they deliver. So, while the current process results in accurate estimates of volume harvested for the purposes of
Fall 2017 Truck LoggerBC 39
One key factor that may vary the weight to volume conversion is the length of time logs have been on the ground before they are weighed, as this significantly impacts drying and thus the weight of the log. cut control compliance and stumpage, when the results are applied to individual contractors that are delivering logs to a large stratum, some may get paid
more and some get paid less depending on the physical characteristics and weight of the trees they are harvesting. An example of a key factor that may
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vary the weight to volume conversion is the length of time logs have been on the ground before they are weighed, as this significantly impacts drying and as
a result, the weight of the logs. This is of particular concern in second-growth hemlock loads.
A second solution being put forward by many is the idea of simply paying loggers by the tonne of logs they deliver
To add to the frustration, the major companies are rarely transparent with respect to data being used to determine the weight to volume conversion. This situation is then compounded for those operations where logs are dumped and towed to a central sort for scaling. It is very common for booms to break up or bundles to break as they are dewatered. With almost total certainty, not all of the logs delivered make it to the sort for scaling in these instances. The result is, again, not being paid correctly for all the logs the contractor delivered. To add to the frustration, the major companies are rarely transparent with respect to the data being used to determine the weight to volume conversion. The obvious solution to this dilemma would be to implement a sample scaling regime that ensures all logs delivered by all contractors are fairly represented in the sample plan. Alternatively, scaling for contractor payment purposes could be separated from scaling for government reporting as is commonly done in Alberta.
where weight scaling is being utilized, rather than by the cubic metre. In New Zealand, virtually all contractors are paid by the tonne for wood they harvest and deliver. While this may require the installation of scales at all log dumps, it would certainly eliminate the lack of transparency and frustration contractors experience with the current process. In both cases, when logs are delivered or when logs are bundled for tow and weighed, the contractor knows immediately what they are being paid. Critics of this idea point to the fact that each species of log has a different density and weight and with a single dollar per tonne rate, the logger would be inclined to focus on heavier logs. For example, the same volume of hemlock weighs more than a comparable volume of cedar and the moisture content could impact the results with either species. Your Custom Truck Body Building Specialist
The solution would be to simply set rates by species and then adjust tonnes delivered based on the species scale since there are few problems in distinguishing species on the sort. While the jury is out on whether this approach to contractor rates would work, it is clear that the current process implemented to reduce costs of scaling results in a severe lack of transparency in how the conversion is done and there are many contractors not being paid for what they deliver because weight of log loss or variability within sample stratums. At a time when contractor sustainability is at the forefront of the industry, ensuring payment for all logs delivered is key to ensuring not only contractor sustainability, but the sustainability of the industry as a whole.
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When is a Cubic Metre not a Cubic Metre?
By Aaron Sinclair
ecently we were asked by a logging contractor to answer the question of “What is the definition of a cubic metre?” On the surface, the factual definition is the amount of wood in a one metre by one metre by one metre cube. However, logs are not nicely crammed into neat cubic blocks for simple measurement. That means a process of measurement is required to quantify how many logs are in a cubic metre (small piece size) or how many cubic metres in a log (large piece size). In British Columbia the measurement of logs to calculate the cubic metres is outlined in The Scaling Manual published by the Timber Pricing Branch of the Ministry of Forests, Lands and Natural Resource Operations. The current version is dated November 1, 2011 with its current amendment number three dated March 15, 2016. The Scaling Manual is a short 504 pages long of complex instructions of how to scale. At its simplest, The Scaling Manual defines the calculation of a cu-
bic metre as a formula that measures the area of the two ends inside of the bark and the length of the log.
A1 + A2 --------2
char and missing wood are straightforward. Rot is more complicated. It is defined as “…the level of decay where
V is the volume of the log in m3. A1 is the area of the small end of the log in m2. A2 is the area of the large end of the log in m2. L is the length of the log in m.
Figure 1.2 The Smalian Formula. This method of determining the measurement of a cubic metre of a log has been the official volume measurement in British Columbia since 1979. But it’s not as simple as just taking three measurements of a log. The Scaling Manual allows for deductions from the volume to account for things such as rot, holes, charred wood or missing wood. Holes,
wood begins to lose its strength and fibre integrity….” Discolouration or stain in itself is not an allowable deduction. The remaining portion of the wood is the “net firmwood volume.” From The Scaling Manual perspective, a cubic metre is actually the net firmwood volume, after permitted deductions. For scale-based stumpage blocks,
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the net firmwood volume determines the volume for stumpage payments to the provincial government. And this is what gave rise to the question asked about defining a cubic metre.
ment of a cubic metre rate calculated on net firmwood volume have agreed to an inferred transfer of fibre quality risk to the contractor. This transfer of risk is an interesting
The contractor...thought they were getting paid a cubic metre rate for all volume they delivered unless the logs were rejected due to quality issues. The contractor that asked the question thought they were getting paid a cubic metre rate for all volume they delivered unless the logs were rejected due to quality issues. A review of various logging contracts across the province identified that none of the contracts specifically defined a cubic metre and only vaguely, if at all, referenced The Scaling Manual. Importantly, the contractor did not know the practice their customer was employing for measuring and calculating a cubic metre for payment of the negotiated logging rate. As a generalization, it costs a contractor the same to harvest, process, and transport a log regardless of the firmwood deductions mentioned above. Contractors who have accepted pay-
question when viewed against the backdrop of Bill 13 replaceable contracts. Generally contractors have no input to block layout or engineering, nor a pecuniary interest in the input fibre or the output fibre. They are a service provider who is effectively required, regardless of economic outcome, to harvest fibre their customer instructs them to harvest under penalty of loss of contract if they do not. So here’s the answer to the question: When is a cubic metre of wood not a cubic metre of wood? When it is a net firmwood cubic metre. Contractors need to clearly understand not only the unit rate they are being paid but the basis for measurement of the unit when negotiating rates. Not understanding
that basis of calculating payment can be costly and result in a contractor negotiating away some or all of their profit before they ever started the work. Knowing your business is key to running a successful, sustainable business. Aaron Sinclair, MBA, is the Principal of PNL Consulting based out of Prince George. PNL Consulting helps businesses maximize profits by proactively planning and analyzing financial results on a continuous basis. Aaron can be reached at 250.961.3114 or firstname.lastname@example.org. Source: The Scaling Manual, Timber Pricing Branch, Ministry of Forests, Lands and Natural Resource Operations, November 1, 2011.
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t h e t r u c k l o g g e r s a s s o c i at i o n
75 y e a r s
JANUARY 17 - 19, 2018 | FAIRMONT EMPRESS HOTEL & VICTORIA CONFERENCE CENTRE, VICTORIA, BC
REGISTRATION BEGINS OCTOBER 12, 2017
VISIT TLA.CA/CONVENTION TO REGISTER
NEW Registration Option This Year!
Please note this year there are no Gold Passports, but instead we are offering a THREE-DAY REGISTRATION which will include all sessions and some events. Events not included are the Leaders’ Luncheon, Loggers’ Dinner & Comedy Theatre, and Spouse Event. Three-day registrations are not limited, so everyone has the opportunity to get a great deal.
TLA MEMBER EARLY BIRD RATE $650 There’s lots of time to take advantage of the Early Bird Rate! Keep in mind if you purchase the three-day registration you will also need to purchase a separate ticket to the Leaders’ Luncheon for $80. TLA Member Regular Registration $750 In effect from December 7, 2017.
44 Truck LoggerBC Fall 2017
HIGHLIGHTS FROM THIS YEAR’S PROGRAM Annual Favourites
• President’s Welcome Reception • Leaders’ Luncheon • Loggers’ Dinner and Comedy Theatre • Industry Trade Show • Minister of FLNRORD Breakfast • Spouse Event • Lunch on the Trade Show Floor • Suppliers’ Night • Live and Silent Auctions
• Steep Slopes - The Latest • Equipment - Tools for Success • Who is Going to do the Work? • Are You Getting Paid for What You Harvest? • Managing the Transition - Second Growth vs Old Growth • Where is our Safety Net? • Market Trends • A View from Afar - Outsider's Perspective • Defending the Working Forest - Learning from Others • Blueprint for the Next 75 Years
Thank you to our committed 2017/2018 annual sponsors PREMIER SPONSOR
Fall 2017 Truck LoggerBC 45
Donation to the TLA Forestry Education Fund RESERVED BID ITEM VALUED AT CAD $98,000.00 This item may be traded at the reserved bid price for any other product manufactured by Southstar such as a processor or grapple processor
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TLA 2018 CONVENTION & TRADESHOW
FAIRMONT EMPRESS HOTEL & VICTORIA CONFERENCE CENTRE, VICTORIA, BC | JANUARY 17 - 19, 2018
FRIDAY, JANUARY 19, 2018 • SUPPLIERS’ NIGHT DINNER & AUCTION LIVE AUCTION BEGINS AT 8:00 PM • UPSTAIRS FOYER - CARSON HALL All proceeds after the reserve bid amount has been met will go to the TLA Forestry Education Fund
46 Truck LoggerBC Fall 2017
Photo: Courtesy of Talon Helicopters
Helicopter Medical Rescue in BC: Fixing What’s Broken By Ian MacNeill
ritish Columbians living, working and playing in remote locations need and deserve a better helicopter emergency medical service (HEMS) network. In its current form it is unable to consistently provide necessary services to either forestry workers injured in cut blocks in Haida Gwaii or hikers suffering heart attacks in the Sea to Sky corridor. There has been a great deal of discussion about the shortcomings of the current system and what needs to be done to bring it up to the kinds of standards enjoyed in other jurisdictions. In fact, a review of the issue was presented by Roger Harris, BC Forest Safety Council Ombudsman, in his report, “Will It Be There? A Report On Helicopter Emergency Medical Services in BC” published in February of this year (see sidebar, page 49). However, little progress has been made so far. Washington State has legislation ensuring 99 per cent of the popula-
tion are within a 60-minute response time to a level 3 trauma centre. Nothing of the kind exists here in British Columbia where we continue to rely on a patchwork of public and private services; industry is required to provide and pay for its own solutions, and volunteer search and rescue personnel are often forced to extract on foot seriously injured individuals from remote locations, leading to unnecessary suffering, and in some cases, loss of life. Germany, by marked contrast, utilizes what has come to be known as the FrancoGerman model. It represents one of the most sophisticated, progressive and humanitarian pre-hospital care programs in the developed world. Unlike in British Columbia where the BC Ambulance Service (BCAS) relies largely on the “scoop and run” policy of simply delivering patients to hospitals, the German model takes the opposite approach by bringing the doctor to the patient, based on the understanding
that it leads to less pain, better health and recovery outcomes, and reduced overall costs. Its ground-based ambulance fleet is augmented by a well-developed air ambulance network that includes more than 120 EMS helicopters as well as other aircraft used for inter-hospital transport. The EMS helicopters, none of which is more than 15 minutes from a potential patient, are staffed with multi-specialty doctors capable of stabilizing patients and treating them for pain in remote situations, something that is rarely available here in BC. All this offered in a geographical area less than half the size of British Columbia. There have been numerous efforts by reformists to change the situation, to establish a similarly progressive and humanitarian model here in BC—albeit one that is tailored to suit the province’s geography and population distribution—without effect. And unfortunately, nothing is likely to change in the air and on the ground until there are some fundamental changes to the law, says Hans Dysarsz, Executive Director of the BC Helicopter Emergency Rescue Operations Society (HEROS), an advocacy group for reform. The root of the problem goes back to 1974 when the government of the day created the BC Ambulance Service, which it mandated to be the sole provider of pre-hospital care in the province. Over the years, say reformers like Dysarsz, a former medivac pilot who has been passionately involved in trying to bring better EMS to BC for more than 30 years, there has been more focus by successive governments on keeping costs down rather than emulating best practices, resulting in a lowest-cost-per-patient transport system instead of a best-possible-outcomes-perpatient system. However, in addition to being occasionally cruel—the time it often takes to get trauma patients to care facilities without benefit of pain-killing drugs can run into multiples of hours—it also represents a kind of false economy. The amount of money spent on transporting patients to hospitals only represents a portion of what trauma and serious injury costs, and often a very small
Fall 2017 Truck LoggerBC 47
portion when injuries are life altering. “Those suffering from potentially fatal, time-sensitive conditions and injuries are the most salvageable people who are present in the entire health care system,” says Dysarsz. “If you can get them to definitive care sooner they will have shorter hospital stays, quicker recoveries, and generate fewer long-term costs to society—in the order of billions of dollars.” And it isn’t just about money. It’s about life and death, and a great deal of preventable pain and suffering. In Germany, emergency response personnel carry not only painkilling medications but universal donor whole blood they can use on the spot when there is serious bleeding. Paramedics in BC do not carry it, says Dysarsz, adding that as a result “serious bleeding in BC is often a death sentence.” This isn’t just frustrating for the public, says Dave Simone, a primary-care paramedic who was with the BCAS from 1992-2004 and is now advocating for reform as a new director of HEROS. He says BCAS personnel feel equally frustrated at not being able to do the kind of work their counterparts are doing around the world. “It would be one thing
if the BCAS was willing to do the job, but if it isn’t then it should get out of the way to let others do it,” he says. All this raises the question: how do we get from where we are to where we need to be? Dysarsz says the only solution is to come up with evidence so convincing that change becomes inevitable. “If politicians and the people of BC understand how much the current system is costing they will demand change,” he says. First step would be a universal cost-benefit analysis carried out by an independent body that could be presented to the government to explain by the numbers why almost every other country in the developed world is moving in an entirely different direction than BC. This needs to be followed by a royal commission with a mandate to make binding recommendations that brings together industry experts from around the world who could come up with a made-in-BC system that takes into account the province’s unique size, geography, weather and population distribution. Start-up costs need not be daunting, says Dysarsz; although Germany uses more than 70 helicopters, BC could get away with five or six bases placed in strategic locations.
And the system wouldn’t necessarily have to be cobbled together from scratch, says Kelsey Wheeler, chief pilot for Talon Helicopters, the go-to helicopter company for North Shore Search and Rescue and other SARs in the Lower Mainland. “The infrastructure already exists throughout the province,” he says. “It’s all about funding. We’re a business and they’re a client. I’m sure we could work it out.” In other words, the solution could comprise a collection of both public and private assets, possibly even including some of military origin— whatever it takes to provide the best possible service. Any advancement would be welcomed by the TLA community and membership says Adam Wunderlich, Chair of the TLA’s Safety, Training and Industrial Relations Committee. “We believe that improved HEMS will not only provide benefits for members but will also benefit forest-dependent communities, First Nations, and other resource-based and rural industries. In fact, we believe that improved HEMS could benefit all British Columbians by providing better patient outcomes across the province.”
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48 Truck LoggerBC Fall 2017
Donate To Make A Difference! “If more people understood the deficiencies in the emergency medical services protocols that exist in British Columbia they would demand change,” says Hans Dysarsz, Executive Director of the BC. Helicopter Emergency Rescue Operations Society (HEROS). To help educate them, HEROS is embarking on a public education campaign that will include media releases, educational seminars and meetings with community leaders throughout the province. However, the society desperately needs money to fund the campaign and is asking British Columbians to contribute as little or as much as they can. “Even five dollars will make a difference,” he says. Donations can be made through the HEROS website: www.nbcheros.org.
BC Forest Safety Council on HEMS In February of this year, BC Forest Safety Ombudsman Roger Harris released a report on the HEMS situation in BC. It made three recommendations, including: that BC consider mandating, either through legislation or policy, guaranteed timelines for the public to be able to access Level 3 trauma care similar to other jurisdictions; that the province undertake a review of the effectiveness of current legislation as it pertains to the provincial emergency ambulance service (BCAS), originally established in 1974; and that Emergency Management BC and the BCAS expand the use of hoisting those injured in remote environments. According to BC Forest Safety Council (BCFSC) CEO Rob Moonen, the report has generated interest both inside and outside the industry, so much so that its recommendations
were due to be “looked at as a motion” at the Union of BC Municipalities convention in September. “I can tell you from experience and the number of calls I have received on the report and the identified gaps that there is more of a collective appetite to drive a solution,” he says, adding that he hoped to be meeting with the appropriate ministers of the new government sooner rather than later to discuss the report’s recommendations. Although he says the BCFSC is precluded from advocating any particular solution, he anticipates that if the government acts on the recommendations there are likely to be a variety of solutions, each one appropriate to the region and community it serves.
Fall 2017 Truck LoggerBC 49
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50 Truck LoggerBC Fall 2017
Frustrated with the lack of progress in the implementation of a progressive model of helicopter emergency medical services (HEMS) in BC, a group of health professionals in the Sea to Sky corridor is taking matters into their own hands. Miles Randell, an advanced life support (ALS) paramedic who has been with the BC Ambulance Service for 20 years as well as a search and rescue volunteer for more than 25, says Technical Evacuation Advanced Aero Medical (TEAAM) will provide emergency medical services and evacuation in cooperation with Blackcomb Helicopters out of Squamish in the summer and Whistler in the winter. Although the not-for-profit is still in the formative stages, it will operate on the European model–all rescue flights
Photo: Courtesy of TEAAM
The TEAAM Approach
will have medical personnel on board capable of administering advanced life support on the ground prior to patient extraction and in the air before delivery to medical facilities. If the company can generate sufficient revenues says Randell,
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Fall 2017 Truck LoggerBC 51
Forestry Impacts: Understanding the United Nations Declaration on the Rights of Indigenous Peoples By Ian MacNeill
Three First Nations themed banners were added to the former US embassy, across from Parliament Hill, during this year’s National Indigenous Peoples Day. The building is slated to be converted to a centre dedicated to Indigenous people.
n a recent mandate letter to incoming Minister of Forests, Lands, Natural Resource Operations and Rural Development, Doug Donaldson, Premier John Horgan stated his government would be “fully adopting and implementing” the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). Under the circumstances it’s fair to ask how much impact this might have on the forest industry, especially considering that Premier Horgan’s letter goes on to say “I expect that you will…work with the Minister of Indigenous Relations, First Nations and communities to modernize land-use planning and sustainably manage BC’s ecosystems, rivers, lakes, watersheds, forests and old growth.”
History of UNDRIP
UNDRIP, first adopted by the UN General Assembly in 2007 with 144 member states in favour set out the in-
52 Truck LoggerBC Fall 2017
dividual and collective rights of indigenous peoples with respect to culture, identity, language, employment, health, education and other issues. It was also a global recognition that indigenous people have been on their lands since time immemorial, that many still continue to live on those lands, and that they have a right to the protection of them as well as a say in how they are used, which is of course the significant aspect of the declaration when it comes to resource industries like forestry. The Canadian government originally stated that while it supported the “spirit” of the declaration it could not vote in favour, arguing that it was fundamentally incompatible with Canada’s constitutional framework, including the Charter of Rights and Freedoms and Section 35 of the Constitution Act, 1982, which deals with Aboriginal and treaty rights. There was particular concern with Article 19,
which seemed to imply that governments needed to secure the consent of indigenous peoples on matters of public policy, and Articles 26 and 28, which could potentially open the door to the renegotiation or even repudiation of historically settled land claims. However, in 2016 Canada officially adopted the declaration and promised to implement it fully and “without qualification.”
Potential Impact of UNDRIP
One of the main reasons Canada officially adopted UNDRIP, as the department of Indigenous and Northern Affairs (INA) points out on its website, is that a declaration is just that, a declaration. Unlike a treaty or covenant it is not legally binding. For that reason it cannot be used in a court of law to influence arguments about timber tenure allocation. Despite that, adopting it as the federal government did in 2016 and what the
provincial government appears to be doing now sends a signal that its principles are going to be respected with respect to how laws are written and business conducted. It will not force so much as guide and influence. Reading through the declaration line by line, it’s easy to see why some regard it as aspirational rather than a reflection of reality. It describes a world that could or should be rather than one that exists today, says Mike LeBourdais, Chairman of the Tulo Centre for Indigenous Economics and previously Chief of the Whispering Pines Band, who describes it as a “shiny new house” aboriginal people and at least some politicians are currently building a foundation to support. The stuff and substance of that foundation will flow from issues related to rights and title, he says. Ultimately, Canada’s aboriginal people need to have the right not just to occupy land and have a say in its management, but to own it, something the Indian Act of 1876 still prevents them from doing. He expects that to change, saying there is political will in Ottawa to move forward on the issue. Doing so will give Aboriginal people more say in how their lands are used and also confer powers of taxation, crucial for development. “We’re tired of watching logging trucks driving by every day loaded with our logs and getting nothing out of it,” he says. “We want a better split on stumpage and rent and we want our environmental protections accommodated. We’re here to stay and we better learn to get along.” In the meantime, he adds, “As far as forestry and the TLA is concerned, accommodation needs to take place before a saw is put to a tree.”
The Legal Perspective
Rob Miller, a lawyer with MT+Co. who heads up the company’s First Nations Economic Development group, says that while Canadian law today often seems to fall well short of the spirit and intent of UNDRIP, Supreme Court decisions— including both Delgamuukw (1997) and Tsilhqot’in (2014)—are moving us inevitably in that direction. “There is recognition of indigenous control and ownership of resources and of seeking indigenous consent prior to development,” he says. That recognition is leading to rapid policy changes at both the national and provincial level. “The engagement that is occurring between
different ministries and First Nations’ communities is markedly different today than it was 10 years ago,” he says. “There is greater consultation, greater accommodation and more discussion of consent, and I don’t see that stopping any time soon.” Ultimately, that will be a positive thing for both industry and First Nations because it will lead to more certainty, he adds.
A Business Perspective
A number of forestry companies in BC are well ahead of the curve when it comes to greater consultation, greater accommodation and more discussion of consent. Miller points to Ecora, an engineering and natural resources consulting company based in Kelowna providing technical services including geotechnical, structural and civil engineering, environmental assessments, and forest estate modeling. Its client base includes major licensees as well as no fewer than 33 Aboriginal communities throughout BC, says company President and CEO Kelly Sherman, who has more than 15 years of experience relationship building with First Nations. Through experience, Ecora has developed what could be seen as a template for developing successful relationships with First Nations. “By remaining trustworthy barriers are broken down and strong relationships are built,” he says, adding that it is vitally important to understand the importance of elders and their traditional knowledge—preaching western science while remaining tone deaf to traditional values will not benefit the relationship. “If you go on the land with an open mind and are prepared to listen and respect what you are hearing you will learn a lot and have a better perspective on how to manage the land,” he explains. “There’s always a practical midpoint. First Nations are interested in the land, industry is interested in the product, and that can make for a very good marriage.” And stay out of the politics; neutrality is a safe haven when there are fluctuations in the balance of power within communities. He adds that successful relationship building with any one First Nations’ community can lead to the opening of the doors of opportunity in others. It certainly has for Ecora, and it could for other forest companies willing to embrace the spirit of UNDRIP and use it as a guide going forward.
Ultimately no forest company operating in BC is going to be forced to adopt UNDRIP or go beyond the practices of consent and accommodation used today via UNDRIP, but those that do embrace it and live it rather than pay lip service to it are more likely to prosper in this emerging economy. British Columbia has a new government and the new Minister of Forests is sitting down with staff and those involved in forestry to fully understand the province’s forest policy. So it’s too soon to predict exactly what “fully and completely” adopting UNDRIP is going to mean, especially with respect to such important and pressing issues as tenure allocation and reform. However, it’s safe to say that based on the experience of those already working with First Nations who have adopted it both in spirit and in practice; it has enormous potential to benefit aboriginal people, industry, and all British Columbians who believe in progressive social and economic development.
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$75,000 to Celebrate 75 Years: Contractors Support Forestry Education TLA Editorial
story of the past, present and future of the forest industry in British Columbia and the TLA has been a supporter from the beginning. “Since I’ve been on the board, the TLA has been a constant supporter donating $10,000 each year,” said Sean Heard, a TLA member who also sits on the board of the BC Forest Discovery Centre. “With this $75,000 sponsorship, the TLA has now donated well over a quarter million dollars to the BC Forest Discovery Centre since it began.” Over the past three years, the Centre has made significant improvements, including a new parking lot, a new front entrance, building renovations, and improved wheelchair accessibility. With this work, the Discovery Centre has almost doubled its yearly attendance and expects to welcome more than 60,000 visitors this year.
he Truck Loggers Association is proud to announce its $75,000 sponsorship toward the BC Forest Discovery Centre’s new Forests Forever exhibit in honour of our 75th anniversary. The TLA has represented independent logging contractors for 75 years and the Board of Directors thought a great way to honour that milestone would be contributing to increased public understanding and support of the forest industry. “I’m proud the TLA is walking our talk,” said Jacqui Beban, TLA President. “This $75,000 will help the Centre build public appreciation for the forest industry and showcase it to attract new workers. This new exhibit is about the future of forestry; it’s not just a museum looking at the past.” For more than 50 years, the Centre has had an educational mandate to tell the
Drone & Forest Equipment
Manufacturing 4 Main Sectors of Modern
TRUCK LOGGERS GALLERY
The Life Cycle of a Tree Nursery Vignette
Sustainability & Future Forests
EXIT TO TRAIN SECONDARY EXIT DURING EVENTS
Introduction to the History of Forestry in BC
Giant Fir Cone
GRAND HALL Tree Ring Quotes
LiDar Wall of Screens
Image: Courtesy of the BC Forest Discovery Centre
Building Technology & Finished Products
Harvest Interactive stations for
The TLA believes the BC Forest Discovery Centre’s 100-acre facility is the perfect place to host a new $1.5 million exhibit to inform the world of our vibrant, regulated, sustainable, innovative and globally competitive, renewable resource industry. We’re pleased the new exhibit will showcase technology like LiDAR, drones and tethered harvesting. The TLA supports the Centre’s ambition to share the story of where wood comes from, how it is harvested and transported and where it eventually ends up. In addition to the TLA’s generous contribution of $75,000, several other forestry organizations have stepped up including Western Forest Products, TimberWest, Interfor, Coastland Wood Industries (a TLA member), Strategic Natural Resource Consultants (a TLA member) and Forest Innovation Investments. Combined, these donations have brought the fundraising total to just over $500,000. The Centre is also in phase two of the grant process for Island Coast Economic Trust and is striving to obtain the maximum grant of $400,000. The fundraising goal of $1.5 million is ambitious and the Centre has given themselves a tight timeline to start the project (late fall 2017). They are encouraging all people and businesses that have a vested interest in the forest industry to get involved and contribute. This is everyone’s story to tell and the project’s success
GRAND HALL / ADMISSIONS
STONE WING Event Space
ENTRY PAVILLION Donor Recognition Art
The diagram shows the proposed topics for the Forests Forever exhibit and the flow of traffic through the building. 54 Truck LoggerBC Fall 2017
will require financial contributions from a wide range of sources. There will be an impressive donor recognition wall as part of the exhibit to honour contributions. For more information about the project and how to support it, please check out the website: bcforestdiscoverycentre. com/forestsforever.
Innovation In Modern Forestry FORESTS FOREVER AN UPCOMING EXHIBIT AT THE BC FOREST DISCOVERY CENTRE
Fall 2017 Truck LoggerBC 55
What’s Old Is New Again: On-The-Ground Training For Loggers By Pieta Woolley
ack in the 1980s in his home province of KwaZulu-Natal, South Africa, industry education expert Russel Robertson faced a huge challenge. A quarter of his workers were sick with HIV or dying from AIDS. At any time, another quarter were trying to flee the country because of the Apartheid-era atrocities, crime and violence. With an annual turnover rate of nearly half his workforce, he had to figure out how to constantly train new workers in the pulp and paper industry—many of whom could not read— to be safe and productive. “We were just desperately trying to educate people,” said Robertson, who also designed training programs for South African workers in the sugar, petrochemical and automotive industries. “You see rapid, exponential growth and productivity when you get the right training. And I am a total believer it needs to be industry-led.” Surprisingly, those old skills from desperate times have come in handy nearly 40 years later, on the other side of the world. Robertson, the BC Forest Safety Council’s Director of Programs and Training, is behind a new on-thejob learning program for this province’s contractors: the logging truck drivers, yarders, road builders, mechanized harvesters, boom boat operators and more. It’s competency-based and administratively-light. This spring, Western Forest Products will try it out as a pilot. Contracting companies are also encouraged to try it and give feedback before it is formalized next year. (How do you participate? See call-out box on this page.) The reason Robertson’s skills are so applicable is that BC’s timber harvesting contractors are also facing a doublewhammy training challenge—though slightly less dramatic. First, as anyone running a contracting business knows, much of your workforce is aging and inching closer to retirement—if they haven’t retired already. How do you capture the knowledge and competency of your elder
56 Truck LoggerBC Fall 2017
workers and pass it on to the less experienced new hires? Second, when accidents do happen in British Columbia’s woods, investigators look for companies to demonstrate their due diligence that the workers involved were properly trained and supervised. Increasingly, the RCMP is involved in what have become criminal investigations. You can’t send your processor operator to university, so how do you document that you know he is qualified to safely run the machine? The model works like this. In short, supervisors assess their workers for competency on each task they do. Workers also self-assess. If there are gaps, free, brief online-learning resources help augment the worker’s knowledge. There is no pass or fail. They are either competent or not yet competent. Supervisors continuously assess whether that worker is competent to perform a task based on a checklist and evidence of his or her work. When they are considered competent, they can move on to the next modules—leaving a defensible trail in the event that due diligence must be demonstrated during an investigation. A similar process will be in place to train supervisors. “This is going to make training a lot more consistent and cost-effective in the long run,” said Robertson. Onthe-job training is often overlooked in education discussions—but perhaps no longer. The TLA is advocating for a job training tax credit for employers who invest in on-the-job training for employees and Elstone is hopeful. The tax credit would help alleviate some of the intense burden timber harvesting contractors are facing to ensure their new, younger workers are safe and productive. “The reality is that a lot of people who are working in the industry didn’t want to go to post-secondary school. They wanted to go to work and pursue
a career in the bush,” said Elstone, noting that path often attracts those who have a more hands-on aptitude that make them excellent forest workers. “With so many industries, the trend is towards the professionalization of the workforce. We’re seeing this in oil and gas and mining. But a lot of the skills in logging, you just can’t learn them at school. You have to be sitting in a machine or on the ground. And that kind of training impacts a business’s productivity for over a year as the employee builds their skills.” Elstone noted that industry has been developing similar plans to Robertson’s for a long time. That said, he still has apprehensions. “We are concerned about the balance between the need for doing this and it becoming an administrative burden,” said Elstone. “That’s why we want contractors to field test this. More paperwork is not going to make you more safe at the end of the day. This is about demonstrating competence.” Elstone continues, “Also, given that the incentives for contractors to remain in this industry are dwindling, industry is going to have to come to grips with the value proposition that Russel’s work is laying the foundation for.”
Field Test New Competency Training Calling all contractors! The regulated faller standard, along with non-regulated industry guidelines for other forestry occupations are ready for testing. Subject to WorkSafeBC approval to pilot the faller program, the BCFSC is looking for contractors to be involved in the pilot. Contact Marla Guldbransen at firstname.lastname@example.org for more information. If you are interested in field-testing the guidelines for road construction, yarding, mechanized harvesting or transportation, please contact Gerard Messier at email@example.com.
Contractors: avoid unnecessary costs in case of wildfires with the right insurance coverage By Peter Pringle
n the Fall 2016 edition of Truck LoggerBC, contributor John Drayton brought up a number of important points about contractor liability in the case of a wildfire from a legal point of view. Given the recent spread of wildfires in BC, I thought it was important to contribute to the conversation from an insurance perspective and expand on contractors’ risks from wildfires. There are typically two scenarios that can transfer liability to a contractor during a wildfire. In the first, the contractor has negligently or wilfully started the fire, or has failed to suppress the fire, and is clearly at fault. In the second scenario, the fire originates within the contractor’s area of operations but the contractor cannot demonstrate due diligence in following proper operational procedures, as laid out in Forest Practices Code and Wildfire Act, for example. Even if the contractor does follow procedure, a failure to demonstrate this—such as not maintaining the necessary paperwork—can render them fully or partially responsible. In either case, if the contractor cannot prove they are not at fault using hard evidence, the cost of fighting the fire can fall on them unless they have the right insurance. It is important for contractors to have insurance that covers: general liability for third-party costs to a) fight a wildfire and b) damages to standing or felled timber; the contractor’s own firefighting costs that are not reimbursed by a licensee or government authority; costs incurred by the contractor for downed timber lost in the fire, including lost profit.
A general liability (GL) policy will cover contractors for both damage to third-party property, such as standing and downed timber, and expenses incurred by third parties in fighting a fire. The Forest Fire Fighting Expenses endorsement has a sub-limit within the policy that does not increase the general limit. This type of policy will cover the demands of government authorities,
licensees and other private entities related to firefighting costs. This will also cover the scenarios described above, compensating for proven claims and defending against unproven claims. Generally speaking, all contracts, whether they are with governmental authorities or forest companies, will have a requirement for the contractor to secure and evidence general liability coverage before being allowed to begin operations.
Contractor’s Own Fire Fighting Costs
While in most wildfire situations, the contractor’s firefighting costs will be reimbursed by the government or licensee, the two scenarios above could leave them without a source for reimbursement for their own costs and those of any subcontractors they have engaged to help fight the blaze. Some licensee logging contracts might offer to cover the costs in this situation, though this is typically only triggered once a cost threshold has been met. Historically, $100,000 was a common benchmark, meaning the contractor was responsible for the first $100,000 themselves. Insurance coverage for this type of risk exposure is now easily available and can be surprisingly cost-effective, depending on the insurance provider.
Contractor’s Interest in Downed Timber
Since the contractor often does not own the timber being cut, they may overlook the need to insure their own unpaid harvesting costs and profit. This can become an issue after a fire where they are designated at fault if the licensee does not agree or is not obligated to pay the contractor for downed timber lost in the fire. Though not as easy to place with some insurers, there is coverage available for such a situation. With this exposure being specific to the forest industry, coverage will only be offered by insurers familiar with logging operations. With the help of the insurance broker, the contractor can determine the
insurable interest in their costs-to-date and profit in order to insure the appropriate amount. Coverage for losses resulting from wildfires is both available and affordable to contractors—not to mention highly recommended. Scenarios where the contractor is either clearly at fault or cannot prove due diligence can become costly without the proper insurance. Contractors should work with their insurance brokers to review the firefighting, reimbursement and insurance clauses within their logging contracts and determine their risk exposure as well as available insurance options. That way, contractors ensure they have the appropriate coverage in place to help reduce their risk, minimizing their losses and avoiding potential hassle in the future. TLA Editorial Note: Any insurance coverage is only as a good as the contractor’s due diligence ensuring all regulations and requirements for prevention and readiness in case of a fire are met. Including having all the required equipment and documentation that goes along with a robust due diligence program. Nobody wants a wildfire and our members work hard to avoid them. Peter Pringle, CIP, is a Managing Director at JLT Canada. He specializes in the construction and forestry business in British Columbia and has over 30 years of experience in the insurance industry. Currently managing the Forestry sub-Practice in Western Canada, Peter has a wealth of experience with new business production, insurer relations, and participates on national operations committees. Peter can be reached at 250.413. 2712 or firstname.lastname@example.org.
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WorkSafeBC Forestry High Risk Strategy Update for 2017 By Budd Phillips
he 2017 Forestry High Risk Strategy (FHRS) represents the fourth year of a five-year strategic plan focusing on the four harvesting activities carrying the highest risks: manual tree falling, mechanized harvesting, cable-yarding operations, and log transportation. (Silviculture is included as a secondary focus of the FHRS, given the high number of serious injuries it generates.) According to WorkSafeBC data, within these four categories the types of work with the highest injury risk are: cable or hi-lead logging, ground skidding, horse logging, log loading, log processing, manual tree falling and bucking, mechanized tree falling, helicopter logging, log hauling and integrated forest management. The attached table details the harvesting activities that WorkSafeBC prevention officers will evaluate to ensure employers and workers meet the requireChart: WorkSafeBC
Harvesting Phase Manual Falling
Cable Yarding Operations
ments of the Workers Compensation Act and the Occupational Health and Safety Regulation. Through FHRS, prevention officers will conduct short, focused inspections that target specific issues and are planned in advance to allow for better scheduling and adequate lead time. The ultimate goal of inspections is to reduce serious injury and fatal injury rates in the areas with the highest risk to forestry workers.
FHRS Updates For 2017
While it’s important FHRS continues along a steady course to reinforce priority safety messaging, newly available data and observations also call for adaptations along the way. For example, “roadside debris” was added to the manual-falling category as a new inspection focus in 2017. The 2017 strategy also called for updates to the compliance workbooks in-
Mech. Injury/Area of Risk • Control of tree (falling cuts) • Risk assessment (windfall, danger tree, etc.) • Brushing • Road/skid trail debris hazards • Maintenance work • Getting off and on machinery • Equipment—loss of stability • Congestion • Struck by Logs • Slips and Falls • Congestion
• MVAs • Loading and unloading activities • Maintenance Work • MSI shoulder injuries • Proper use and installation of Binders
• Motor Vehicle accidents • Lack of ERP/Practice • Lack of adequate MSI risk assessment/ Management Program
58 Truck LoggerBC Fall 2017
troduced in 2016 that are completed when a high-risk violation occurs. The revised workbook aims to improve outcomes and allow for a better process for mining data and analyzing trends so officers can better target critical areas. WorkSafeBC is also undertaking a review of all new faller-training sites, including those operated by industry partners, to ensure training is delivered in a compliant and safe manner for students and instructors. Finally, the Steep Slope Logging Inspection Checklist has been revised to include the new traction assist harvesting methods increasingly used in BC.
Seeing Results From FHRS
The results of our High Risk Strategy continue to be encouraging, though fluctuations in the short term are to be expected. Injury rates for hand falling dropped from 29.5 in 2015 to 27.3 in 2016, and
Inspection Focus 1. Falling cuts 2. Danger tree and windfall assessment and plans 3. Unnecessary brushing practices 4. New faller training locations 5. Roadside debris endangering workers 1. Maintenance work plan and lockout 2. Three Point Contact procedures 3. Steep slope assessment plans 4. Site planning and layout 1. Clearing the turn 2. Yarding angles 3. Landing the log 4. Site planning and layout 1. Driving and Road Assessment 2. Loading, off-loading and securing of load 3. Best practices for maintenance work (lock out, access and egress) 4. Cab Guards 5. Binder use and installation 1. ERP elements 2. Planning and conducting operations 3. Driver training/policies 4. MSI Risk Assessment/Management/Education
rates for the various forms of mechanical harvesting and mechanical ground skidding operations have also declined, some significantly. While the injury rate for cable harvesting has declined since 2012, it continues to present challenges, as do log hauling and tree planting, the injury rates for which have increased slightly in that same timeframe.
Looking Forward to 2018
In 2018, our strategy will continue to hone in on the areas that generate the highest claim numbers and present the greatest levels of risk. Next year will see the introduction of an advanced, inthe-field training course for prevention officers in log transportation, following the successful implementation of an advanced hands-on course in manual falling for prevention officers in 2017. The goal of this training is to augment the knowledge of forestry prevention officers and support consistency of inspections across the province. Budd Phillips is a Prevention Field Services Manager for WorkSafeBC. He can be reached at email@example.com.
(Continued from page 14) home. It also means that they have a solid process by which to further strengthen their partnerships with Indigenous peoples and that species-at-risk and special ecosystems are preserved with a coordinated and effective approach to implementation on the ground. Last, but not least, companies must be able to innovate. Spurred by investment, they must also have a tax environment conducive to continue to pay British Columbians good, living-wage jobs while offering sustainable, superior products at prices their customers are willing to pay in comparison to competitors worldwide from other jurisdictions with lower costs of doing business. Such an environment increases the attractiveness of coastal BC for investors boosting investment in technology and operations. Coastal forestry must continue to find ways to further utilize forest residues in an economically viable manner. Finally, government policy must support ongoing initiatives which are of central importance to the industry in growing market access worldwide and product offerings from the BC coast.
Creating investment certainty is key to ensuring the global competitiveness of coastal forestry in BC and the jobs, economy and growth and expansion of our world-class sustainable forest management practices. With a new provincial government now in place, BCâ€™s coastal forest industry is looking forward to collaboration that will build further understanding and development of government policy that supports investment and the prosperity of BC. The first step to a better tomorrow is made today. Rick Jeffery is the President and CEO of Coast Forest Products Association.
Show Your Pride In Forestry! Post a photo of your sticker on your truck, laptop, yarder, etc! Tag it: #forestryfeedsmyfamily
Fall 2017 Truck LoggerBC 59
At Your Service
SOLUTIONS. INNOVATION. EXPERTISE.
Jardine Lloyd Thompson Canada Inc. As the primary equipment and liability insurance provider to the TLA, JLT are the ones to call for all your business and commercial insurance questions and inquiries Peter Pringle Steve Hicks Direct 250 413 2712 Direct 250 413 2723 www.jltcanada.com
1-888-finning | finning.ca (346-6464)
Yard Load Haul Labour Contractor
New/Used/Exchange Hydraulic Excavator Parts Over 400 Hitachi/John Deere Excavators parted out
250.204.1557 1.877.336.2301 firstname.lastname@example.org
STUMP TO DUMP
LOGGING CONTRACTOR Sunshine Coast-based
Office: 604-530-5758 Fax: 604-530-3554 Toll Free: 888-530-5444
Proudly Supporting the TLA
SLADEY TIMBER LTD.
Email: email@example.com Shop: (604) 883-1166
Office: (604) 883-2435 Fax: (604) 883-2426
TM LASK ENTERPRISES LTD.
OEM DISTRIBUTOR FOR THE WRI & WCR LOG BUNDLING CRIMPERS
C: 778-878-7399 E: firstname.lastname@example.org OFFICE PHONE & FAX: 604-592-9198 MAILING ADDRESS: P.O. Box 85021, Willoughby PO Langley, BC, V2Y 0W3 CAMPBELL RIVER CONTACT
C: 604-364-3805 E: email@example.com
www.tmlask.ca 60 Truck LoggerBC Fall 2017
Providing safe, top quality falling & bucking services that exceed our customer's expectations since 1996. T: 250-596-9488
(Continued from page 19) his family members’ exemptions, which was possible under the old rules. This will result in an increase in tax paid on the sale of his businesses.
Jim will have an opportunity to create a deemed disposition in 2018 of his qualified small business corporation shares and shelter the capital gain with the deduction. This will allow Jim and his family to use their capital gains exemptions before this opportunity is lost. They will be deemed to re-acquire the property at this stepped-up cost base, therefore reducing future capital gains on sale. This election must be made before the due date of the personal or trust tax return for 2018.
Holding Passive Investments Inside a Private Corporation
The government has discussed changing the rules to prevent the use of the corporate tax deferral to hold passive investments inside a corporation. Currently, the shareholder can decide when they receive dividends, thus
can control when the personal taxes are paid. As such, there is a potential deferral of tax. This tax deferral was originally intended as an incentive for Canadiancontrolled private corporations to invest in their businesses. However, some have made all necessary capital and labour investments and are left with significant after-tax cash inside their corporate structures which is being invested passively (e.g. bonds, shares, rental properties). The government believes this tax deferral provides an advantage to business owners that is not available to employees. In their paper, the Department of Finance indicates that the corporate tax deferral should not be used to accrue passive investments inside a corporation. The paper proposes several options to eliminate this perceived benefit and speculates on various options to mitigate the deferral. Unlike the other issues addressed in this paper, the government has not released any draft legislation related to the passive investment income proposals, indicating that they will begin drafting legislation once the consultation period is complete. They have however, commented that they intend to tax invest-
ment income earned in a corporation at a higher rate to remove the benefit that they believe business owners are taking advantage of. The measures introduced, will have a significant impact on tax planning for your contracting business. To minimize your tax exposure, it’s important to talk to your accountant or business advisor about how these changes could impact you and your business going forward. Learn More: The TLA hosted a webinar in late September to help its members understand these proposed tax changes and give feedback on them to the federal government. To learn more about this issue, watch the recorded webinar on the TLA website, www.tla.ca. Chris Duncan, CPA, CA, is a Business Advisor with MNP’s Private Enterprise group who specializes in forestry, real estate and construction businesses. Working out of the Duncan office and serving clients across British Columbia, 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 firstname.lastname@example.org.
Advertiser Index: Page #
Page # A&A Trading Ltd. Armtec BC Forest Safety Council Brandt Tractor Ltd. Brutus Truck Bodies Cannon Bar Works Ltd. Catalys Lubricants CIBC Wood Gundy C.M. Bay Log Ltd. Enex Fuels Finning Ford Motor Company of Canada Inland Group -Tigercat Island Pacific Equipment Ltd. Island Spring Ltd. Jardine Lloyd Thompson Johnstone’s Benefits -TLA members Johnstone’s Benefits -ILA/NWLA members Langley Excavator Parts Exchange Nootka Sound Timber Co. Ltd. North Island Communications Ole’s Hakai Pass / Coastal Camp Solutions
4 40 16 9 & 60 41 42 51 41 60 63 6 & 60 15 2 48 28 18 & 60 35 49 60 28 35
Olympic Forest Products Ltd. Peterson Pierce Pacific Manufacturing Probyn Log Ltd. Prolenc Manufacturing Inc. Road Safety At Work/ Justice Institute of BC Sibola Mountain Falling Ltd. Sladey Timber Ltd. TM Lask Enterprises Ltd. W. D. Moore Logging Waratah Distribution Wesgroup Equipment - Doosan Wesgroup Equipment - Vermeer West Coast Tug & Barge Western Equipment Woodland Equipment Ltd. - Eltec Woodland Equipment Ltd. - Hyundai Woodland Equipment Ltd. -Tractionline/Ecoforst T-Winch WorkSafeBC
53 37 34 51 29 43 60 60 60 43 64 11 30 4 31 12 21 50 17
Fall 2017 Truck LoggerBC 61
tournament TLA Golf Tournament: A Rousing Success Once Again The TLA’s 21st annual golf tournament was a fun-filled day full of golf, networking and prizes. The sun shone for the most part and the Caribbean theme—and spit-roasted pig—were well received. The golf course was at its best and, as always, TLA members enjoyed the great forest history Crown Isle has on display. New this year, we did team photos before the golfers headed out and after the tournament each player got to take home a souvenir photo. This year at the tournament we raised $5,700 for the TLA Forestry Education Fund which included $1,700 at the Nootka Sound Timber Co. Ltd. shooter bar (which is the highest ever), $200 raised at the first-table-to-the-buffet auction, and $3,800 raised at the silent auction. The silent auction, new this year, was lots of fun and we’ll be doing it again next year.
Congratulations to this year’s winning team: Ponting Contracting Ltd. (Left to right: Dave Jensen, Mark Ponting and Tyler Michaud. Not pictured: Cody Ponting and Adam Berkenstock.)
In honour of the TLA’s 75th anniversary, the golf tournament is going to Bear Mountain Resort Community in Victoria next year. We’ll take over both Bear Mountain golf courses so everyone can take part. Look out for more information about next year’s tournament in 2018. Finally, thank you to all our generous sponsors. We appreciate it!
A N N U A L SPO N SO RS PREMIER
62 Truck LoggerBC Fall 2017
Fall 2017 Truck LoggerBC 63
THE NEW HTH624C 4X4
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64 Truck LoggerBC Fall 2017
Published on Oct 3, 2017
The voice of British Columbia's forest industry - forest policy, new technology and challenges facing the industry.