The Multinational Monitor

OCTOBER 15, 1985 - VOLUME 6 - NUMBER 14

W H O   C O N T R O L S   C A N A D A ?

Cut and Run

Canadian Forests Under Siege

by Jamie Swift

TORONTO, Ontario-When Great Lakes Forest Products of Thunder Bay, Ontario announced late last year its plans to sink $25 million into a new pulp mill in the state of Washington, it created a minor stir of controversy in the region.

Situated at the head of Lake Superior just north of Duluth and Minnesota's Sawtooth Mountains, Thunder Bay is a city heavily dependent on the forest industry, much like hundreds of other communities along Canada's forest frontier. The sprawling pulp and paper complexes of Great Lakes and Abitibi-Price (the world's largest newsprint manufacturer) are the principal employers at the Lakehead.

Great Lakes sent tremors throughout the community when it announced in 1984 that it was heading south with its investment dollars. The trade magazine Canadian Forest Industries noted in an editorial that such a shift of capital could indeed signal a trend in the industry.

In 1983, Abitibi-Price in partnership with the Thomson newspaper chain completed a $240 million mill expansion in Georgia. Canada's largest forest company, MacMillan-Blcedel of Vancouver, has been upgrading a mill in Alabama. And Montreal's Consolidated-Bathurst has spent millions on a British mill in order to ship raw pulp into the protected European market. Altogether, the foreign projects undertaken by Canadian forest firms had a value of over $900 million (Canadian).

Under fire for allowing such capital exports when domestic unemployment rates stubbornly remained over 10 percent, the federal government's Industry Minister Sinclair Stevens defended the move by Great Lakes. He reaffirmed the recently-elected Progressive Conservative government's commitment to making things as comfortable as possible for capital, both domestic and foreign, and the government's faith in multinational corporations.

Echoing the Conservatives' "Open for Business" message, Stevens pledged, "If there is any way we can ensure that the economic climate in Canada becomes more attractive than in the United States, I think that's what we've got to work to."

Others, however, believe more safeguards are necessary in the forest industry to protect the country's resources. Historically the Canadian government has undervalued its timber, often allowing logging companies to reap profits much higher than would be possible in the United States. Many environmentalists believe that just when Canada's forests most need investment in silviculture and renewal, money generated by the forests shouldn't be shipped abroad.

The government's own Science Council of Canada warned in 1983 that "one-eighth of Canada's productive forest has deteriorated to the point where huge tracts lie devastated, unable to regenerate a merchantable crop within the next 60 to 80 years. Each year some 200,000 to 400,000 hectares of valuable forest land is being added to this shameful waste."

It is now widely recognized that Canada, usually thought of as a land of unending wilderness and abundant forest resources, is facing a wood supply crisis. Years of over-cutting and neglect of reforestation have led to woefully depleted forest reserves. Communities dependent on pulpmills and sawmills face impending wood shortages within the next 15 to 25 years, a relatively short time period considering it takes between 60 and 100 years to grow a new forest in Canada's northern climates.

Canadian forests support a $23 billion industry, by far the country's largest export earner. Over a million workers owe their livelihoods either directly or indirectly to the forest. But the government owners of the forest land base and the corporations which are the tenants appear unwilling or unable to effectively address the reforestation problem. Current investments in a new crop of trees will not pay off until the middle of the next century, and neither government officials nor corporate executives seem to have the foresight to plan that far in advance.

Of course, the main actors in the forest drama like to pay lip service to forest renewal. Public and private sector officials offer soothing reassurances that new forestry strategies will pay off. In several key provincial jurisdictions (British Columbia, Ontario and New Brunswick), the policy is to turn the land over to the major corporations under long-term, renewable agreements. The private sector then carries out reforestation and the government pays the costs.

This has led to a kind of quick fix forestry involving new plantations of hundreds of millions of seedlings. Some foresters worry that the huge sums required to nurture these plantations in the decades to come may not be forthcoming from restraint-minded governments. Others are concerned that such monocultures will fall prey to the ravages of disease and insects.

Huge plantations may look attractive politically ("We doubled our seedling output last year" is a common political refrain) but there are no assurances that this blanket prescription for replacing the natural forest will actually work on many forest sites. Forestry is site specific. New forest management policies, however, are centrally directed by large bureaucracies and frequently display little sensitivity to the diverse nature of the resource.

Whatever their limitations, the new agreements are popular with the large, integrated forest products firms. Under the agreements, the companies are guaranteed access to the remaining natural timber as well as public subsidies for the logging roads needed to get at the wood. In the past two years Great Lakes Forest Products and the other majors in Ontario have spent over $34 million in public money to build logging roads.

Residents of communities like Thunder Bay are often reassured by government officials that the new partnership between the public and private sectors is the answer to chronic forestry ills. But many, including representatives of the workers in the forest industry, are reluctant to trust the multinationals.

The forestry industry has changed from the days when it was controlled by independent firms that were in the business of turning wood fiber into lumber, pulp and newsprint. A recent wave of takeovers has shifted control of the industry into the hands of the largest conglomerates in the country, and these firms display no regional loyalty to forest communities once wood supplies decline. Their horizons are neither regional nor national, but global.

In 1981 alone, $2.5 billion was spent to purchase control of Canadian forest products firms.

  • Noranda Mines, a subsidiary of Brascan (controlled by an arm of the Bronfman family), bought MacMillan-Bloedel.
  • Canadian Pacific, one of Canada's largest corporations, bought Canadian International Paper from International Paper of New York. Canadian Paper already held Great Lakes Forest Products.
  • Abitibi-Price was absorbed by Olympia & York, a Toronto real estate empire that controls millions of square feet of office space in downtown Manhattan. Olympia and York recently purchased Gulf Canada from its American parent in the biggest takeover of 1985.
  • Montreal-based Domtar (number two after MacMillanBloedel) was bought up by the Quebec civil service pension fund as part of the Quebec government's nationalist project.

With an industry controlled by such giants, it was little wonder that the decision of Great Lakes Forest Products to shift its investment attention to the Pacific Northwest provoked controversy.

Great Lakes recently received $48 million from the government to help it modernize its Ontario mills. Mill modernization and technological change have meant job loss throughout the industry. Still, the federal government's open-for-business philosophy is based on the hopes that, if corporations get enough tax breaks, the current unemployment problem will be solved.

"(The Conservatives) give tax breaks to the private sector and ask us to have faith that business will create jobs," said James Buchanan, president of the 60,000 member Canadian Paperworkers Union. "If we continue to put our faith in the multinationals, pretty soon we'll be left to rely on hope. And then all we'll have left will be charity."

As the mills become more capital intensive, jobs vanish. Canadians worried about both jobs and the environment are urging a labor-intensive approach to forestry, creating jobs in forest renewal-planting, thinning and tending. But the corporations are keen on tending the new plantations with a chemical fix of insecticides and herbicides. As a result, forest management techniques have led to environmental fights across the country.

"We have to take advantage of today's high forest industry profits while we can, making sure more of the money generated by our forest is plowed back into them," concluded Buchanan after the Great Lakes move. "Let's put more people to work on reforestation. This creates the jobs we need when unemployment is high. The multinationals want to invest in other countries. But we think we should be investing in our future."

Jamie Swift is a Toronto-based journalist. He is the author of Cut & Run: The Assault on Canada's Forests.

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