DOVER-FOXCROFT, Maine — It’s tough enough for American sawmills to compete when the lumber industry is depressed by the economy; it’s still tougher when foreign competition has the competitive edge because of government subsidies.
The United States and Canada signed a Softwood Lumber Agreement in 2006 that would level the playing field for sawmills in both countries, but that playing field is hardly level because the Canadian government continues to subsidize its forest industry.
“Since we implemented this agreement in 2006, the Canadian government has continued to heavily subsidize its forestry industry, undercutting U.S. softwood lumber products and slowing production at mills around the nation,” Sen. Olympia Snowe said this week in a prepared press release.
In 2009, Snowe urged President Obama to address the agreement during his meetings with Canadian Prime Minister Stephen Harper in Ottawa. In January of this year, the U.S. Trade Department formally requested arbitration proceedings with Canada to stop British Columbia’s violations. This dispute is currently under review by the London Court of International Arbitration.
Luke Brochu, president of Pleasant River Lumber Co. in Dover-Foxcroft, was among sawmill owners who met recently with Snowe and U.S. Trade Representative Ron Kirk in Washington, D.C., to push for swifter enforcement action when violations occur.
“Our friends to the north have a way of procrastinating and making things stretch out and during that time we’re suffering,” Brochu said Wednesday, of the violations. Brochu’s family-owned and operated sawmill employs 90 people and produces 90 million board feet of lumber each year. That lumber is sold mostly on the East Coast, the megalopolis from Portland to Richmond, Va., he said.
The lumber industry is “terribly depressed” because of the lack of construction going on, Brochu said. And with what little demand for lumber exists, the Canadians have the competitive edge because they get subsidized, he said. In British Columbia, for example, wood is being purchased for 25 cents a cubic meter while some of the operations in the Northeastern states are paying more than $20 a cubic meter, he said. “It makes our life very difficult,” he said.
To survive the disparity and the poor market, Brochu said his company has been operating as lean as possible and hasn’t had to lay anyone off, but it has experienced periods of financial loss.
Brochu doesn’t see a turn-around in the market soon. “We’re not seeing any improvement in the housing sector,” he said. ”Indications are that it’s going to drag on until 2013 is what we’re starting to hear from our economists.”
What would help American sawmills like his, Brochu said, is quicker enforcement action when violations have been identified by the U.S. Trade Department. If a violation occurs, then the United States should immediately place duties on the lumber.
“In essence, we’re competing against the governments of Canada; we’re private business competing against governments of Canada,” Brochu said. “They shouldn’t be getting government subsidies and we say they are.” His business does not have the luxury of subsidies so his company pays the price for the wood and then competes on the marketplace with a foreign business that basically has received their logs free, he said.
Brochu is optimistic, however, that the government will react quicker on the violations in the future. “I’m just very thankful that our delegation, Sens. Olympia Snowe and Susan Collins and Congressman Mike Michaud, have been very supportive. We very much appreciate it,” he said.