…read this one, from the Vancouver Sun.
According to the story, panelists at a forum on the future of the BC forest sector warned that the industry is completely unprepared for the long-term effects of globalization. With the emergence of a worldwide timber market, BC is now competing against dozens of new rivals, ranging from New Zealand to Malaysia to South America to Europe. And cutthroat competition among suppliers means one thing for timber prices: they’re going down, down, down.
The upshot—industry analysts predict that the extreme market competition in years to come will make the pressure of the 1980s and 1990s look ‘tame by comparison’. That doesn’t bode well for BC, since its timber companies are only about half as profitable as those from other parts of the globe.
To add to the BC timber industry’s woes, the worldwide demand for timber may be artificially high right now, as a global real estate boom (worldwide, property values are up an astonishing 33 percent in three years) has fuelled homebuilding in the US and elsewhere. But booms can quickly turn to busts, and if the red-hot US real estate market turns out to be just a bubble, the biggest market for BC timber could dry up.
Low prices will mean that timber companies will have to radically squeeze costs—which typically means replacing people with productivity-enhancing machines. But if the history of the US Northwest’s timber wars in the late 1990s is any guide, we should expect the BC industry to turn to blame someone else—either the government or environmentalists—for the job losses.
In the end, pinning your economy to low-priced commodities in a global market is a sucker’s game. So if you start hearing stories about how BC’s (still lax) environmental regulations are responsible for thousands of timber job losses, and a decline in BC’s competitive advantage in forest products, don’t get suckered yourself.
