The Toronto Sun



Energy costs killing forestry

Hydro rates have risen 60% -- and that could affect some 36,000 jobs province-wide


Think the forest industry in Ontario is something that only affects the north? Think again.

According to Ministry of Natural Resources' figures, every forestry job in this province creates 4.1 jobs in other parts of the provincial economy. And right now, the northern sawmills and the pulp and paper business are tanking, so the reverse is true. For every forestry job that is lost, another four go down the tubes with it. And that hits home everywhere in this province.

Part of the problem is the Liberal policy on electricity, says New Democratic leader Howard Hampton, who himself represents some of the hardest hit areas in his home riding of Kenora-Rainy River.

Plentiful hydro-electricity in northern Ontario provides some of the cheapest power in the world. Yet northern companies are forced to fork out the same skyrocketing electricity costs as companies in the south -- where power is not in as good supply. And that's breaking the backbone of the forest industry.

Premier Dalton McGuinty recently announced a $140-million bail-out for the forestry sector, but Hampton said this only helps one or two operations. It's politically motivated, he said, aimed at shoring up flagging Liberal fortunes in Thunder Bay and Sault Ste. Marie rather than giving the industry a meaningful strategy for recovery.

"They focused on three or four mills that are in real danger of closing down before an election. This has more to do with saving Liberal skins in the next election than it has to do with positioning Ontario's forest sector on a sustainable basis," Hampton said.

"When you drive up hydro rates by 60% in an industry where at least 35% of the cost of operation is hydro-electricity, you can put a lot of people out of business," Hampton said. Small power plants in Northern Ontario can produce hydro at one or two cents a kilowatt hour. Yet pulp and paper mills, which consume huge amounts of electricity, have to buy the juice at six cents a kilowatt hour.

Industry spokesmen say they've lost 8,800 direct jobs. That translates to 36,000 indirect jobs province-wide. All agree that what is really needed is a stable price for electricity for businesses in the north. That price is about $45 a Megawatt hour, (MWH) says Jamie Lim, President and CEO of the Ontario Forest Industry Association. Right now, the price is anywhere between $60-$70 a MWH. And that's scaring off new investment, she said. Quebec and Manitoba have much cheaper power.


"Ontario companies are investing, but it's not in Ontario," said Lim. She says the Liberals' $140 million is a good start, but they still have a long way to go.

"The forestry industry has been a cornerstone of this province's economy for 200 years," she pointed out.

"The problem we have in Ontario is that we have lost the competitive edge over the last four years," she said.

Cec Makowski, Vice President of the Communications, Energy and Paperworkers Union, echoes the call for a $45 a MWH price for electricity.

"We are seeing jobs evaporate in the renewable resource sector," he said. "In the course of a couple of short years, two key costs -- wood and energy -- have gone through the roof," Makowski said.

"Communities that rely on the mill for their economic sustainability are having the guts ripped out of them," he said, pointing to 5,000 direct jobs that have been lost at the closure of mills in Cornwall, Kenora and Smooth Rock Falls.

"Others are paring back in virtually e very other mill operation," Makowski said.

Northern Ontario shouldn't be punished for the short-sighted energy policies of a succession of governments. The Liberals need to take another look at energy costs and the forestry industry. If not, you can be sure that when a tree falls in the northern forest, no one will hear it. Everyone will be in Quebec or Manitoba.