Tuesday, September 24, 2019

State Of The Industry (2019): BC Tree Planting

A year ago, I wrote a post about the state of the BC reforestation industry.  It gained a lot more traction than I expected (7000 views in 48 hours) and spurred a lot of discussion between foresters and our industry.  Here's a link to that post if you'd like to re-read it:


To recap, I mentioned that tree planters were receiving piece-rate compensation that was the worst in more than a decade, and that, with inflation, prices should be about twenty percent higher than in 2006-2007.  I suggested that the industry was at a cross-roads.  With the demand for planters about to suddenly exceed supply (due partly to significant wildfire seasons in 2017 and 2018), I also suggested that if prices didn't increase significantly for 2019, the industry would have major problems meeting obligations.  Let's take a look at where things stand just twelve months later.

What Happened in 2019?

As a whole, industry prices rose in 2019.  The majority of planters would agree to that statement.  Of course, there is no way of determining exactly how much, because even planters themselves rarely know what their exact average tree price was for the season (except those very few that track their production using Excel spreadsheets, or using an app like Numbies).  Is it fair to say that planter prices probably rose about 12-15% industry-wide compared to 2018?  I'm not sure, but I think that this estimate is in the ball park so I'm going to go with it.

Is there a way of determining how much prices rose at the contractor level?  Well, not exactly, but let's take a look at public data.  The following numbers are based upon publicly-tendered work by government offices such as BC Timber Sales and the BC Ministry of Forests:

2018 overall average bid price:  53.7 cents/tree
2017 overall average bid price:  38.9 cents/tree
  Year-to-Year Increase of:          38%

These numbers were based upon known public tenders totalling approximately 59.72 million trees in BC.  Will those bid prices continue to rise this fall, or will they flat-line?

Unfortunately, public data is only the tip of the iceberg when it comes to an overall understanding of tree planting pricing.  BC was expected to plant approximately 270 million trees in 2019.  Alberta was expected to plant perhaps another 80 million.  These numbers were estimates, but were good enough for the point I’m about to make.  Considering that we only had public data on approximately 60 million of 350 million trees total, it’s obvious that public bid pricing represented only approximately twenty percent of the total market.

As there is no reliable source of data for private work we have to rely on anecdotal accounts.  Based on what I heard in the past twelve months, there was a wide range of reaction to the increases in public pricing.  Some licensees were receptive and sympathetic to the needs of industry.  Others were less forthcoming in approving rate increases.  Keep this dichotomy in mind, because it will become relevant in the near future.  It’s not hard to figure out who will be at the highest risk for non-completion of contracts.  We know that the labour force will follow the money.  Contractors who plant for licensees that aren't paying market prices will find it challenging to attract and retain sufficient workers.

Before we talk more specifically about the planting industry, let's look at a macro view of BC's forest sector as a whole (and current problems with fiber pricing).

BC's Forest Sector

A lot of tree planters don't pay much attention to what's happening in the forestry sector in general, which is unfortunate.  I get it.  For many, tree planting is just a short-term summer job.

Right now, BC's logging industry is not particularly healthy. Here are a couple of links:



Pay close attention especially to that second article.  It has an interactive map of BC that shows the status of a number of mills that are currently operating with reduced shifts, or are in temporary shutdown or bankruptcy.

Look at the 3-year chart lumber pricing, to get a better understanding of the present situation:

Some planters have wondered if the mill closures will have a significant impact upon tree planting in 2020.  The answer is:  Yes and No.

In theory, silviculture obligations are exactly that:  obligations.  Even if a mill is not harvesting wood, they are still obligated under BC laws to reforest the lands that they harvested in the past.  So in that sense, trees still need to be planted.

Of course, there will be some exceptions.  In some cases, mills are going bankrupt, and simply don't have funds to plant trees.  In other cases, silviculture obligations can be legally deferred for a short window of a few years (although it becomes costly to catch up).  Importantly, if a mill isn't harvesting wood right now, that means that they aren't creating new blocks for us to plant two years from now.

So yes, this is definitely going to have some short-term and medium-term impact on the planting industry.  Even this past July (a few months ago), one planting contractor suddenly had more than 4 million trees pulled away from them a few days before their contract was supposed to start.  That mill could only move forward with a fraction of their planned summer planting program due to their financial situation (the rest of the trees were either sold or put into cold storage until 2020).

On a positive note, the very large corporations (Canfor, West Fraser, Tolko) are in the industry for the long-haul, and know that they have to sustain some operations despite the low lumber prices.  And of course, the government branches (MOFLNRO, BCTS, and projects funded by FCI and FFT) are going to, for the most part, eat up as many trees as possible, since the west coast forest nursery industry is currently at capacity. 

Speaking of Canfor, their September contractors' newsletter points out that BC is the only province which is currently suffering from the lumber pricing situation.  The newsletter looked at shipments to the United States in the first half of 2019, and noted that production curtailments in BC were mostly offset by gains in other provinces.  While BC lost 304 million board feet (MMfbm) or a drop of 9%, three other provinces did relatively well:  Alberta increased by 49 MMbfm (up 6%), Ontario increased by 61 MMbfm (up 9%), and Quebec increased by 78 MMfbm (up 8%).  So in other words, although the mills in BC are in a bad state, the situation is not mirrored across the rest of Canada.

Annual Volume Predictions for British Columbia

Again, the WFCA comes to the rescue (for my research and rhetoric) with some annual volume predictions in their September 20th issue of the Rumour Mill RoundUp.  To be more specific, check out this graphic:

We can see that there are opportunities and challenges for BC's planting industry.

The opportunity, obviously, is that there is a lot of work coming down the pipeline.  Of course, if company's aren't able to attract a workforce for 2020, this will be irrelevant, and we'll have another "trees in the dump" story at the end of the season.

Aside from the obvious challenge of trying to plant forty million extra trees, there's a less obvious challenge:  Why are all of the additional trees being scheduled for the Spring plant?  Perhaps BC's foresters should have a "Timing Summit" to coordinate their planning, because this is not the best way to attack a production bulge.

To give credit to MOFLNRO, they have already extended the spring planting window by ten days.  A number of contracts will have June 30th as the required completion date (rather than June 21st).  That's a great step in the right direction.

However, the Spring Bulge is still a problem.  If you look at all the major players in the industry, they are almost without exception involved in summer planting too.  A lot of this planting typically starts almost as soon as the "Spring" (over-wintered) trees are complete.  A few companies commonly have a short "break week" at the end of June, or a gap between the end of over-wintered stock and the start of hot-lifted summer trees.  MOFLNRO was smart to recognize this and be flexible with their deadlines, as this definitely takes some pressure off some contracts.  However, for the industry as a whole, pushing spring deadlines back by a week and a half doesn't address the need to plant 40 million extra trees.  It's like squeezing extra groceries into a shopping bag.  The bag can only hold so much before it splits.

For 2021 and beyond it would be helpful for foresters to consider moving some of their trees from spring to summer.  After all, they might get slightly better prices, because there are still some contractors out there who are full all spring, but hungry for [additional] summer work for their planters.

Also, although this may sound crazy, why aren't BC foresters planting a lot more trees in the Fall?  In the Maritimes, a huge amount of planting is done in September and October.  When I spoke to one nursery representative there a few weeks ago, he mentioned that mortality in August and November was significant.  The mortality was high in August due to heat.  In November the roots didn't have time to prepare for winter.  However, he said that the survival rates were excellent in September and October.  Quebec also has a significant Fall planting program.  Maybe some parts of BC should consider trying the same approach.

A fall plant would serve several purposes.  For one, it would take away trees from the spring bulge.  Also, it would mean that companies doing the fall contracts would be more likely to have longer-term planters doing the work, since many of the seasonal summer planters would be in school.  It's always beneficial to have a more-experienced workforce planting your trees.  I know that many of my own experienced planters who are no longer in university would be quite interested in fall planting work.  In the long term, if we could start offering longer seasons (say 100 days per year instead of 70), the workforce would be more likely to stick with planting for additional years.

If ten million trees were moved from spring scheduling to fall planting, it would solve a LOT of problems.  Those ten million trees would reduce the required size of BC's annual workforce by perhaps as many as 300 planters.  If you're wondering where I got that number, 4% less trees in the spring probably means 6% fewer planters, because inexperienced candidates would be the ones to be sacrificed (on an estimated work force size of about five thousand planters).  I think that both foresters and company owners would agree that reducing the annual hiring needs by 300 rookies would be very beneficial.  A moderate fall planting program in the appropriate areas of the province would help us build a better workforce, resulting in less incidents and accidents by new and young workers, and reduced seedling mortality thanks to a more experienced workforce.

Problems Specific to the Tree Planting Industry

On the one hand contractors are dealing with problems that include high fuel prices, high WorkSafe contribution rates, high health taxes, significant jumps in minimum wage, and general inflation on a wide range of goods and services.  All the while, they are struggling with the best ways to attract and retain a competent workforce.

Planters, on the other hand, have been dealing with stagnant wages for almost a decade (if you ignore 2019 wages).  While that kind of financial oppression might be palatable to some individuals for a few years, there comes a time when too much pressure has built up.

Tree planting, whether as a summer job or as a professional career, is simply not attractive to today’s job seekers.  Although the 2019 season was better than most in the past, many Canadians have heard through friends about the physical and emotional hardships associated with planting.  They’ve also heard horror stories from hundreds or even thousands of former planters who bring up issues with companies that don’t pay properly, that cut corners on health and safety, and that generally give the impression of not caring about their employees.  Decent-paying jobs are widely available in the city.  Annual take-home pay for tree planting is less than stellar.  Is there any wonder that the number of applicants has been dropping industry-wide?

Let’s look at contractors and planters separately …

Planting Contractors

Some people assume that the planting companies (contractors) are the ones who drive the industry and who dictate what happens.  In some ways that’s a fa├žade.  Contractors are subject to the rules and regulations of government and licensees.  They’re subject to the whims and vagaries of their workforces.  This, coupled with the slowly mounting financial pressures from 2008 onward, has created a situation where some major contractors had their backs up against the wall.  Frankly, I’m quite surprised that no planting contractors went out of business in 2017 or 2018.

For some time, say from around 2007 to 2017, the general opinion within the industry was that it might be healthy to all other companies if one major company became insolvent.  During that period, an insolvency would arguably eliminate some bid price competition, and possibly allow all other companies to become slightly healthier as the weak were weeded out.  Today's industry has a very different mindset.  Company owners know that there is enough work in the next few years to keep everyone busy.  Furthermore, some believe that the insolvency of any one significant company might actually be counterproductive to everyone else.  Contractors want to reassure their clients that the work can get done as long as prices are fair.  If industry perceives that this is no longer possible and that alternate solutions must be sought out, external factors might come into play that aren’t favorable to the long-term health of the industry.  It is better for companies to act for the collective good.  A rising tide floats all boats.


Today’s workforce is generally younger and less experienced than it has been in some time.  This is a trend that has been coalescing slowly over the past several years.  As the industry becomes less attractive to participants they move on to other forms of employment.  On the coast, planters with more than ten years of experience become less common with every passing year.  In the Interior, they're as rare as rocking horse manure.  This especially affects contractors in more technical regions, who must learn to deal with a less experienced workforce.

On the other hand, social media means that today’s planters are more connected and informed than ever before.  And it’s not just due to sites like Replant.ca and Facebook groups – these are the tip of the iceberg.  Planters are connecting and sharing information on a dozen other types of social media too.  This erodes loyalty to specific companies and creates a situation where the workforce is more transient, always searching for greener pastures.

Improving Recruitment & Retention

The 2020 season is going to be record-breaking.  How can we ensure that the industry can attract sufficient labour to satisfy demand?  Recruitment of new employees is important, but holding onto experienced employees is critical.

Let’s look at ways that contractors can improve retention first.  I’ll address three separate ideas:

1.      Increase Prices – Unquestionably, this will help.  Whether current prices are too high, just right, or not high enough is the subject that always causes a great deal of controversy any time a room full of silviculture foresters get together.  Let me put it in terms that are none too gentle:  It doesn’t matter what foresters think.  It matters what planters think.  This is what will either motivate them to keep planting, or encourage them to walk away from the industry.

2.      Camp Costs – For a lot of planters, camp costs are an oft-mentioned issue when it comes to dissatisfaction.  However, there is a bit of a divide on this issue, between planters who understand the economic implications of the camp cost system vs those who don’t.  To be honest, it would be easy for a company to eliminate camp costs.  They would only need to lower tree prices slightly to compensate and keep their income statements balanced.  Planters would be “happy.”  But they’d be no further ahead.  This is why I’m fairly indifferent about whether or not the camp cost system should be eliminated, and I don't see it as a priority.  Overall, it would have no net economic impact upon the workforce.  The money has to come from somewhere.  All that the elimination of camp costs would result in would be a minor economic redistribution of wealth between various groups of planters.  You can read more about the economic theory behind camp costs at this link:  replant.ca/campcosts

3.      Treat Employees Better – There are several key pillars to this approach.  Top-up your first-year planters to minimum wage during their initial learning period.  Pay people their full wages on a regular bi-weekly or twice-monthly schedule.  Pay people for “extra” labour, such as camp setups and breakdowns, and reefer unloadings.  Ensure that their vehicles, equipment, and camps or motels are properly maintained and/or meet reasonable standards.  And most importantly, remember that your company depends on your planters, so just treat them with respect in general.  The companies that don’t will always find many of their employees migrating to competitors, or leaving the industry permanently.

The Kamloops Business & Market Summit

It's impossible to predict what to expect going forward.  The Western Forestry Contractors' Association is hosting a Business & Market Summit in Kamloops this week.  Many foresters and planting company owners will attend.  This annual summit typically addresses topics as diverse as supply/demand of labour, treatment of workers, seasonal scheduling, viewing practices, and much more.

My thought is that there will be an unspoken undercurrent of expectation that the 2019 public bid prices will be treated as a new baseline rather than a lucky anomaly.  While summit attendees cannot talk about pricing (because that would be collusion), they will agree in general terms that the improvements that we saw during the Fall 2018 viewing season were a stepping stone.  Due to the record-breaking provincial production requirements in 2020, prices may have to increase again this year.  My sense is that an additional five to ten percent increase for 2020 would put the industry at a sustainable level that would enable it to meet Clients' expectations for the next three years.  And I'll also be quick to point out that I'm not trying to be greedy.  We're just dealing with basic supply/demand economics.  Looking at the provincial sowing requirements for the few years after 2020, I suspect that prices will stabilize for a few years starting in 2020, and I believe that's also fair.  Note that right now I'm currently referring only to public bid pricing as the private sector still has some catching up to do.  And this will be problematic considering the financial crisis that is currently hitting most mills.

It's important to remember that changes in planter prices do not necessarily correlate directly to changes in bid prices.  Public bid prices increased significantly in 2019.  Private sector bid prices also increased in 2019 (although less significantly).  But even though planter prices also improved somewhat in 2019, they are still well below what prices were twelve to fifteen years ago, adjusted for inflation.  Last year was a step in the right direction, but there need to be additional hikes to put planter earnings on par with fair historical levels.  Over the past twenty years, the average hourly wage (non-planting) in BC rose when compared to increases in the Consumer Price Index.  Yet despite last year's bump in pricing, planting wages have declined against the CPI through that entire period.  In other words, planter wages have decreased significantly over the past twenty years when compared to both inflation, and to wage rates for other employment in the province as a whole.

To be honest, I'm not sure if the industry can plant the extra 40 million trees this year, without somehow lengthening the spring season significantly.  That's difficult to do though, because many of the largest BC contractors are also tied into work in Alberta in late June through early August, and can't just abandon their commitments there.  But money talks.  If prices in BC are significantly better than in Alberta, the Alberta projects will be the ones that get delayed and suffer.

Where Do We Go From Here?

If you’re a forester, it will be in your best interests to secure a partnership with a long-term contractor, and to focus beyond the "low price" paradigm.  Many foresters with market foresight have already seen the advantages of paying a few more cents on the bottom line in return for avoiding contract-completion headaches in the field.

It appears that production requirements within BC are going to remain high for the next few years.  We may see more multi-year contracts than we've seen in the past, despite the fact that "locking in" a purchase price at the high point of an economic cycle is typically not good advice.  However, working with a specific contractor year after year tends to have a lot of advantages for a forester.

This year, many foresters have realized this year that there are benefits to getting tender packages out early.  An early tender takes advantage of the late summer weather, and lets a forester secure commitments before planting contractors grow weary of time spent on the viewing trail.  Of course, the private sector was much more nimble than the public sector, as usual, so many of the private mills in Alberta have been significantly ahead of the curve this season with respect to early tenders.  The entrenched guard using BC Bid will still be putting viewing packages together in October and scratching their head wondering why so few contractors are submitting late-season bids.

Incidentally, the WFCA put out a good list of suggestions for foresters in one of their recent Rumour Mill Roundup newsletters.  Check out their list at this link:

If you’re a company owner, it would be in your best interests to remember the successes of the public viewing last fall.  Public bids are a barometer which private industry studies closely.  Putting in a poorly thought-out bid on a public job may seem like a silo'd event, but the repercussions on the industry and on your own company reach further than you think.

Also, if you're a company owner, think about how much more smoothly the 2019 season went than 2018.  Reflect upon the value of your work force.  Pay them fairly, and more importantly, treat them fairly.  You need them to get through 2020.  If you're able to let them know that there will be further price increases in 2020 compared to this recent season you will have an easier time of holding on to experienced employees.

If you’re a planter, it will be in your best interests to pay attention to what's happening that will affect your wages.  Take time to understand how the public bidding system works in BC because those bids have a profound effect upon the economics of our industry.  Critically, these bids are one barometer used by the private sector in their negotiations with contractors.  Bookmark this link to see how bidding unfolds through October and November:  2020 Public Bid Results

Pay attention to your legal and regulatory rights and stand up for them.  If your company is contravening employment standards legislation, walk away.  Vote with your feet.  You will be able to get a job elsewhere.

I hear constant complaints from planters who think that we need a union to improve our situation.  I disagree.  There's an easier way.  You saw how tree prices improved this past season, right?  It happened because of the perceived supply/demand imbalance in the labour force.  Some company owners were petrified (after multiple non-completion fiascos in 2018) that they wouldn't be able to complete their seasons unless they were able to offer better wages in 2019.  This led directly to better tree prices.  If you want to maintain that pressure on owners, stop telling all of your friends and random people that you meet in bars that tree planting is a wonderful career and a life-changing experience.  It's this illogical idolization of planting culture that allows the worst companies to continue to find new cannon fodder employees.  I swear, sometimes I think that we're our own worst enemies.

Planters don't need a union; they need to act in unison.  Use word-of-mouth to let everyone know that there are much better jobs out there than being a tree planter for the summer.  This will lead to fewer applicants.  A shortfall in planting applications will hit the bottom feeder companies the hardest.  Scarcity creates value, and if there are less applicants, experienced planters become more valuable.  If you're a vet, it is in your best interests to stop telling your friends and acquaintances that they should become tree planters.

Wrap Up

I assume that I'll write a State Of The Industry post in the fall of 2020 too.  In that one, I hope I'll be talking mostly about general industry issues (safety, problems with quad access on deactivated roads, the need for affordable biodegradable flagging tape, etc.) rather than having such a strong focus on declining long-term wages and industry economics.

I think that's all that I have to say right now.  I'm currently finishing up the fall plant on the BC coast and simultaneously doing some planning work with Replant.ca Environmental, a new tree planting company that I'm running in Atlantic Canada.  I've also been thinking about putting together a compilation album this fall of songs about tree planting, by tree planters (please email me if you want to participate).  But mostly, I'm looking forward to seeing the upcoming bidding results on BC Bid ...

Be careful when you work.  Even professionals make mistakes sometimes.