U.S. softwood duties harder to 'swallow' for northern Ontario sawmills with sagging lumber prices

2018 was a strange year for northern Ontario's forest industry, especially companies that produce lumber. It's been so strange, that analysts are uneasy making predictions for the year ahead.

Eacom says it spent 'almost 60 million' on duties this year

Forest companies in northern Ontario enjoyed high lumber prices for much of 2018, which helped ease the sting from U.S. import duties. (Erik White/CBC )

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.

A worker sorts lumber at the Goulard sawmill in Sturgeon Falls. (Erik White/CBC )

"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.

The Domtar plant in Espanola is one of the few paper mills still operating in northern Ontario, thanks largely to the specialty products its 400 workers make. (CBC)

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.

Corrections

  • 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

About the Author

Erik White

journalist

Erik White is a CBC journalist based in Sudbury. He covers a wide range of stories about northern Ontario. Connect with him on Twitter @erikjwhite. Send story ideas to erik.white@cbc.ca

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.