Thanks to Wednesday's ruling in BC's favour on the allegations of dumping lumber into the United States, area sawmills can now sell lumber products across the U.S. border with less concern about financial penalties.
The decision comes at a time when the BC lumber market is pondering if there is much of a need to sell wood products to American customers. Several Asian countries, especially China, have recently become favourable customers of BC wood.
Almost all of BC's lumber was sold to American homebuilders prior to the extraordinarily bitter softwood lumber negotiations in the early 2000s. The agreement was finalized in 2006 and has since been extended to 2015. Meanwhile, the US housing collapse in the wake of the global economic meltdown of 2008 forced BC lumber producers to find new markets.
"It's not as simple as just flipping our wood over to some other country, but it is definitely more difficult to do business when the market is distorted by politics," said Bill Kordyban, president of Carrier Lumber, which sells anywhere from one-third to one-half of its finished products to American customers. The rest goes to Canadian buyers with some sales in the Japanese market.
BC government data gathered this spring shows that exports of wood products to Asia rose almost four per cent this year over last. April's monthly total alone was $499 million in wood products heading east instead of south.
Looking specifically at China, the 2011 export of softwood products from BC jumped 74 per cent from 2010 and 200 per cent from 2009.
In 2003, China bought less than $70 million worth of BC lumber in its history, but in nine years China has wracked up more than $1 billion in purchases from BC mills.
China now owns 29 per cent of the BC softwood lumber market, with the US at 42 per cent.
"We still need the U.S. housing market. Our fortunes are still tied to the U.S.," said Lloyd Larsen of L&M Lumber. "China wants our low-grade products but we produce more than that, we have to sell the quality stuff somewhere. Japan wants it, somewhat, but mainly it means we need to have the US housing market rebound. China just isn't buying that grade of lumber - yet, anyway."
There are signs of that rebound slowly taking shape. New housing starts were at their worst in 2008 at about 500,000 that year, but in 2012 the projection is for 750,000 new homes to begin construction in the US.
BC wood currently accounts for 25 per cent of the lumber sold in the United States. John Allen, CEO of the Council of Forest Industries, said this is a big downturn from pre-global economic crisis days when it was close to 35 per cent, but it is still a significant amount of income for BC mills.
"The U.S. has been harassing us on an ongoing basis since 1981 in the lumber industry," he said.
"When our market share was in the teens, nobody bothered us, but when we got up as high as 34, 35 per cent, they came right after us. It's all about market share. They use trade law as a tool to either collect from us or impose cost on us."
And then came China, Allen said.
"It has been a great assistance to us, we have sold huge volumes to China and other markets in Asia which has taken a lot of pressure off us when times were really tough," he said.
Kordyban agreed that "China saved the entire BC forest industry and I really have to credit Minister Bell for personally recognizing the potential there and putting in a lot of work on behalf of the BC forest sector. His perseverance and vision paved the way and it really paid off for us. We - all of us - owe him for that, I feel."
Canfor CEO Don Kayne echoed the sentiment, saying "Over the last decade, the return on investment has been obvious and staggering for our province, and we thank government for their founding presence and continued investment [in attracting Chinese customers] from 2002-03 to today."
Kordyban said the Chinese market represents BC's biggest and best chance at new customers.
"They [China] are just experimenting with our wood, and look at how much market share they have," he said. "If you can get them to change one strip in one model of door from steel over to wood, that is enough to keep a plant like ours open."
So many factors are now in play that weren't there when the Softwood Lumber Agreement was hammered out between Canada and the US - a major shift in respective currency values, capital improvements to BC's air, rail, highway and shipping infrastructure, Canadian firms buying major holdings in the American sawmilling industry and vice versa, and new international customers emerging for BC's wood.
"The lines have been significantly blurred," said Kordyban.
"The overall market conditions have changed a lot, and you would hope that would temper future agreements somewhat."
