U.S. softwood duties harder to 'swallow' for northern Ontario sawmills with sagging lumber prices
Eacom says it spent 'almost 60 million' on duties this year
December is the month for making predictions of what the coming year has in store.
But those in northeastern Ontario's forest industry are hesitant to do any forecasting about 2019, given the year that just went by.
"We really will have to see, because nobody could have predicted the kind of pricing we saw in 2018," says Christine Leduc, director of public affairs for Eacom Timber Corporation.
The lumber coming out of the company's sawmills in Nairn Centre, Elk Lake, Gogama and Timmins was worth $300 per thousand board feet or so in the fall of 2016, climbed steadily up to $700 this past summer and then tumbled down to $400 to finish 2018.
This was also the first full year for the softwood lumber duties the U.S. government brought in back in the spring of 2017, which Leduc says for Eacom is 20 per cent, meaning that almost $60 million is "being left at the border."
She says the longer the trade dispute goes on, the more northern Ontario jobs, especially those at older and less profitable mills, could be in danger.
"For 2018 the market largely absorbed the duties and we were profitable, but the longer this process drags on, the more the pricing is low, the more that will have an impact," says Leduc.
Rayonier Advanced Materials is the other big lumber producer in the north.
It merged with Tembec about a year ago and operates sawmills in Chapleau, Hearst, Kapuskasing and Cochrane, plus a newsprint mill in Kapuskasing.
Director of external affairs Eric Johnson says the duties were "easier to swallow" when prices were high.
"Quite frankly, the U.S. is dependent on Canadian lumber. It's having an impact on their housing prices even. So, this does not help anyone on either side," he says.
It's been boom times in recent years for timber producers in the north, but no so for paper mills, most of which have closed up.
One of the survivors is the Domtar plant in Espanola, which makes specialty paper including Band-Aids, muffin cups and fast food takeout bags.
Joanne Lamothe, the president of Unifor Local 74 representing 300 of the 400 workers in Espanola, says they keep developing new products and finding new customers.
"And that's why we're still here. That's why we're still viable," she says.
Lamothe says in recent years, the Espanola paper mill has seen a big turnover in the workforce, with about half of the positions now filled with younger workers.
Like other northern mills, the Espanola paper plant is decades old and Lamothe wants to see the company put some money into infrastructure, to make sure it keeps running well beyond the new year.
Domtar did not make anyone available for an interview.
- In an earlier version Eacom was quoted as saying it spent more than $75 million on duties this year. The company has since clarified it spent almost $60 million.Dec 20, 2018 11:08 AM ET