News

Ontario pledges aid to forestry sector PDF

The Toronto Star
Thu 18 Aug 2005
Page: D9
Section: Business
Byline: Richard Brennan
Source: Toronto Star

The Ontario government has promised to have a financial incentive package ready for the beleaguered forest industry in northern Ontario by the end of next month.

While there are no specifics, Natural Resources Minister David Ramsay said it would be not unlike the fund created for the automotive industry.

"It will be a total package that will basically address the competitiveness issue for this industry," said Ramsay, who along with Premier Dalton McGuinty and Northern Development Minister Rick Bartolucci met with northern Ontario mayors.

McGuinty said the auto package has been successful, "so we are looking at some similar kind of support that would act not as a bail-out but rather as an incentive for new investment."

Roger Anderson, President of the Association of Municipalities of Ontario, told the annual conference "urgent action is needed to assist Kenora and all our northern communities who are being devastated by the decline in an industry that employs 84,000 Ontarians directly and 275,000 Ontarians indirectly."

A forest industry report to the provincial government in June described the situation as a "crisis" and identified a dozen mills in danger of closing. In fact, since then Abitibi-Consolidated announced it is closing its paper mill in Kenora.

The industry is facing dramatically higher costs, particularly for electricity, which has climbed by 30 per cent in the last three years. Electricity accounts for up to one-third of their cost of production.

The situation has been made worse by the rising Canadian dollar, which hurts exports, and by the softwood lumber duties imposed on Canadian products by the United States.

Ramsay refused to put a dollar amount on the provincial package for an industry that has annual sales of $19 billion.

The forest industry is making four major demands:

Reverse the downloading of lumber roads. This would cost the government about $35 million a year.

Provide the industry with a fuel tax credit to offset the cost of hauling wood to the mills. Estimated annual cost $15 million.

Provide the industry with some sort of break on electricity prices.

The industry is also calling for the province to establish a "prosperity fund" of about $500 million, similar to the amount set aside for the auto industry, to help modernize its mills.

Michael Power, Mayor of Greenstone, which includes places such as Geraldton, said he was pleased to get the government's commitment for a deal by the end of September.

"We were successful in getting the coverage it needed and getting it onto the government's agenda," Power said.

"There will be a total package by the end of September, similar to the auto industry."

Illustration:
Tom Thomson Toronto Star file photo Abitibi Consolidated's Kenora mill, to be shut down in October, is just one example of northern Ontario's devastated forestry industry. Ontario Premier Dalton McGuinty and ministers David Ramsay and Rick Bartolucci. Tom Thomson Toronto Star file photo Abitibi Consolidated's Kenora mill, to be shut down in October, is just one example of northern Ontario's devastated forestry industry. Ontario Premier Dalton McGuinty and Ministers David Ramsay and Rick Bartolucci.