Fall out from the WFP Strike

[RPF]

Just curious what, if any, effect the WFP strike on Vancouver Island is having on planting contracts this season?

[jdtesluk]

I have only heard some general reports of a few contractors facing significant volume cuts on the coast. This may prompt some of them to look to the interior, potentially for subcontracting opportunities. However, it really comes down to the movement of workers. Last year, there was a problem keeping coastal planters on the coast long enough to finish, with many of them itching to get to creamy interior jobs. Perhaps this year, there will be a bit less pressure?

[Scooter]

I know of one NI crew that is about half size this coming spring compared to last, but that's not just for WFP work so it's hard to interpret the true effects.

With coastal earnings being mediocre in a lot of places at the same time that Interior earnings are strengthening, I think there is a bit of general malaise about the coast. Some people are just walking away from coastal work and are pretty indifferent about that choice. Having said that, others are annoyed at coastal earnings. But don't count on these brief comments to be a true barometer of what's happening on the coast, industry-wide. There are lots of exceptions re. earnings in both directions. There are still some excellent contracts out there. And there are some places where the pricing is almost criminal.

[jshirls]

What I've heard is that multiple companies have reduced their crew sizes from lack of work

[mwainwright]

Is there any logging happening on the island these days?

[jdtesluk]

Yup, just not on WFP land. I understand Mosaic (IT and Timberwest) are still going. BCTS contractors would still be operating.

[Scooter]

I thought that Mosaic was on curtailment since late November? Or maybe that was just a slowdown, not a complete cessation of harvesting?

[jdtesluk]

Oops, I think you are correct on that Scooter. They indicated a temporary closure back in November. With them it seemed there is more prospect of a reasonable timeframe for getting back to work, while WFP has labour contracts heaped on top of bad market conditions.

I think that may only leave a few small licensees and woodlots. Maybe Coulson and some First Nations owned harvesting groups. However, the vast majority of the big players have indeed laid down their saws.

[mwainwright]

So using that as an indicator, it sounds like there will be a few lean years coming up for Vancouver island planting?

[TripleS]

Apart from a few contracts, it's been terrible over there for a decade.

[Cyper]

As long as contractors continue to see Vancouver Island early spring planting as a means of populating their interior crews for May & June, prices will continue to suck particularly for south Island early work. This year Zanzibar has decided to expand and has taken lots more interior planting. As a result they need to fill those crews which of course is the big challenge for 2020. It's well documented that finding enough planters to get all of those May and June trees in the ground is the biggest challenge facing our sector. So Zanzibar has perpetuated the low pricing on the south Island by dropping prices back to the low levels that we've seen there for ages. Zanzibar with so much lucrative interior work to reap profits from, has no need to make any money from their coast contracts.
They also have no need to pay fair wages to their coastal crews because planters are lined up for the early work and many would argue that they are lucky to get a spot on those crews. Zanzibar is not alone in this as it's been going on for quite some time now with the contractors ever changing as they get burned out eventually from the grind of underpaying people while getting little respect or appreciation from very demanding coastal logging companies. Zanzibar has just enabled the continuation of this sad situation where only the logging companies are the real winners.

[jdtesluk]

Yes, Zanzibar does have more work on the island this year than in previous ones. That much is widely known. However, I do have to ask how you know about their pricing during this expansion while there is not yet a tree in the ground?
The model of business you describe is hardly their MO.
Everyone knows that the south island pricing has been weak in recent years. However, I have been told by several contractors that their prices actually went up this year. Have you heard different?

[Cyper]

Company's MOs change over time. Perhaps Zanzibar is currently looking to improve their salability by accumulating as many interior multi year contracts as possible to go with their direct award work. Perhaps their ownership, growing long in the tooth, is looking to maximize what they can get for the company as the current owners look to retire? It's hard to know what really drives a company in terms of how they set their pricing. In any case, there was no good reason that prices would have risen in the current climate and the word on the street down here is that bids did not go up.
What we do know is that the newly minted amalgam Mosaic, is focused on getting the lowest prices possible. Zanzibar happens to be lower than everyone else so they get the work. Mosaic does not release bid results but insiders are saying that pricing is stagnant.

[jdtesluk]

Back to your post Cypher, you didn't really answer my question. I was wondering how you knew they lowered their prices to a certain level when nobody has planted a tree yet. You have heard that prices are stagnant. I have heard that prices (to the planter at least) have gone up...if just a bit. Last year, I saw 17-cent trees on the south island and it was not Zanzibar. It is also worth noting that some contractors can do more with the price based on how many commuters they rely on, and how efficient their staff are.

I think when we point at one company as sinking the market, we can't merely base that on how much work they have. I also think it's rather dodgy to speculate on the owner's motivations and career trajectories as one speculates on as-yet unknown prices. Maybe we should wait and see what happens before concluding someone has led a race to the bottom.

Mosaic relies on multiple contractors every year, and offers them a certain amount at a set price - generally take it or leave it, with little room to negotiate. It is not at all like the open-market bidding we see on BCTS and so forth. Zanzibar is one of several working for them (Evergreen and Wagner among others I believe). We all know the coast is in a sorry state for planting prices. A big reason for that is overall volume, with too many parties (planters and companies included), and not enough trees to support an upwards push. However, picking just one contractor and labeling them as "enablers" seems capricious unless their behavior significantly departs from the rest.

I am interested in what people think could be done to address coastal conditions. The coast has been in pretty much the same cycle for the last 6-7 years, with everyone (rightly) unsettled by the conditions, and each year pointing their fingers at whatever company seems to have work. Volume seems unlikely to rise substantially in the near future, and the supply of veteran planters remains strong. What is the best chance of change? Cohesion among planters? Cohesion among contractors? Licensees finding religion and recognizing the value of planters? <<< okay, that last one was pure sarcasm. Seriously though, what do do?

[_I3^RELATIVISM]

the only true way to prevent all this concerns is to have more horizontally structured companies, put more responsibility in planters, because that is the only way you will incentivize the opposite. Is good to see a couple cooperatives popping up, that structure will probably solve some of this issues.