The financial crisis in British Columbia's forest industry has resulted in one of the province's largest forest companies creating a financial reclamation program designed to help it weather the current storm.
Canfor has reportedly issued letters to its contractors, advising them about "Project Endurance", where they are being told that as of April 1st and continuing on until April 1 of 2009, they will be taking a ten percent haircut on costs, and are expected to reduce their cost expectation by that amount while the industry tries to sort out its troubles.
Canfor which has Jimmy Pattison as one of its major shareholders, has run into trouble across the province due to the economic problems of the US housing market, where a good portion of thier product is destined. Indications for this year and next are that a recovery is a fair way off in the distance, meaning that the problems will linger in British Columbia's forest sector for a while yet.
Canfor recently announced a number of shift reductions, down time schedules and out right plant closures to try and buy some time until those conditions and markets improve. Which means that Project Endurance may be but the start of other measures, designed to help ride out the economic storm below the 49th.
Opinion 250 out of Prince George had some of the details on the program and the feedback from the new, if less than enthusiastic recruits to the program.
Prince George, B.C. - It’s called “Project Endurance” and it is Canfor’s latest effort to get through what it calls the “extraordinary meltdown” of the forest industry.
Under the “project” all of Canfor’s contractors are to trim costs by 10% from April 1st of this year, to April 1st of 2009.
The cost reductions cover all areas, from trucking to falling, road construction, silviculture and administration.
There have been mixed opinions surfacing from the contractors who were handed a note telling them that Canfor wants these companies and their subs to take a 10% cut.
Although Canfor met with their contractors, the subs weren't so lucky "At the very least they should have come and sat down with us, if we could increase volumes I’m sure we might have been able to take some cuts, but 10%, that’s a long stretch."
He said his company has not been handed the note but he was informed that his company will fall in line.
Another contractor says his company was given the letter to take the 10% cut. "We have a fuel surcharge to contend with, we are asking the employees to work harder and now we are being called upon to take a further 10% off." He adds, "Just when can you be sure you got 10% off?”
The operator of a large trucking company said that he has been in business for 25 years and has always had a problem trying to keep the driver seats filled in his trucks. "How can you take money away from them and hope to have them and you survive? Eventually, you can only bleed so much, my suppliers have also taken it on the chin. My view is that we are at the bottom of the barrel and even we can only take so much."
What are they going to do now that the company has come down with the word? The contractors say there is no room to move "What can you do?" say the contractors, "We are not being asked, we are being told. "
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