Bryan Yu, chief economist for Central 1 Credit Union, had no sooner completed a grim economic prognosis of B.C.’s ailing forest economy when, as if to punctuate the point, Domtar announced it would indefinitely idle its Howe Sound pulp mill in Port Mellon on Aug. 20.
He said it was an “unhappy coincidence” that the announced pulp mill closure just happened to be announced the day before Central 1 published its economic commentary, which describes B.C. forest economy reaching the “breaking point.”
The mill’s closure will result in about 400 workers losing their jobs. Domtar (formerly Paper Excellence) gave no date for when the mill will shut down. But if it is before the end of this year, that will mean three major pulp mills in B.C. will have shut down in B.C. in a single year.
Domtar announced in December it would shutter its Crofton mill, which actually wound down operations at the beginning of this year. And Canfor announced in July the permanent closure of its Northwood pulp mill in Prince George.
Some workers at the Port Mellon mill had only recently relocated from Crofton, according to Alton Toth, board chairman for the Sunshine Coast Regional District.
“So to come here only to then lose your job again, that’s a big deal,” he said.
The announced idling of the Howe Sound pulp mill in Port Mellon is a snapshot of what has been happening throughout B.C. over the last few years. It may have reached a point of no return.
Yu’s report warns “the sector may have hit a point that is impossible to turn around as closures are permanent and reinvestment will be a challenge.
“Forestry is unlikely to regain its mantle as an economic juggernaut for the economy despite having more than enough trees. The damage has been too great, and mill closures are likely permanent. The short-term goal should be to stem further mill closures and output losses to support local communities.”
Lack of economic fibre a familiar refrain
Domtar’s rationale for the mill’s closure is now so familiar that it is now press release boilerplate that can be used by any number of companies when announcing yet another sawmill or pulp mill closure in B.C.
Domtar cited “unprecedented and sustained poor pricing for pulp globally, and a decline in affordable domestic fibre.”
The Council of Forest Industries (COFI) estimates 21 mills, mostly sawmills, have shut down in B.C. since 2023. In almost every case, when these mill closures are announced, companies cite a lack of economic fibre as at least one of the reasons.
Sawmill closures create a death spiral for the whole industry. Pulp mills rely on chips from sawmills and low-value pulp logs from harvesting. When a pulp mill goes down, it makes it even less economically viable for loggers to harvest timber.
In a typical old growth stand, about 30 per cent of the timber is pulp logs, says log broker Barry Simpson of Oceanview Forest Products. The ability to sell those logs to pulps mills is critical to making a harvest even worthwhile. So when a pulp mill goes down, it makes it even less economic to harvest a stand of timber.
“If you don’t have someone that’s going to consume those chips and pulp logs, it’s going to impact your ability to log,” Simpson said.
“You cannot log without making pulp logs. What do you do with pulp logs, because now there’s too much fibre for the amount of pulp mills that are left?”
B.C. forest economy cut in half
The inability to harvest timber and make a return is all part of a vicious death spiral that has resulted in the actual annual harvest in B.C. falling to about 30 million cubic metres, when the theoretical annual allowable cut is actually 60 million cubic metres.
That actual annual cut is now only half what it could be because the entire forest economy in B.C. is now only half what it was just 10 years ago.
Since 2014, sawmill output declined from monthly averages of 2.5 million cubic metres to 1.2 million in 2026, “representing a more than halving of production over just over a decade,” the Central 1 Credit Union analysis notes.
So in just 10 years, B.C.’s once great forest industry has shrunk to half its former size.
The forest sector represented five per cent of GDP in B.C. ten years ago, Yu notes. Yu estimates it’s now down to 1.6 per cent.
The closure of sawmills and decline in logging has resulted in 27,300 permanent job losses between 2005 and 2025. That’s direct jobs and does not account for all the indirect jobs that are lost when a sawmill or pulp mill shuts down.
The closure of the Howe Sound pulp mill will result in 400 direct job losses.
“There’s probably another 1,000 indirect jobs—whether that’s contractors or support services things like that,” Toth said.
He estimates the Howe Sound pulp mill generates $1 billion a year in economic activity on the coast that will be lost.
Policy barriers and the path forward
B.C.’s forest sector has been in decline for two decades, but that decline has accelerated into a veritable death spiral since the NDP government came to power in 2017.
The NDP government can’t be blamed for the mountain pine beetle epidemic that wiped out roughly half of the merchantable timber in B.C.’s interior between the late 1990s and early 2000s.
Nor can it be blamed for the crippling softwood lumber duties imposed by the U.S. after the last softwood lumber agreement expired in 2015.
And it can’t be blamed for market forces, like lower demand and prices for lumber in the U.S. or pulp prices in Asia.
But it can be blamed for a series of policies, like an old growth logging moratorium, that have made it uneconomic to access inputs: i.e., timber.
“Homegrown policy issues have arguably been substantial in throttling supply, which has contributed to the downturn,” Yu writes.
I suspect the environmental wing of the NDP are perfectly happy with this. Environmentalists in B.C. would no doubt be thrilled to see B.C.’s working forests turned into parks.
At 75, Simpson has been in the logging industry as a forester and log broker for half a century, and says the current NDP government has done more to throttle the industry than any previous government.
“They’ve passed more legislation in the last 10 years than I’ve seen in 50 years of being in this business, and all of it’s designed to make us log less, or make it so expensive we can’t afford to log it all,” Simpson said.
“There’s no support in Victoria for our industry. We’ve always struggled with governments. This is the worst government I’ve seen, and I’ve seen a lot of them. They are very unsupportive.”
Death by a thousand stakeholder consultations
On August 27, the Ministry of Forests announced plans to address the fibre access crisis by “exploring” a new working forest model—something COFI has been pushing for a few years now.
“The province is taking steps to explore a Working Forest Landscape Model that builds on the cumulative work of recent forestry reviews to advance a modernized forest-management system in British Columbia,” the ministry said in a press release.
The idea is to ringfence working forests for the purpose of logging the way parks are ringfenced against logging. But isn’t that what Crown forest tenure is supposed to be already?
The ministry states it will “identify where sustainable timber production will be prioritized in order to stabilize an economic land base that contributes to an annual harvest of 45 million cubic metres and provides investor confidence in the forestry sector.”
I wouldn’t get my hopes up. This latest plan to “explore” this new working forest model “builds on the cumulative work of recent forestry reviews.” In other words, more study, more consultations, more consensus building and, in the meantime, more sawmill closures.
If the NDP government was a fire department, its response to a house fire wouldn’t be to immediately dispatch a fire truck. It would be to convene stakeholder groups and study sessions to try to come to a consensus on how best to put out the fire.
Nelson Bennett’s column appears weekly at Resource Works News. Contact him at [email protected].
Resource Works News
