Today’s Chronicle Journal had a one-page ad by Resolute
Forest Products written in response to a Chronicle Journal editorial on July 18th
entitled “Innovation But When”.
In the response, Resolute maintains that the editorial implies that
there has been no capital investment or pro-active action taken by any Canadian
or North American company relative to the forest products industry. Resolute then proceeds to list the
major capital projects it has recently announced: a 54 million dollar
investment for improvements to a wood waste boiler and steam turbine
installation at the Resolute Thunder Bay mill, an 8 million dollar upgrade of
its sawmill complex, a 30 million dollar investment in the idled Ignace mill
and another 20 million dollars at the newsprint mill in Iroquois Falls.
Resolute is justifiably miffed at being lumped in with a
large chunk of the forest industry that did not invest sufficiently in its
mills and met the perfect economic forestry storm of the early 21st
century with aging infrastructure and equipment. Resolute is indeed an example
of a proactive and engaged forest products company and its investments are key
to the survival and prosperity of the forest products industry in Thunder Bay
and the Northwest. There is also its
relationship with CRIBE (Centre for Research and Innovation in the Bio-Economy)
and FP Innovations, which will look at innovative ways of using forest biomass.
In Thunder Bay, Resolute is the only survivor of that economic
storm with a mill complex that dates back to the 1920s. The Resolute mill is the latest corporate incarnation of the
Great Lakes Paper Company, which over time has been Great Lakes Forest
Products, Canadian Pacific Forest Products, Avenor, and Abitibi-Bowater. A hallmark of
the original Great Lakes Paper was that it was locally owned and an example of
local Lakehead entrepreneurship. Having
our own locally owned head office meant substantial control over investment
decisions and white-collar employment that deepened our local labour and professional opportunities.
Indeed, the fact that this is the only pulp mill that ultimately
survived out of the four mills in Thunder Bay is a testament to the original
good decision making in plant and equipment that made the company viable for
resale and continued production in the long run.
Resolute is also correct in maintaining that it had to deal
with economic events largely out of its control such as the appreciation of the
Canadian dollar or the decline in demand for newsprint driven by the
technological change of the computer age.
Indeed, taking out a one-page newspaper ad is a wonderful example of
supplier- induced demand. However, Resolute has developed a selective
historical memory and conveniently omits the effect of provincial government
policies on the forest sector crisis.
Indeed, it was not too long ago that the North cried out in protest
against provincial wood allocation and electricity price policies. Moreover, there was the exceedingly
slow response of the provincial government in realizing the extent of the
crisis and finally offering some relief in areas such as electricity prices.
Finally, it should be noted that even active management and
being proactive cannot always save you from the realities of the market especially
when combined with slow or ineffective government policy assistance or indeed detrimental trade policies such as the softwood lumber dispute. Witness what has happened to the
Buchanan mills even with all their energetic responses and efforts. It is an important lesson we should not
forget.
