Carlton Owen Webinar


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Carlton Owen Webinar

  1. 1. The Softwood Lumber Dispute: What It’s About, Why and What It’s Got to do with the U.S. Endowment A Webinar Developed for Blandin Foundation’s Seeing the Forests AND the Trees Carlton N. Owen President & CEO May 1, 2008
  2. 2. Productivity Tour Webinar
  3. 3. Context for the Issue <ul><li>U.S. – “we build with wood” -- largest consumer of softwood lumber </li></ul>
  4. 4. Context for the Issue <ul><li>Canada – largest producer/exporter of softwood lumber </li></ul><ul><li>The U.S. Market – 2005 </li></ul><ul><ul><li>Canada 33.5 bbf </li></ul></ul><ul><ul><li>U.S. 28.0 bbf </li></ul></ul>
  5. 5. What Really Underlies Issue <ul><li>One North American Forest </li></ul><ul><li>3000 mile border </li></ul>
  6. 6. What Really Underlies Issue <ul><li>U.S. Forests </li></ul><ul><ul><li>72% owned by private sector </li></ul></ul><ul><ul><li>28% by gov’t (increasingly not available) </li></ul></ul><ul><li>Canadian Forests </li></ul><ul><ul><li>96% owned by government (mostly provinces) </li></ul></ul>
  7. 7. What Really Underlies Issue <ul><li>U.S. is the primary consumer </li></ul><ul><li>Our industry is relatively small compared to Canada but… </li></ul><ul><li>Our industry is still # 1 industry in certain states </li></ul>
  8. 8. Other Contextual Issues <ul><li>Forest products by far one of Canada’s largest industries </li></ul><ul><li>Primarily an export economy </li></ul><ul><li>Government wishes to keep people employed </li></ul>
  9. 9. The Argument <ul><li>Canada provides raw material to its industry free or at a competitive advantage </li></ul><ul><li>Is this really true? </li></ul>
  10. 10. The Facts <ul><li>The Canadian tenure system is complex </li></ul><ul><ul><li>Area tenures </li></ul></ul><ul><ul><li>Volume tenures </li></ul></ul><ul><li>Canada shifts “landownership responsibility” to producer </li></ul><ul><ul><li>Build roads to gov’t standards </li></ul></ul><ul><ul><li>Pay stumpage rates </li></ul></ul><ul><ul><li>Replant and manage forests until “free to grow” </li></ul></ul>
  11. 11. Extremely Complex Issue <ul><li>There have been impacts in the US from Canadian softwood lumber being imported but there are other factors that have impacted </li></ul><ul><li>But there are impacts that </li></ul>
  12. 12. SLA 2006 <ul><li>Booming housing market </li></ul><ul><li>Free Credit </li></ul><ul><li>18 months later </li></ul><ul><li>…demand drops! </li></ul>
  13. 13. Current Context <ul><li>Housing crash – low demand for product </li></ul><ul><li>Parity of dollar – no buffer </li></ul>
  14. 14. Current Context <ul><li>High fuel prices </li></ul><ul><li>Cheaper global products – from 0 to 3bbf of non-NA inroads (before fall of dollar) </li></ul>
  15. 15. Current Context <ul><li>Little investment in U.S. mills; higher investment in Canada (competitive advantage) </li></ul>
  16. 16. Traditional Response <ul><li>Anti-dumping/countervailing duty to “level” playing field </li></ul><ul><ul><li>Dollars often reinvested in reforestation OR rebated to producers </li></ul></ul><ul><li>Court challenges </li></ul>
  17. 17. Lumber IV Differs <ul><li>The “Byrd Amendment” </li></ul><ul><ul><li>Adopted October 2000 </li></ul></ul><ul><ul><li>Allows U.S. business to “claim” part of duties </li></ul></ul><ul><ul><li>Declared void by the World Court </li></ul></ul>
  18. 18. SLA 2006 <ul><li>Arrival of Harper Government – opening </li></ul><ul><li>Canadian producers claim # of rulings in their favor </li></ul><ul><li>The US producers remind that they have the Byrd Amendment </li></ul>
  19. 19. SLA 2006 <ul><li>Katrina suggests means to help </li></ul>
  20. 20. SLA Contents <ul><li>Of $5.5 billion in duty funds </li></ul><ul><ul><li>$4.5b rebated to Canadian producers </li></ul></ul><ul><ul><li>$1b to U.S. causes </li></ul></ul><ul><ul><ul><li>$500m to Coalition members </li></ul></ul></ul><ul><ul><ul><li>$450m meritorious initiatives </li></ul></ul></ul><ul><ul><ul><li>$50m to “binational softwood lumber council” </li></ul></ul></ul>
  21. 21. Meritorious Initiatives <ul><li>Three Causes </li></ul><ul><li>Sustainable forestry </li></ul><ul><li>Timber-reliant communities </li></ul><ul><li>Disaster relief/affordable housing </li></ul>
  22. 22. Seattle Post Intelligencer Article
  23. 23. Meritorious Initiatives <ul><li>1. Sustainable forestry </li></ul><ul><li>Timber-reliant communities </li></ul><ul><li>American Forest Foundation </li></ul><ul><ul><li>$150m; missions </li></ul></ul>
  24. 24. Meritorious Initiatives <ul><li>1. Sustainable forestry </li></ul><ul><li>Timber-reliant communities </li></ul><ul><li>US Endowment </li></ul><ul><ul><li>$200m </li></ul></ul>
  25. 25. Meritorious Initiatives <ul><li>Mission 3 - </li></ul><ul><li>Disaster relief/affordable housing </li></ul><ul><li>Habitat for Humanity </li></ul><ul><ul><li>$100m </li></ul></ul>
  26. 26. Where From Here – SLA 5?? <ul><li>U.S. Endowment effort on “check-off” – bind/grow the market </li></ul>
  27. 27. Where From Here – SLA 5?? <ul><li>Canadian producers buying U.S. facilities </li></ul>
  28. 28. Final Thoughts <ul><li>Best trading partners -- $1.4B/day </li></ul><ul><li>Even friends have differences </li></ul><ul><li>Differing tenure systems root of dispute </li></ul><ul><li>Declining markets, currency issues exacerbate problem </li></ul>
  29. 29. A Better Day Ahead? <ul><li>Mergers and acquisitions may help </li></ul><ul><li>Growing the market and viewing it differently is the key </li></ul>
  30. 30. Jim Bowyer <ul><li>Canada and the US face many of the same challenges as we seek to compete globally </li></ul><ul><li>Build coalitions, conflict less </li></ul><ul><li>What will change things? </li></ul>
  31. 31. Jack Rajala <ul><li>Structural issues </li></ul><ul><li>Stumpage costs </li></ul><ul><li>Lack of investments in mills </li></ul><ul><li>Is Canada more limited now in its exports since we have a larger supply to export to Asia and Europe? </li></ul>
  32. 32. Bernadine Joselyn <ul><li>What are we going to hear on our visit to Thunder Bay? </li></ul>
  33. 33. Stephan Bergmann <ul><li>How did the American Forest Foundation secure its $150m? </li></ul><ul><li>How does the endowment disperse funds? </li></ul>
  34. 34. Three Initiatives <ul><li>Retention and restoration of healthy working forests </li></ul><ul><li>Encouraging and creating new value streams </li></ul><ul><li>Community capacity and leadership in forest reliant communities </li></ul>
  35. 35. Bud Stone <ul><li>Vast difference in the ways that the Crown lands and our federal forests are managed </li></ul><ul><li>Difference in attitudes of the public in both countries </li></ul>
  36. 36. Mark Jacobs <ul><li>Threats from other wood imports </li></ul><ul><li>Is there any discussion between our two countries on how to deal with these threats </li></ul>
  37. 37. The Softwood Lumber Dispute: What It’s About, Why and What It’s Got to do with the U.S. Endowment A Webinar Developed for Blandin Foundation’s Seeing the Forests AND the Trees Carlton N. Owen President & CEO May 1, 2008
  38. 38. Your Homework <ul><li>Did you hear anything that surprised you? </li></ul><ul><li>Did you hear anything that changed your point of view? </li></ul><ul><li>Call our ‘talkback’ line </li></ul><ul><li>888-654-2278 </li></ul><ul><li>PIN 3344 Access Code 218 327 8764 </li></ul>