Edmonton Journal
2007.01.16
Paul Marck
The Edmonton Journal
EDMONTON - Last winter Timberline Haulers broke a 40-year tradition: It stopped hauling logs for Weyerhaeuser's Grande Prairie lumber mill.
"I would rather spend my time doing something else. I'm not interested in pursuing that at all," said Gregg Wald, whose father began the Grande Prairie business in the early 1960s. "Basically, it's not worth it to us."
The economics of contract lumber hauling just did not make sense to the Walds anymore.
Today, the forestry business in Alberta, which employs nearly 50,000 people in more than 50 communities, is losing people. Their jobs remain.
Despite a gloomy forestry economy with low prices and an export tax on lumber, the real job-loss culprit is Alberta's hot energy economy, resulting in an overall skills shortage. Essentially, log haulers, saw, pulp and panel board mills and manufacturers are finding that the energy sector is poaching truck drivers, labourers and tradespeople.
"The oilpatch, they steal people, they pay more," laments Yad Minhas, who along with his brother Mohinder runs Minhas Brothers Holding Ltd., which operates a log loading and hauling business for mills in Grande Prairie.
The Alberta Forest Products Association sounded a warning in December of a bleak year ahead, with production curtailments and even the threat of mill closures due to surging labour, transportation and energy costs caused by Alberta's booming oil and gas economy.
Minhas is living with the reality. Wages for log hauling are good, at $25 to $30 an hour. But the oilpatch pays $35 to $40, and money-losing sawmills can't compete. "The problem is the logging industry has limited profit, " says Minhas. As a result, log haulers are left scrambling.
It has been impossible to keep his 45 trucks moving and 100 staff positions filled with local talent, so Minhas began importing workers from Fort St. John and rural areas around Grande Prairie. That led the company to a novel approach to solve its labour problems. With Grande Prairie suffering a housing shortage, especially for migrant workers attracted by Alberta's promise of good jobs, Minhas built its own work camp.
It was a controversial and desperate move, initially opposed by the County of Grande Prairie. But it was the only way for Minhas to lure people from out of town. The full-service camp is completely filled, with 60 staff living there on the edge of Minhas's property in the Grande Prairie industrial area.
It was a costly venture, at $150,000 to build. But Minhas says the effort has paid off and others are closely watching his example.
Yet even as the Minhas fleet hauls and loads timber for Canfor, Tolko and Weyerhaeuser, cost pressures have never been so severe. The price of fuel has doubled in the last three years and competing with the oilpatch for workers has driven up wages and costs.
"They talk about inflation being two per cent. The inflation for my business has been 20 per cent in the last year," says Minhas. "This year is going to be tough."
The Walds, however, decided to abandon forestry for other pursuits. When logging slowed down, Timberline began hauling building materials for Reco Construction, which does industrial, commercial and residential building and paving. Last year it bought the contractor, completing its transition away from logging. "We do better on the construction side," says Wald. "The profits are so much better."
It's not just contractors suffering from a labour shortage and pointing to the thriving energy industry for poaching jobs. For the first time in recent memory, sawmills and pulp mills are competing for skilled and unskilled workers as well as tradespeople.
Traditionally, mill jobs are secure, well paying and suffer little turnover.
That's not the case anymore.
At the Daishowa-Marubeni pulp mill in Peace River, a mill staff of 300 once had a low turnover rate of about four per cent a year. That tripled to 12 per cent from 2003 to 2006.
Mill manager Tim Lanteigne lost seven senior managers to a single oil company last year, taking more than 100 years of pulp-making experience out the door.
"When you lose that kind of expertise, you don't notice it right away. But after six months, you sure do."
As a result, the company expects to announce new hiring and retention policies in the next few weeks in a bid to stem the talent drain.
"You're forced to look at different ways of managing ... anything to entice your employees to stay," says Lanteigne. "You really need to provide a unique culture in your facilities."
At Canfor's Grande Prairie sawmill, job vacancies go wanting as well.
"There's high turnover in an area where we've never experienced before," said woodlands manager Jim Stephenson.
Canfor has a unionized workforce, but like other forestry operations is losing both hourly workers and tradespeople.
"Many of the oil service industries are paying higher wages than we do," said Stephenson. There was a time when mill jobs paid more, plus offered the stability of a secure workplace.
HIGH TURNOVER IN HIGH LEVEL
The situation is just as acute at the Tolko sawmill in High Level. Among 280 hourly paid workers, 151 -- more than half -- are new hires over the last year. That's practically unheard of.
"We are just having a hard time finding people," says Rob Layton, general manager of Tolko's High Level operation. "I would hire 20 people tomorrow if I could find them."
Entry-level jobs starting at $24 an hour and benefit packages worth another 38 per cent of the package are no longer a draw. The oilpatch lures people, and the overall effect drives up Tolko's costs.
It means a lot of overtime at the mill: time and a half for the first three hours, with double time for anything more.
"You are paying a pretty good premium for being shorthanded," says Layton.
Layton and other forestry executives believe there is a role for government to play, in both attracting more people to fill Alberta's jobs and in setting a balance in the industrial sector, particularly in the way energy projects are regulated and approved.
"I don't think it's going to get any better until the energy sector gets reined in to a reasonable pace of development," Layton says.
GOVERNMENT LEADERSHIP SOUGHT
Industry says it needs an action plan and government leadership.
The AFPA has identified rising costs as the most critical problem facing forestry and says it needs to work closely with the new Stelmach government to identify and respond to the pressures.
A meeting with industry leaders is scheduled with Ted Morton, Alberta's new minister of sustainable resource development. The AFPA is also putting the finishing touches on its forestry competitiveness report, due for release in February.
The Forest Industry Suppliers and Logging Association of Alberta has 300 member companies, many working in both forestry and the oilpatch, providing a variety of service and support roles.
FISLA has sent the cautionary message to its members that while oilpatch work is lucrative at the moment, firms need to ensure their businesses are diversified.
"Both industries are cyclical, but during down cycles forest product mills continue to operate and procure local goods and services. Conversely, the patch shuts down entirely," says executive director Ken Glover.
FISLA wants to see more co-operation and collaboration between the petroleum and forestry industries on workforce co-ordination, attraction and retention, Glover said.
He further suggests initiatives to attract labour from abroad could be jointly funded and co-ordinated by the petroleum industry and forest industry, rather than duplicating efforts.
pmarck@thejournal.canwest.com
ALBERTA LUMBER
- Price per thousand board feet, Jan. 5, 2007: $269 US; year ago: $369
- Average annual production: 3.3 billion board feet
- Lumber value: Approximately $1 billion Cdn
- Number of major saw mills and manufacturing plants: 34
- Average forestry sector salary: $60,000.
Number of trees to build a 1,700 sq.-ft. house: 157