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Quebec Lumber Prices Down

Volume 50 No. 21 – May 26, 2000

Under the Guise of Safety

Ithink I’m starting to hate the word ‘safety’. You can’t go anywhere or do anything anymore, without someone first stuffing this bothersome word up your nose, then proffering all manner ofbrightly colored and obtrusive safety equipment to put on, followed by instructions on how to conduct yourself on the operation. I find both the equipment and conduct requirements ridiculous overkill; they do little more than impair my ability to get the job done. I’m quite aware such a stance is bound to bring down a ton of bricks down on my head, especially from the forest industry which is so safety conscious, but before you start collecting ceramic projectiles to eradicate my existence from polite society, let me explain.

When I was a kid, one of my most memorable events was the day I got my first two-wheel bicycle. It was a three quarter size bike—a kid’s bike—and I remember it clearly. It had skinny, jet-black tires, a turquoise frame, and white fenders with two thin turquoise accent lines at exactly the right point on the bend of the fender to envisage speed and flight. How I longed for the day I could jump on the seat with a running start as I had seen those lucky kids who already rode a bike do, and peddle off without a care to the corner store, or a mile down the road to a friend’s house. Problem was I couldn’t ride—didn’t know how!

My romanticized view of wheeled freedom changed quickly to banged knees and elbows, skinned palms, and anger and frustration as I tried to master the art of balancing on two skinny wheels. Buoyed on, however, by encouraging words from my parents, as well as stubbornness and determination, I gradually acquired the skill. At first I traveled a few short feet (at which point I ran into the house excited as hell to inform my mother that I could now ride), then ever longer distances, until that glorious day when I rode down the driveway out into the street, and out into the world. What rapture! What pride! What freedom! Naturally it didn’t take long to become adept at my new skill, but back then it was an unimaginable triumph.

“Nice little story,” you say, “but what’s that got to do with the subject of safety?” Fact is, I learned to ride without a single piece of safety gear. I didn’t have knee or elbow pads, didn’t have a bicycle helmet, didn’t have anything like that, yet I survived with little more than a scrape or two, a few ragged pant cuffs that got chewed up in the chain, and the occasional bruise to my ego.

Today it’s a different story. Say I head out on my bicycle without first rigging up with all the required safety equipment. It’s probable I’ll be waylaid by the bicycle police, given a stern reprimand, and perhaps even have to make one of those mandatory contributions to the government’s bottomless coffers.

I’m not against safety for safety’s sake.

Safety requirements have no doubt prevented immeasurable tragedy and suffering over the years, but I am against safety when it becomes a taskmaster. Think for a moment of all the restrictions put in place under the guise of safety and think of how costly it is to disregard them. Is the objective really safety, or is it control?

Authoritarian organizations can implement almost any restriction they choose under the safety umbrella. There are no arguments against safety—not logic, not practicality, not even cost. Safety is supreme. It has become a religion, a singleness to which we must all pay homage, and in some cases, I believe it has reached ridiculous proportions.

I remember while visiting my aging mother one day, she asked me to get a pill for her from a plastic bottle in the medicine cabinet. When I opened the medicine cabinet door, I discovered a selection of plastic containers all with the tops smashed off, leaving jagged plastic spikes sticking up. When I asked her why, she told me she couldn’t get the tops off the bottles so she had to break them open with a hammer. The pills had been dispensed in a child proof bottle-safety again–with a lid that even I would have had trouble releasing. The pill container was so damn safe she couldn’t get to the medication.

I’m not arguing with the concept of safety for safety’s sake, but it can certainly be an effective tool for other purposes as well. Photo radar, for instance, while implemented under the guise of safety, has certainly generated a considerable booty of cash for governments across the country. I’m sure you will have no trouble thinking of other safety rules and regulations that have accomplished the same thing. One is tempted to ask if the real purpose is safety, or revenue generation?

Safety has considerable potential to be a puissant mechanism for power and control; it wields power to implement restrictions and control to enforce them. Safety requirements are backed by powerful enforcement bodies ranging from the Workers Compensation Board, to the police and the law courts. Safety may be sold as a preventive and protective measure, but it can be a powerful tool to restrict and channel. Thou shalt do this, thou shalt do that, and if thou doesn’t, thou shalt pay, or perhaps even be sent to jail.

Democracy is touted as the best system under which to live, but a guarantee of rights is nebulous under any system. There are always those ready to take away rights and willing to employ any available contrivance to do so—even if it’s done under the guise of safety.

Farewell to Donohue

With nearly 100 years of successful operation behind it, Donohue Inc., a company whose roots are long in Quebec’s history, has ceased to exist. In a $7.1 billion takeover announced last February, Donohue is now officially part of the Abitibi-Consolidated  http://www.bowater.com/en/?langtype=4105  empire. A family-owned company and one of the most efficient in the industry, Donohue supplied newsprint to well-known papers such as the New York Times. Last year, Donohue reported earnings of $212 million on revenues of $2.5 billion.

The company emerged out of the Labrador Electric and Pulp Co., which was started in 1900 in Clermont, Quebec. At first, the operation was little more than a power generating station, but in 1906, construction got underway to build a pulp mill. The East Canada Pulp and Paper Co., as it was then called, operated until 1913, when it went into bankruptcy. At that time, brothers Timothy and Charles Donohue bought the company and started Donohue Inc.

During its years of operation, the company spawned several prominent Quebec politicians, including former Premier of Quebec Louis St-Laurent, who was an early secretary of the company, as well as Lomer Gouin and Lucien Bouchard, who were also board members of Donohue.

Cree Fight Ruling

A recent ruling by the Quebec Appeal Court has overturned a decision made last year by the Quebec Superior Court which found that Quebec and Canada had violated the Cree’s forestry rights under a 1975 agreement. The Cree maintain that logging has damaged their lands and ruined their way of life and they want it stopped. They initially won their case, but the verdict was appealed and subsequently reversed.

In response, the Cree have launched a public relations campaign to have Quebec lumber boycotted south of the border. A Cree delegation recently traveled to Altanta, Georgia to meet with Home Depot shareholders and convince them not to buy wood products from the James Bay region of Quebec. The company spends up to $700 million a year on wood products from the area.

Despite the appeal decision, the Cree are planning to continue their legal battle and may take their case to the Supreme Court of Canada. In the meantime, they plan to continue a vigorous publicity campaign which could include linking their claim to the Canada-U.S. Softwood Lumber Agreement.

First Particleboard Mill

Sino Forest Corporation of Toronto, Ontario has announced it is developing the first ever particleboard mill in China. Cost of the plant is estimated at US$28 million. The company expects to be generating revenues of US$35.0 million by 2001, with an anticipated margin of 35 per cent.

Located Gaoyao City, the new plant is designed to produce up to 100,000 cubic meters of international quality particleboard per year. Completion of the Gaoyao mill is expected by the middle ofthis year, but already expansion plans are in the works. An upgrade to produce up to 600,000 cubic meters of laminated particleboard is scheduled for next year.

WSPF Holds & Pivots

Close your eyes and think of lumber— that’s what this cash market is finally doing at the tail end of May. After six continuous weeks of gradual erosion on KD R/L Std&Btr 2×4 from $300, the pivot point was marked on May 18th at $260. Tone began to improve by the close ofbusiness on Friday the 19th, and by Tuesday of this week, a few makers had nudged asking prices upward a few dollars. All the doom and gloom of the previous weeks were forgotten in a surge of optimism, resulting in Thursday prices so firm, you could have bounced a dime on them. Order files began to build at midweek with the eventual mark of June 5 achieved by most, and June 12 for a few others. Even with the small recovery reflected in this week’s numbers, producers are not particularly

satisfied. Watch for additional announcements of production curtailments and extended summer maintenance and holiday shutdowns. Meanwhile, output backlogs sit in mill yards waiting for buyers. In KD R/L Std&Btr, 2×4 stamped upward $10 to $270 by the end of the week, with a few sales at $272. On KD R/L #2&Btr, 2×6 wasn’t quite as strong as 2×4, but was able to snap on $5 to $265; 2×8 gobbled ten to bulk up to $280. Unfortunately, wides were the losers of the western spruce crowd. Embattled by cheaper hem/fir wides that are landing in midwest and southeastern destinations at substantially less cost, KD R/L #2&Btr 2×10 and 2×12 each disgorged

$5 to $305 and $320 respectively.

Studs Purposeful

After many weeks of futility, this was finally a week that reminded studs makers why they’re in this business. Makers gained confidence from a high inquiry level, closed a tidy pile of orders, and bumped prices. Tone remained firm even after the prices ratcheted upward as much as $15. Asking levels on KD SPF 2×4 92-5/8” PET studs ranged from a low ball $255, to a premium stud value of $292, with mid grade studs going for $270. Order files plumped into the week of June 19 on commodity studs.

ESPF Short Lived

Eastern traders were not confident  that this week’s flurry meant anything  more than short covering. Although  western traders happily insisted that this  was the beginning of something beautiful,  eastern producers were more circumspect.  “I’ll wait till it carries through another  week before I say this is the one we’ve been  waiting for,” said one trader. Prices did  recover approximately $5 on commodity  dimension, while KD eastern SPF 2×4-8’  studs declined $3 to $325.

Cedar Digesting

Customers held off on doing more  buying while they waited for the arrival of  a spate of orders placed in the previous two  weeks. Clears continue to be scarce and  pricey, while commons wait at the back of  the shelf gathering dust. Cedar log supplies  are adequate for the present, but with the  caveat that producers are watching the  skies for lightning; fire restrictions on  logging could restrict log supplies and push

prices up.

Fir Sniffing

Players sniffed the air for new, higher  numbers. In fir, it’s often the case that a  quick whiff is all the warning you’ll get  before a big swing up or down. What had  been asking levels became solid sell levels  by this midweek. Counter offers were out  of the market as cheapsters sold off the last  of their bargain rolling cars.  After generating zero profits in  previous weeks, long lengths were cut out  of the production line-up. Doug fir mills  took a look at the market and began  switching to other species. Hem/fir will  now be in greater supply; wides are already  killing western spruce delivered to the  south and midwest.  Hints of upcoming production  curtailments excited customers and got  them back in a buying mood. Traders were  confident in their ability to hold at, and get,  list prices that in past weeks had only been  numbers on a sheet of paper. Even these  tentative steps approaching the positive  were welcome after the last few weeks,  which had been about as exciting as reruns  of the Brady Bunch.

OSB & Plywood

When L-P announced their production  curtailments last week, OSB prices  immediately firmed higher. But the firmer  prices had no follow-through at all. Prices  for 7/16” held  unchanged at C$355 in  both Toronto and Vancouver. In eastern  Canada, where OSB producers could sell  without difficulty at this level, there was  little inclination to move much higher. The  strike among concrete drivers is still  unsettled in the Toronto area and  construction activity remains impaired. No  one, it seems, will buy ahead until the  dispute is over. Secondary product can be  found, say traders, but if business were at  normal levels, secondary inventory levels  would be inadequate. Order files are out to  the end of the first week in June.  Out west, the OSB market slowed  even more rapidly. Enquiries were sporadic  with many U.S. buyers getting ready for  the long Memorial Day weekend. There  were enough sales of 7/16” early in the  week at C$355 to encourage OSB mills to  raise prices, but all admit that little or no  business was done at the new, higher levels.  Asking prices for 7/16” ranged from C$359  to C$367. Order files range from May 29 to  barely into the week of June 12.  Construction activity in the Vancouver area  remains very slow, and secondary product  is easy to find. Traders say small orders of  7/16” can be filled at around C$340 to  C$345.

Cargo & Reload

Poor weather and anticipation of the  long Memorial Day weekend combined to  dampen the lumber business in the U.S.  northeast. Selling prices for green fir were  marginally firmer for narrows and off for  wides, say traders. Buyers know that there  is no shortage of lumber at west coast mills,  and have limited purchases to their  immediate needs. Retailers are reported to  have ample inventory for the anticipated  surge of long-weekend buyers. Most had  bought ahead and there was little last  minute buying, say wholesalers.  Replacement prices from fir mills in the  U.S. West are little changed. “They’re not  being greedy,” said one trader, “they don’t  want to be accused of dumping lumber into  a market that is already well-supplied.”  Order files are reported to be nonexistent.  Green hemlock selling prices moved  down this week. Eacom now has cargo  hemlock on the ground at Red Hook, and is  aggressively seeking to regain lost market  share from Futter and Sherwood. As a  result, prices took a beating.

Refer to Madison’s Lumber Reporter for the latest news in the lumber industry.

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