It is an extremely difficult time for forestry. Forest workers and communities across the province are feeling the awful toll that the worst market conditions in memory are taking on our sector. But time is what is required for markets to recover and it is up to us now to build the basis for this recovery.

Politics aside, it is time to be candid in assessing what government can realistically do to assist the industry. We are experiencing "Dutch disease" where the value of one of our exports - oil - is inflating the value of our currency. The Bank of Canada has limited ability to adjust interest rates to counteract this effect. Like the price of oil, the credit crunch caused by the subprime mortgage fiasco and U.S. housing crisis is beyond our control, yet it impacts markets.

So what can government do to assist the beleaguered forest sector? On the coast our challenges are market driven, but also structural which provides some opportunity for government action. First and foremost, policy driven costs need to be eliminated and no new costs should be added.

The province's 90-day Regulatory Review is reducing some regulatory costs while work continues on a second set of reforms that while harder to implement could significantly reduce costs. Implementing these changes is critical to our industry's survival and recovery.

New initiatives like the carbon tax and the Forest and Range Statutes Amendment Act have increased costs. These and other pending pieces of legislation and regulations must be reviewed to ensure no unnecessary costs are added and a tangible benefit is provided. Required improvements in productivity can be enhanced by taxation, investments in training, education and research and development. The hemlock project, coordinated by FPInnovations and funded by governments and industry, is a great example of R&D measures needed to drive innovation and competitiveness. The Community Development Trust, funded by the federal government and delivered by the province, will help improve the skills of the remaining workforce. Of course, more can be done in all these areas.

During the Asia trade mission in May, Natural Resources Minister Gary Lunn and B.C. Premier Gordon Campbell were excellent ambassadors for our industry, reinforcing the positive benefit of wood and the need to continue to build markets, develop products and gain customers.

Continued funding of market programs is essential in shaping our future. And all the while industry has to keep its sleeves rolled up, relentlessly pursuing improvements to the business. There is a future for the coastal forest industry and our work today, together with government reforms, will position us to survive and capitalize tomorrow.

TRADE MISSIONCoast Forest's President and CEO Rick Jeffery joined Minister of Natural Resources Gary Lunn on a trade mission to China and South Korea in May to increase market opportunities and awareness about the importance of the Asian market to the future of the coastal industry, our communities and our workers. Facing unprecedented challenges in the U.S. housing market, significant currency appreciation and falling lumber prices, B.C.'s forest companies know that there is no time like the present to invest in market diversification. Diversified markets will provide a stronger, more resilient future for our sector, which is why Coast Forest has been extremely grateful for the support that Natural Resources Canada and Forestry Innovation Investment provide for offshore market development, explains Coast Forest's Rick Jeffery.

Government support, including $8 million per year from Canada's Ministry of Natural Resources and similar support from FII, has allowed the forest sector to pursue market development in China, South Korea, Japan and many other countries. This support is critical to strengthening our industry by diversifying our customer base, increasing demand for wood products and demonstrating the suitability of wood in construction, landscaping, manufacturing and value-added applications.

Minister Lunn had the opportunity to directly witness how his ministry's support for a complex array of building code, training, quality assurance, demonstration and promotion activities comes together to create tremendous success in new wood products markets. Canada has seen more than a 900 per cent growth in forest products exports to China and a doubling of exports to South Korea as a direct result of in-market program activities. In both Seoul and Shanghai, Minister Lunn met with key builders and wood products customers, hearing firsthand about the extent of market opportunities and the work that remains to be done.

Opportunities in Asia can be very different from our traditional wood markets, as less land is available in cities like Shanghai and Beijing for single-family homes. Applications such as landscaping, re-roofing and hybrid construction offer immediate scope for very significant wood use in urban China, while rural areas offer more promise for wood frame structures.

During his time in Shanghai, Minister Lunn visited the first commercial wood truss roof renovation site at Zhabei, donated wood structures built by students at the Canada Wood College for use by foster care children and rural elementary students, and visited an amazing landscaping project. The mission concluded in Beijing, with the opening of the British Columbia-Canada Pavilion for the 2008 Olympic Games, a prominent facility near Tiananmen Square, featuring a variety of Canadian wood.

"The contributions that both governments are making to offshore market development are providing great returns," says Jeffery. "Minister Lunn's support for the forest sector and his understanding of how important international growth is to our future is making a difference."

90-DAY REGULATORY REVIEWIn mid-May the provincial government announced a number of changes to the regulatory review process, selected from over 540 submissions. The announcement is a modest first step as most of the changes do not require regulatory or policy shifts and will not significantly impact needed reduction in operational costs. Many simply reaffirm good business practices government agencies should be following on a day-to-day basis. There is a focus on eliminating unnecessary information requirements and on taking a risk-based approach in managing a number of business areas.

There was good news for forest companies operating in the North and Central Coasts of B.C. Government has recognized there is an increased cost of new ecosystem based management practices by providing a cost estimate in the stumpage rate determination in the region. It's also good news that government agencies must ensure consistency with the Government Actions Regulation by identifying the need for land removals from the Timber Harvesting Land Base and the impacts of these decisions, something Coast Forest has long been calling for.

Coast Forest Products has been working on priority issues to improve timber pricing and submitted a number of policy proposals to the review, including the inclusion of BC Timber Sales costs, the modernization of points of origin, and the ability of licensees to allocate costs incurred on Forest Service roads. In addition, J-grade whitewood pricing should reflect the current market conditions and its utilization for pulp products to make Hembal stands viable for harvest. These recommendations were not included in this first regulatory review announcement but if acted upon, these policy changes could start making a significant difference for coastal operators, workers and communities.

BILL 37 CARBON TAXThe provincial government’s carbon tax, which introduces a graduating tax on fossil fuel purchases, will cost the beleaguered forest sector $34 million in its first year, with a price tag rising to $100 million by 2012.

"The revenue neutral provisions of the bill have minimal offset value to the sector," explains Coast Forest's Rick Jeffery. "Over time, the forest industry will be able to capture the carbon value in its products, but transitional help is needed to reflect the vulnerability of the industry."

Coast Forest is asking government to consider additional transitional revenue offset measures, including a possible recognition in stumpage appraisals to reflect the increased costs of the tax, PST reductions on electricity, and return of the tax on a company specific basis for investments in energy efficiency and greenhouse gas reduction. 
Currently, 70 per cent of the tax will be paid by industry, but only 30 per cent will be returned through corporate tax cuts. The association has united with the province's other major industries to convince the provincial government that more of the tax should flow back to industry.

Adds Jeffery, "The forest industry has much work to be done to ensure the GHG Reduction Targets Act and carbon tax are implemented in a manner that is consistent with other jurisdictions so as not to create further economic hardship for a sector that is at the bottom of the worst economic cycle in its history."

SAFETY UPDATEOn April 17, 2008 Owen Fransen, a 55-year-old faller from Crofton on Vancouver Island, was killed while working for Island Pacific Logging near Lake Cowichan. Owen was falling timber on extremely steep ground when he was struck by a cedar windfall that had become dislodged. Sadly, our thoughts and prayers are with his friends, family and loved ones as they work through this difficult time. Tragically, after two years of no faller fatalities in the industry, this is the third faller who has died on the coast this year.

Two weeks after this accident changes to WorkSafeBC's, Occupational Health and Safety Regulation, Part 26 - Forestry Operations came in to effect. Not unexpectedly, part of the focus of the changes affect the supervision of fallers. This major amendment to the health and safety regulation for forestry is focused on reducing the high number of serious injuries and fatalities in the sector. The regulation has been reorganized, and major changes were made in the following areas:

• Prime Contractor: Making the requirements for having a qualified prime contractor on multi-employer sites clearer and more detailed (section 26.1.1)
• Planning: Stepping up the requirements related to "planning and conducting" (section 26.2)
• Equipment Operations: Introducing specific requirements identifying hazards and safe work areas around equipment (section 26.14.1)
• Manual Falling and Bucking: Making the requirement to have a qualified supervisor for hand fallers more specific and detailed (section 26.22.1)
• Hauling: Outlining logbook requirements for log haulers (section 26.71.2), and changes regarding climbing on bunks and trailers.

There are also a number of other changes relating to training, initial safety meetings, high visibility clothing and other parts of the regulation. All of these regulations came into effect May 1, 2008, except those for section 26.69(6) which requires binder removal stations to be certified by a professional engineer. This section will come into effect January 1, 2009. In addition, proposed changes concerning roads are still in the works. WorkSafeBC considers the first two months of the regulation an implementation phase with the emphasis "on consultation and education on the new provisions of Part 26."

OWNER OPERATOR UPDATEEarly in April, the BC Forest Safety Council launched a certification program for the Individual Owner Operator. This first-of-its-kind program in Canada, now makes it possible for the one-person firm to get SAFE certified and will enable individuals such as owner operator log truck drivers, backhoe operators, machine operators, forestry professionals and fallers to get certified.

This program is for those individuals that do not hire either employees or contractors, with a focus on how well the IOO integrates his or her safety activities with those of the larger organization they are working for. Part of the program requirements include a four-hour training course being held frequently around the province. Certification is obtained through the use of the SAFEty Log, which is an 'in the truck' safety business centre, and submission of documentation to the BC Forest Safety Council to support safety related activities. For more information visit www.bcforestsafe.org.