State Of The Industry, Fall 2022 (Tree Planting in Western Canada)

“Conflicting Economic Data.”  That seems to be the current theme of Canada’s financial reality.  And the same phrase may perfectly describe the situation that western Canada’s planting industry currently finds itself in.  Bear with me for couple paragraphs of economic commentary, before I go more directly into the outlook for the 2023 planting season.  Economic analysis matters, because I believe that a major recession is coming our way like an oncoming freight train.

Around the globe, inflation is running rampant.  It doesn’t really matter how you define inflation, because all indicators are on the rise:  Food, fuel, other energy, consumer goods, services, etc.  Economists could argue for weeks about the current reasons for inflation, but the basic pressures are heavily rooted in energy supply shocks and a couple years of barely-restrained printing of money by various nations’ central banks (mostly to support global economies during Covid).  The current consumer price index inflation numbers are running at slightly over 7% annually in Canada.  As a result, the Bank of Canada has been pushing up the interbank lending rate, which causes banks to increase their prime rates and all other interest rates.

Higher interest rates generally cause people to pay down debt, rather than spending their earnings on fun things.  Therefore, the goal of higher interest rates is to cut down on consumer spending, which reduces demand for goods and services.  In turn, reduced demand normally puts downward pressure on prices for goods and services.  But higher interest rates also hurt a lot of people, because most of Canada’s population has mortgages, credit cards, and/or loans of various types.  We’re getting attacked from both sides, paying more at the pump, more at the grocery store, more for other goods and services, AND dealing with higher interest rates on top of that.  Sure, the higher interest rates will eventually stop prices from rising so quickly, but as I mentioned earlier, I believe that we’re in for a lot of short-term pain over the next 12-24 months.

In terms of wages, the economy is still quite strong, and there are more job opportunities than there are people to fill them.  The current unemployment rate in Canada is pretty low when compared with historical data.  When unemployment is low, employers need to compete harder to attract employees, so wages go up.  Although there are various ways of measuring this, it is likely safe to say that by year-end, wages in Canada will have increased by at least four percent compared to last year.  Unfortunately, a four percent increase in your wages doesn’t seem so great when everything that you buy costs ten percent more than it did a year ago.

The planting industry’s economic health varies from year to year according to many factors, but usually the most significant impact depends on the basic supply/demand of planting contracts, ie. how many trees the industry needs to plant each year.  When overall industry numbers go up (as they did a few years ago, after the 2017 and 2018 wildfire seasons in BC), tree prices go up at a company level.  And sometimes this trickles down to a corresponding increase in planter prices.  When industry volumes go down, companies bid aggressively to chase a diminishing amount of work, and prices go down.  We saw that happen these past twelve months.  The “boom & bust” periods are especially visible in public government work, which accounts for roughly 20% of the trees planted in BC each year.  However, work for private clients makes up the other 80% of industry volume.  Private client pricing (mills, logging operations) is more stable than public tenders, because a lot of that work is based upon multi-year agreements between mills and planting contractors who work together year after year.

Going into 2023, industry volumes are decreasing.  In 2022, we think that BC planted about 286 million trees.  The estimate for 2023 is roughly 262 million trees.  Planting contractors are therefore competing for a piece of a smaller pie.  Supply/demand economics dictate that public bid prices would normally decrease during the Viewing Season (for 2023 projects), which is just starting to ramp up.  But a drop in prices is the last thing that we need right now.

Company owners have numerous expense items to worry about.  Fuel has obviously jumped significantly in the past 12 months.  Buying a truck is more expensive.  Truck rental costs are rising significantly right now for 2023.  Prices for parts are higher, and maintenance/repair costs are way up.  For companies that have a Business Line of Credit or Payroll Credit Facility, interest rates are now double what they were six months ago.  Employer contributions on CPP and EI are also increasing, by 4.38% and 5.56% respectively (which of course is compounded if labour costs are increasing).

Food costs are much higher than a year ago.  The kitchen team from my camp did a comparison study of invoice prices from GFS for 2022 vs. 2021, using a basket of approximately thirty commonly purchased items, and the average price increase was 35.5%.  That’s stunning.  The only people that benefit from this are planters who work out of camp-based operations with kitchens, because they are shielded from these food cost increases (except when buying their own food in town on days off).  But these higher food costs are certainly hurting the companies that run camps.

There may be significant other challenges that companies have to navigate.  I’m a bit out-of-the-loop on this right now, but there were rumours of enhanced requirements for on-site dressing stations in 2023, and also for more ETV’s spread throughout the workforce.  Having more first aid gear available is unquestionably a benefit for workers.  But who is going to pay for this?  The workers?  If company owners don’t recognize and budget for these potential costs, and bid accordingly, that’s exactly what might happen.

Commercial regs for flight crew fatigue are changing for small operators in mid-December (large operators had to implement these same changes 24 months earlier).  Although the exact rules are quite complex, a general starting point is that the maximum length of a pilot’s "duty day" is being cut from 14 hours to roughly 12 hours per day (the exact length will vary based on certain criteria).  This means that if a pilot arrives at the hanger to start pre-flight planning at 5am, they have to be home with the machine parked and flight plans closed by 5pm, which of course means that they will have to leave the field worksite earlier than most of us are accustomed to.  The maximum hours of daily "flight hours" is also being cut, to 8 hours per day, although this won’t have significant impact since the machine isn't usually running that many hours in a day (except maybe up in High Level).  However, the minimum length for the "rest period" from night to morning is being raised from 10 hours to 12 hours.  It thus becomes essentially impossible for a pilot to fly trees out to stock up a block in the evening, then to return early the next morning to move crews. 

Going back to the length of duty day, the 12 hour day is a best-case scenario.  The exact regs are very complex, and depend on things such as the number of flights per day (that's the number of start/stop cycles of the machine's engine, not take-offs and landings).  The duty day length will also depend on the start time in the morning.  When a pilot starts especially early in the morning, their duty day becomes shorter.  So for example, a pilot doing seven or fewer flights in a single duty day, whose flight cycles are typically between 30 and 50 minutes duration, can only have 11 hours for duty day if they start at 5:59am or earlier.  Let's say that you need a pilot on site at 7am to start slinging trees before the planters arrive, but the ferry time from the airfield to Staging is 1hr.  The pilot will need to start their duty day with the pre-flight inspection and filing of flight plan no later than 5:30am in order to get in the air by 6am, and even that is optimistic because most rotary wing operators will budget a full hour from start time to being airborne.  Because the official start of the duty day is earlier than 6am, the pilot is now only allowed to have a duty day length of 11 hours.  So that could mean that the duty day runs from 5:30am to 4:30pm.  But since the pilot needs an hour of ferry time after planting to get back to the airport, AND time for post-flight and closing the flight plan, they really need to start flying home at 3pm.  Which means that planters might need to fly out of the block starting at 2:15pm.

One solution would be to run two pilots with each machine, to give planters a longer day, but helicopter companies would be reluctant to do this because it would double their labour costs.  Machine costs would also increase significantly if a helicopter needed to return to the airfield mid-day for a crew swap.  And on top of that, the industry doesn't have enough high-hour qualified pilots to make that scenario to work on a broad basis.

There are slight variations and allowances to these changes for certain situations, and a commercial pilot will have a better understanding.  Some details are available here, but again, the CARS regs are very complex.  The bottom line is that these changes will probably impact almost all planting operations that use helicopters extensively, so Project Managers need to contact their preferred helicopter providers and get a full understanding of these potential changes, before putting together any more heli budgets.  Helicopter use may become increasingly associated with constrained production.

There is also a good chance that minimum wage will jump significantly before next summer.  That’s great for workers in many underpaid industries.  It’s also good for tree planters, because companies that hire first-time workers must pay everyone at least the equivalent of minimum wage (including overtime) if their piece-rate earnings are not sufficient.  Will companies that hire large numbers of first-time planters have the foresight to plan for this possibility, and adjust bid prices upward?  A rising tide floats all boats.

Let’s go back to the lower industry volumes.  Can anything be done about this?  A few years ago, we thought that volumes would be historically strong for the next several years.  Part of that was based on the assumption of strong growth of federal tree planting projects, from programs such as the federal “2 Billion Trees” initiative.  But the 2BT program is struggling to scale up quickly, which isn’t a real surprise.  I’m quite familiar with the program, having acted as a project lead proponent for small projects both this year and last year, but my work (on the east coast) has been with very small numbers of seedlings.  For 2BT to work, big players need to design projects that will result in tens of millions of trees being planted, and there are a lot of challenges associated with designing such a project (especially in figuring out where to plant the trees).

In a perfect world, several of the dozen largest planting contractors would each purposefully plan to scale back operations in 2023 by retiring a camp.  I know of at least one major contractor that has already made a conscious decision to do exactly that.  If several companies planned to downsize this way, there would be less concern about the limited number of trees that are available for 2023.  But wait, why should we expect just the biggest companies to save the day?  If every company (regardless of size) downsized by just 8.3%, then the overall 2023 volume would be appropriate for the slightly smaller planting industry.  In such a scenario, supply-based downward pricing pressure would disappear, and bid prices would undoubtedly jump significantly.  Company owners AND their workforces would benefit.  Our industry is nimble enough to do this, but do company owners have the resolve?  Again, it’s the company owners that are hurting themselves if they don’t understand the need for every company to scale back slightly.

Planters expect wages to increase in 2023.  They know that wages are increasing in just about every other sector, and they know that workers are scarce.  What will happen if bid prices decline this fall, and owners have to tell planters after Christmas that planter prices are staying the same?  How many planters will seek employment elsewhere?  Will planting companies be able to hire enough people to get through 2023?  A lot of companies struggled to get their trees planted last year due to hiring challenges, and million of “spring” trees didn’t get planted until July.  Hiring will likely be even harder this year, considering the general labour market situation, so why risk chasing too many trees?  It’s better for companies to aim to scale back.

What else can planters (and companies) expect from 2023?  Well, from what I’ve seen so far, there are a few challenges to look forward to:

-        Head Protection:  WorkSafe has mandated the use of head protection on ALL understory planting in BC from now on.  While a hardhat may not protect you if an entire tree falls onto you, it could make a difference if you get hit by a dead branch.  Of course, hard hats bring their own separate problems, and planters hate wearing them.  Incidentally, we’re also seeing an increase in expectations for due diligence with more detailed DTA assessments.

-        Wildfire Planting:  There has been a LOT of wildfire restoration work in BC in the past four years.  Probably more than twenty companies have worked in the Elephant Hill fire alone since 2018.  Planting continues there, but so does grass encroachment.  As the grass spreads each year, the difficulty increases.

-        Plastic Ribbon:  The Cariboo-Chilcotin region (ranchland) banned the dropping of plastic flagger this past year, to protect cattle from eating plastic.  The full impact of this change was not felt in 2022, as a lot of multi-year contracts were still in progress.  But several multi-year contracts just ended, and the flagger ban throughout this region will be more ubiquitous in 2023.  Couple this with thicker grass in the burns, and we’re going to see a lot of double plants in 2023.  The industry MUST find a cost-effective supply of biodegradable ribbon soon, or loosen up spacing rules.  There are now a limited number of 500' rolls of corn starch ribbon available from Motion for $2.87 per roll, which is approximately three times the cost of polyethylene plastic flagger.  But if everyone bidding on no-flagger contracts were to add another 1.0 cents per tree to their bid price, that would be enough to purchase one roll of biodegradable flagger for roughly every one box of trees planted.  Bidders can pass the cost of this product on to clients!  We just need to make sure that every bidder factors that cost into their bid prices.  Easier said than done, of course.  Also, that price might eventually come down some, if the industry starts buying the corn starch product in large quantities.

-        Unwrapped Trees:  Again on the theme of saving plastic, more planters may see boxes being shipped this year without bundle wrappers.  It’s a great concept.  Single-use plastic is no good for anyone.  If western Canada plants 400 million trees per year including the prairies, that’s probably 30 million bundle wrappers per year that end up in landfills and occasionally scattered across blocks.  And aside from the plastic, if it takes 5 seconds to unwrap each bundle, that’s costing planters 2.5 million minutes each year.  I’m all for reducing plastic, and I’m quite familiar with planting trays of unwrapped trees on the east coast.  But when planters have to share boxes and each person has to do a count of their share of the box, unwrapped trees become a challenge.  We've also discovered that some nursery packing crews can’t count, resulting in boxes that don't have the correct number of seedlings in them.  When boxes are overfilled, it hurts the nursery, it hurts the planters, and it indirectly hurts the planting companies.  Nobody benefits except the Clients, who get free trees.  Nurseries that are moving in this direction need to implement working quality control systems BEFORE unwrapped trees become more widespread.  Perhaps it would help to tie the bundles with twine?  Or even better, wrap them in a band of light kraft paper or wax paper with a small piece of masking tape to seal the wrapper.  That would continue to protect the plugs better than a box of loose trees, which the forestry clients would prefer.  And it would allow for better monitoring of counts (both on the planter side and the nursery side), while still eliminating plastic wrappers.

-        Vehicle Safety:  I'll cautiously comment that vehicle safety seems to be improving slightly throughout the industry in the past few years.  Yes, I'm aware of some exceptions, and some accidents.  But we're generally seeing more common sense.  I have to give a shout out to ABBA here.  My crews meet a lot of other companies on the road, and this year, ABBA wins my award for the most professional radio use and cautious driving, at least when we worked in the same area back in April/May.  There seems to more of a safety-driven impetus from some Clients recently, a few of whom are asking for GPS trackers and/or dash cams (audio off) in their contractors' vehicles.  These devices probably make some people drive more cautiously, which is good.  A side note:  For anyone working in the Sparks wildfire area in 2023, be careful.  Some of those roads are going to be pretty sketchy when they're wet.

-        Access:  I’ll focus again on the regions where wildfire planting has been happening for the past few years.  It’s safe to say that in those regions, the low-hanging fruit has been plucked.  Each year, the blocks become more difficult to access.  Helicopter work is becoming more common.  And that brings up a good point.  What happens if someone gets hurt on a block where it’s impossible to extract a seriously injured patient without a helicopter?  Do companies have helicopters on standby for emergency situations such as this?  This is a good time to put in a plug for the services of the TEAAM helicopter recovery service for remote workers.

In terms of fire activity, as of October 17th there were still 202 active wildfires burning in BC.  That's crazy.  I've never seen so much active smoke during a Viewing Season.  Many of these fires will impact our industry in 2024 and beyond.

This year’s Viewing Season is really just getting under way in earnest in the past two weeks, and companies are on the edge of their seat about what will happen.  Will we see lower prices, due to decreased industry volumes?  Will we see higher prices, due to a recognition of how inflation is significantly affecting the cost of running a company?  We’re in the middle of an economic tug-of-war.  Now you see why I started off with the phrase, “Conflicting economic data.”  If company owners are smart, most of them will downsize slightly.  If that happens, bid prices will increase this year DESPITE the lower industry volumes, and companies will be able to react appropriately to general wage and inflation trends.

Considering what we had to deal with for the last three years, it seems crazy to say that 2023 may be the most challenging year that the industry has seen in decades.  But this time, the challenge will be economic rather than a global health pandemic.  Let’s hope, in the coming weeks, that company owners will bid appropriately …

 

Jonathan “Scooter” Clark 

www.replant.ca

 

Comment, December 15th - Many companies chased volume, and bid prices are down overall (sometimes significantly) from the levels of two years ago.  I'll put together a full report by the time the WFCA Conference happens at the end of January, and I'll link that here.

 

 

 

Links to Previous "State Of The Industry" Posts:

Fall 2021:  https://jonathan-scooter-clark.blogspot.com/2021/10/state-of-industry-fall-2021-bc-tree.html

Spring 2021:  https://jonathan-scooter-clark.blogspot.com/2021/04/state-of-industry-2021.html

Fall 2019:  https://jonathan-scooter-clark.blogspot.com/2019/09/state-of-industry-2019-bc-tree-planting.html

Fall 2018:  https://jonathan-scooter-clark.blogspot.com/2018/09/state-of-industry-british-columbia-tree.html

 

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:

  https://jonathan-scooter-clark.blogspot.com/2018/09/state-of-industry-british-columbia-tree.html

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:

https://www.cbc.ca/news/canada/british-columbia/mill-workers-forest-industry-staff-reactions-closures-1.5283821

https://www.cbc.ca/news/canada/british-columbia/b-c-mill-workers-quesnel-tolko-1.5250013

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 façade.  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.

Planters

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:

https://wfca.ca/2019/08/western-forestry-contractors-association-rumour-mill-roundupdate-volume-19-issue-12/

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.