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Canfor makes more moves
The Canadian Press - Jan 26, 2023 - BC Biz

Photo: The Canadian Press

VANCOUVER — Canfor Corporation says as many as 157 employees face layoffs in one northern B.C. town, but the company says it’s too early to estimate job losses in a second community as the forest products firm restructures its B.C. operations.

Canfor announced Wednesday it is permanently closing its sawmill and pellet plant in Chetwynd, west of Dawson Creek, and shuttering its sawmill in the Bulkley Valley town of Houston for an unspecified period while it builds a new facility there.

The Chetwynd closure is expected in April or May, and the announcement came just two days after the mill reopened following a holiday curtailment, but a company statement says Canfor is “committed to supporting displaced employees,” and where possible, it says they will top the list for hiring at other mills.

The statement says “it is too early in the redevelopment planning process to fully understand” how many of the 333 employees in Houston could be laid off as Canfor designs what it describes as a “globally competitive manufacturing facility” producing “high-value products.”

Canfor president Don Kayne has said the company is making “difficult but necessary decisions to create a more sustainable operating footprint” in B.C., and an email sent late Wednesday says the company will “explore creative options” to retain as many employees as possible.

Opposition Liberal forestry critic Mike Bernier, whose riding encompasses Chetwynd, said in a social media post that he is “devastated” by the closure of the Chetwynd mill, which comes about a week after Canfor confirmed it would close the pulp line at its Prince George operation, costing 300 jobs by the end of this year.

A lack of available fibre for the mills is one reason for the restructuring and the company estimates the Chetwynd and Houston shutdowns will remove approximately 750 million board feet of annual production capacity, or the equivalent of enough lumber to build nearly 46,000 houses.

“Our goal is to match our mill capacity with the economically available fibre for harvest,” Kayne said in his statement released Wednesday. “This is what will ultimately create greater stability for our employees and communities.”

Forests Minister Bruce Ralston issued a statement responding to the Canfor restructuring and saying the B.C. government’s immediate priority is to assist affected workers and provide community support teams.

The statement says the government welcomes Canfor’s decision to build a new mill in Houston, producing higher-value products from a wood supply that has declined by more than 25% since 2008, in part due to wildfires and the end of the harvest of beetle-killed timber.

New forestry program launches
Okanagan Edge Staff - Jan 24, 2023 - BC Biz

Photo: Western Forest Products

The provincial government has pledged a certain amount of fibre supply to small and medium-sized manufacturers that create value-added wood products, all in an effort to accelerate the growth of the industry and create jobs.

The BC Timber Sales Value-Added Manufacturing Program will be restricted to facilities that have minimal or no forestry tenure and will require that facilities be accredited as a value-added, secondary manufacturer. The program will dedicate 10% of its available timber supply to the program for licensees to bid on, and more volume is expected in the future.

“We are encouraged to see government recognize that a dedicated fibre allocation for the value-added sector is required,” Interior Lumber Manufacturers’ Association president Paul Rasmussen said in a press release. “We will continue to work closely with the government to ensure the required volume gets delivered to value-added facilities.”

Value-added products include mass timber, plywood, veneer, panelling and flooring, and they are in demand as alternatives to carbon-intensive construction products like cement.

“Our government’s vision is to build a stronger, more resilient forestry industry through more value-added manufacturing,” Minister of Forests Bruce Ralston said. “British Columbians expect that we get the most value from our forests and create more jobs for every tree harvested.

“That’s why we are taking action to ensure innovative, secondary manufacturers have access to the timber they need to invest and grow their operations.”

New deal for support workers
The Canadian Press - Jan 16, 2023 - BC Biz

Photo: Contributed

VICTORIA — Thousands of health-care support workers in B.C. have a tentative contract agreement after a year of talks.

The BC General Employees’ Union and Health Employers Association announced the agreement Monday, saying it was reached early Sunday morning.

The contract covers 21,700 people who work in private homes, group homes, residential living centres, child development, mental-health centres and other programs around B.C.

The union says in a statement the deal represents substantial gains that workers had identified, such as significant wage increases, protecting workers’ benefits and greater control over working conditions.

Full details of the contract won’t be released until after the ratification vote, but the union says it’s a three-year term with general wage increases in each year, and contains a clause for low-wage redress for some workers.

The BCGEU represents about 13,000 of the workers under the contract, while representatives of other unions, including Hospital Employees, CUPE, Health Sciences Association and BC Nurses Union, were also at the negotiation table.

MLA: Time to cut stumpage fees
Glacier Media - Jan 10, 2023 - BC Biz

More workers in the B.C. lumber industry have been told to stay home now that Canfor has extended sawmill and pulp mill curtailments into late January.

Citing weak market conditions and the lack of economically viable fibre, last week the lumber giant announced two-week extensions of its curtailments at Prince George Sawmill and Plateau Sawmill in Vanderhoof, which will keep both mills closed until Jan. 30.

That’s in addition to a three-week curtailment at the Canfor Polar sawmill near Bear Lake and a four-week temporary shutdown at Intercontinental Pulp Mill in Prince George, which took effect on Dec. 19.

Last May, Canfor’s 94-employee Isle Pierre sawmill west of Prince George closed permanently.

The latest round of closures is only the start of challenges local mills are likely to encounter in the coming months while they grapple with reduced supplies of beetle-killed timber. Canfor’s December-January curtailments will reduce the lumber market by 171 million board feet.

Nechako Lakes MLA John Rustad said mills in north central B.C. region are going to require nine-figure investments to modernize and reconfigure their operations to make them more profitable in a province that’s recognized as the highest-cost producer in North America.

“For example, the mill in Smithers, the mill in Houston, the mill in Vanderhoof, Dunkley’s mill (near Hixon) and so many others all need to be rebuilt because they were all built for the diet of pine beetle wood,” said Rustad. “They all need to be retooled and rebuilt for the fibre that’s coming in to be able to be as efficient as possible.

“No board in their right mind is going to say, ‘We’re going to spend $100 million or $150 million rebuilding a mill when they don’t know what their fibre is going to look like and they don’t know what the cost structure will look like.’ There’s so much change coming from government. How do you invest.”

Rustad says the answer to create more certainty in the market might be for B.C. to scrap its stumpage fee system while it looks for ways reduce the cost of harvesting to timber companies. Under the current system, forestry companies bid for contracts based on the market value for a stand of trees and pay for the right to harvest those trees on Crown land. Stumpage partially funds the province’s health care and education programs, and in some cases is shared with First Nations communities under forest consultation and revenue agreements.

“We should actually get rid of our stumpage system,” Rustad said. “It is useless. The market price that was put in place back when we were in government made sense at the time, but it no longer makes sense. We should actually go to a tax on the end products, where the more you can do with a log, the less tax you pay. So it becomes an incentive for creating more value-added and creating more higher-value products.”

Rustad, a five-term MLA who now sit as an independent, worked for 20 years in the forest industry before he was first elected in 2005. As part of the Liberal government he served as Minister of Aboriginal Relations and Reconciliation and was B.C’s Minister of Forestry, Lands and Natural Resource Operations.

In April, the province boosted its stumpage fees and timber profits revenue sharing agreements with First Nations to $131 million, more than double the $59 million they received in 2021.

“Today, with the changes the government has put in, they’re putting 20 per cent of the volume into First Nations’ hands and that’s fine. You’ve got address rights and title and find some way to do that,” Rustad said.

“The problem is now the companies are paying two landlords because the First Nations still have to submit stumpage to the province, but they aren’t going to want to do that for free, so they’ll sell for a profit for them as well. So now the companies are having to pay the province and the First Nations for the same volume, and that doesn’t make any sense.”

As of Dec. 16, Madison’s Softwood Lumber Market benchmark price for 1,000 board feet of Western-produced spruce-pine-fir was $390. Industry analysts estimate the current break-even point for producers is $500.

Because production costs are high at local mills, Rustad said whenever the market is weak enough to necessitate temporary closures, local mills will be among the first targeted for closure or curtailments.

“We’re seeing that play out now with Canfor,” Rustad said. “It’s a real problem in British Columbia, and people don’t realize just how challenging our forest sector is right now to operate. I’m a firm believer that there’s a good future for our forest sector, but there’s big changes that are needed in order to get it back to a competitive edge and driving new investments.

“If you want a healthy forest sector in British Columbia—it’s the backbone of so many communities and has been the backbone of the province for so many decades—you need to recognize the need to put in some real change that is going to drive investment and not the approach that’s currently being taken.”

Rustad plans to be in Vancouver next week for the annual general meeting of the Truck Loggers Association and will be unable to attend the B.C. Natural Resources Forum next week in Prince George. He said for the past year the trucking industry has been grappling with a realization that the value of logging truck assets has plummeted due to uncertainty in the forestry sector and dim prospects for a quick turnaround in that industry.

“Their perspective, when they were meeting with the companies, was they were trying to figure out if they could put any assets on the books, because they had already written down all of B.C.’s assets at zero,” Rustad said. “They were unsaleable and worthless. Obviously there’s hundreds of millions of dollars worth of equipment, but if you can’t sell something, what’s it worth?

“They were trying to figure out how to bring it back on the books in terms of value and how they recommend people investing in forest companies.”

Investor money tough to find
Glacier Media - Dec 20, 2022 - BC Biz

Photo: Amy Hirschi, Unsplash

Michael Anderson and his team spent much of 2022 on the hunt for what he describes as “Goldilocks partners” for his Vancouver tech firm Expeto Wireless Inc.

The company specializes in simplifying enterprise networking over private and public mobile networks. And in a bid to boost growth, Anderson was after new investors to serve as those coveted Goldilocks partners.

But new investors in the venture capital space have been proving more challenging to come by as central banks across the globe hike rates to curb inflation. All that cheap capital flowing in abundance at the outset of the pandemic has since given way to what experts at business services firm KPMG Canada are calling a “return to normal.”

“Despite, let’s say, the economic headwinds, there are a tremendous amount of very wonderful venture firms out there waiting to find the right deals,” Anderson told Glacier Media following this week’s announcement Expeto has raised US$12 million in a Series B funding round.

While existing investors like Lavrock Ventures, Mistral Venture Partners and Vancouver-based Evok Innovations were good to participate in the latest funding round, Expeto still needed to uncover new investors amid a rapidly cooling climate for venture capital.

“My peers would say in the industry, you have to go out there and talk to a lot of folks to really find that match, to find that firm that has—beyond just capital—but really the expertise and experience and really a fundamental thesis about the area that a company like Expeto is focused on,” Anderson said.

Expeto has developed a platform that helps businesses better manage wireless networks for their operations. For example, if a device like a drone or even a robot is equipped with the appropriate SIM card, Expeto’s platform helps clients ensure private cellular coverage on a worksite such as a mine remains reliable and those devices remain connected to the network.

In addition to the existing investors, the latest funding round eventually drew new investors Sorenson Capital, 5G Open Innovation Lab and Samsung Next. The company’s total financing now rings in at $20 million.

But such fundraising successes have been growing scarcer in recent months.

Venture capital funding in Canada dropped to US$1.4 billion in the third quarter of 2022—down significantly from the US$2.5 billion raised during the same period one year ago, according to an October report from KPMG.

“This is the lowest quarter in nearly two years as we continue to see quarter-over-quarter declines in 2022,” KPMG Canada said in a note. “What we are seeing now is a return to normal … Investors are more cautious as they brace for a possible recession amid significant market volatility and economic uncertainty. That’s led them to be highly selective.”

For Brent Holliday, the current state of raising venture seemed inevitable by the start of the summer.

“There was so much capital that shifted towards tech,” the CEO of Vancouver-based Garibaldi Capital Advisors Ltd., which provides mergers and acquisitions, and capital-raising advisory services to tech companies, told Glacier Media earlier this month. “You could see a supply-side bubble coming a mile away. There was just too much money.”

But a number of B.C. tech firms are proving resilient amid this return to normal levels of venture capital investment.

Both Elastic Path Software Inc. and MineSense Technologies Ltd. revealed last week the close of significant funding rounds that drew $30 million and US$42 million, respectively.

With the close of Elastic Path’s latest round, the Vancouver-based software firm has raised a total of $90 million this year.

“Right now, there’s still plenty of investment available for companies with strong fundamentals that are pursuing very exciting markets,” said Elastic Path CEO Jamus Driscoll, whose company specializes in back-end software for e-commerce platforms.

The company will be using the fresh capital to improve its “composable” commerce offerings to brands. Composable commerce is a relatively new concept, referring to efforts to make it easier for brands to assemble or “compose” different e-commerce functions from different vendors.

Driscoll likened typical e-commerce offerings to a die-cast toy whose parts can’t be moved. Composable commerce, he said, is more akin to toy Lego pieces that can be easily moved around and modified to create a desired shape.

“We may find ourselves in a somewhat fortunate position but we’ve got very strong fundamentals. We’re at the forefront of doing something that we think is going to be a really fundamental shift in a very large market over the next couple of years. And there’s still appetite for growth in that market and still appetite for investment,” he said.

“If you’re in that position, then there’s still capital to be raised.”

RBC: Buyers’ market soon in BC
The Canadian Press - Dec 16, 2022 - BC Biz

Photo: The Canadian Press

TORONTO — High interest rates will continue to hold back homebuyers into the new year, except in Ontario and B.C., a new report by RBC says.

The report released Thursday said those purchasing real estate in Ontario and B.C. in 2023 will hold a stronger hand as conditions in these provinces continue to favour buyers as opposed to sellers.

In the report, Robert Hogue, assistant chief economist for RBC, said nationwide real estate conditions look reasonably stable with sales-to-new listings in “balanced territory.”

“The number of homes changing hands is running below pre-pandemic levels in most regions of the country,” Hogue said.

He noted that this is especially the case across many markets in Ontario and B.C., which are beginning to operate outside of the balanced territory.

Sales in Vancouver, Victoria, the Fraser Valley, Toronto, Ottawa, Hamilton, London and Niagara are now seeing a ratio of sales to listings close to 0.40, which Hogue calls the threshold where buyers have more “sway on prices.”

Property values also fell in Toronto and Vancouver, as Hogue said the trend towards reversing some of the outsized price gains will likely continue in the short term.

Sales in many of these markets have slumped to their lowest levels in a decade, aside from during the pandemic, Hogue said.

He said that the price correction is largely a result of overshooting earlier in the pandemic, where local buyers were met with a sharp decline in affordable property.

Other markets in Quebec and Atlantic Canada are also currently operating at historically low levels.

On the other hand, the report said housing markets in the Prairies remain fairly robust with resales in Calgary, Edmonton, Saskatoon and Regina remaining well above pre-pandemic levels.

Home sales and prices have fallen this year as rising interest rates have increased the cost of borrowing for Canadians.

The country’s big banks have raised their interest rates as the Bank of Canada has raised its key interest rate seven times since March in an effort to bring inflation under control.

CRTC nixes processing fee
The Canadian Press - Dec 08, 2022 - BC Biz

Photo: The Canadian Press

OTTAWA — Canada’s telecommunications regulator refused a request from Telus Corp. to charge some customers a credit card processing fee.

While Telus didn’t need the CRTC’s approval to add the surcharge, the regulator said Thursday that it was concerned about its effects on affordability, consumer interest and “the most vulnerable consumers, who rely on credit cards to pay their everyday bills.”

“The CRTC is sending a clear message to Telus and other telecommunications service providers that are thinking of imposing such a fee on their customers,” the regulator said in a news release.

“Should the practice continue, the CRTC will explore all available regulatory options.”

Telus did not respond to a request for comment on the refusal.

The Vancouver-based company first broached the fee with the CRTC over the summer, saying it could apply to credit card payments made in Alberta and B.C. for regulated home telephone services.

Telus began to charge a 1.5% fee to clients paying by credit card in October in areas where services are not regulated by the CRTC, including its wireless and internet customers outside of Quebec.

Telus was free to add the surcharge as of Oct. 6 after a class-action lawsuit from retailers against Visa, MasterCard and banks which issue cards was settled.

The settlement over fees charged and restrictions set by banks and credit card companies was reached in 2017 but took time to wind through provincial approvals.

The settlement included $188 million in payouts from banks and credit cards, of which about $131 million is available to be paid out to Canadian merchants, as well as the removal of the surcharge restriction from Visa and Mastercard.

The removal of the restriction allows merchants to potentially recoup processing fees for credit cards that range from as low as around 1% for basic cards to nearly three per cent for cards that offer rewards such as cash back or loyalty points.

Prior to the settlement, businesses accepting credit cards had to absorb the costs associated with such payments.

The CRTC’s ability to guide practices around surcharges like the one Telus wanted to charge is limited because the organization only regulates services in certain markets where there is not enough competition to protect the interests of consumers.

Telephone services in rural and remote regions and internet services operating through terrestrial facilities in the Far North are among the most common the CRTC regulates.

The CRTC does not regulate other services, including wireless and internet services, meaning they do not need the CRTC’s approval to modify their rates, terms and conditions.

BC teachers get big bump
The Canadian Press - Oct 31, 2022 - BC Biz

Photo: The Canadian Press

VANCOUVER — A tentative contract has been reached for British Columbia’s 49,000 public school teachers in a deal the union says would take them from near the bottom to the “top tier” of pay in Canada.

In a statement sent to members, BC Teachers’ Federation president Clint Johnston said the agreement was reached after more than 50 days of bargaining and the union executive is recommending that its members ratify the contract.

Johnston said he’s proud that the team was able to secure a tentative agreement that has significant salary and other gains for teachers.

“If ratified, this agreement will take us from near the lowest-paid teachers in Canada into the top tier. I am deeply grateful to the members of the team who worked so hard to get us to this point,” Johnston said.

The statement sent Sunday said the annual pay for teachers at the top of the salary grid will be $10,000 to $13,500 more per year than it is now by the third year.

“For the first time ever, experienced B.C. teachers will cross the $100,000-per-year threshold putting you much closer to, or even above, teachers in places like Calgary and Toronto,” he said.

By the end of the three-year term, Johnston said, new members’ annual salary will be approximately $6,000 to $8,500 per year higher than it is now, depending on their grid placement and category.

Other improvements in the deal include 10 additional minutes of preparation time for elementary teachers, improvements to heath and maternity benefits and a provincial minimum standard for professional development funding, the statement said.

Catching up to Canada’s best-paid teachers has been a priority for the federation for years, and the gains, if ratified, will help address recruitment and retention challenges, the statement said.

The BC Public School Employers Association, which negotiates on behalf of the provincial government, said the agreement was reached on Friday.

The association said the agreement follows the provincial shared recovery mandate, which sets out specific wage increases, including inflation protection, while ensuring the government has the resources to protect services and support economic recovery.

The mandate promises a flat salary increase of 25 cents per hour plus 3.24 per cent in the first year, a 5.5 per cent salary bump in year two and a two per cent increase in year three. The final two years also include potential cost-of-living adjustments.

The union said there were challenges and frustrations of negotiating teacher workloads, but the bargaining team feels the agreement is the best it could get.

“Personally, I do not believe that any form of job action would result in any significant changes to workload at this time,” Johnston said in the statement.

A ratification vote will be held by each union local between Nov. 16 and 18.

BC trying to ease crunch
The Canadian Press - Sep 07, 2022 - BC Biz

Photo: The Canadian Press

LANGFORD — The squeeze of global inflation has prompted the B.C. government to spend $600 million to boost a tax credit and increase family benefits for low- and moderate-income residents.

Premier John Horgan announced the province is also capping rent increases at 2% for 2023 instead of the rate of inflation.

Horgan says inflation is driving up the costs of groceries, gas and other goods and services, and the next support measures will offer families a cushion during challenging times.

About 85% of people in B.C. are expected to benefit from the increase in the Climate Action Tax Credit payment, estimated to be worth up to $1,500 a year for a family of four.

The B.C. Family Benefit will also rise by as much as $58.33 a month for each child under 18 years old.

No one needs to apply for the enhanced credit and family benefit because the temporary increases will be automatically received if a person’s income tax filing is up-to-date.

The government said last month it was preparing to introduce a series cost-of-living initiatives, starting with a $60-million education affordability fund to ease the burden of back-to-school costs.

That fund will expand school meal programs and help families pay for supplies and field trips in an effort to take the sting out of school costs.

Finance Minister Selina Robinson foreshadowed the government’s cost relief plans last month when she delivered last year’s final budget numbers, which included a surplus of $1.3 billion after earlier projections of a deficit nearing $10 billion.

Lululemon posts solid quarter
The Canadian Press - Sep 01, 2022 - BC Biz

Photo: The Canadian Press

VANCOUVER — Lululemon Athletica Inc. says revenue climbed 29% in the second quarter compared with the same period last year as it saw sales climb across its operations including higher gains in both online and international segments.

The Vancouver-based athletic clothing company, which reports in U.S. dollars, said Thursday it had revenue of US$1.9 billion for the quarter ending July 31, up from US$1.45 billion last year, as sales increased 28% in North America and 35% internationally.

Sales climbed as the company saw higher traffic both in stores and online, and it was better positioned for inventory than last year, said company chief executive Calvin McDonald on an analyst earnings call.

“Much of last year we were under-inventoried and not able to fully maximize our business. This year, we are in a much better position.”

The sales translated into net income of US$289.5 million, or US$2.26 per diluted share, up from US$208.1 million or US$1.59 per share for the same quarter last year.

Lululemon was expected to earn US$1.87 per share on US$1.77 billion of revenue, according to financial data firm Refinitiv.

Total comparable sales were up 23%, including 16% for in-store and 30% for direct-to-consumer net revenue. Traffic to stores were up over 30%, and to its online store up over 40%, said McDonald.

“Importantly, we are not creating this traffic through markdowns or price promotions. Lululemon remains predominantly a full-price business,” he said.

Lululemon has set a goal of doubling 2021’s net revenue by 2026, including a quadrupling of international net revenue.

In that aim the company is especially focused on China, where it recently launched a digital flagship store on online retail giant JD.com and in the quarter added eight stores in China.

Lululemon will also shortly be opening stores in Spain, it’s first new market in the region in three years.

Overall the company opened 21 net new company-operated stores during the second quarter, ending July with 600 stores.

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