Guidelines eating profits.

Inclement spring weather has forced Northern Ontario forest producers to scramble for raw material this spring, but some say overly protective and "restrictive" provincial conservation guidelines designed to protect wildlife habitat and sensitive eco-systems are taking thousands of hectares of wood supply out of circulation.

Fibre supply issues due to wet weather and soft road conditions in the bush caused Bowater to shut down its Thunder Bay sawmill for six weeks in late May and June and temporarily lay off 125 workers. It resulted in all available supply being diverted to maintain their pulp and paper mill operations.

Though the sawmill was scheduled to reopen July 5 as fibre flows stabilized, Sue Prodaniuk, spokesperson for the paper-making giant, says there are long-term issues with wood supply surrounding the forest management planning process.

Prodaniuk says the province's conservation guidelines are reducing the area of allowable fibre available to industry, and needs review.

"There certainly has been layer upon layer of guidelines and the process has become a lot more complicated, and they haven't been reviewed for their effectiveness."

"The whole planning process is open to interpretation ... and the guidelines are just adding more and more of a layer of issue surrounding the allowable cut that's there."

Prodaniuk says Minister of Natural Resources David Ramsay's published comments in June, indicating there is not a shortage of wood and that forest companies must make better use of their cut allocations by building roads, should be amended.

"The issue surrounding fibre supply is not just access to fibre, but access that is economical and makes business sense."

Bowater holds sustainable forest licences mostly around the Ignace- Sioux Lookout area.

"As we go farther North and farther afield to access fibre, there's more cost involved and we have to ask ourselves how efficient are we in comparison to other areas."

In northwestern Ontario, some forestry stakeholders say the lack of wood for area mills has resulted in thousands being laid off in an industry that contributes $1.7 billion annually to the area's economy and is responsible for one of every three jobs in the region.

"The estimate is that there are probably 4,000 workers out of work in the northwest and the lumber prices are probably higher than they've been in the last five years," says Atikokan Mayor Dennis Brown, the president of the Northwestern Ontario Municipal Association. His community lost 100 sawmill jobs last year at Atikokan Forest Products. "The issue seems to be (about) getting enough wood."

Brown says discussions between industry stakeholders and MNR officials have been ongoing for two years over the new guidelines of conservation areas and the amount of forest available to harvest, but he believes the "MNR has to become more proactive in trying to work with companies in preserving the jobs."

There are also industry concerns that Ontario's Living Legacy process has consumed too much prime harvesting area.

"Living Legacy was set up to amount to 12 to 15 per cent of area set aside for conservation and parks," says Brown, "but when you talk to the people from industry, they feel it could be as high as 28 per cent. That's the issue; there's a lot of wood being taken out of the wood basket."

Brian Nicks, a forester with Domtar, says shortages exist for large-diametre logs for many saw and veneer mills, causing them to drop a shift at their Chapleau mill in northeastern Ontario.

Even private wood sources are drying up, partly by "foreign" interests from Michigan and other provinces.

One of their private land sources feeding their mills was purchased by a competitor company from Quebec, and those logs are being "exported" out of the province.

"The private wood supply sources are not as abundant and secure as they used to be," says Nicks, since 17 per cent of SPF (spruce-pine-fir) processed in Ontario sawmills comes from private land sources.

Fortunately, the trickle-down effect has not yet affected their pulp and paper operations, which use wood residue such as chips and tree tops.

Though not a proponent of undoing the Living Legacy process, Nicks says the industry must make better use of the existing available forest.

Rolling back protective guidelines is not the answer, he says. The biggest industry issue remains their "inconsistent application" that is not based on good, up-to-date science, allows too much flexibility or local interpretation and are "applied at the maximum all the time."

"That is what the industry is frustrated with in Ontario, the overzealous application in certain areas and the lack of consistency. The guidelines are useful, but they need to be up to date, and need to be applied consistently and fairly."

More intensive forestry management is also needed, he says, though it is capital intensive and comes at a time when the industry is struggling for markets, and profit margins are weak. Domtar has adapted by investing in technology geared to lower grade, smaller diameter wood in surplus.

"We've been able to generate high value quality product out of small diameter timber as a result of installing hew saw equipment and MSR (Machine Stress Related) lumber grading machines."

Jeff Barton, mill manager at Cheminis Lumber in Larder Lake, attributes the tight supply and strong competition for wood to more consumption, more mills and better operating capacity.

"Every stick has a name on it and anything that doesn't, you have to fight tooth and nail to get it."

The 30-employee sawmill draws wood partly from their own woodlands operation within the Timiskaming Forest Alliance and from purchased wood. Though running only one shift, Barton says they could expand to two shifts if the wood supply were there.

Considered a small producer, producing about 12 million board feet annually, Cheminis produces specialty items like six-by-six and six-by-eight beams, and bigger timber is tougher to acquire and more expensive.

Restrictions stipulating a certain number of trees must be left behind to emulate natural disturbance patterns are costly for forestry companies and have taken away available wood supply.

Though not in favour of less regulation, Barton says there must be a "thorough evaluation" on whether the guidelines are working, and whether they are being overlapped to diminishing returns. His company has adjusted by using more tamarack and becoming better at recovering lumber from the logs they use.

Since the MNR reduced staff over the last decade and handed joint forest management on Crown lands with industry, Barton says both sides must engage in a "critical and open" analysis of whether guidelines are working.

By IAN ROSS 

Northern Ontario Business