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Mired in a fog of controversy and litigation for more than 25 years, issues of forest management in Montana and the causes of troubles in the timber industry remain a topic of discussion and disagreement among the state's citizens. 

Like a pair of fraternal twins, the timber markets of the United States and Canada don't quite look identical.

In the West, both sides cut conifers mainly for the U.S. housing market. The industries each revolve around huge swaths of public forest, and have boisterous debates about how to manage that landscape. Whole communities depend on the logging and milling business north and south of the border.

But Americans and Canadians see the same issues differently in ways likely to roil relations throughout the Pacific Northwest. Take the housing market.

Housing starts in the United States hit a nine-year high in October with 1.32 million starts. While that's still off the long-term average of 1.5 million, it means good news for anyone selling 2x4s. Until we get to the business of selling 2x4s.

Two-thirds of British Columbia's lumber production flows south to the United States, according to market analysis by Business Vancouver journalist Gordon Hamilton. Most of the remaining third goes across the Pacific Ocean to China. And several cross-border issues demand attention.

First, the Canadian dollar currently buys 74 U.S. cents. That's down from near-parity in 2012. And it means Canadian lumber imports have a big competitive price advantage against American suppliers. Hamilton noted it also means the Canadians attract more attention from price-sensitive Chinese lumber importers.

"We see less tourists and more wood coming this way," said Craig Rawlings of Forest Business Network, a timber industry newsletter. "It always seems to me there’s no shortage of wood in the world. If it doesn’t come from Canada, it has to come from somewhere else."

Currency exchange rates also aggravate the larger negotiations over western wood markets, codified in the U.S.-Canadian Softwood Lumber Agreement that expired last year. Twelve months of negotiations failed to produce a replacement for the previous 10-year deal. And in November, U.S. trade officials filed a dispute accusing the Canadians of dumping government-subsidized wood into the U.S. market. They seek punishing duties of up to 40 percent in retaliation.

The election of Donald Trump to the U.S. presidency has raised particular alarm in the British Columbia timber industry, Hamilton noted, because of Trump's campaign pledges to reconsider American trade deals. While the Americans have lost most of their trade cases against the Canadians, that hasn't helped gain back profits the Canadians might have earned while the market was locked up in legal limbo.


Trump's change of command comes just as Tolko Industries closed a large sawmill in Merritt, British Columbia, shortly after the B.C. forestry officials announced a 38 percent drop in timber supply due to the region's beetle-killed stands having grown too dry and brittle to harvest. The mill closure cost 200 jobs.

Hamilton also reported Canadian logging contractors have been struggling with increasing operating costs and an inability to get their mill buyers to raise delivery prices accordingly. Residents of Vancouver Island have clashed over how much of the island's remaining old-growth forest to open to logging.

In Frebruary, B.C.'s legislative assembly approved protections for nearly 16 million acres of the Great Bear Rainforest on the province's central Pacific coast, opening just 15 percent of it to logging. The agreement ended nearly 20 years of land management dispute and could be a template for future decisions, Hamilton reported.

Russ Vaugen, a timber analyst whose family owns sawmills in both Washington and British Columbia, said the way the two nations handle their landscapes needs work.

"In the U.S., you have a federal government that’s walked away from consistent management of its forest system," Vaugen said. "That puts American mills in a difficult spot – buy logs from expensive, faraway sources or go out of business.

"That's contrasted (in Canada) with a supportive government making sure mills are still operating within the rules they’ve created for sustainability in their forests.  They have an opportunity to run mills on a consistent schedule to maintain viability in the future."

Vaugen acknowledged that difference stems from the U.S. Forest Service's struggles with a multi-use responsibility in its forests, while the Canadian foresters have much less public involvement in the debate.

"What they did (in Canada) was they identified important places to protect, set those aside, and the rest of the area went to management," Vaugen said. "You can argue if management is appropriate, but I do not hear Canadians saying their management practice are bad. I mainly hear Americans are saying that."

As the western Canadian timber horizon has shrunk, many firms there have expanded their reach into the United States.

"The Weyerhaeuser (medium-density fiberboard) plant in Columbia Falls – a lot of wood fiber comes out of Canada to feed that mill," Rawlings said. "Most Canadian timberlands, B.C. in particular, have a shelf-life of saw logs that is pretty much over with. That’s why so many Canadian companies have invested heavily in the (U.S) Southeast. They can play the market any way they need to by having plants on both sides of the border. In industry we complain, but they’re part of the bigger picture. Everybody trades with everybody."

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