Feb 5, 2015
Ask anyone connected to the forestry sector, from mill owner to logging contractor and everyone in between what it takes to survive and thrive in the forest industry and they will tell you that it’s a desire to not give up. From 2003 to 2012 that’s exactly what 50% of the forest industry did in New Brunswick in the face of a perfect storm of an economic recession not seen in a generation. Couple this with an at par Canadian dollar, escalating costs and intense competition from countries where labor conditions and environmental concerns do not rank so highly as they do in New Brunswick and you have some of the reasons why so many mills were beaten into submission and found it impossible to keep their doors open.
So who are the strong and why have they survived where others failed? It was sound business management, including some $647 million dollars in capital investment between 2005-2009, even as world markets were unravelling, that allowed the forestry companies, most of whom are represented by the industry association Forest NB, to survive and compete. Recent comments reported by CBC New Brunswick attributed to Green Party leader David Coon regarding the closure of the Maritime Fiber and Energy (MF&E) mill in Fredericton seeks to assign blame on anyone and everyone except the management of this ill-fated enterprise.
Mr. Coon insinuates all sorts of ills and woes that befell Maritime Fiber and Energy at the hands of government and big industry but at the end of the day the business was undercapitalized due to lack of investors and thus exposed the YSC Marketing Board to significant risk. Mr. Coon insinuates there is some undefined correlation to the crown land management process and lack of credit facility from wood suppliers as contributing to MF&E’s failure but MF&E were not forced into buying directly from the larger licensee as was suggested. They could have harvested their allocation themselves, which incidentally 75%, on average, of the 47,559m3 generously allocated by the province annually from 2011-2015 was never used by choice or lack of financial liquidity. These are not unjust wrongs sentenced on an innocent small business, although both Mr. Munn, the principal investor in the mill, and Mr. Coon are singing this woeful tune. These are the stark realities of restarting a sawmill in an extremely mature and competitive market in the highest wood cost environment in the country.
It’s equally unfortunate that Mr. Munn has chosen to also deflect blame to others, in this case government, including citing some undefined loss of $34 million dollars annually but does not describe what exactly this loss was referring to. The publically available Department of Natural Resources income statement shows a net surplus of $4 million and $7 million respectively for fiscal years 2013/14 and 2014/15 which is a significant improvement over previous years.
Mr. Coon in his interview goes on to suggest that he is now the champion of sub-licensees; defender of the little guy. The fallout from the failure of Maritime Fiber and Energy will play itself out and there will be more casualties in the form of unsecured creditors that will not be so interested in Mr. Coon’s blame game. To put this into perspective, the forestry companies represented by Forest NB include several small family owned enterprises all contributing to the employment of 20,000 New Brunswickers. There are many that are comparable in size to MF&E, faced the same challenges, and yet have endured; are they somehow also to blame Mr. Coon?
Executive Director Forest NB