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The impact of the forest industry on economic development in the central interior of British Columbia Vance, Eric Carter 1981

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IMPACT OF THE FOREST INDUSTRY ON ECONOMIC DEVELOPMENT IN THE CENTRAL INTERIOR OF BRITISH COLUMBIA by ERIC CARTER VANCE B.A., The University of B r i t i s h Columbia, 1975 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in THE FACULTY OF GRADUATE STUDIES Department of Geography We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA A p r i l , 1981 © E r i c Carter Vance, 1981 I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r an advanced degree a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r agree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by t h e head o f my department o r by h i s o r h e r r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Department o f Geography The U n i v e r s i t y o f B r i t i s h C o l u m b i a 2075 Wesbrook P l a c e V ancouver, Canada V6T 1W5 Date A p r i l , 1 9 8 1 DE-6 (2/79) i ABSTRACT There are very few published studies that have investigated in d e t a i l the economic impact of the forest industry at a subprovincial l e v e l in B r i t i s h Columbia. The reason most often cited i s that the techniques of analysis viewed as most appropriate for handling such an undertaking require more economic data than are e a s i l y obtainable. It i s the hypothesis of this study that s u f f i c i e n t data do exist to allow a close examination of the economic impact of the forest industry at a regional or l o c a l scale and that such an analysis can be conducted with some widely u t i l i z e d and r e l a t i v e l y simple techniques of measurement. The central i n t e r i o r of B.C. has been chosen as the study region because of i t s heavy dependence upon the forest industry for i t s economic well-being. The thesis begins with a discussion of the h i s t o r i c a l development of the forest industry i n the central i n t e r i o r . It concentrates upon the economic factors that have affected the industry's d i r e c t i o n and rate of growth and the impact that this has had on o v e r a l l regional development. Analysis of the present relationship between the forest industry and the regional economy is in part accomplished using two forms of Economic Base Analysis - the Location Quotient method and the Minimum Requirements technique. Both of these forms of measurement are reviewed, highlighting the major th e o r e t i c a l and empirical research involving t h e i r application, p a r t i c u l a r l y in regards to the forest industry in other regions of North America. Using S t a t i s t i c s Canada labour force data, the analysis has concluded that an employment m u l t i p l i e r of 2 . 1 3 i s j u s t i f i a b l e for the central i n t e r i o r of B.C. The l a t t e r portion of the thesis attempts a dynamic approach to tracing the linkages between the forest industry and the rest of the regional economy. Applying s t a t i s t i c a l analysis to three types of data - employment, earnings, and unemployment - the study reveals the complexity of the i n t e r i n d u s t r i a l linkages within the regional economic system. Several of the more s i g n i f i c a n t findings are that the nonbasic sector of the economy exhibits surprising r e s i l i e n c e to short-term employment fluctuations and that the unemployment rate i s an often overlooked effect that must be c a r e f u l l y considered in determining the actual rate of development within a region. i i i TABLE OF CONTENTS Page ABSTRACT i LIST OF TABLES i v LIST OF FIGURES v ACKNOWLEDGEMENTS v i CHAPTER 1 - INTRODUCTION 1 F o o t n o t e s 7 CHAPTER 2 - THE DEVELOPMENT OF THE FOREST INDUSTRY IN CENTRAL BRITISH COLUMBIA 8 2 . 1 The E a r l y Years o f Development: 1 9 0 7 - 1 9 5 3 8 2 . 2 Rapid Development i n the Region: 1 9 5 4 - 1 9 7 5 . . . . 19 F o o t n o t e s 3 7 CHAPTER 3 - ECONOMIC BASE ANALYSIS AND ITS APPLICATION TO THE CENTRAL INTERIOR REGION 39 3 .1 A Review o f Economic Base A n a l y s i s 41 3 . 2 The Assumptions Approach 4 4 3 . 3 The L o c a t i o n Q u o t i e n t Method 4 5 3 . 4 The Minimum Requirements Technique 4 8 3 . 5 E m p i r i c a l Economic Base A n a l y s i s I n v o l v i n g the F o r e s t I n d u s t r y 51 3 . 6 The A p p l i c a t i o n of Economic Base A n a l y s i s t o the C e n t r a l I n t e r i o r 5 7 F o o t n o t e s 6 9 CHAPTER 4 - ANALYSIS OF EMPLOYMENT, EARNINGS, AND UNEMPLOYMENT IN THE CENTRAL INTERIOR, 1 9 7 3 - 1 9 7 6 7 3 4 . 1 A n a l y s i s o f Employment 7 3 4 . 2 A n a l y s i s o f E a r n i n g s 8 0 4 . 3 A n a l y s i s o f Unemployment 8 7 F o o t n o t e s 9 5 CHAPTER 5 - CONCLUSIONS 9 6 BIBLIOGRAPHY 1 0 0 i v LIST OF TABLES Page I Coast and I n t e r i o r Lumber P r o d u c t i o n , 1 9 5 1 - 1 9 7 6 22 I I P o p u l a t i o n o f C e n t e r s i n Economic Region 7 24 I I I Number and S i z e o f M i l l s i n the C e n t r a l I n t e r i o r 26 IV Summary of M u l t i p l i e r s C a l c u l a t e d by E m p i r i c a l S t u d i e s of the F o r e s t I n d u s t r y 56 V Labour F o r c e i n the C e n t r a l I n t e r i o r by I n d u s t r y f o r 1971 58 VI B a s i c - N o n b a s i c Employment R a t i o s C a l c u l a t e d u s i n g Economic Base A n a l y s i s 60 V I I B a s i o - N o n b a s i c Employment i n the C e n t r a l I n t e r i o r as C a l c u l a t e d by the Minimum Requirements Technique 63 V I I I Mean Employment by I n d u s t r y and Region, 1 9 7 5 - 7 6 75 IX F l u c t u a t i o n i n Employment, 1 9 7 5 - 7 6 77 X Mean Weekly E a r n i n g s by I n d u s t r y and Region, 1 9 7 3 - 7 6 81 XI F l u c t u a t i o n i n Mean Weekly E a r n i n g s , 1 9 7 3 - 7 6 85 X I I Unemployment i n the C e n t r a l I n t e r i o r , 1 9 7 3 - 7 6 88 LIST OF FIGURES Page 1 Location of Study Region 4 2 M i l l Locations and Daily Capacities in the Central Inte r i o r of B.C. - 1926 13 3 M i l l Locations and Daily Capacities in the Central Interior of B.C. - 1936 15 4 M i l l Locations and Daily Capacities in the Central Interior of B.C. - 1948 17 5 M i l l Locations and Daily Capacities in the Central Interior of B.C. - 1954 21 6 M i l l Locations and Daily Capacities in the Central Interior of B.C. - 1965 27 7 Number of Sawmills in B r i t i s h Columbia, 1960-1973 28 8 B r i t i s h Columbia Sawmill Capacity, 1960-1973 30 9 M i l l Locations and Daily Capacities in the Central Interior of B.C. - 1973 32 ACKNOWLEDGEMENTS My thanks to Dr. Bob North and Dr. Bert Farley of the Department of Geography for the i r comments and suggestions on e a r l i e r drafts of thi s thesis. Thanks also to my advisor, Dr. Ken Denike, who was always encouraging and never l o s t f a i t h that someday a f i n a l thesis draft would cross his desk. It has been a pleasure working with and learning from Ken in pursuing both my academic and professional areas of inte r e s t . Thanks most of a l l to my wife, P a t r i c i a , who did the typing and who has somehow managed to endure a l l the late nights and lo s t weekends I dedicated to f i n i s h i n g my degree. 1 CHAPTER 1  INTRODUCTION The importance of the forest industry within the economy of 1 B r i t i s h Columbia has been well documented by numerous studies. However, most of these studies have concentrated upon analyzing the economic impact of the industry at the p r o v i n c i a l l e v e l , yet i t i s at the regional and community scales that the impact i s most f e l t , often through the loss or addition of jobs. The s i t u a t i o n i s made more complex by the highly i n t e r r e l a t e d linkages between the basic sector, forestry, and the wide array of goods and service producing industries which form the nonbasic sector. This complexity within the economic system, when combined with the r e l a t i v e lack of data available at the regional and l o c a l l e v e l s , has tended to cause analysts to shy away from attempting studies which investigate in d e t a i l the relationships between the forest industry and the t o t a l economy within a single community or region. It i s the hypothesis of this study that s u f f i c i e n t data exist to allow a close analysis of the economic impact of the forest industry at a subprovincial l e v e l and, furthermore, that such an analysis can be accomplished using existing techniques of measurement, several of which have been advanced and widely u t i l i z e d by geographers for many years. It would be injudicious to suggest that any analysis could f u l l y outline and explain the extremely i n t r i c a t e workings of the economic system but the emphasis here i s to analyze and i d e n t i f y as much of the rel a t i o n s h i p between the industry and the other sectors of the 2 economy within a region as i s possible given the constraints of the data. In addition, there i s l i t t l e evidence to suggest that more time-consuming or complex techniques of measurement, such as imput-output analysis or econometric modelling, could do a more credible job of explaining the workings of the system. This view would seem to be supported by the lack of such studies by economists and others despite the intense concern shown for a better understanding of the role of the forest industry within the p r o v i n c i a l economy. The impetus for t h i s thesis was an interest in empirically testing some of the basic concepts of central place theory using a group of communities in the central i n t e r i o r of B r i t i s h Columbia, a region heavily dependent upon forest related a c t i v i t y . In attempting to research the economic structures of the i n d i v i d u a l oommunities, i t was discovered that detailed information from published sources i s v i r t u a l l y nonexistent. Even at the regional scale, l i t t l e exists beyond some rather s u p e r f i c i a l treatments of economio development, most of them conducted by government agencies. Discussions of the s i t u a t i o n with individuals from the government and private industry revealed that no one seems to have a clear picture of how a basic industry can a f f e c t economic development nor could anyone id e n t i f y with a degree of certainty how trends within the industry might a f f e c t other economic sectors. Most f e l t that while such information could prove useful, the complexity of the system does not allow analysis using what they perceive to be the existing sources of data and methods of handling such an undertaking. A better understanding of the economic forces at 3 work within a region with strong dependence upon a single extractive industry would seem to be b e n e f i c i a l to community and regional planning groups as well as to private industry. It would be p a r t i c u l a r l y useful in devising long term development strategies as attempts are made to predict and adjust to changes in the basic industry and to the res u l t i n g e f f e c t upon inter r e l a t e d i n d u s t r i a l sectors. Because of i t s heavy dependence upon forest - related a c t i v i t y , the central i n t e r i o r of B r i t i s h Columbia, as delimited by Economic Region 7 (see Figure 1 ) , has been chosen for empirically testing the hypothesis of this study. Within this region, thirteen communities were determined as having high employment in the woods and m i l l s . These provide a s u f f i c i e n t number of cases for testing the methods of analysis used in this study. The region not only represents a convenient s t a t i s t i c a l unit, thus f a c i l i t a t i n g data compilation and analysis, but also forms a r e l a t i v e l y cohesive functional region within which Prince George serves as the highest order center. The c i t y provides important goods and services to many of the outlying communities and acts as the focal point of the region's forest industry. The h i s t o r i c a l development of the forest industry within B r i t i s h Columbia's central i n t e r i o r i s outlined in Chapter 2 of this study. Discussion of the h i s t o r i c a l development of the industry i s necessary because i t provides the reader with a firm knowledge of how the industry operates in conjunction with the region. This i s needed in order to c l e a r l y follow the analyses of Chapters 3 and 4 . Chapter 2 begins with the f i r s t h a l f -century of development between 1 9 0 7 and 1 9 5 3 , when the region was 1 0 ° , 20° ^Created in 1968. Miles F IGURE 1: L O C A T I O N OF S T U D Y A R E A . 5 s t i l l v e r y much a p a r t of the p r o v i n c e ' s r e s o u r c e f r o n t i e r . The d i s c u s s i o n f o c u s s e s upon th o s e f a c t o r s , such as the c o n s t r u c t i o n o f the r a i l w a y system and t e c h n o l o g i c a l advancements, t h a t have s t r o n g l y i n f l u e n c e d the p r e s e n t l o c a t i o n a l p a t t e r n o f the i n d u s t r y . By 1953, the s p a t i a l p a t t e r n had become w e l l d e f i n e d . The d i s c u s s i o n i n the l a t t e r p a r t o f Chapter 2 c o n c e n t r a t e s upon the v e r t i c a l and h o r i z o n t a l i n t e g r a t i o n o f t h e i n d u s t r y and t h e i r s p a t i a l i m p l i c a t i o n s . I t must be emphasized t h a t the i n t e n t here i s not t o examine i n d e t a i l the development of the i n d u s t r y i t s e l f but r a t h e r how t h i s development has a f f e c t e d the communities and economy of t h e r e g i o n . A comprehensive u n d e r s t a n d i n g of the i n t e r n a l w orkings of the i n d u s t r y i n the p r e g i o n can be o b t a i n e d from D. M u l l i n s * s t u d y . I n Chapter 3, the d i s c u s s i o n f o c u s e s upon Economic Base A n a l y s i s and i t s a p p l i c a t i o n t o a number of communities i n the r e g i o n . The f i r s t s e c t i o n r e v i e w s the development of the t h e o r y and i n v e s t i g a t e s t h e s t r e n g t h s and weaknesses o f s e v e r a l of i t s major t e c h n i q u e s of measurement. T h i s i s f o l l o w e d by the e m p i r i c a l f i n d i n g s o f a v a r i e t y o f Canadian and American s t u d i e s which have used Economic Base A n a l y s i s or v a r i a n t s o f i t i n a n a l y z i n g t h e economic impact o f t h e f o r e s t i n d u s t r y . The f i n a l s e c t i o n o f the c h a p t e r p r e s e n t s the f i n d i n g s o f the a n a l y s i s of the c e n t r a l i n t e r i o r ' s economic s t r u c t u r e as i t r e l a t e s t o t h e f o r e s t i n d u s t r y . The r e s u l t s o f t h i s a n a l y s i s a r e compared t o the o t h e r s t u d i e s . I n the f o u r t h c h a p t e r , a more complex method of a n a l y s i s i s p r e s e n t e d . I t i n v o l v e s the a p p l i c a t i o n o f a dynamic approach t o 6 tracing linkages between the industry and the rest of the economy. As previously mentioned, no analysis can be expected to f u l l y explain the system but the intent here i s to shed further l i g h t upon how the regional economy i s tie d to the forest industry and to suggest how some of the more sa l i e n t forces i n t e r r e l a t e . The chapter i s divided into three sections, each of which analyzes and discusses d i f f e r e n t types of data employment, earnings, and unemployment. Chapter 5 presents a summary of the findings and conclusions of this thesis. Based upon the findings reached here, some areas of analysis which seem worthy of further research are b r i e f l y outlined. 7 CHAPTER 1  Footnotes 1 . For detailed information on the forest industry's contribution to the pr o v i n c i a l and federal economies, see F.L.C. Reed and Associates, The B r i t i s h Columbia Forest  Industry - Its Direct and Indirect Impact on the Economy ( V i c t o r i a : Province of B r i t i s h Columbia, Department of Lands, Forests and Water Resources, 1 9 7 3 ) . A second edition of the Reed report was published in 1 9 7 5 which contains more recent s t a t i s t i c s on some aspects of the industry. See also Peter H. Pearse, Timber Rights and Forest Polioy in B r i t i s h  Columbia ( V i c t o r i a : Report of the Royal Commission on Forest Resources, September, 1 9 7 6 ) . 2 . Doreen K. Mullins, Changes in Location and Structure in the  Forest Industry of North Central B r i t i s h Columbia, 1 9 0 9 - 1 9 6 6 (Unpublished M.A. Thesis, Department of Geography, University of B r i t i s h Columbia, September, 1 9 6 7 ) . 8 CHAPTER 2 THE DEVELOPMENT OF THE FOREST INDUSTRY IN CENTRAL BRITISH  COLUMBIA In order to gain an understanding of the current structure of the forest industry in the central i n t e r i o r , as well as i t s relationship to the o v e r a l l economy of the region, i t i s necessary to examine i t s development in some d e t a i l . Analysis of the industry's h i s t o r i c a l trends also allows some speculation as to future directions which the industry may take and how thi s in turn may a f f e c t other sectors of the economy. The task i s accomplished through a review of relevant l i t e r a t u r e and data on the region and with the aid of a series of maps which have been designed to trace the changes in the loc a t i o n a l pattern, si z e , and function of the wood processing m i l l s through time. The emphasis throughout the chapter i s upon demonstrating the important part which the forest industry has had in shaping the region's economic development. 2 . 1 The Early Years of Development: 1 9 0 7 - 1 9 5 3 In pinpointing the single greatest impetus behind the growth of the central i n t e r i o r ' s forest industry, i t can most l i k e l y be i d e n t i f i e d as the construction of the railway system, beginning with the Grand Trunk P a c i f i c (soon taken over by the Canadian National Railway) and l a t e r with the completion of the Pa c i i c Great Eastern (renamed the B r i t i s h Columbia Railway) through to Prince George. The improved a c c e s s i b i l i t y which these r a i l l i n e s gave to the region did not create an instant demand for the vast stands of timber available, but i t did allow existing forest 9 companies and entrepreneurs with venture c a p i t a l to at least consider the p o s s i b i l i t y of placing m i l l i n g operations in a previously remote area of the province. Prior to the building of the G.T.P. between 1907 and 1914, the only forest industry in the area consisted of a small number of m i l l s , no more than a dozen at most, located in a few scattered communities and producing rough-sawn dimension lumber, shingles, and shakes for l o c a l use. The region was s t i l l very much a part of the province's f r o n t i e r . In the northern portion the economy was based on fur trapping, mineral exploration, and small pockets of agriculture, the l a t t e r located mainly along the terraces of the Fraser, Nechako, and Bulkley Rivers. Clustered settlement was confined to a few small towns, some of which had t h e i r beginnings many years before as trading posts and s t i l l offered only a minimum of goods and services. Fort St. James and Fort Fraser were founded in 1806 and Fort George in 1807, a l l three having been established by Simon Fraser and other Northwest Company o f f i c i a l s during t h e i r exploration of the region. To the south, around Quesnel and Williams Lake, there was farming and c a t t l e ranching. This area had already experienced a boom period during the Cariboo Gold Rush of the 1860's but afterwards, when the gold was gone, most of the s e t t l e r s moved away, leaving l i t t l e but worked out claims and nearly deserted towns as a reminder of the b r i e f prosperity of the region. Meanwhile, on the coast the forest industry was already decades old and firmly entrenched. Dozens of sawmills, some 1 exceeding 100 M.B.F. da i l y capacity, were processing logs brought by water from along the coast of the mainland and 10 Vancouver I s l a n d . One pulp m i l l was i n p r o d u c t i o n and s e v e r a l more were under c o n s t r u c t i o n . W.G. Hardwick's study of the pr o v i n c e ' s c o a s t a l f o r e s t i n d u s t r y emphasizes the v e r t i c a l and h o r i z o n t a l i n t e g r a t i o n of the wood p r o c e s s i n g u n i t s , as w e l l as t h e i r c e n t r a l i z a t i o n i n the S t r a i t of Georgia r e g i o n , which was p o c c u r r i n g by the e a r l y 1900's. Rather than p l a c i n g the m i l l s at the timber supply i n remote l o c a t i o n s , the f o r e s t product companies had made d e l i b e r a t e d e c i s i o n s which u l t i m a t e l y l e d to t h i s c e n t r a l i z a t i o n and the economies of s c a l e which f o l l o w e d . Once the l o c a t i o n a l p a t t e r n had been e s t a b l i s h e d , with i t s heavy dependence upon cheap water t r a n s p o r t of the raw m a t e r i a l , c o a s t a l companies showed l i t t l e i n t e r e s t i n the development p o t e n t i a l of an i n t e r i o r f o r e s t i n d u s t r y . I r o n i c a l l y , years l a t e r the i n t e r i o r was to d u p l i c a t e the l o c a t i o n a l p a t t e r n on the c o a s t , the major d i f f e r e n c e being a r e l i a n c e upon r a i l and truck t r a n s p o r t of logs r a t h e r than upon s h i p p i n g . The announcement i n 1907 t h a t c o n s t r u c t i o n of the G.T.P. through the c e n t r a l i n t e r i o r would proceed sparked a f l u r r y of a c t i v i t y along i t s proposed r o u t e . I n v e s t o r s took a sudden i n t e r e s t i n the r e g i o n and hundreds of a p p l i c a t i o n were made f o r timber s i t u a t e d i n c l o s e p r o x i m i t y to where the r a i l l i n e was to be b u i l t . ^ By the completion of the l i n e i n 1914, p o p u l a t i o n and development had expanded c o n s i d e r a b l y . T h i s marked the beginning of an export o r i e n t e d f o r e s t i n d u s t r y but the growth was slow and s p o r a d i c . New sawmills were l o c a t e d a l o n g s i d e the r a i l w a y , p r o v i d i n g t i e s , cedar p o l e s , and other c o n s t r u c t i o n m a t e r i a l to the G.T.P. and c a t e r i n g to the needs of the communities which had sprung up. These sawmills were o r i e n t e d towards the e a s t e r n 11 side of the region, on that section of the l i n e between Prince George and Valemount where some agriculture settlement already-existed. The area contained prime timber, including Douglas-fir, and was close to the market in the P r a i r i e Provinces. The economic s t a b i l i t y of these early m i l l s was very precarious. Once the railway was completed, there was a decreased demand for t i e s and lumber. Many of the new communities were simply small clusters of residences and a few businesses, some of which served no greater purpose than r a i l stops along the l i n e . After t h e i r sudden i n i t i a l growth, development slowed considerably and with i t the need for lumber products. Thus, the majority of the m i l l s remained small, employing few men and operating only two or three months each year. The m i l l s changed hands often, as well as suffering from frequent f i r e s which completely destroyed several operations. J.H. Kenney c i t e s four major reasons for the f a i l u r e of the m i l l s . Besides the limited l o c a l demand, the m i l l s were faced with the high cost of shipping, the distance from large consuming markets, and a lack of jobs and f a c i l i t i e s in the region to attra c t new s e t t l e r s . Two major events took place in 1914 which resulted in severely c u r t a i l i n g the export market for wood products from the central i n t e r i o r . The f i r s t was the outbreak of World War One. The P r a i r i e market collapsed as new settlement ceased and some existing s e t t l e r s l e f t to j o i n the m i l i t a r y . Demand was further reduced by crop f a i l u r e s a year e a r l i e r which had f i n a n c i a l l y hurt many of the farmers. The second blow to the fledging i n t e r i o r forest industry was the completion of the Panama Canal. The coastal industry was able to take f u l l 12 advantage of the canal to service the Eastern U.S. seaboard and the United Kingdom, the two major A t l a n t i c markets. The i n t e r i o r m i l l s couldn't complete with the much lower costs that water shipment afforded. Despite the adverse economic conditions which the industry faced, some m i l l s continued to operate intermittently and they became a permanent part of the regional economy. They had created and helped sustain many small towns, some of which s t i l l bear the names of the o r i g i n a l forest companies. East of Prince George, located at regular 15 to 20 mile intervals are communities such as Lamming M i l l s , Cornell M i l l s , S i n c l a i r M i l l s , 5 and Hutton M i l l s . After the war ended in 1918, the economy of the region began to pick up. A good market had opened for p i t props in B r i t a i n and there was some demand again, although rather unstable, from the P r a i r i e Provinces. Population was on the increase as hundreds of s e t t l e r s , many of them assisted by the Soldier Settlement Board, moved in to the area, p a r t i c u l a r l y west of Prince George.^ Most established themselves in agriculture but part-time work in the woods and m i l l s became a common means of supplementing incomes. In 1921, the region gained i t s second railway with the completion of the P a c i f i c Great Eastern l i n e from Squamish on the 7 south coast through to Quesnel. This new li n k stimulated l i t t l e development in i t s early years, p a r t i c u l a r l y in the forest industry. As Figure 2 indicates, there was not a single m i l l of s i g n i f i c a n t size located along the route from Quesnel south to 100 Mile House. The central i n t e r i o r seemingly had l i t t l e to offer as incentive to companies contemplating expansion. The 1 3 Mill T y p e & Daily Capac i t y • 1 0 - 2 0 # 2 1 - 5 0 O 5 1 - 1 0 0 Sawmills ( M B J J Q 1 0 1 - 5 0 0 o v e r 5 0 0 A Pulp & Paper • Plywood o 40 80 120 I 160 I Miles FIGURE 2. MILL LOCATIONS AND DALY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1926 14 1 9 3 0 ' s , which brought economic hardship to a l l p a r t s of the country, f u r t h e r depressed the r e g i o n ' s economy. The coast continued i t s dominance of the f o r e s t i n d u s t r y . F.D. Mulholland s t a t e d i n a 1 9 3 7 government r e p o r t t h a t , "The sawmills are so very f a r from t h e i r very c o m p e t i t i v e markets that they are p e r p e t u a l l y f i g h t i n g the handicap of long r a i l - h a u l and f r e i g h t charges. I t i s u n l i k e l y t h a t any great i n c r e a s e i n u t i l i z a t i o n w i l l occur u n t i l economic c o n d i t i o n s a f f e c t i n g the world pulp market are such t h a t i t w i l l be p o s s i b l e to c o n s t r u c t a p u l p - m i l l to u t i l i z e some of the spruce, or u n t i l g r e a t l y i n c r e a s e d demand q develops on the P r a i r i e s . " D e s p i t e the smal l s c a l e of f o r e s t r y i n the r e g i o n , with even fewer m i l l s i n 1 9 3 6 than ten years p r e v i o u s l y (see F i g u r e 3 ) , the i n d u s t r y was s t i l l an important employer. Without work i n the woods or m i l l s , t here was v i r t u a l l y no source of income f o r many of the s e t t l e r s h i t hard by the Depression economy. Mulholland d e s c r i b e s the only other 1 0 i n d u s t r i a l p a y r o l l s as being the r a i l w a y (C.N.R.) and the c o n s t r u c t i o n and maintenance of government roads. 1 1 A i n t e r e s t i n g o b s e r v a t i o n i s made by M u l l i n s on the low t e c h n o l o g i c a l l e v e l of the i n d u s t r y i n the r e g i o n up u n t i l 1 9 3 9 . T h i s c o n d i t i o n , she maintains, was caused by a l a c k of c a p i t a l r e s u l t i n g from poor markets, thus r e s t r i c t i n g sawmills to l o c a t i o n s proximate to the C.N.R. Th i s s e v e r e l y l i m i t e d the area of resource e x p l o i t a t i o n and the m i l l s i t e s chosen by entrepreneurs were d i c t a t e d by the l o c a t i o n o f prime timber stands w i t h i n a few mi l e s r a d i u s of the r a i l w a y . T h e r e f o r e , the best timber was o f t e n not being u t i l i z e d which i n t u r n f u r t h e r depressed demand. To push back i n t o the p l a t e a u d i s t r i c t s , Sawmills C M B J J Mill Type & Daily Capacity • 1 0 - 2 0 • 2 1 - 5 0 © 5 1 - 1 0 0 Q 1 0 1 - 5 0 0 o v e r 5 0 0 / \ Pulp & Paper • P l ywood o i_ 40 _ L _ 80 I 120 _ l 160 I Miles FIGURE 3: MILL LOCATIONS AND DAILY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1936 16 logging operations needed to construct adequate roads, a d i f f i c u l t and expensive undertaking which few companies seemed able or w i l l i n g to afford. Stimulated development came with the beginning of the Second World War as large quantities of lumber were required on the Pr a i r i e s and elsewhere for the construction of a i r bases and other m i l i t a r y i n s t a l l a t i o n s . The demand for lumber further increased after the war ended and housing starts jumped. This triggered tremendous expansion in the forest industry with new mi l l s rushing into production to meet demand. As Figure 4 indicates, many of these m i l l s were quite limited in terms of daily production capacity with most capable of only ten to twenty M.B.F. of lumber d a i l y . The large established forest product companies s t i l l were not w i l l i n g to commit themselves to placing m i l l s in the central i n t e r i o r , thus i t was the small entrepreneurs who continued to build the industry. These smaller m i l l s , although portable, were s t i l l t i e d to locations adjacent to either the B.C.R. or C.N.R. l i n e s . A few were u t i l i z i n g truck transport but the road network was quite rudimentary. The majority of the m i l l s , including the larger units, were in the established area of development along the C.N.R. from Prince George to Valemount but several dozen smaller operations had located in the v i c i n i t y of Quesnel and Williams Lake to the south and along the l i n e west of Prince George. Expansion of the industry into these l a t t e r areas was necessary for new m i l l s wishing to locate near both good timber and r a i l service since the forests in the eastern sector were already largely allocated. 17 Mill Type & Daily Capacity • 1 0 - 2 0 # 2 1 - 5 0 H) 5 1 - 1 0 0 Sawmills GVLBJJ Q 1 0 1 - 5 0 0 O o v e r 5 0 0 / \ Pulp & Paper • P l ywood o 40 _L_ 80 l 120 I 160 —J Miles FIGURE 4. MILL LOCATIONS AND DALY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1948 18 C o n s i d e r a b l e p o s t - w a r d e v e l o p m e n t was t a k i n g p l a c e i n a n d a r o u n d P r i n c e G e o r g e . T h e t o w n h a d g a i n e d i m p o r t a n c e when t h e G r a n d T r u n k P a c i f i c R a i l w a y a n n o u n c e d t h a t i t w o u l d u s e P r i n c e G e o r g e a s t h e r e g i o n a l h e a d q u a r t e r s o f i t s o p e r t i o n s i n t h e p r o v i n c e . B y t h e t i m e t h e r a i l l i n e r e a c h e d t h e t o w n , s p e c u l a t o r s h a d i n v e s t e d h e a v i l y i n t h e s i t e a n d a b u i l d i n g boom was u n d e r w a y . T h i s e a r l y b u r s t o f g r o w t h g a v e P r i n c e G e o r g e a s i g n i f i c a n t a d v a n t a g e o v e r o t h e r s e t t l e m e n t s a l o n g t h e r a i l w a y a n d w h i l e i t e x p e r i e n c e d t h e same e c o n o m i c f l u c t u a t i o n s a s t h e r e s t o f t h e r e g i o n , i t c o n t i n u e d t o d o m i n a t e i n s i z e a n d i m p o r t a n c e a s t h e c e n t r a l i n t e r i o r d e v e l o p e d . I t s c e n t r a l l o c a t i o n a t t r a c t e d many h i g h e r o r d e r b u s i n e s s e s r e q u i r i n g a l a r g e t h r e s h o l d p o p u l a t i o n a s w e l l a s many g o v e r n m e n t s e r v i c e s w h i c h u s e d t h e t o w n a s a r e g i o n a l h e a d q u a r t e r s . A s i z e a b l e n u m b e r o f m i l l s h a d l o c a t e d w i t h i n s e v e r a l d o z e n m i l e s o f P r i n c e G e o r g e t h u s b e n e f i t t i n g f r o m t h e a v a i l a b i l i t y o f s e r v i c e s a n d a l a r g e l a b o u r f o r c e . F o l l o w i n g t h e e x a m p l e s e t b y t h e c o a s t a l i n d u s t r y , t h e i n t e r i o r m i l l s h a d r e c o g n i z e d t h a t a g g l o m e r a t i o n a l l o w e d s u b s t a n t i a l e c o n o m i c s a v i n g s o v e r a d i s p e r s e d l o c a t i o n a l p a t t e r n w h i c h p r e s e n t e d s u c h p r o b l e m s a s a l a c k o f s e r v i c e s a n d a s k i l l e d l a b o u r f o r c e a n d l i m i t e d a c c e s s t o r e l i a b l e a n d s u f f i c i e n t t r a n s p o r t f o r r a w a n d p r o c e s s e d t i m b e r . T h e 1 9 5 0 ' s b r o u g h t e v e n g r e a t e r g r o w t h t o t h e c e n t r a l i n t e r i o r ' s f o r e s t i n d u s t r y ( s e e F i g u r e 5 ) . Two m a j o r f a c t o r s w e r e r e s p o n s i b l e f o r t h i s r a p i d d e v e l o p m e n t . T h e f i r s t was t h e l o n g d e l a y e d c o m p l e t i o n o f t h e B . C . R . l i n e f r o m Q u e s n e l t o P r i n c e G e o r g e i n 1 9 5 3 , g i v i n g t h e n o r t h e r n s e c t i o n o f t h e r e g i o n a c c e s s t o s h i p p i n g o n t h e l o w e r c o a s t . A s w e l l , many g o o d s a n d s e r v i c e s required by the industry could now be obtained more re a d i l y and often at a lower cost. The second factor was the much improved post-war technology which allowed for easier road construction and created better logging and transport equipment. Harvesting operations began moving into remote areas with good timber stands which had previously been economically unfeasible to log and transport to m i l l locations. The completion of the B.C.R. l i n e to Prince George has been 12 viewed by some analysts, including P. Gamble, as the most important stimulus to resource development in the central i n t e r i o r . The C.N.R. had for many years enjoyed a v i r t u a l transportation monopoly on the export of wood products from the region yet had done l i t t l e to encourage i n d u s t r i a l growth. Lawrence c i t e s the railway for i t s p a r t i c u l a r l y uncooperative attitude towards the lumbermen. C.N. r a i l cars would tr a v e l empty from the P r a i r i e s to the m i l l s to take on lumber, thus charging the m i l l s for the cost of running the oars in both dire c t i o n s . As well, the C.N.R. made v i r t u a l l y no attempt to aid development of the industry by promoting the export of wood products through i t s western terminus at the port of Prince Rupert. Harold Moffat, ex-mayor of Prince George, stated in 1972 that, "...the P.G.E. has been the main impetus to our growth. Although the Grand Trunk P a c i f i c and la t e r the Canadian National were here for many years p r i o r , they did l i t t l e or nothing to stimulate growth mostly due to the rate structure that i s managed 13 from Montreal." 2.2 Rapid Development in the Region; 1954-1975 The location of new m i l l s coming into operation after 1954 20 tended to reinforce the pattern previously established. Many of the new m i l l s were small in comparison to coastal units and were capable of producing less than 50 M.B.F. of lumber per day. However, what they lacked in size they made up for in numbers and i n t e r i o r lumber production was quickly catching up to coastal production (see Table I ) . The smaller m i l l s were mostly portable and stationed themselves in the woods at the logging s i t e s . They were taking advantage of the growing road system for the trucking of t h e i r products, usually rough-cut lumber, to c o l l e c t i o n points along the r a i l l i n e s for further processing and export by r a i l to market or to the coast for transfer to ships. This system of placing smaller m i l l s in the woods was rather short-lived but i t continued over the next decade as timber harvesting operations penetrated further into the plateau areas. Along the B.C.R. and C.N.R. l i n e s , the larger m i l l i n g units were agglomerating in or near centers which had already been involved in forest related a c t i v i t y for many years. P a r t i c u l a r l y notable in Figure 5 i s the c o l l e c t i o n of approximately six t y m i l l s in the v i c i n i t y of Prince George. Some of the m i l l s were handling a l l stages of processing while others were planer m i l l s which specialized in the l a t t e r stages of lumber production. The same type of development was taking place in other centers, especially Smithers, Burns Lake, Quesnel, and Williams Lake. Each was gaining control over a log supply region, the size of which was dictated by transport distance and cost as well as the processing c a p a b i l i t i e s of the m i l l s in each center. The largest sawmills were located in the upper Fraser River valley east of Prince George. This was the area where the region's forest Mill T y p e & Daily Capac i t y • 10-20 # 21-50 Q 51-100 Q 101-500 o v e r 500 A P u , P & Paper O P l ywood Sawmills (MJBIJ o i_ 40 80 i 120 I 160 I Miles FIGURE 5. MILL LOCATIONS AND DALY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1954 TABLE I - COAST AND INTERIOR LUMBER PRODUCTION, 1951-1976 Year Coast I n t e r i o r * B . C . T o t a l (Thousands of Board Feet) 1951 2,519,528 1,294,349 3,723,877 1952 2,275,508 1,420,951 3,696,459 1953 2,571,631 1,474,093 4,045,724 1954 2,683,649 1,695,046 4,378,695 1955 2,756,096 2,158,189 4,914,285 1956 2,454,177 2,280,793 4,734,970 1957 2,352,481 2,059,906 4,412,387 1958 2,565,492 2,284,473 4,849,965 1959 2,345,656 2,602,929 4,948,585 1960 2,849,803 2,455,315 5,305,118 1961 2,955,950 2,663,747 5,619,697 1962 2,019,555 2,984,303 6,003,858 1963 3,395,952 3,338, 1 19 6,734,071 1964 3,492,091 3,603,191 7,095,282 1965 3,649,485 3,800,000 7,449,485 1966 3,680,245 3,638,863 7,319,108 1967 3,912,894 3,196,900 7,109,794 1968 4,144,306 3,666,833 7,811,139 1969 3,910,758 3,784,848 7,695,606 1970 3,789,609 3,867,078 7,656,687 1971 4,184,918 4,752,488 8,937,406 1972 4,027,086 5,478,952 9,506,038 1973 4,401,675 6,021,906 10,423,581 1974 3,403,100 5,338,795 8,741,895 1975 2,500,600 4,944,695 7,445,295 1976 3,987,506 6,638,610 10,626,116 *The i n t e r i o r lumber p r o d u c t i o n f i g u r e s i n c l u d e a l l f o r e s t d i s t r i c t s i n the i n t e r i o r of B . C . , not j u s t i n the c e n t r a l i n t e r i o r r e g i o n . Source: S t a t i s t i c s Canada, Canadian F o r e s t r y S t a t i s t i c s , Catalogue 25-202 ( A n n u a l ) . 23 industry had originated and the m i l l s were firmly established. Years before, they had secured large tracts of good timber for harvest and now the companies were able to access them by road. However, rather than clustering into a few towns the m i l l s tended to r e t a i n t h e i r h i s t o r i c a l l i n e a r pattern along the C.N.R. with the exception of the newer m i l l s near Valemount. The industry was no longer creating new towns as i t had in the 1910's and 1920's when communities grew up around m i l l i n g operations. The trend was towards locating in or near existing centers. The communities could not be la b e l l e d company towns in the sense that they were controlled by, or dependent upon, one company. They were m i l l s towns but the dependence was upon an assortment of m i l l s owned by d i f f e r e n t operators who together made up the forest industry of the region. The large companies on the coast continued to concentrate upon coastal forestry and showed l i t t l e interest in the central i n t e r i o r . To commence operations in the region meant adjusting to methods and equipment which were largely a l i e n to their c a r e f u l l y developed system of harvesting, transporting and processing. In conjunction with the growth of the forest industry was rapid growth of the population, especially in the centers where m i l l i n g a c t i v i t y was on the increase (see Table I I ) . In Prince George, the population t r i p l e d between 1951 and 1961 with much of the increase occurring in the early 1950's around the time of the completion of the B.C.R. Equally s i g n i f i c a n t increases were experienced in Quesnel, Williams Lake, Smithers, and Vanderhoof. With each succeeding census, more centers had grown in population to the point where they gained the status of individual census TABLE II - POPULATION OF CENTERS IN ECONOMIC REGION 7* CENSUS DIVISION 14 1921 1931 1941 1951 1956 1961 1966 1971 Prince George MacKenzie McBride Valemount 2,053 2,479 2,027 4,703 10,563 13,877 24,471 113 652 656 33,101 2,332 658 693 237 489 582 590 CENSUS DIVISION 2 Burns Lake Fort St. James Houston Smithers Telkwa Vanderhoof 218 801 1,016 615 1,041 1,081 699 2,487 576 1,460 1,290 1,213 699 3,135 668 1,507 1,367 1,483 2,232 3,864 712 1,653 759 1,204 1,962 580 1,085 350 644 CENSUS DIVISION 4 Quesnel Williams Lake 100 Mile House 653 540 1,587 913 4,384 1,790 4,673 2,120 5,725 3,169 829 6,252 4,072 1,120 *A11 of the centers l i s t e d were in existence prior to 1921 with the exception of MacKenzie which was incorporated in 1966. Any center without a population figure before 1966 was too small to be considered a separate census subdivision or enumeration area. Source: S t a t i s t i c s Canada, Censuses of Canada, 1921-1971. 4=" 2 5 subdivisions. It would be misleading to inf e r that t h i s growth can a l l be attributed to the forest industry. Other i n d u s t r i a l development, p a r t i c u l a r l y mining, was taking place during t h i s period, some of which eventually dominated communities such as Fraser Lake and Granisle. However, the forest industry was responsible for a large measure of the population growth through either direct employment or i n d i r e c t l y by stimulating development of service industries. In the eleven year period between 1 9 5 4 and 1 9 6 5 , the number of registered m i l l s in the region increased from 168 to 2 3 5 (see Table I I I ) . The early 1960's marked the high point in the growth of m i l l i n g operations and by the l a t t e r part of the decade, their numbers were quickly declining while the average da i l y production capacity of each m i l l was increasing. Of the m i l l s shown in Figure 6 , over one half were units capable of less than 20 M.B.F. of lumber d a i l y . As their locations indicate, they had continued to move greater distances from the r a i l l i n e s and major roads, evidence of the increased complexity of the region's secondary and logging road network. However, the large number of small m i l l s indicated on the map appears at f i r s t to be contradictory to the trend indicated in Figure 7 where the number of units in operation declined throughout the province in the 1 9 6 0's. In addition, Table III shows that by 1973 the t o t a l number of sawmills in the central i n t e r i o r had declined d r a s t i c a l l y from 2 3 5 to 6 4 with most of the m i l l s in the 1 0 - 2 0 M.B.F. category disappearing. Van Scofield of the Northern Interior Council of Forest Industries suggested that although each of the m i l l s would have been registered with the pr o v i n c i a l Forest Service, many TABLE I I I - NUMBER AND SIZE OF MILLS IN THE CENTRAL INTERIOR Year Daily Capacity (M.B.F.) Total Daily Total Number  Maximum Capacity* of M i l l s 10-20 21-50 51-100 101-500 Over 500 1926 1936 1948 1954 1965 1973 4 2 61 135 125 16 13 9 14 27 76 20 2 2 4 4 29 5 2 5 21 930 690 2,320 5,457 11,700 13,320 19 13 79 168 235 64 *Based on upper value of each daily capacity category. Source: The "ABC" B r i t i s h Columbia Lumber Trade Directory and Year Book (Vancouver: Progress Publishing Company). ON 27 Mill Type & Daily Capac i t y • 1 0 - 2 0 • 2 1 - 5 0 Sawmills ( M B J J (P 5 1 - 1 0 0 Q 1 0 1 - 5 0 0 o v e r 5 0 0 / \ Pulp & Paper • PlvWOOd ( T h o u s a n d ft. 7 - 3/8 i n j 0 l_ 40 80 120 I 160 I Miles FIGURE 6. MILL LOCATIONS AND DALY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1965 FIGURE 7 - NUMBER OF SAWMILLS IN BRITISH COLUMBIA, 1960-1973 2500 -2000 -00 H M S3 1500 -Operating 1000 -Non-operating 500 1960 1961 1962 T961 1961 T965 V9U TWf f968 T9E9 i"970 f971 1972 1973 Source: Derived from annual s t a t i s t i c s of the B.C. Forest Service Reports (Victoria: Government of B r i t i s h Columbia). IV) 00 29 were no longer operating by 1965, not even on an intermittent basis.^ ^  The decrease in the number of m i l l s during the 1960's indicates the trend of the industry towards large, centralized operations. The small operators could not economically compete with the growing number of m i l l s capable of producing hundreds of thousands of board feet of lumber d a i l y . These large complexes located adjacent to r a i l service in order to supply the growing markets of Eastern Canada and the United States. A large amount of lumber was also moving south on the B.C.R. to Vancouver and Squamish for water shipment to Asian and western U.S. seaboard markets. The harvesting, processing, and marketing of lumber had become a highly complex and sophisticated business which the small operators found themselves incapable of handling as costs rose. Lumber production did not suffer with the disappearence of these smaller m i l l s because each of the large m i l l s was producing as much as the combined t o t a l of a dozen or more of the smaller operations (see Figure 8). Interior lumber production kept pace with the coastal forest industry and in 1970 i t permanently moved ahead of the coast to the point where in 1975 the i n t e r i o r produced nearly twice as much lumber (see Table I ) . Much of the reason for the coastal industry's declining share of production lay with the aging equipment in i t s m i l l s . Some operations had become so economically unfeasible that they were shut down permanently while others required extensive renovations. Furthermore, the stands of large, prime timber located along the coast were quickly becoming depleted. The m i l l s were forced to adjust to -p CD CD C M X) ca o C M o w c o E-i l-H o <: P L , 30 25 20 15 10 FIGURE 8 - BRITISH COLUMBIA SAWMILL CAPACITY*, 1960-1973 Non-Operating 1960 T961 T9o2 T9B3 T 9 0 I 19O1> T96"6* T967 T9615 T9T9 ^970 T9T1 1972 T 9 7 3 *Capacity refers here to the volume of lumber a m i l l can produce in an 8 hour s h i f t . Source: Derived from annual s t a t i s t i c s of the B.C. Forest Service Reports, op.ci t . 00 o 31 s m a l l e r s e c o n d g e n e r a t i o n t i m b e r a n d wood o f a l e s s e r q u a l i t y , b o t h o f w h i c h d e c r e a s e d p r o d u c t i o n . T h e i n t e r i o r i n d u s t r y h a d t h e a d v a n t a g e o f much n e w e r e q u i p m e n t w h i c h h a d b e e n d e s i g n e d t o p r o c e s s s m a l l e r d i a m e t e r l o g s s u c h a s E n g l e m a n n S p r u c e , W h i t e S p r u c e , L o d g e p o l e P i n e , F i r , a n d B a l s a m . T h e s m a l l e r d i a m e t e r o f t h e t r e e s a n d t h e g e n t l e r t e r r a i n p e r m i t t e d h i g h l y m e c h a n i z e d l o g g i n g i n much o f t h e c e n t r a l i n t e r i o r s o t h a t m o r e t i m b e r c o u l d be h a r v e s t e d i n l e s s t i m e . V e r t i c a l i n t e g r a t i o n o f t h e i n d u s t r y a c c e l e r a t e d i n t h e 1 9 6 0 ' s w i t h t h e c o n s t r u c t i o n o f p u l p a n d p a p e r m i l l s a n d p l y w o o d a n d v e n e e r p l a n t s ( s e e F i g u r e 9 ) . T o g e t h e r w i t h t h e s a w m i l l s t h e s e o p e r a t i o n s f o r m e d a s y s t e m o f r o a d s u p p l y a n d u t i l i z a t i o n i n w h i c h t h e m i l l s c o m p l e m e n t o n e a n o t h e r . R o u n d w o o d u n s u i t a b l e f o r s a w m i l l i n g i s s e n t d i r e c t l y t o t h e p u l p m i l l s a s a r e c h i p s a n d some r e s i d u e f r o m t h e m i l l s . T h e b o l t s o f c o r e w o o d f r o m v e n e e r p r o d u c t i o n a r e a l s o u s e d i n p u l p i n g . M o s t o f t h e p u l p l e a v e s t h e r e g i o n w i t h o u t a n y f u r t h e r m a n u f a c t u r i n g w i t h t h e e x c e p t i o n o f t h e P r i n c e G e o r g e P u l p a n d P a p e r C o . m i l l w h i c h c o n v e r t s i t s p u l p t o p a p e r p r o d u c t s . A l t h o u g h i t i s common w i t h i n t h e p r o v i n c i a l p u l p i n d u s t r y t o s e l l u n p r o c e s s e d p u l p t o m a r k e t s , t h e r e i s a h i g h e r p e r c e n t a g e o f f u r t h e r p r o c e s s i n g o f t h e p u l p i n t o n e w s p r i n t a n d o t h e r p a p e r p r o d u c t s o n t h e c o a s t . F o r e s t i n d u s t r y a n a l y s t s e x p e c t t h a t w i t h i n a f e w y e a r s , t h e i n t e r i o r m i l l s w i l l f o l l o w t h e c o a s t a n d m o r e o f t h e p u l p w i l l l e a v e t h e r e g i o n i n a p r o c e s s e d f o r m , t h u s c r e a t i n g m o r e j o b s . A s w i t h t h e s a w m i l l i n g i n d u s t r y , t h e p u l p a n d p l y w o o d m i l l s a r e h i g h l y e f f i c i e n t p r o d u c e r s , m o r e s o t h a n some o f t h e i r o l d e r c o u n t e r p a r t s o n t h e c o a s t t h a t h a v e r e c e n t l y h a d t o e x t e n s i v e l y 32 Sawmills C M B J J Mill Type & Daily Capacity • 1 0 - 2 0 • 2 1 - 5 0 O 5 1 - 1 0 0 Q 1 0 1 - 5 0 0 o v e r 5 0 0 / \ Pulp & Paper (Tons) • P l ywood CThousand 0 40 i 80 _1_ 120 I 160 I Miles FIGURE 9. MILL LOCATIONS AND DALY CAPACITIES IN THE CENTRAL INTERIOR OF B.C. - 1973 3 3 update th e i r operations. Thus, i n t e r i o r m i l l s are able to maintain a r e l a t i v e l y competitive position on world markets despite the often longer transportation distances. The present l o c a t i o n a l pattern of the industry has had a s i g n i f i c a n t effect upon the development of centers in the region. Those communities containing the heaviest concentration of forest related a c t i v i t y have grown steadily in population, most notably Prince George, Quesnel, Williams Lake, and the Vanderhoof to Burns Lake area. In terms of absolute numbers, Prince George i s by far the dominant center as a res u l t of the large labour force employed in i t s numerous sawmills and three pulp m i l l s . This employment has stimulated hundreds of jobs in related service industries, p a r t i c u l a r l y transportation, machining, and product f a b r i c a t i o n , assembly, and repair. As w i l l be discussed in Chapter 3 , the number of in d i r e c t jobs which this employment has induced i s even greater than the labour force d i r e c t l y employed in the industry. Two other communities, Houston and MacKenzie, have experienced large population increases since 1 9 6 6 (see Table I I ) . Houston i s the s i t e of one of the largest sawmilling complexes in the province, a project which was completed in the early 1 9 7 0 ' s . Capable of producing in excess of 6 0 0 M.B.F. of lumber per day, the operation has created hundreds of d i r e c t jobs and boosted the service industries, helping to t r i p l e Houston's population between 1 9 6 6 and 1 9 7 1 . MacKenzie i s of p a r t i c u l a r interest because i t provides a rare modern example of a community in the province created s p e c i f i c a l l y by and for the forest industry. The D i s t r i c t of MacKenzie, incorporated in 1 9 6 6 , was b u i l t 34 as a j o i n t venture by three forest product companies to accomodate two pulp m i l l s and several sawmills on the edge of 15 W i l l i s t o n Lake. The B.C.R., which had constructed i t s l i n e as far as Fort St. John in 1958, b u i l t a 23 mile extension into MacKenzie for the movement of pulp and lumber to either Vancouver or 120 miles south to Prince George for transfer to the C.N.R. Unique to the region i s MacKenzie's heavy useage of water transport on W i l l i s t o n Lake for the shipment of a portion of the timber cut north of the community. The MacKenzie project i s worth mentioning in d e t a i l not only because i t i s a modern company town but also because i t indicates that the central i n t e r i o r forest industry has not reached a "plateau" in terms of possible future development. For example, the decision by the forest product companies to locate in a previously undeveloped part of the region indicates that other development i s not necessarily inextricably t i e d to present m i l l s i t e s and population centers. As well, the largest producer and employer in MacKenzie i s B.C. Forest Products, a major company on the coast for many years prior to i t s involvement in the central i n t e r i o r . This points to the growing interest amongst some coastal forest product companies in seeking new regions for development now that coastal production i s on the decline r e l a t i v e to the i n t e r i o r . Given present conditions in the central i n t e r i o r , i t has been suggested by analysts that development p o s s i b i l i t i e s involve the construction of wood 1 fi processing f a c i l i t i e s in or near existing communities. However, development in the Stuart and Takla Lakes area northwest of Fort St. James may be stimulated i f and when the B.C.R. continues 35 with the construction of i t s l i n e which presently stops at Driftwood, about 150 miles north-west of Fort St. James. Any future consideration given to the area by the forest industry obviously e n t a i l s more than adequate transportation but i f such development does take place, i t w i l l boost the economy of the region considerably through the creation of hundreds of jobs and, perhaps, the locating of a new community. The purpose of this chapter has been to demonstrate how the forest industry of the central i n t e r i o r has developed into a highly integrated and centralized system in much the same manner as had previously occurred on the coast. The m i l l s have grouped into a few communities, most of them h i s t o r i c a l l y important centers of forest related a c t i v i t y , thus concentrating the population and labour force. Once the l o c a t i o n a l pattern was established, the more advanced wood processing operations, in p a r t i c u l a r pulping and plywood, located so as to maximize benefits from economies of scale, thus becoming an integral part of the wood supply and production system. The small, independent operators who started the industry were gradually taken over by a smaller number of large companies capable of involvement at a much greater scale. The r e s u l t has been that much of the economic development in the region has involved the forest industry and created a dependence in many of the communities upon this single resource. Thus, a s i t u a t i o n has evolved where the economy of the central i n t e r i o r i s heavily t i e d into the state of the forest industry and any future d i r e c t i o n which i t may take, either v o l u n t a r i l y or as a r e s u l t of market conditions. This i n t e r r e l a t i o n s h i p between the forest industry and the centers 36 that i t dominates forms the topic of Chapter 3> 37 CHAPTER 2  Footnotes 1. M.B.F. i s a term commonly used in the forest industry to denote one thousand board feet. 2. Walter G. Hardwick, Geography of the Forest Industry of  Coastal B r i t i s h Columbia (Occasional Papers in Geography, No. 5, Canadian Association of Geographers, B.C. Divis i o n , Department of Geography, University of B r i t i s h Columbia, 1963). 3. Joseph C o l l i n s Lawrence, Markets and Capital ; A History of  the Lumber Industry of" B r i t i s h Columbia (1778-1952) (Unpublished M.A. Thesis, Department of History, University of B r i t i s h Columbia, September, 1957), pp. 54-55. 4. J.H. Kenney, A Regional Survey of the Hazelton-Vanderhoof,  B.C. Area (Graduating Essay, Department of Geography, University of B r i t i s h Columbia, 1948), p. 63. 5. James F. Gilmour, The Forest Industry as a Determinant of  Settlement in B r i t i s h Columbia; The Case for Integration  Through Regional Planning (Unpublished M.Sc. Thesis, School of Community and Regional Planning, University of B r i t i s h Columbia, A p r i l , 1965), p. 104. 6. For a detailed history of settlement in the Bulkley and Nechako Rivers area, see Kenney, op.cit. 7. A thorough account of the development of the P.G.E. i s contained in Paul E. Gamble, The B r i t i s h Columbia Railway and  Regional Development (Unpublished M.A. Thesis, School of Community and Regional Planning, University of B r i t i s h Columbia, A p r i l , 1972). 8. Data on the m i l l locations and sizes were taken from The  "ABC" B r i t i s h Columbia Lumber Trade Directory and Year Book (Vancouver, Progress Publishing Company). 9. F.D. Mulholland, The Forest Resources of B r i t i s h Columbia ( V i c t o r i a : Department of Lands, B.C. Forest Service, 1937), p. 108. 10. The Grand Trunk P a c i f i c Railway was taken over by the Canadian National Railway shortly after World War One. 11. Doreen K. Mullins, Changes in Location and Structure in the  Forest Industry of North Central B r i t i s h Columbia, 1909-1966" (Unpublished M.A. Thesis, Department of Geography, University of B r i t i s h Columbia, September, 1967). 12. Gamble, op.cit., p. 46. JL 3 8 1 3 . Ibid., p. 5 8 . 1 4 . From statements made in a personal interview in Prince George, February, 1 9 7 8 . 1 5 . MacKenzie I n d u s t r i a l , Community, and Commercial Survey (Prince George: Fraser-Fort George Regional Development Commission, March, 1 9 7 7 ) . 1 6 . The Central Report - 7 6 ( V i c t o r i a : Department of Economic Development, Government of B r i t i s h Columbia, 1 9 7 6 ) , pp. 4 0 -4 8 . 39 CHAPTER 3 ECONOMIC BASE ANALYSIS AND ITS APPLICATION TO THE CENTRAL  INTERIOR REGION Having demonstrated in the previous chapter how the forest industry has h i s t o r i c a l l y dominated much of the central i n t e r i o r ' s economic development, the intent here i s to analyze and quantify t h i s dependency. A wide variety of techniques of measurement purporting to accomplish t h i s task have been developed by urban and regional analysts, beginning with some i simple attempts by H. Hoyt in the 1 9 3 0's to quantify basic-nonbasic r a t i o s in American c i t i e s . The early methods have subsequently been vastly refined and expanded upon to encompass such r e l a t i v e l y sophisticated techniques as input-output analysis and econometric modelling. While these advanced methods of analysis have been widely advocated as more "real world" J and accurate in th e i r r e s u l t s , they are not applicable to a l l regions or situations, p a r t i c u l a r l y because of th e i r need for large quantities of r e l a t i v e l y detailed data. When i n i t i a l l y gathering information for this portion of the thesis, i t became evident that i f a method of analysis such as input-output was to be used, considerably more economic data were required on the communities and forest industry of the central i n t e r i o r . A t r i p was made by the author to the region in 1 9 7 7 to ascertain the f e a s i b i l i t y of gathering data through a firm-by-firm approach and/or unpublished l o c a l government s t a t i s t i c s . Discussions with o f f i c i a l s of several large forest product companies, the Northern Interior Council of Forest Industries, 40 the Regional D i s t r i c t of Fraser-Fort George, and the City of Prince George indicated that there was l i t t l e economic data available beyond that already published by sources such as S t a t i s t i c s Canada. Furthermore, i t was suggested that a firm-by-firm survey would be an extremely time-consuming undertaking and that there was l i t t l e l i k e l i h o o d of cooperation from some of the necessary information sources. Despite the unsuccessful attempt to gather further economic data, the t r i p did allow the opportunity to v i s i t a l l but three of the region's thirteen largest population centers. The three towns not v i s i t e d were, Fort St. James, McBride, and Valemount. Given the constraints of time and data a v a i l a b i l i t y , Economic Base Analysis was chosen as most appropriate for t h i s study although i t i s a form of analysis prone to continued c r i t i c i s m from some analysts. Two forms of E.B.A., the Location Quotient method and the Minimum Requirements technique, have been applied in an attempt to increase the degree of accuracy of the analysis and r e s u l t s . Each has i t s own p a r t i c u l a r strengths and weaknesses, thus i t i s necessary to begin with a review of the existing l i t e r a t u r e and relevant empirical research involving Economic Base Analysis. The l a t t e r portion of the chapter presents and discusses the results of applying the two forms of E.B.A. to labour force data on communities in the central i n t e r i o r . This chapter i s therefore intended not only to provide a better understanding of some of the i n t e r r e l a t i o n s h i p s between the forest industry and the regional economy but also to contribute to the empirical research u t i l i z i n g the E.B.A. approach. 41 3.1 A Review of Economic Base Analysis E s s e n t i a l l y , the economic base theory states that a community's economic growth comes from the export of goods and services which i t produces l o c a l l y but s e l l s outside of i t s boundaries. This creates the income upon which the rest of the community depends and i s termed the basic sector, in this case the forest industry. The rest of the business a c t i v i t i e s within the community that supply goods and services for l o c a l sale or use are referred to as nonbasic. A key phrase here i s "economic growth" because th i s i s what distinguishes a community or region undergoing the process from one which exists on a subsistence economy. In the l a t t e r , no trade takes place outside of the area's boundaries and while development may occur, i t would usually be at a r e l a t i v e l y slower rate than i f trade occurred. This would be esp e c i a l l y true at the l o c a l and regional le v e l s being investigated here. Obviously, the theory i s based on a highly s i m p l i f i e d view of an urban or regional economic system and i t ignores certain important and observable economic factors. However, i t serves as a useful base upon which many models have been fashioned, including the widely u t i l i z e d Lowry model. While the basic-nonbasic concept was vaguely recognized as early as 1921 and f i r s t applied to a s p e c i f i c c i t y in 1932 by R. Hartshorne in his study of Minneapolis-St. Paul,^ advancement of 7 the methodology i s credited to Hoyt. He proposed a method for measuring basic a c t i v i t y which was termed his "six steps" for lack of a better t i t l e . I t involved comparing the percentage of people employed in various a c t i v i t i e s in a community with the national percentage to determine which a c t i v i t i e s had more 42 workers at the l o c a l l e v e l than the national averages. The excess employment was considered to be the basic employment of the community and whatever i t was that they produced was taken as goods or services destined for export. It i s from this early work by Hoyt that the Location Quotient method discussed l a t e r in this chapter was derived. Hoyt was also the f i r s t to examine in any d e t a i l the concept of basic-nonbasic r a t i o s . O r i g i n a l l y , because of limited data and testing, he assumed the employment r a t i o to be 1:1 for a l l centers. Through l a t e r empirical research, he concluded that the r a t i o actually varied for each community. Hoyt's i n i t i a l interest in the economic base was through his work with the Federal Housing Administration in the United States where he found the method useful as an indicator of l o c a l housing market demand. He soon realized that i t had even greater applications. R. Andrews states that, "Hoyt considered the economic base idea to be a tool that might be employed in analyzing the economic background of c i t i e s with the objective of Q forecasting the future of the entire c i t y . " The 1940's produced dozens of economic base studies on American c i t i e s . Some followed the existing techniques of measurement, but many provided new ideas on how to u t i l i z e the concept. However, academic interest in the subject appears to have receded i f judged by the number of relevant a r t i c l e s , thus many of the advances in methodology went largely unpublicized. q The series of a r t i c l e s by Andrews in the early 1950's sparked renewed inter e s t , p a r t i c u l a r l y amongst geographers. J. Alexander published a 1954 paper in which he suggested how geographers could best approach economic base theory. He 43 states, "This concept has merit for urban geography because i t c l a s s i f i e s economic base functions fundamentally on the basis of space-relationships, i t reveals one group of economic t i e s which bind a c i t y to other areas, i t permits a c l a s s i f i c a t i o n of and comparative analysis of settlements, and i t provides an additional method of c l a s s i f y i n g individual economic a c t i v i t i e s 10 ' within a c i t y . " From an empirical study presented in the same paper, Alexander found that as a community grows, i t s proportion of nonbasic employment grows as well. There were also indications that a somewhat constant relationship exists between the size of the labour force and the size of the population which i t supports. If such relationships can be shown to exist for communities in the central i n t e r i o r , they could be b e n e f i c i a l as a planning tool in helping to understand how increases or decreases in the forest related labour force impact upon population and employment in the rest of the community. Alexander raised some questions which he f e l t warranted further study, including: does the basic-nonbasic r a t i o vary with the type of settlement, are the nonbasic a c t i v i t i e s similar from center to center, and does the employment r a t i o vary not only with the size and type but also with the location of settlement? Given the intent of this chapter and the type of data available for E.B.A., there are e s s e n t i a l l y three techniques of measurement which could be p o t e n t i a l l y u t i l i z e d - the Assumptions Approach, the Location Quotient method, and the Minimum Requirements technique. The decision to apply the l a t t e r two techniques rather than the Assumptions Approach i s outlined in the following three sections. 44 3.2 The Assumptions Approach In the Assumptions Approach to E.B.A., certain industries and commercial firms are assumed to be wholly basic employment a c t i v i t i e s , others are considered wholly service oriented, and the remainder are a combination or "mix" of basic and nonbasic. The major problem i s in determining how each economic a c t i v i t y i s 11 to be categorized. W. Isard makes extensive mention of a 1952 12 Wichita, Kansas study as an empirical example of the Assumptions Approach and i t serves to explain why the technique i s not appropriate for application to employment data on the communities in the central i n t e r i o r . The Wichita study presented employment data broken down into twenty-one economic a c t i v i t i e s , including eleven sub-categories of manufacturing. This i s in contrast to the employment data available for use in thi s study which are broken down into only twelve sectors, including just one category for manufacturing. To aid in a l l o c a t i n g employment to wholly basic or non-basic status, the Wichita study was able to make use of "...available 1 3 empirical data on sales, markets, etc." J To determine the basic-nonbasic r a t i o for mixed industries, the Location Quotient 1 4 technique was applied. Given that the l e v e l of disaggregration of the S t a t i s t i c s Canada data i s much less than that of the Wichita study and that there exists a dearth of comprehensive empirical evidence to suggest that any pa r t i c u l a r sector of the twelve i n d u s t r i a l a c t i v i t i e s can be viewed as e n t i r e l y basic or nonbasic, i t i s obvious that the Assumptions Approach i s unsuitable. Hence, either the Location Quotient method or Minimum Requirement technique w i l l have to be r e l i e d upon to 45 determine the r a t i o . 3.3 The Location Quotient Method 15 The Location Quotient formula, as given by C. Tiebout i s : x national employment in industry i t o t a l l o c a l employment " t o t a l national employment Solving for x yields the number of people who would be employed in industry i in the community i f i t had just enough to supply i t s own needs. If the actual employment in that industry exceeds x, the residual i s considered export and thus becomes part of the basic sector. Strong c r i t i c i s m has been leveled at the Location Quotient method of examining the economic base, p a r t i c u l a r l y by those analysts who have chosen instead to use the Minimum Requirements technique. The method assumes that the community being studied i s t y p i c a l of other communities in the country in that i t w i l l have si m i l a r demands. It i s obvious that strong economic and c u l t u r a l differences exist between some regions of Canada. However, i f , for example, B.C. employment figures rather than national figures were used, the Vancouver and V i c t o r i a metropolitan areas, with approximately three-quarters of B.C.'s population, would exert a strong influence. As well, p r o v i n c i a l employment data would strongly r e f l e c t the high numbers in the forest industry labour force, thus the number calculated as required at the l o c a l l e v e l to meet the demands of the community (nonbasic employment) would be far in excess of r e a l i t y . Of course, even when using the national l e v e l as the benchmark, the method assumes s e l f - s u f f i c i e n c y when in fact trade i s taking H6 place with other countries. This i s a problem no matter what benchmark i s used and, as Yeates and Garner state, "Ultimately i f 1 ft the world i s taken as unit then a l l a c t i v i t i e s are nonbasic." Productivity per employee has been another concern of c r i t i c s . It i s possible that output from a community i s above the national average, therefore more of the employment should belong to the export category. Tiebout notes that this c r i t i c i s m 17 is most applicable in the manufacturing industry. 1 It i s v i r t u a l l y impossible to ascertain i f such a v a r i a t i o n in productivity between manufacturers or communities exists in the central i n t e r i o r . However, i t would seem to be of l i t t l e , i f any, significance because of the size of the centers being analyzed. Such a concern would seem more v a l i d at the metropolitan or p r o v i n c i a l l e v e l . It has been found that the L.Q. tends to underestimate the number of employees in the basic sector, thus creating higher ra t i o s than should be the case. Tiebout compared export percentages based on survey results versus L.Q. derived figures for six large c i t i e s in the United States. In every case the L.Q. estimate was below the survey figure for basic employment. R. Leigh discusses the problem of underestimation in his study of 1 8 Vancouver's economy. He obtained data from which he was able to accurately calculate the percentage of sales outside the Vancouver area for f i f t e e n industries. He then calculated what the re s u l t s would be using the L.Q. method and data from the 1958 Canadian Census of Production. Leigh concluded, "Location quotients do not c l e a r l y i d e n t i f y or rank those industries that constitute the economic base of the c i t y . For these reasons, 4 7 estimates of basic employment derived from location quotients tend to be underestimates ( i n comparison to sales proportion based estimates) and the basic-nonbasic employment r a t i o s based 1 9 on them would be misleading." In defense of the method, i t can be argued that i f indeed L.Q. produced estimates are inaccurate, i t should be to approximately the same degree for each. Therefore, they can s t i l l be used to test most relationships and are s t i l l acceptable when used in r e l a t i v e comparisons. 20 E. Ullman et a l . provide further discussion of relevance on the topic of L.Q. accuracy. Since the L.Q. tends to underestimate exports, i t overestimates the m u l t i p l i e r . For example, i f a c i t y has the same percentage employed in a given sector as the average in the country, this average includes production both for average internal c i t y needs and average exports from a c i t y . Thus, measuring from the average w i l l p r a c t i c a l l y always produce a smaller export than measuring from the minimum. If an excess above the average i s taken as the export (instead of excess above the minimum), a much higher m u l t i p l i e r w i l l r e s u l t . Ullman noted that t h i s would be p a r t i c u l a r l y true the greater the degree of aggregation ( i e . the less the breakdown of i n d u s t r i a l categories). An advantage of the L.Q. i s that i t i s capable of measuring in d i r e c t as well as di r e c t exports. For example, i f an industry produces a semi-finished good which i t then s e l l s l o c a l l y to another industry which uses i t to produce a finished product for export, the L.Q. method w i l l indicate both goods as export rather than just the l a t t e r . This i s p a r t i c u l a r l y relevant in examining the forest industry where a piece of timber may undergo several 48 stages or more of processing by d i f f e r e n t manufacturers in i t s journey from the woods to market. 3.4 The Minimum Requirements Technique The Minimum Requirements technique of measuring the economic base has been favoured by some analysts but, l i k e the L.Q. method, i t contains some weaknesses. A succinct d e f i n i t i o n of 21 the technique i s provided by Tiebout. For each community, the percentage of the t o t a l labour force employed in each industry i s calculated. The percentages for a given industry are then ranked in decreasing order of magnitude. The lowest percentage of a l l the communities for the industry i s presumed to be the minimum required to s a t i s f y the community's needs. A l l other employment i s considered export and therefore basic. 22 H. Brodsky and D. Sarfaty, as well as pointing out some of the previously discussed problems with the L.Q. method, advance the M.R. technique because i t i s derived from central place theory and i s l o g i c a l l y grounded in the concept of urban economic thresholds. However, they do allow that, "As an i n d i r e c t technique... the minimum requirements method i s not without defects, perhaps the most serious of which i s that a l l c i t i e s within the same population range are regarded as having i d e n t i c a l 2? nonbasic components." J In r e a l i t y , variations in l o c a l consumption, income, and distance from competing centers a f f e c t nonbasic a c t i v i t y . Ullman et a l . defend the approach as "...a s u r p r i s i n g l y r e l i a b l e indicator, although no more than an approximation, and...it i s the best short cut method for estimating, es p e c i a l l y 24 for aggregate groupings." Using the M.R. approach, they found 49 that the larger a c i t y , the more s e l f contained i t i s , a finding that confirms one of the basic premises of central place theory. For a town of 10,000 persons, the basic to nonbasic employment was calculated to be 1:0.5. For a population of 250,000, the r a t i o was 1:1 and i t climbed to over 1:2 for c i t i e s in the m i l l i o n s . These r a t i o s are somewhat questionable in that they are lower than those calculated for much smaller communities investigated by the studies discussed in the section which follows. In defense of the L.Q. approach compared to the M.R. technique, Ullman et a l . observed that the method could be less awkward when applied to i n d i v i d u a l , disaggregated industries, especially i n a small town where the Minimum Requirement for a minor industry might be expected to be zero yet the industry s t i l l s e l l s most or a l l of i t s output l o c a l l y . They concluded, "At best,...at extreme disaggregation,... i t i s about a standoff -the location quotient suffers from measuring an i r r e l e v a n t average..., or conversely, the minimum may provide a f a l s e low 2S minimum." They f e l t that the M.R. technique was superior to the L.Q. approach because the minimum gives more nearly a gross figure while the L.Q. gives a net figure. A consistent c r i t i c i s m of the M.R. technique has been that taking the minimum can often r e s u l t in "flukes" so that some of the minimums determined to be necessary to s a t i s f y the needs of a community in various i n d u s t r i a l sectors are much lower than should be the case. G. Alexandersson and I. Morrissett ' attempted in separate studies to get around this problem by using the 5 percentile (K f a c t o r ) , an approach which drops the bottom 50 one or more minimums from the c a l c u l a t i o n of the mimimum requirements. Ullman and M. Dacey responded by arguing that there are equally good reasons for being consistent and taking the actual minimum, especially at higher l e v e l s of aggregation with fewer i n d u s t r i a l sectors. They admit that as the breakdown becomes f i n e r , the chances of flukes increases but that for the 14 i n d u s t r i a l types which they used, a K factor i s not necessary. Despite Ullman and Dacey's argument, the K factor has become standard practice in most applications of the M.R. 'technique. In an a r t i c l e that i s highly c r i t i c a l of the M.R. approach, 29 R. Pratt summarizes his discussion by stating that the technique i s i n f e r i o r to the L.Q. method because averages are more meaningful then minimums, both techniques require the same assumptions, and M.R. i s subject to greater error from improper disaggregation. Pratt's c r i t i c i s m s served only to spark further arguments for and against both methods of Economic Base Analysis but Ullman, Dacey and Brodsky provide what would seem to be the best compromise: "It might be argued that, just as the location quotient, or national average approach, gives too high a l o c a l component, since i t would include average exports, the minimum would give too low a l o c a l figure, because some of the employment or production above the minimum could represent production for the l o c a l market (import s u b s t i t u t i o n ) . Thus, some figure between the minimum and the average (location quotient) might 30 give a better general measure." It i s with t h i s thought in mind that the decision was made to use both the Location Quotient and Minimum Requirements methods of E.B.A. in the analysis which follows the next section. 51 3.5 Empirical Economic Base Analysis Involving the Forest  Industry Various forms of E.B.A. have been u t i l i z e d extensively in the l a s t ten to f i f t e e n years in studies that have involved analyzing the economic impact of the forest industry on communities or regions in both the United States and Canada. Most of the studies have r e l i e d upon employment data as opposed to income or production figures because the former are generally more readily obtainable and allow greater ease in ca l c u l a t i o n of basic-nonbasic r a t i o s and m u l t i p l i e r s . Discussion of the findings and conclusions of these studies i s important because they provide a useful comparison in determining the accuracy of E.B.A. derived r a t i o s and mu l t i p l i e r s for communities in this thesis. 31 A 1969 study on a l l aspects of the Ontario forest industry-^ devoted considerable space to a discussion of the employment impact of the industry. An analysis was made using three communities, Dryden, Kapuskasing, and Hearst, which were considered t y p i c a l of centers with a large amount of forest-related a c t i v i t y . The study found that as the remoteness of a town increases, the basic-nonbasic r a t i o tends to decrease, an indication that s e l f - s u f f i c i e n c y would also tend to decrease. The finding also confirms the widely-held b e l i e f that remote resource based communities are lacking in many of the goods and services which would help to create a more stable labour force. A l o c a l community m u l t i p l i e r of 2 ( i e . , a r a t i o of 1:1) was found by the study to be f u l l y j u s t i f i e d and in fact a conservative figure. The report states, "...both theory and empirical work 52 indicates that a m u l t i p l i e r as high as 2.5 or even more could be assumed for basic employment in Southern Ontario communities, whether in the forest industry or in related secondary 32 manufacturing and service industry." J A Canadian study in 1972 on Manitoba's wood-using industry J calculated employment m u l t i p l i e r s based upon the r e s u l t s of the Ontario report. The Manitoba study was able to determine m u l t i p l i e r s for several d i f f e r e n t sectors of the forest industry although the figures are on a p r o v i n c i a l scale. The highest m u l t i p l i e r was for the pulp and paper industry at 2.05 while sawmilling was s l i g h t l y lower at 2. No attempt was made to explain the possible reason for a higher pulp and paper m u l t i p l i e r but i t i s most l i k e l y because such operations are generally located in much larger communities than the average sawmill. The authors of the report conducted a s i m i l a r study in the same year on Saskatchewan's forest industry and estimated a s l i g h t l y lower p r o v i n c i a l m u l t i p l i e r of 1.97. In the United States, studies on the economic impact of the forest industry have been able to use more sophisticated techniques of measurement because of the greater amounts of data available at the regional or community scales. A research paper on the P a c i f i c Northwest by D. F l o r a J used sales data to determine a basic to service r a t i o of 1:1.26. Flora points out that the decline of the forest industry could have an e f f e c t on non-local service a c t i v i t y , e s pecially in wholesaling, transportation, and equipment manufacturing and s e r v i c i n g . However, the study was unable to obtain an adequate quantitative measure of such an e f f e c t . 53 I n p u t - o u t p u t a n a l y s i s was used i n a 1968 paper which l o o k e d a t P e n n s y l v a n i a ' s f o r e s t i n d u s t r y . Based on d i r e c t and i n d i r e c t income, the s t u d y found t h a t a t o t a l e x p o r t m u l t i p l i e r o f $ 1 . 8 8 e x i s t e d by a n a l y z i n g the e x p o r t by paper f i r m s from a p a r t i c u l a r c o u n t y . In a n o t h e r county w i t h a s a w m i l l i n g economy, every d o l l a r o f goods s o l d was e s t i m a t e d t o produce $ 2 . 2 4 i n economic a c t i v i t y . Commenting on t h i s s t u d y , H e d l i n e t a l . s t a t e t h a t , "The r e l a t e d employment m u l t i p l i e r s would be s l i g h t l y h i g h e r because average income i s lower i n s e r v i c e i n d u s t r i e s than i n l o g g i n g and manufacturing."-^ They suggest t h a t such a m u l t i p l i e r would be i n the o r d e r of 2 . 2 6 . The f i g u r e s seem c o n s e r v a t i v e when compared t o a 1970 r e p o r t on the r o l e o f f o r e s t 37 l a n d s i n the Washington s t a t e economy. 1 Income m u l t i p l i e r s c o m p i l e d from i n p u t - o u t p u t t a b l e s produced f i g u r e s from 2 . 2 f o r paper m i l l s t o 4 . 1 9 f o r l o g g i n g . However, i t must be kept i n mind t h a t c a l c u l a t i n g m u l t i p l i e r s a t the s t a t e l e v e l would be t a k i n g i n t o a c c o u n t t r a d e a c t i v i t y o u t s i d e t h e communities and c o u n t i e s . T h e r e f o r e i t s h o u l d be e x p e c ted t h a t the s t a t e - l e v e l m u l t i p l i e r ( s ) would be h i g h e r . A s i m i l a r methodology was u t i l i z e d by K. Runyon et a l . i n t h e i r a n a l y s i s o f the Nova S c o t i a f o r e s t i n d u s t r y . However, i n s t e a d o f income m u l t i p l i e r s , the s t u d y was a b l e t o d e r i v e employment f i g u r e s from Dominion Bureau of S t a t i s t i c s i n p u t -o u t p u t t a b l e s a v a i l a b l e a t a p r o v i n c i a l s c a l e f o r 1 9 6 0 . The employment m u l t i p l i e r s ranged from 1 .4 f o r m i s c e l l a n e o u s wood p r o d u c t s ( e x c l u d i n g f u r n i t u r e ) and 3 . 2 f o r s a w m i l l i n g t h rough t o 3 . 5 f o r p u l p and paper. An i n t e r e s t i n g attempt was made t o i d e n t i f y b a s i c employment 54 i n the timber i n d u s t r y of the P a c i f i c Northwest and Northern C a l i f o r n i a u s i n g the L o c a t i o n Quotient technique. The study d i v i d e d a f o r t y - o n e county D o u g l a s - f i r r e g i o n i n t o f i f t e e n economic areas based e s s e n t i a l l y on commuting d i s t a n c e s and shopping p a t t e r n s . The l a r g e s t c i t y i n each of the economic areas was i d e n t i f i e d as the growth cent e r s i n c e i t t y p i c a l l y i s the most r a p i d l y growing p a r t of an area. The growth c e n t e r and surrounding communities form an economic area d e s c r i b e d by W. Maki et a l . as being c h a r a c t e r i z e d by a high degree of interdependence and i n t e r n a l economic l i n k a g e s . For each of these areas, the study c a l c u l a t e d L.Q.'s by comparing n a t i o n a l employment i n each i n d u s t r i a l s e c t o r with l o c a l employment i n tha t s e c t o r . The excess employment above the norm was c a t e g o r i z e d as producing f o r export markets and t h e r e f o r e b a s i c . T h i s method of a n a l y s i s d e r i v e d an employment m u l t i p l i e r of 2.26. The o n l y p u b l i s h e d study of r e l e v a n c e on B r i t i s h Columbia's f o r e s t i n d u s t r y has been a widely d i s t r i b u t e d r e p o r t prepared by Lin F.L.C. Reed and A s s o c i a t e s f o r the B.C. F o r e s t S e r v i c e . The r e p o r t made a number of assumptions concerning the economic base but i t produced employment r a t i o s and m u l t i p l i e r s approximately e q u i v a l e n t to those found i n many of the a r t i c l e s d i s c u s s e d here, some of which the r e p o r t acknowledged. For the pro v i n c e as a whole, Reed c a l c u l a t e d the b a s i c to nonbasic r a t i o as 1:2 and the m u l t i p l i e r t h e r e f o r e to be 3, although l a b e l l e d as a " c o n s e r v a t i v e " e s t i m a t e . In an attempt to determine the impact of the i n d u s t r y on an i n d i v i d u a l community, a survey was conducted by Reed i n the P r i n c e George area. The boundaries of the survey area were 55 d e l i m i t e d as w i t h i n a twenty m i l e r a d i u s from P r i n c e George, c o n t a i n i n g 54,000 p e o p l e . I t i s i m p o r t a n t t o note t h a t a l t h o u g h most l o g g i n g o p e r a t i o n s l a y o u t s i d e o f the b o u n d a r i e s , most l o g g i n g employees were c o n s i d e r e d as m a i n t a i n i n g households w i t h i n the s u r v e y a r e a . A s i m i l a r a ssumption has been made f o r a l l t he communities i n the a n a l y s i s which f o l l o w s . A l s o assumed i n Reed's s t u d y was t h a t a l l the wood i n d u s t r i e s , paper and a l l i e d i n d u s t r i e s , and f o r e s t s e r v i c e s were b a s i c a c t i v i t i e s . T w e n t y - f i v e p e r c e n t o f employment i n a g r i c u l t u r e , m a n u f a c t u r i n g ( o t h e r than f o r e s t p r o d u c t s ) , c o n s t r u c t i o n , and the f i v e i n d u s t r i a l groups i n the s e r v i c e s e c t o r was c o n s i d e r e d b a s i c . The r e s u l t s y i e l d e d a m u l t i p l i e r o f 2.43. A p p l y i n g the same type of a n a l y s i s t o an employment s u r v e y of t h e Okanagan r e g i o n which c o n t a i n s the major f o r e s t p r o d u c t c e n t e r s o f P e n t i c t o n and Kelowna, Reed produced an almost i d e n t i c a l m u l t i p l i e r o f 2.49. T a b l e IV p r o v i d e s a summary of the type and s i z e of m u l t i p l i e r s c a l c u l a t e d by the e m p i r i c a l s t u d i e s d i s c u s s e d i n t h i s s e c t i o n . The t a b l e p r o v i d e s a c l e a r i n d i c a t i o n t h a t the s i z e o f the m u l t i p l i e r v a r i e s depending upon a number of f a c t o r s , i n c l u d i n g the type o f d a t a used, the g e o g r a p h i c a l l o c a t i o n and s i z e o f t h e r e g i o n a n a l y z e d , and the method o f a n a l y s i s a p p l i e d . The employment m u l t i p l i e r s range from 1.4 f o r m i s c e l l a n e o u s wood p r o d u c t s i n Nova S c o t i a t o 3.5 f o r p u l p and paper, a l s o i n Nova S c o t i a . The two employment m u l t i p l i e r s o f most r e l e v a n c e to t h i s s t u d y a r e th o s e c a l c u l a t e d by Reed o f 3-0-for B r i t i s h Columbia and 2.49 f o r P r i n c e George. \ TABLE IV - SUMMARY OF MULTIPLIERS CALCULATED BY EMPIRICAL STUDIES OF THE FOREST INDUSTRY Region P a c i f i c Northwest P a c i f i c Northwest and Northern C a l i f o r n i a Pennsylvania Ontario Washington State Nova Scotia B r i t i s h Columbia and Prince George Manitoba Author(s) and Year Flora, 1965 Maki et al,1968 Gamble, 1968 Hedlin and Menzies, 1969 Government Report, 1970 Runyon et al,1972 Reed et a l , 1973 Teskey and Smith, 1975 M u l t i p l i e r 2.26 2.26 1.88 - 2.24 2.26 2 - 2.5 2.2 (Paper Products) 4.19 (Logging) 1.4 (Misc. Products) 3.2 (Sawmill) 3.5 (Pulp & Paper) 3 2.49 2 - 2.05 Jjrpe Income Employment Income Employment Employment Income Employment Employment Employment Employment Saskatchewan Teskey and Smith, 1975 1 .97 Employment 57 3.6 The Application of Economic Base Analysis to the Central  Inter i o r The labour force data for t h i s analysis came from the 1971 Census of Canada published by S t a t i s t i c s Canada. Of the fourteen centers in the central i n t e r i o r for which data were given, a l l but one, Fraser Lake, were i d e n t i f i e d as having s i g n i f i c a n t involvement in the forest industry. Fraser Lake was omitted because most of i t s employment i s in the mining sector. Two types of employment data were available - Labour Force by Occupation and Labour Force by Industry. Occupational employment was rejected because i t would not be possible to i d e n t i f y the t o t a l number employed in a given i n d u s t r i a l sector. For example, those persons l i s t e d as c l e r i c a l could be employed in v i r t u a l l y any business a c t i v i t y from a grocery store through to a pulp and paper company. Table V shows the industry d i v i s i o n s and the t o t a l numbers employed in each for the three census di v i s i o n s (2, 4, and 14) within the study region. In c a l c u l a t i n g both the L.Q.'s and M.R.'s, the "industry unspecified or undefined" category in Table V was assumed to be evenly divided up amongst the twelve other industries. The basic-nonbasic r a t i o s which were derived using the L.Q. method are much higher than should be expected for communities which range in population from only 658 to 33,101 (see Table VI). This i s p a r t i a l l y accentuated by the fact that Canada i s i t s e l f an exporter and national figures were used in c a l c u l a t i n g the expected nonbasic needs of the communities. The lowest r a t i o i s 1:1.86 (a m u l t i p l i e r of 2.86) for MacKenzie, a community which had only been in existence for f i v e years prior to 1971 and was TABLE V - LABOUR FORCE IN THE CENTRAL INTERIOR BY INDUSTRY FOR 1971 1. Agriculture 1,905 2. Forestry 3,890 3. Fishing and Trapping 45 4. Mines, Quarries and O i l Wells 1,215 5. Manufacturing* 10,080 6. Construction 3,810 7. Transportation, Communications, and U t i l i t i e s 5,365 8. Trade 6,940 9. Finance, Insurance and Real Estate 1,410 10. Community, Business, and Personal Services 11,535 *Includes sawmilling and pulp and paper as well as miscellaneous wood using industries. Source: S t a t i s t i c s Canada, 1971 Census - Experienced Labour Force by Industry (Cat. 94-780) C O 59 s t i l l developing i t s nonbasic i n d u s t r i a l sector. The highest r a t i o i s 1:7.02 for Prince George, the largest center. The second largest settlement, Quesnel, does have the second highest r a t i o but the order aft e r that point does not match the decending size of the centers. The relationship between the size of the community and i t s L.Q. derived m u l t i p l i e r was tested by electronic computer using the subprogram Pearson Product Moment Correlation C o e f f i c i e n t s , a 41 form of bivariate c o r r e l a t i o n analysis available in S.P.S.S. The r e s u l t i n g r value was +.51 (s = .003), indicating a relationship of only moderate strength. In simpler terms, the c o r r e l a t i o n confirms what i s f a i r l y obvious from a careful study of Table VI - that in t h i s p a r t i c u l a r case, the size of the community i s not always in d i c a t i v e of the employment r a t i o . However, one must take into account the fact that with the exception of Prince George, the populations of the centers vary by only a few thousand and Economic Base Analysis has usually been empirically tested using c i t i e s with populations in the tens 42 of thousands or more. With suoh a limited range of population amongst the thirteen communities, the analysis r e a l l y cannot be expected to produce a near perfect r e l a t i o n s h i p . Calculation of the basic-nonbasic r a t i o s using the M.R. technique yielded results that are much more oompatable with the empirical results of other studies. For each industry, the second lowest ranked percentage was taken as being the minimum to 4^ avoid any of the flukes which Alexandersson and Morrissett J both suggested might ex i s t . The r a t i o s range between 1:0.78 and 1:1.29 with an average employment m u l t i p l i e r of 2.09. While the TABLE VI - BASIC-NONBASIC EMPLOYMENT RATIOS CALCULATED USING ECONOMIC BASE ANALYSIS 1971 Population 1971 Labour Force L.Q. Method** M.R. Method*** Prince George and South Fort George* 33,101 14,930 1 :7.02 1:1.17 Quesnel 6,252 2,640 1:5.9 1:1.15 Williams Lake 4,072 1,945 1:4.36 1:1.07 Smithers 3,864 1,475 1:3-15 1:1.07 MacKenzie 2,332 1,085 1:1.86 1:1.03 Houston 2,232 890 1:2.94 1:1.12 Vanderhoof 1,653 695 1:4.34 1:1.14 Fort St. James 1,483 550 1:2.37 1:1.11 Burns Lake 1,367 550 1:3-47 1:1.13 100 Mile House 1 ,120 545 1:5.0 1:1.16 Telkwa 712 225 1:2.56 1:1.04 Valemont 693 245 1:2.7 1:0.78 McBride 658 250 1:3.7 1:1.29 *South Fort George was combined with Prince George because i t i s located within two to three miles of the c i t y . **The L.Q. derived ratios were calculated using national versus l o c a l employment by industry as discussed i n Section 3.3. ***The M.R. derived ratios were calculated using the second lowest ranked percentage (K factor) as discussed in Sections 3.4 and 3.6. Source of population and labour force figures: S t a t i s t i c s Canada, 1971 Census of Canada. 61 m u l t i p l i e r i s in l i n e , a test of the relationship between the populations and M.R. generated m u l t i p l i e r s yielded an extremely poor r value of +.04 (s = 0.247). The weak relat i o n s h i p i s not p a r t i c u l a r l y surprising nor in d i c a t i v e of the relationship which might be found i f , as mentioned, centers with a much wider range of populations in the province were subjected to similar testing. S t a t i s t i c a l testing was done on the relationship between the. size of the population and labour force in each community since i t had been suggested by analysts that a somewhat constant relationship e x i s t s . The r value produced was +.99 (s = .001), an almost perfect positive l i n e a r r e l a t i o n s h i p , thus in theory one would expect a constant r i s e or decrease in the labour force as a s i m i l a r change occurs in population. This finding must be viewed with caution because of the small size of the centers under investigation and i t cannot be assumed that such a strong relationship would be found in a l l circumstances, expecially where the number and size of the communities i s much greater. 44 Alexander raised the question of the e f f e c t of location upon the basic-nonbasic r a t i o s . He thought i t possible that the proximity of one center to another may influence the r a t i o s , a concept which has i t s roots in central place theory, but he did not suggest what consequences might be expected. Although 4C5 evidence was presented in the Ontario forest industry study that remoteness tends to decrease the basic-nonbasic r a t i o , no firm conclusion.can be drawn here. The L.Q. r a t i o s are somewhat higher for the more densely populated Prince George to 100 Mile House portion of the region, while at the r e l a t i v e l y remote communities of MacKenzie, Fort St. James, and Valemount they are 62 lower. However, the accuracy of the L.Q. r a t i o s i s quite open to question, thus to test the effect of location on the r a t i o s , the M.R. generated figures would be more acceptable but they also do not produce a discernable pattern. Comparing the r a t i o s produced by the L.Q. method and the M.R. technique, the l a t t e r c l e a r l y provides a more accurate indicator of the nonbasic employment generated by the basic i n d u s t r i a l sector, most of i t involved in wood processing. The employment m u l t i p l i e r of 2.17 for Prince George, for example, i s f a i r l y close to the figure of 2.43 calculated by Reed and 46 Associates in th e i r survey of the c i t y . However, the r a t i o s generated by the L.Q. method should not be dismissed as e n t i r e l y without use. Although the m u l t i p l i e r s are far too high for such small communities, they do r e f l e c t to a moderate degree the increased nonbasic i n d u s t r i a l sector as the population increases. The inference i s that when discussing m u l t i p l i e r s in r e l a t i v e terms, the relationships revealed by the L.Q. method can have v a l i d i t y . In Table VII, the basic and nonbasic employment, as calculated by the M.R. technique, has been t o t a l l e d for the communities to present a composite of the regional employment c h a r a c t e r i s t i c s . The minimum percentage assumed as necessary in each industry to supply the needs of the region (as represented by the thirteen communities) i s applied against the t o t a l labour force of 26,024, y i e l d i n g a figure which indicates how many workers should be expected. This number or anything lower i s nonbasic employment while anything in excess of the figure i s basic employment. TABLE VII - BASIC/NONBASIC EMPLOYMENT IN THE CENTRAL INTERIOR AS CALCULATED BY THE MINIMUM REQUIREMENTS TECHNIQUE Industry Labour Force M.R.{%) Basic Nonbasic Agriculture 95 0 95 0 Forestry 1430 3.9 419 1011 Fishing 20 0 20 0 Mining 210 0 210 0 Manufacturing 4530 7.9 2475 2055 Construction 1935 2.4 1300 635 Transportation 3045 6.6 1323 1722 Trade 4250 8.9 1935 2315 Finance 1035 1.8 569 466 Community Business 6095 13.6 2556 3539 Public Administration 1285 1.7 848 437 Unspecified 2094 6.3 443 1651 Totals 26,024 12,193 13,831 64 One of the problems associated with the M.R. approach i s obvious when comparing the basic-nonbasic figures in many of the industries. For example, the region does not require 1011 people in forestry to supply the internal population, leaving only 419 workers to take care of the export market. On the other hand, in the finance sector i t i s u n r e a l i s t i c to believe that over half of the labour force i s engaged in providing services outside of the central i n t e r i o r . The assumption that the minimum required by the communities can be calculated from the second lowest percentage employed in a given industry i s somewhat unreasonable when dealing with an area where much of the basic employment i s engaged in the same a c t i v i t y . The resu l t i s that far too high a percentage of the labour force i s relegated to nonbasic employment because even the second lowest percentage i s too high. The opposite holds true in some of the service oriented industries where the minimum requirement i s too low thus the basic employment i s exaggerated. This i s cause in part by some of the smaller towns being in close proximity to a larger center, such as Prince George, therefore r e l y i n g upon the larger center to supply certain services which otherwise would l i k e l y be found in the smaller places. The basic-nonbasic r a t i o s for the individual industries therefore cannot be accepted as accurately indicating the economic structure within the region. The net re s u l t of the M.R. induced basic-nonbasic employment rati o s i s a regional employment m u l t i p l i e r of 2.13, meaning that each job in basic industry i s responsible for 1.13 jobs in the nonbasic sector. The m u l t i p l i e r works out despite the inaccuracies amongst some of the individual i n d u s t r i a l r a t i o s 65 because the o v e r and u n d e r e s t i m a t i o n s tend t o b a l a n c e out so t h a t the net r e s u l t i s a m u l t i p l i e r t h a t seems r e a s o n a b l e when compared t o t h e m u l t i p l i e r s found i n o t h e r e m p i r i c a l s t u d i e s o f the f o r e s t i n d u s t r y (summarized i n T a b l e I V ) . However, i t i s s t i l l l ower t h a n the employment m u l t i p l i e r o f 3 f o r B.C. and 2.49 f o r P r i n c e George c a l c u l a t e d by Reed and A s s o c i a t e s . The f i g u r e s i n T a b l e V I I b e g i n t o r e v e a l the c o m p l e x i t y o f the r e g i o n a l economy, as much through some of the q u e s t i o n s t h a t they r a i s e as t h r o u g h what they s e r v e t o e x p l a i n . There a r e some ob v i o u s i n c o n s i s t e n c i e s , such as the supposed l a c k o f an a g r i c u l t u r a l i n d u s t r y f o r i n t e r n a l consumption, a s i t u a t i o n which r e s u l t s from a g r i c u l t u r a l employment b e i n g o u t s i d e o f the communities. T h i s i s a problem o f boundary d e l i m i t a t i o n . No m a t t e r how the s t u d y r e g i o n i s d e f i n e d something i s alway l e f t o u t s i d e o f i t which c o u l d be i n c l u d e d . However, the i n d u s t r i a l c a t e g o r i e s p r e s e n t some i n t e r e s t i n g c h a r a c t e r i s t i c s . The b a s i c i n d u s t r y i s assumed t o be composed l a r g e l y o f the l a b o u r f o r c e w i t h i n the f o r e s t r y and m a n u f a c t u r i n g ( s a w m i l l i n g , p u l p , and paper) c a t e g o r i e s y e t even a c c e p t i n g the f a c t t h a t some of t h e o t h e r i n d u s t r i e s have f a r more shown as b a s i c employment than s h o u l d be t h e c a s e , the d i v i s i o n between b a s i c and n o n b a s i c becomes r a t h e r u n c l e a r . I t i s e s s e n t i a l t o r e c a l l t h a t the economic base t h e o r y d e f i n e s b a s i c i n d u s t r y as t h a t p o r t i o n o f the economy t h a t i s i n v o l v e d i n the e x p o r t of goods and s e r v i c e s which i t produces l o c a l l y but s e l l s o u t s i d e o f the r e g i o n ' s b o u n d a r i e s , thus c o n t r i b u t i n g t o economic growth under normal c i r c u m s t a n c e s . T a k i n g as an example the t r a n s p o r t a t i o n i n d u s t r y , i t i s p o s s i b l e t o c o n s t r u c t a t h e o r e t i c a l s i t u a t i o n t o demonstrate the c o m p l e x i t y o f t h e system. Much o f t h e t r a n s p o r t f u n c t i o n i s i n v o l v e d i n the movement of f o r e s t p r o d u c t s by road and r a i l both w i t h i n and o u t s i d e o f t h e r e g i o n , t h e r e s u l t b e i n g t h a t a f a i r l y s o p h i s t i c a t e d t r a n s p o r t network and i n f r a s t r u c t u r e has been c r e a t e d . The employment i n the t r a n s p o r t a t i o n s e c t o r w i l l o b v i o u s l y a t t r a c t a demand f o r more l o c a l s e r v i c e s but t h a t does not make i t a b a s i c employer because i t i s not s t i m u l a t i n g e x p o r t o r i e n t a t e d b u s i n e s s , o n l y a d d i n g t o the i n t e r n a l system. However, the good t r a n s p o r t a v a i l a b l e c o u l d a t t r a c t a f o o t - l o o s e i n d u s t r y i n v o l v e d i n an e x p o r t o r i e n t e d goods p r o d u c i n g s e r v i c e which can l o c a t e anywhere w i t h adequate t r a n s p o r t a t i o n . T h i s new i n d u s t r y would be a b a s i c employer but i n r e a l i t y i s i t dependent or independent i n r e l a t i o n t o the r e s t o f the economy? I f the f o r e s t i n d u s t r y was t o s u f f e r a sharp and permanent d e c l i n e , t h i s would a f f e c t the s e r v i c e s o f f e r e d by the t r a n s p o r t i n d u s t r y s i n c e i t w i l l have l o s t i t s major s o u r c e o f income. The end r e s u l t would be t h a t the f o o t - l o o s e i n d u s t r y may f i n d t h a t i t s l o c a t i o n i s no l o n g e r as i d e a l as when the f o r e s t i n d u s t r y was p r o s p e r i n g , f o r c i n g a move or r e d u c t i o n i n employees. 47 Many such t h e o r e t i c a l examples can be c r e a t e d , but the purpose i s m e r e l y t o demonstrate t h a t i n d u s t r i a l l i n k a g e s e x i s t which a r e so i n t e r w o v e n t h a t what on the s u r f a c e may appear t o be r e p r o d u c a b l e t o a s i m p l e e x p l a n a t i o n o r t h e o r y i s i n f a c t p a r t of a much more complex system. S a y e r ' s c r i t i c i s m o f t h e Lowery 48 model, w i t h i t s f o u n d a t i o n s p a r t l y i n economic base t h e o r y , h i t s home the p o i n t t h a t t h e model cannot measure two-way c a u s a t i o n between the major elements o f a system ( f o r example, 67 b a s i c v e r s u s n o n b a s i c ) . However, S a v e r ' s c o n c e r n w i t h t h e Lowry model i s not e n t i r e l y a p p l i c a b l e here because the a n a l y s i s does not p u r p o r t t o measure a n y t h i n g but a s t a t i c r e l a t i o n s h i p and c e r t a i n l y the t e c h n i q u e s employed up t o t h i s p o i n t i n the s t u d y do not p e r m i t i t . What must be emphsized i s t h a t u l t i m a t e l y much of t he r e g i o n ' s employment, even i f i t may appear b a s i c and independent when measured i n c e r t a i n ways, s t i l l r e l i e s upon t h e f o r e s t i n d u s t r y . To suggest o t h e r w i s e would be p l a c i n g the c e n t r a l i n t e r i o r much f u r t h e r a l o n g i n i t s economic development than i s the c a s e . I t i s s t i l l v e r y much a r e s o u r c e e x t r a c t i v e economy based e s s e n t i a l l y upon a s i n g l e i n d u s t r i a l s e c t o r . The r e s u l t s o f a p p l y i n g the L.Q. and M.R. t e c h n i q u e s o f Economic Base A n a l y s i s t o the c e n t r a l i n t e r i o r p r o v i d e some i n s i g h t i n t o the economic s t r u c t u r e but many q u e s t i o n s remain unanswered. The a n a l y s i s can go o n l y so f a r as t o i d e n t i f y the s t r e n g t h o f the r e l a t i o n s h i p between the f o r e s t i n d u s t r y and the n o n b a s i c i n d u s t r i a l employers. I t cannot e x p l a i n the workings o f the economic system t h r o u g h i d e n t i f i c a t i o n o f how the b a s i c and n o n b a s i c s e c t o r s i n t e r a c t and change t h r o u g h t i m e . An attempt a t p r o v i d i n g a dynamic approach t o the problem i s made i n Chapter 4 . The Minimum Requirements approach has p r o v i d e d t h e employment m u l t i p l i e r ( 2 . 1 3 ) which seems most a c c e p t a b l e when compared t o o t h e r e m p i r i c a l s t u d i e s o f t h e f o r e s t i n d u s t r y . A l t h o u g h i t i s lower than Reed and A s s o c i a t e s ' employment m u l t i p l i e r s f o r P r i n c e George ( 2 . 4 9 ) and B r i t i s h Columbia ( 3 . 0 ) , both o f them a r e somewhat h i g h e r than most o f the o t h e r s t u d i e s ' m u l t i p l i e r s . As d i s c u s s e d e a r l i e r , a f i e l d s u r v e y i n the form o f a f i r m - b y - f i r m approach would be i d e a l b u t , g i v e n c i r c u m s t a n c e s , not a workable s o l u t i o n at the time. Since i t was argued i n the hypothesis of t h i s study that s u f f i c i e n t data does e x i s t to allow an e m p i r i c a l a n a l y s i s of the r e g i o n ' s economic s t r u c t u r e using E.B.A., then the a n a l y s i s has achieved a degree of success. What one may j u s t i f i a b l y q u e s t i o n i s whether or not a m u l t i p l i e r of 2.3 i s a c c u r a t e . The problem i s to f i n d and s u c c e s s f u l l y implement some form of economic a n a l y s i s on the r e g i o n which can be proven to be more a c c u r a t e . 69 CHAPTER 3  Footnotes 1. Arthur M. Weimer and Homer Hoyt, P r i n c i p l e s of Urban Real  Estate (New York: Ronald Press, 19391^ 2. See W. ' Leontief et a l . , Studies in the Structure of the  American Economy: Theoretical and Empirical Explanations in  Input-Output Analysis (London: Oxford Press, 1953), for some early examples of the application of input-output analysis. See also Chapter 8 of W. Isard et a l . , Methods of Regional  Analysis: An Introduction to Regional Science (Cambridge, Massachusetts: The M. I .T. Press, 1960). A~~ more recent discussion of input-output can be found in Chapter 7 of W. Isard, Introduction to Regional Science (Englewood C l i f f s , New Jersey: Prentice-Hall, 1975). A good introduction to econometric modelling i s found in Gerhard Tintner, Econometrics (New York: John Wiley and Sons, 1952). 3. For example, see Maurice H. Yeates and Barry J. Garner, The  North American City (New York: Harper and Row, 1971), p. 130. 4. For a discussion and c r i t i c a l analysis of the Lowry model, see R. Andrew Sayer, A Critique of Urban Modelling - From  Regional Science to Urban and Regional P o l i t i c a l Economies, Volume 6, Part 3, pp. 195-201. 5. M. Aurousseau, "The D i s t r i b u t i o n of Population : A Constructive Problem", The Geographical Review, Vol. 11, 1921, pp. 563-592. 6. Richard Hartshorne, "The Twin City D i s t r i c t " , The  Geographical Review, Vol. 22, 1932, pp. 431-442. 7. Weimer and Hoyt, op.cit. 8. Richard B. Andrews, "Mechanics of the Urban Economic Base", Land Economics, Vol. 29, 1953, p. 163. This i s the f i r s t of a series of twelve a r t i c l e s by Andrews which appeared in consecutive issues of the journal from May, 1953 to February, 1956. 9. Ibid. 10. John W. Alexander, "The Basic-Nonbasic Concept of Urban Economic Functions", Economic Geography, Vol. 30, 1954, p. 260. 11. Isard, Methods of Regional Analysis: An Introduction to  Regional Science, op.cit., pp. 189-198. 12. Federal Reserve Bank of Kansas City, "The Employment M u l t i p l i e r in Wichita", Monthly Review, Vol. 37, September, 1952. 70 13. Isard, Methods of Regional Analysis; An Introduction to  Regional Science, op.cit.. p. 196. " 14. The Wichita study u t i l i z e d the Location Quotient in two ways: (1) comparing Wichita's percentage share of each industry with i t s percentage share of U.S. population, and (2) dividing Wichita's per capita employment in each industry by per capita employment in the U.S. 15. Charles M. Tiebout, The Community Economic Base Study (New York: Committee for Economic Development, 1962), p~. 47. 16. Yeates and Garner, op.cit., p. 122. 17. Tiebout, op.cit. 18. Roger Leigh, "The Use of Location Quotients in Urban Economic Base Studies", Land Economics, Vol. 46, 1970, pp. 202-205. 19. Ibid, p. 205. 20. Edward L. Ullman, Michael F. Dacey, and Harold Brodsky, The  Economic Base of the 101 Largest U.S. C i t i e s and Minimum  Requirements for 1967) (Seattle: University of Washington, 1968), p. 17. 21. Tiebout, op.cit. 22. Harold Brodsky and David E. Sarfaty, "Measuring the Urban • Economic Base in a Developing Country", Land Economics, Vol. 53, No. 4, November, 1977. 2 3 . Ibid, p. 447. 24. Ullman, Dacey, and Brodsky, op.cit., p. 17. 25. Ibid, pp. 19-20 26. Gunnar Alexandersson, The Industrial Structure of American  C i t i e s (Lincoln: University of Nebraska Press, 1956). 27. Irving Morrissett, "The Economic Structure of American C i t i e s " , Papers and Proceedings of the Regional Science  Association, Vol. 4, 1958, pp. 239-256. 28. Edward L. Ullman and Michael F. Dacey, "The Minimum Requirements Approach to the Urban Economic Base", Papers and  Proceedings of the Regional Science Association^ Vol. 6~7 1960, pp. 175-194. 29. Richard T. Pratt, "An Appraisal of the Minimum Requirements Technique", Economic Geography, Vol. 44, 1968, pp. 117-124. 30. Ullman, Dacey, and Brodsky, op.cit., p. 51. 71 3 1 . Hedlin, Menzies, and Associates, The Ontario Forest Industry  -Its Direct and Indirect Contribution to the Economy (Province of Ontario, Department of Lands and Forests, 1 9 6 9 ) . 3 2 . Ibid, p. 7 2 . 3 3 . A.G. Teskey and J.H. Smyth, Employment, Income, Products, and  Costs in Manitoba's Primary Wood-Using Industry (Edmonton: Northern Forest Research Centre, Canadian Forestry Service, Environment Canada. Information Report NOR-X-138, November, 1 9 7 5 ) and Saskatchewan's Forest Industry and Its Economic  Importance (Edmonton: Northern Forest Research Centre, Canadian Forestry Service, Environment Canada. Information Report NOR-X-140, November, 1 9 7 5 ) . 3 4 . Donald F. Flora, "Economic Evaluation of Potential European Pine Shoot Moth Damage in Ponderosa Pine Region" (U.S. Forest Service, P a c i f i c Northwest Forest and Range Experiment Station, Research Paper PNW 2 2 , May, 1 9 6 5 ) . 3 5 . Hays B. Gamble, "The Regional Economic Role of Forest Product Industries", Journal of Forestry, Vol. 6 6 , 1 9 6 8 , pp. 4 6 2 - 4 6 6 . 3 6 . Op.cit., p. 71 • 3 7 . Business-Economics Advisory and Research, Inc., The Role of  Forest Lands in the Washington Economy (Washington Forest Protection Association, December, 1 9 7 0 ) . 38. K.L. Runyon et a l . , Analysis of the Economic Impact of  Sawmills and Pulp and Paper M i l l s in Nova Scotia (Fredericton: Maritimes Forest Research Centre, Canadian Forestry Service, Department of the Environment. Information Report M-X - 3 3 , July, 1 9 7 2 ) . 3 9 . Wilbur R. Maki et a l . , "Importance of Timber-Based Employment to the Economic Base of the Douglas-Fir Region of Oregon, Washington, and Northern C a l i f o r n i a " (Portland, Oregon: U.S. Forest Service, Forest and Range Experiment Station, Research Paper PNW 76, A p r i l , 1968) . 4 0 . F.L.C. Reed and Associates, The B r i t i s h Columbia Forest  Industry - Its Direct and Indirect Impact on the Economy ( V i c t o r i a : Province of B r i t i s h Columbia, Department of Lands, Forests and Water Resources, 1 9 7 3 ) -4 1 . Norman H. Nie et a l . , S t a t i s t i c a l Package for the Social  Sciences (Toronto: McGraw-Hill Book Company, Second Edition, 1 9 7 5 ) , pp. 2 8 0 - 2 8 8 . A l l testing was done at the University of B r i t i s h Columbia using an I.B.M. 3 7 0 / 1 6 8 computer. 4 2 . For example, Alexandersson , op.cit., analyzed only the 8 6 4 American c i t i e s with 1 9 5 0 populations of 1 0 , 0 0 0 or more. The major problem with applying either the L.Q. or M.R. techniques to centers with populations of a few hundred or 7 2 t h o u s a n d i s i n o b t a i n i n g s u f f i c i e n t l y d i s a g g r e g a t e d e m p l o y m e n t d a t a , e s p e c i a l l y i n C a n a d a . 4 3 . A l e x a n d e r s s o n , o p . c i t . a n d M o r r i s s e t t , o p . c i t . 4 4 . A l e x a n d e r , o p . c i t . 4 5 . H e d l i n e t a l . , o p . c i t . 4 6 . R e e d e t a l . , o p . c i t . p . 5 1 . 4 7 . S e e , f o r e x a m p l e , I s a r d , M e t h o d s o f R e g i o n a l A n a l y s i s : A n  I n t r o d u c t i o n t o R e g i o n a l S c i e n c e , o p . c i t . , p p . 197-198. 4 8 . S a y e r , o p . c i t . 7 3 CHAPTER 4 ANALYSIS OF EMPLOYMENT, EARNINGS, AND UNEMPLOYMENT IN THE CENTRAL  INTERIOR, 1 9 7 3 - 1 9 7 6 The a n a l y s i s i n the previous chapter i s l i m i t e d i n that i t dea l s with data obtained f o r , and r e p r e s e n t i n g , a s i n g l e p o i n t i n time - J u l y 1 , 1 9 7 1 , the date of the l a s t major Canadian census. An a n a l y s i s of a dynamic nature using data over a p e r i o d of time would be more explanatory because i t could t r a c e the types of c o n d i t i o n s and r e l a t i o n s h i p s suggested i n Chapter 3 to determine i f they c o n t i n u o u s l y hold t r u e and the extent, i f any, to which they change. Such an a n a l y s i s c o u l d a l s o produce r e s u l t s i n d i c a t i n g some i n t e r - i n d u s t r i a l l i n k a g e s which Economic Base A n a l y s i s i s not even capable of suggesting, l e t alone t e s t i n g . The chapter i s d i v i d e d i n t o three s e c t i o n s -employment, earnings, and unemployment - each of which u t i l i z e s a form of data incompatible with the others so that separate analyses are r e q u i r e d . 4 . 1 A n a l y s i s of Employment Employment data were provided by the M i n i s t r y of Labour, i Government of B r i t i s h Columbia and cover the two year p e r i o d of 1 9 7 5 - 1 9 7 6 on a monthly b a s i s . Included are data f o r Economic Region 7 (the c e n t r a l i n t e r i o r ) , P r i n c e George, and B r i t i s h Columbia, thus a l l o w i n g comparison of employment trends and c h a r a c t e r i s t i c s at three l e v e l s - urban, r e g i o n a l , and p r o v i n c i a l . T h i s d i s a g g r e g a t i o n was not a v a i l a b l e p r i o r to 1 9 7 5 , t h e r e f o r e the employment a n a l y s i s covers a s h o r t e r p e r i o d of time than f o r the earnings and unemployment data. Table VIII reveals some interesting stat i s t i c s on the employment structure of both Prince George and the central interior but before discussing them in detail, the reader must be cautioned against taking the number of employees in each industrial category as being absolute totals. For example, Prince George obviously does not have every employee in the transportation sector of the region nor does i t have 98.3% of those working in finance. The problem li e s with Statistics Canada's sampling technique whereby only industrial establishments employing twenty or more persons at any time during the year were surveyed. Since Prince George is the center of many of the larger industrial operations in the region, i t has been the focal point of sampling in the surveys. Thus, while the figures and resulting percentages are too high by a quantity which cannot be accurately determined, they are good indicators of what industries are most dominant and where this dominance is concentrated. The small percentage of workers employed in forestry (includes loggers and forest service personnel) in the central interior relative to the province as a whole is of particular significance. It indicates that there are s t i l l a number of small logging contractors employing less than twenty persons operating in the region despite the trend in the manufacturing end of the industry towards a few major employers. Although no statistics could be found in B.C. Forest Service reports which could accurately pinpoint the number of independent logging contractors in the region or the labour force associated with 2 them, a lumber trade directory revealed that dozens of such TABLE VIII - MEAN EMPLOYMENT BY INDUSTRY AND REGION, 1975-76 Prince George Central Int e r i o r B.C. Employees % of Total for; Employees % of Total Employees Central Int. B.C. for B.C. Forestry 13 1.3 1 995 6.8 14,719 Mining 1,623 12.9 12,591 Manuf acturing* 3,959 36.3 3.3 10,921 9.1 120,672 - Durable Goods 2,079 24.4 2.9 8,533 12 71,127 - Wood Products 1,978 23.7 5.1 8,346 21.5 38,889 - Nondurable Goods** 1,880 78.9 3.8 2,388 4.8 49,545 Construction 386 81.7 1.8 472 2.3 20,991 Transportation 1,343 100 1.5 1,343 1.5 89,307 Trade 1,820 72.9 2.2 2,494 3-0 83,795 Finance 527 98.3 1.7 536 1.7 31,445 Service 813 49.8 1.5 1,632 2.9 55,969 Industrial Composite*** 8,860 43.6 2.1 20,308 4.7 429,591 *Durable and nondurable goods are subcategories of manufacturing, thus their employment when t o t a l l e d equals the employment in manufacturing. In turn, wood products i s a subcategory of durable goods. **Includes pulp and paper production which forms the majority of employment in th i s category for the central i n t e r i o r . ***The i n d u s t r i a l composite covers the above i n d u s t r i a l categories only. It does not indicate t o t a l employment in Prince George, the central i n t e r i o r , or B.C. S t a t i s t i c s Canada has stated that the following a c t i v i t i e s are excluded - agricul t u r e , f i s h i n g , and trapping, education and related services, health and welfare services, r e l i g i o u s organizations, employment in private households, and public administration and defense. Source; Employment in B r i t i s h Columbia by Industry ( V i c t o r i a : Research and Planning Branch, Ministry of Labour, Province of B r i t i s h Columbia). -o 76 small operators do exist. The logging s t a t i s t i c s also suggest the highly mechanized harvesting techniques used in the central i n t e r i o r which have reduced the need for the r e l a t i v e l y large labour force required for coastal logging. Even i f the region's t o t a l percentage of logging employees i s somewhat higher than the 6.8% shown, the implication i s s t i l l that a r e l a t i v e l y small work force i s responsible for supplying timber to a wood products industry which accounts for over o n e - f i f t h of the p r o v i n c i a l t o t a l of employment i n th i s category. Since productivity per forestry employee i s high, due mainly to mechanization, the permanent loss or addition of jobs in the industry should have a s i g n i f i c a n t impact on the t o t a l regional economy. In Table IX, the percentage of fl u c t u a t i o n in forestry employment i s shown to be higher (50.6%) in the central i n t e r i o r than for the province (45.3%). Interior logging i s of a more seasonal nature while on the coast the climatic conditions normally allow for year-round work in the woods. The question i s whether or not th i s f l u c t u a t i o n in forestry employment has an effect upon employment in the wood processing industry since the l a t t e r i s dependent for continual operation upon timber supply. The rela t i o n s h i p between i n d u s t r i a l employment fluctuations in the two categories was s t a t i s t i c a l l y tested, again using the Pearson c o r r e l a t i o n subprogram of S.P.S.S. The r value of +.04(s = 0.184) which was generated indicates that no relati o n s h i p between employment in the two sectors was evident over the twenty-four month period. Despite t h i s s t a t i s t i c a l f i nding, i t obviously cannot be inferred that the two industries TABLE IX - FLUCTUATION IN EMPLOYMENT, 1975-76 Prince George Central Inte r i o r B.C. I min. max. 1 min. max. 1 min. max. Forestry- 82. 8 5 29 50. ,6 615 1 ,244 45. 3 9,973 18,242 Mining • - 47. .3 992 1,883 29. 2 9,611 13,582 Manufacturing 33. 4 2,986 4,484 34. .3 8,059 12,260 27. 2 94,387 129,655 - Durable Goods 14. 7 1,913 2,243 28. ,0 6,800 9,455 25. 4 56,075 75,181 - Wood Products 15. 6 1,796 2,127 30. .0 6,529 9,324 46. 2 23,356 43,381 - Nondurable Goods 57. 9 943 2,241 57. .0 1,217 2,858 30. 7 38,235 55,136 Construction 57. 6 228 517 51. .7 302 625 43- 2 13,931 24,542 Transportation 19. 1 1 ,207 1,492 19. . 1 1 ,207 1,492 11. 7 82,442 93,329 Trade 19. 7 1,605 1 ,999 12. .9 2,271 2,608 10. 2 79,586 88,601 Finance 18. 5 477 585 20, .2 484 607 9. 3 30,214 33,346 Service 19. 0 740 914 19. .9 1 ,457 1,833 14. 9 50,502 59,315 I n d u s t r i a l Composite 17. 1 7,969 9,610 39. .8 17,349 28,833 11. 4 398,584 449,811 Source: Employment in B r i t i s h Columbia by Industry, op.c i t . operate independent ly of one a n o t h e r . As Pearse s t a t e s , "The l e v e l of economic a c t i v i t y , i n terms of income and employment, i n these communities ( r e f e r r i n g to m i l l towns) i s determined by the a v a i l a b i l i t y of t imber from these r e g i o n s (harvest a r e a s ) , and the r e l a t i o n s h i p between wood produced and income and employment i s more or l e s s c o n s t a n t . " J T h i s statement i s i n r e f e r e n c e to l o n g - t e r m i n s t a b i l i t y of l o g s u p p l y , thus the i n f e r e n c e i s t h a t over s h o r t p e r i o d s ( i e . , months) , p r o d u c t i o n need not be s e r i o u s l y a f f e c t e d . This can be achieved through the s t o c k p i l i n g of t imber when the m i l l s a n t i c i p a t e seasonal slowdowns or c l o s u r e s i n the woods, most of which l a s t f o r o n l y a month or two. I n d i c a t i v e of the r e l a t i v e s t a b i l i t y of m i l l p r o d u c t i o n i s the f l u c t u a t i o n i n wood products employment of 30% as compared to the much h i g h e r f i g u r e f o r l o g g i n g employment. The i n t e r i o r wood products i n d u s t r y i s i n f a c t more s t a b l e than f o r the p r o v i n c e as a whole, i n c l u d i n g the coast where h a r v e s t i n g can operate almost c o n t i n u a l l y . In t e s t i n g the s t r e n g t h of the r e l a t i o n s h i p between f o r e s t r y and pulp and paper employment, which forms the m a j o r i t y of the nondurable goods c a t e g o r y , an r va lue of +.0(s = 0 . 3 9 9 ) was c a l c u l a t e d . A g a i n , r e a l i t y suggests t h a t there must be interdependence because the pulp and paper m i l l s r e c e i v e a s u b s t a n t i a l p o r t i o n of t h e i r supply d i r e c t l y from the woods r a t h e r than v i a s a w m i l l s . P a r t of the problem i n t r a c i n g the r e l a t i o n s h i p here can be a t t r i b u t e d to a four month s t r i k e i n 1975 which i n v o l v e d n e a r l y a l l of the workers i n the c e n t r a l i n t e r i o r ' s pulp and paper i n d u s t r y , caus ing an u n c h a r a c t e r i s t i c 5 7 * 9 % f l u c t u a t i o n i n employment w i t h i n the nondurable goods category. The impact of this s t r i k e i s examined in d e t a i l in the section on unemployment analysis while the focus here i s upon analysis of the wood products sector of manufacturing where no lengthy work stoppages took place. Fluctuation in wood products employment in Prince George was one-half of that for the central i n t e r i o r and only one-third of the p r o v i n c i a l f l u c t u a t i o n . The r e l a t i v e s t a b i l i t y of l o c a l employment in sawmilling and plywood production comes with the greater size of the community over surrounding centers which are part of the larger f l u c t u a t i o n for the central i n t e r i o r . Prince George has a sizeable labour force from which to draw as well as the benefits which come from the sheer scale of i t s wood products operations. This allows some of the shorter-term variations in supply and demand to be absorbed without the same effect upon employment that could occur under similar conditions in other communities with smaller operations. While demand i s e s s e n t i a l l y controlled by external factors about which the forest industry can do l i t t l e except eventually adjust, supply i s largely a matter of int e r n a l regulation. Here Prince George has the advantage of an enormous timber supply region, a s i t u a t i o n which Pearse notes i s not uncommon with size - "Generally, economic supply regions have tended to expand with advances in transportation, economies of c e n t r a l i z a t i o n , and integration of 4 manufacturing." The proportion of the t o t a l l o c a l and regional employment involved in the wood products sector suggests that i t would have a strong influence on employment in the nonbasic industries. S t a t i s t i c a l analysis for Prince George revealed several 80 correlations of moderate values but o v e r a l l the relationships were weak. For example, the r value for trade was +.22(s = 0.01) and for service i t was +.0(s = 0.413). Of moderate strength was transportation with +.36(s = 0.001) while finance was highest at +.52(s = .001). Again, one must question whether or not these tests of the strength of the relationships between wood products and the nonbasic economic sectors are producing meaningful r e s u l t s . There i s no obvious explanation for finance being more c l e a r l y t i e d to employment fluctuations in the forest industry than to some of the service industries which exhibit l i t t l e or no c o r r e l a t i o n . At the regional scale, testing of the same relationships generated results s i m i l a r to those for Prince George. 4.2 Analysis of Earnings The earnings data were also supplied by the Ministry of Labour and cover the same geographical areas and industries as the employment data, however they are for a forty-eight month period between 1973 and 1976. "The earnings figures correspond to gross pay for the week, before deductions, and include such items as overtime, piecework and commission earnings, cost of l i v i n g and other bonuses, and other regular premium pay." The weekly figures were averaged out by S t a t i s t i c s Canada to provide the mean weekly earnings for the month by industry. Table X indicates that there i s no one of the three geographical areas that i s consistently higher or lower than the others in terms of weekly earnings by industry. However, B.C. does have a higher'average in more categories than either Prince George or the central i n t e r i o r . This i s the r e s u l t of cer t a i n TABLE X - MEAN WEEKLY EARNINGS BY INDUSTRY AND REGION, 1973-76* Prince George Central Interior B.C. Forestry- $ 250.53 $ 271.54 $ 270.50 Mining 269.47 278.53 Manufacturing 257.49 244.51 237.36 - Durable Goods 229.09 232.74 238.81 - Wood Products 227.24 232.39 234.73 - Nondurable Goods 288.70 285.03 235.33 Construction 295.09 301.88 308.34 Transportation 213-37 213-37 237.01 Trade 187.70 186.24 178.90 Finance 172.06 171.69 184.71 Service 121.71 116.81 142.47 Industrial Composite 223-35 228.73 216.37 *See the footnotes in Table VIII for a detailed explanation of the industries. Source: Average Weekly Earnings in B r i t i s h Columbia by Industry ( V i c t o r i a : Research and Planning Branch, Ministry of Labour, Province of B r i t i s h Columbia). 00 82 regions within the province having extremely high earnings, mostly as a consequence of their r e l a t i v e l y remote locations. For example, in the Northwestern and Peace River regions, earnings have t r a d i t i o n a l l y been higher to at t r a c t s k i l l e d workers. As well, more overtime and bonuses are accrued by the labour force. The central i n t e r i o r approximates the midpoint of the average earnings for the ten economic regions in B.C., thus i t could be viewed as a semi-remote area. In the more populated southern regions, the average wages are generally the lowest. Prince George has a lower i n d u s t r i a l composite than the rest of the central i n t e r i o r , an indication that because i t i s a larger community and offers more amenities to workers, the need to a t t r a c t a labour force through higher wages i s p a r t i a l l y o f f s e t . Its average earnings are further depressed by the large number of employees i n the industries such as trade and service which t y p i c a l l y pay lower wages. In contrast, the nondurable goods sector in Prince George, which i s comprised mostly of pulp and paper employees, has weekly earnings that on average are higher than for any other industry, except construction, in either the region or province. This i s due to the generally highly s k i l l e d jobs which pay well because of t o t a l unionization in the pulp and paper industry and because the companies s t r i v e to keep employee turnover rate low in order to minimize re t r a i n i n g . Within the wood products category, the mean weekly earnings are f a i r l y consistent between the three geographical areas. The wage structure for sawmill and plywood plant employees i s uniform throughout the province although there are several bargaining 83 u n i t s o f the I n t e r n a t i o n a l Woodworkers of A m e r i c a , each o f which i s r e s p o n s i b l e f o r a r e g i o n o f B.C. The e a r n i n g s a r e good when examined on an h o u r l y b a s i s but wood p r o d u c t s e a r n i n g s as a whole a r e not as h i g h as i n f o r e s t r y or p u l p and paper because the g e n e r a l l e v e l o f s k i l l r e q u i r e d i n most m i l l i n g j o b s i s c o n s i d e r e d l e s s and the bonus and o v e r t i m e o p p o r t u n i t i e s a r e not as abundant. The economic c o n t r i b u t i o n per employee t o the r e g i o n i s t h e r e f o r e lower f o r t h o s e persons i n wood p r o d u c t s m a n u f a c t u r i n g than i n l o g g i n g o r p u l p and paper but the o v e r a l l c o n t r i b u t i o n o f the s a w m i l l l a b o u r f o r c e i s q u i t e s i g n i f i c a n t because of the l a r g e number o f w o r k e r s . The h i g h e r e a r n i n g s w i t h i n the f o r e s t i n d u s t r y r e l a t i v e t o most of the n o n b a s i c i n d u s t r i e s have some i m p o r t a n t i m p l i c a t i o n s f o r the measurement of b a s i c i n d u s t r y economic impact. G i v e n t h a t , on a v e r a g e , each j o b i n the i n d u s t r y was e s t i m a t e d i n Chapter 3 as c r e a t i n g a demand f o r 1.13 workers i n the s e r v i c e s e c t o r , the c o n t r i b u t i o n o f t h e s e l a t t e r employees t o t h e economy i s l e s s . I f an income m u l t i p l i e r c o u l d be d e r i v e d , i t s h o u l d t h e o r e t i c a l l y be l e s s than the employment m u l t i p l i e r . T h i s would impact through th e e n t i r e system so t h a t f u r t h e r n o n b a s i c j o b s , t h a t a r e g e n e r a t e d and r e l y i n p a r t upon the i n i t i a l n o n b a s i c employment, would be c r e a t e d a t a s l o w e r r a t e because the average n o n b a s i c employee has lower e a r n i n g s and t h e r e f o r e l e s s d i s p o s a b l e income f o r goods and s e r v i c e s . The e a r n i n g s d a t a a l s o p o i n t t o t h e need i n some cases t o d i s t i n g u i s h between the b a s i c s e c t o r s o f the f o r e s t i n d u s t r y i n d i s c u s s i n g the impact of a m u l t i p l i e r i n d e t a i l . For example, one hundred workers i n the p u l p i n d u s t r y s h o u l d c r e a t e more of a 84 demand f o r employment through higher earnings than would be produced by one hundred sawmill workers. However, the example c o u l d be complicated by a wide range of f a c t o r s which might serve e i t h e r to f u r t h e r accentuate the g r e a t e r economic power of the pulp s e c t o r employment or perhaps o f f s e t i t so that u l t i m a t e l y the wood products employment may produce equal or even g r e a t e r nonbasic a c t i v i t y . Wood products employers may r e l y more upon goods and s e r v i c e s from the l o c a l area f o r use d i r e c t l y i n t h e i r o p e r a t i o n s thus i n c r e a s i n g nonbasic employment not only through the needs of the employees but through the requirements of the m i l l as w e l l . At the r e g i o n a l l e v e l , i t i s p o s s i b l e to s t a t e with confidence t h a t the wood products s e c t o r i s the dominant f o r c e w i t h i n the f o r e s t i n d u s t r y simply because of the g r e a t e r a b s o l u t e number of employees than i n any of the other f o r e s t r e l a t e d s e c t o r s . In P r i n c e George, i t would be extremely d i f f i c u l t to determine the s e c t o r with the most impact, measured by e i t h e r income or employment inducement, because the labour f o r c e i n pulp and paper i s almost equal to that i n wood products. Based upon the i n d u s t r i a l composite, P r i n c e George's percentage of f l u c t u a t i o n i n mean weekly earnings i s g r e a t e r than f o r e i t h e r the c e n t r a l i n t e r i o r or f o r the p r o v i n c e as a whole, although the d i f f e r e n c e between the g e o g r a p h i c a l areas i s l e s s than 3% (see Table X I ) . In c o n t r a s t , the f l u c t u a t i o n i n employment between the areas ranged over 28% f o r a two year p e r i o d , the c e n t r a l i n t e r i o r e x h i b i t i n g the g r e a t e s t i n s t a b i l i t y . Higher f l u c t u a t i o n s i n earnings f o r f o r e s t r y and c o n s t r u c t i o n workers can be e x p l a i n e d by the more seasonal nature of t h e i r work. The wide f l u c t u a t i o n i n the earnings of the nondurable TABLE XI - FLUCTUATION IN MEAN WEEKLY EARNINGS,* 1973-76 Prince George Central Inte r i o r B.C. 1 min. max. I min. max. I min. max. Forestry- 60.3 $158 $399 46.6 $196 $367 51.7 $188 $388 Mining 40.0 210 349 36.9 218 345 Manuf acturing 43.2 194 342 42.8 192 335 37.6 189 302 - Durable Goods 41.4 178 304 41.2 181 308 38.2 189 306 - Wood Products 44.3 170 305 41.4 181 308 40.5 184 309 - Nondurable Goods 48.6 201 392 49.8 199 396 37.5 187 299 Construction 54.5 200 440 52.6 204 430 45.0 225 409 Transportation 40.1 167 278 40.1 167 278 37.6 185 297 Trade 42.4 141 245 41.1 140 238 37.5 139 223 Finance 35.9 138 215 36.0 138 216 37.6 141 226 Service 37.6 95 153 33.4 95 143 36.0 112 175 I n d u s t r i a l Composite 39.0 177 290 37.6 182 292 36.8 170 269 *The minimum and maximum earnings are rounded to the nearest d o l l a r . Source: Average Weekly Earnings by Industry in B r i t i s h Columbia, op.cit. 00 86 goods sector i s the r e s u l t of the previously mentioned four month labour dispute. Much of the fluctuation i s also caused by increased wages over the four year period so that by the end of 1976, the average earnings would have been subs t a n t i a l l y higher than at the beginning of 1973. This i s e s p e c i a l l y true of the basic i n d u s t r i a l sectors such as forestry, wood products, and nondurable goods, the employees in which are covered by powerful union bargaining units, thus wages tend to climb at a more rapid rate than in the nonbasic industries which t r a d i t i o n a l l y have encompassed the bulk of the lower wage earners. The figures in Table XI suggest that there i s in fact a greater degree of s t a b i l i t y exhibited in nonbasic industry over the short-term, an indication that the service side of the economy, although dependent upon the forest industry, i s able to ride out minor fluctuations in basic industry rather than reacting with even greater swings in employment and earnings. S t a t i s t i c a l analysis was applied to test the relationships between various i n d u s t r i a l earnings in a more rigorous manner over the forty-eight month period. Testing f i r s t for forestry in 2 the central i n t e r i o r , r values emerged which were consistent for a l l the assumed dependent industries. They ranged from + .55 for service to +.66 for finance ( a l l s = 0.001) indicating a moderately strong positive r e l a t i o n s h i p . The wood products industry yielded correlations which were higher, for example, +.90 for trade, +.94 in finance, and +.86 for service ( a l l s = 0.001). Correlations of equal strength existed in the nondurable goods (pulp and paper) category. It can be questioned whether or not the analysis has uncovered legitimate s t a t i s t i c a l r e l a t i o n s h i p s between the earnings of the i n d u s t r i a l s e c t o r s or i f i t has merely t r a c e d the i n c r e a s i n g wages i n a l l c a t e g o r i e s over four y e a r s . A t e s t of the r e l a t i o n s h i p between mining and wood products, two v a r i a b l e s which would seem t o t a l l y independent of each other, produced an earnings c o r r e l a t i o n of high s t r e n g t h with an r of + . 8 6 (s = 0 . 0 0 1 ) . T h i s f i n d i n g supports the c o n c l u s i o n t h a t , to some degree, i n d u s t r i a l earnings trends r a t h e r than interdependencies are being measured by the c o r r e l a t i o n a n a l y s i s . 4 . 3 - A n a l y s i s of Unemployment Data obtained through Canada Manpower^ pr o v i d e a d i f f e r e n t view of the economic p i c t u r e i n the c e n t r a l i n t e r i o r because r a t h e r than simply s t a t i n g how many persons were employed i n a given month f o r a p a r t i c u l a r s e c t o r , the numbers r e v e a l s h o r t -term labour c o n d i t i o n s through the number of unemployed. The s t a t i s t i c s have been compiled from f o r t y - e i g h t monthly r e p o r t s produced by each of the Manpower o f f i c e s i n P r i n c e George, Quesnel, and W i l l i a m s Lake between 1 9 7 3 and 1 9 7 6 . U n f o r t u n a t e l y , the s i x t e e n category unemployment breakdown i s by o c c u p a t i o n a l group r a t h e r than by i n d u s t r y thus an unemployed f o r e s t i n d u s t r y worker could be r e g i s t e r e d under any one of a number of occupations ranging from the obvious, f o r e s t r y and l o g g i n g , to such f i e l d s as c l e r i c a l or managerial (see Table X I I ) . The m a j o r i t y of f o r e s t i n d u s t r y unemployment, however, f a l l s under f o r e s t r y and l o g g i n g , p r o c e s s i n g (which i n c l u d e s pulp and paper, s a w m i l l i n g , and plywood), and t r a n s p o r t . Canada Manpower c o n s i d e r s i t s data to be r e l i a b l e but i t o b v i o u s l y can only account f o r those persons seeking employment who r e g i s t e r as 88 TABLE XII - UNEMPLOYMENT IN THE CENTRAL INTERIOR, 1973-1976 Managerial, Administrative and related Natural Science, Engineers and related Social Sciences and related Teaching and related Medicine and Health C l e r i c a l and related Sales Forestry and Logging Processing Machinery and related Product Fabricating, Assembly and Repair Construction Trades Transport Equipment Operating Material Handling and related Other Crafts and Equipment Operating Mean  Unemployed 22 23 14 21 41 382 163 193 230 35 60 328 84 31 8 Fluctuation in  Unemployment (min - max) 0-90 0-99 0-60 1-149 0-144 34-1167 13-532 0-881 10-681 0-165 3-213 16-1325 3-354 0-106 0-34 c l i e n t s of the service. There are no doubt others who are unemployed at any given time who do not regi s t e r and attempt to fin d employment on the i r own. However, assuming that most of the unemployed work force would wish to c o l l e c t unemployment insurance, r e g i s t r a t i o n with the Canada Manpower service i s a prerequisite. The data shown i s Table XII i s a summary of much more detailed unemployment s t a t i s t i c s disaggregated into approximately 200 occupations, but the sixteen category occupational breakdown given here i s s u f f i c i e n t to examine the more sa l i e n t aspects of the unemployment trends. Turning f i r s t to an examination of unemployment within the forest industry, the s t a t i s t i c s indicate a f a i r l y low mean unemployment l e v e l given the size of the basic labour force. I f one accepts the basic-nonbasic r a t i o of 1:1.13 derived in the previous chapter as a f a i r estimation, the unemployment r a t i o exhibits a higher number of unemployed nonbasic workers. Using the Assumptions Approach, i f i t i s theorized that a l l of the unemployment in forestry, logging, and processing i s basic, plus 50% of that in transport, and 25% of a l l other occupational groups (an estimation which seems quite generous), the average basic-nonbasio unemployment r a t i o i s 1:2.04. The discrepancy may be explained by several factors but the most l i k e l y reason involves the mobility of the labour force in the forest industry r e l a t i v e to some of the other occupational groups. This concept was proposed in part by R. Byron in his study of community s t a b i l i t y in the north central i n t e r i o r as related to forest 7 pol i c y . The forest industry, as with most high paying basic 90 i n d u s t r i a l j o b s , tends to a t t r a c t people from other r e g i o n s e x p e r i e n c i n g high unemployment. T h i s mobile work f o r c e , o f t e n young and f r e e of the r e s p o n s i b i l i t i e s (such as house ownership or f a m i l i e s ) which would t i e them to one l o c a t i o n , migrates to areas where the p o t e n t i a l f o r employment i s p e r c e i v e d as g r e a t e s t . I f jobs are i n f a c t s c a r c e or l a y o f f s occur, they move on to another r e g i o n with very few w i l l i n g or able to remain unemployed f o r lo n g . On the other hand, jobs i n the s e r v i c e r e l a t e d i n d u s t r i e s are o f t e n occupied by a l e s s mobile labour f o r c e c o n s i s t i n g of permanent l o c a l r e s i d e n t s . These occupations do not pay w e l l enough to a t t r a c t many workers from other areas and i n s t e a d go to those committed f o r v a r i o u s reasons to remain i n the r e g i o n . The idea o f the f o r e s t i n d u s t r y a t t r a c t i n g and/or r e t a i n i n g unemployed workers hoping f o r a job o p p o r t u n i t y has important r a m i f i c a t i o n s f o r the r e g i o n a l economy. The d i s c u s s i o n has focussed on b a s i c - n o n b a s i c employment r e l a t i o n s h i p s but to t h i s can be added the r e l a t i o n s h i p to unemployment. The unproductive labour f o r c e , b a s i c or nonbasic, i s to a l a r g e measure the c r e a t i o n of b a s i c i n d u s t r y yet i t i s a s i t u a t i o n over which the b a s i c i n d u s t r y has v i r t u a l l y no c o n t r o l . T h i s group d e t r a c t s from the economic w e l l - b e i n g of the r e g i o n because most of i t s members would have r e l a t i v e l y l i t t l e expendable income and would o f t e n be i n c r e a s i n g s o c i a l c o s t s through the need f o r a v a r i e t y of government s e r v i c e s , i n c l u d i n g Canada Manpower. In the f o r e s t i n d u s t r y , the l o g g i n g s e c t o r i s the most seasonal employer because of reduced o p e r a t i o n s d u r i n g the s p r i n g thaw i n March and A p r i l and the months of heavy p r e c i p i t a t i o n , 91 normally in October and November before complete freeze-up. Machinery cannot e f f e c t i v e l y navigate the boggy ground conditions, leaving few timber locations that can be logged continually. The effect of this decreased productivity upon the manufacturing side of the industry was measured by s t a t i s t i c a l analysis to derive correlations. The results are s u r p r i s i n g l y strong p o s i t i v e relationships for several of the more d i r e c t l y involved sectors, a finding that contradicts the weaker relationships yielded by analysis of employment. Measured against forestry and logging unemployment, the r value for processing was + .77 (s = 0.001) and for transport i t was +.84 (s = 0.001). Testing against unemployment in other occupational groups the independent variable yielded r values ranging from + .26 for teaching to +.80 for construction ( a l l s = 0.001). Because of the high c o r r e l a t i o n between processing and the forestry and logging operations, taking processing as the independent variable produced relationships s i m i l a r to the former unemployed group. The low r value was again teaching at +.30, and the high value was the expected construction sector with an 2 r of +.79 (both s = 0.001), excluding forestry, logging, and transportation. The analysis i s measuring two trends in correlating occupational unemployment - the f i r s t being the monthly fluctuations and the second being the tendency over the four year period of gradually increasing unemployment in a l l categories. Thus, in Table XII, the minimum number of unemployed i s more l i k e l y to have been recorded sometime in 1973 while the maximum figures occur in 1976. Byron observed this trend in his study a n d a t t r i b u t e d i t t o t h e p o o r e c o n o m i c p e r f o r m a n c e o f some c o m m u n i t i e s w i t h i n t h e c e n t r a l i n t e r i o r r a t h e r t h a n t o g r o w i n g u n e m p l o y m e n t t h r o u g h o u t t h e r e g i o n d u e t o g e n e r a l l y d e p r e s s e d e c o n o m i c c o n d i t i o n s . He n o t e s , f o r e x a m p l e , t h a t t h e n u m b e r o f u n e m p l o y e d i n P r i n c e G e o r g e h a s b e e n g r o w i n g s l o w l y c o m p a r e d t o i t s r a p i d p o p u l a t i o n g r o w t h w h i l e Q u e s n e l h a s e x h i b i t e d a d i s p r o p o r t i o n a t e u n e m p l o y m e n t i n c r e a s e r e l a t i v e t o i t s s l o w p o p u l a t i o n g r o w t h r e c e n t l y . T h e s t a t i s t i c a l a n a l y s i s s e e m s t o be m e a s u r i n g m o r e t h e t r e n d o f t h e d a t a t o w a r d s g r e a t e r u n e m p l o y m e n t r a t h e r t h a n p u l l i n g o u t r e l a t i o n s h i p s i n m o n t h l y u n e m p l o y m e n t . T h e q u e s t i o n o f how q u i c k l y t h e n o n b a s i c s e c t o r s o f i n d u s t r y r e s p o n d t o f l u c t u a t i o n s i n t h e f o r e s t i n d u s t r y a g a i n i s r a i s e d a s i t was f r o m t h e f i n d i n g s o f t h e p r e v i o u s t w o s e c t i o n s . T h e a s s u m p t i o n t h a t t h e d e p e n d e n t v a r i a b l e s a d j u s t i m m e d i a t e l y ( w i t h i n t h e same o n e m o n t h p e r i o d ) t o a n e q u i l i b r i u m l e v e l i s f o u n d b y B y r o n t o be u n j u s t i f i e d . He s t a t e s , " I t i s o b v i o u s t h a t t h e r e a r e l a g s i n t h e a d j u s t m e n t p r o c e s s , p e r h a p s b e c a u s e l a b o u r c a n n o t be d i s m i s s e d i m m e d i a t e l y , o r b e c a u s e o f u n f i l l e d o r d e r b o o k s when l u m b e r p r i c e s d e c l i n e , o r a d e l a y i n q r e c r u i t m e n t i f b u s i n e s s p r o s p e c t s i m p r o v e . " ^ B y r o n c o n c l u d e s t h a t t h e a d j u s t m e n t p r o c e s s may t a k e t w o o r t h r e e m o n t h s t o r e f l e c t u p o n t h e n o n b a s i c i n d u s t r i a l s e c t o r . T h e b e s t e x a m p l e o f a l a r g e f l u c t u a t i o n i n f o r e s t i n d u s t r y u n e m p l o y m e n t was t h e 1 9 7 9 s t r i k e o f 1 , 5 9 9 p u l p a n d p a p e r w o r k e r s i n t h e r e g i o n w h i c h o c c u r r e d b e t w e e n J u l y a n d O c t o b e r w i t h a t o t a l o f 9 9 , 0 3 9 m a n - d a y s l o s t . U n e m p l o y m e n t i n t h e p r o c e s s i n g o c c u p a t i o n s s t o o d a t 7 5 0 i n J u l y a n d r o s e t o 7 6 9 i n O c t o b e r b u t d r o p p e d b y o n l y 1 7 8 u n e m p l o y e d t o 5 9 1 t h e n e x t m o n t h , t h u s t h e 9 3 1 0 m a j o r i t y of the s t r i k i n g workers d i d not seek other employment. The r e g i o n a l economist f o r Canada Manpower i n P r i n c e George po i n t e d out that the pulp and paper labour f o r c e i s r e l a t i v e l y s t a b l e so that most workers would have waited out the labour d i s p u t e r a t h e r than seeking a l t e r n a t i v e employment. Assuming a three month l a g i n the adjustment process f o r other occupations, the r e s u l t s of the s t r i k e should show up i n the October unemployment numbers. In f a c t , the t o t a l unemployed changed by only one person from 5 9 3 4 i n J u l y to 5 9 3 3 i n October. Three months a f t e r the s t r i k e ended, unemployment grew to 6 6 6 8 people seeking work. One would have to conclude t h a t the s t r i k e had v i r t u a l l y no e f f e c t on employment i n the other s e c t o r s of the economy d e s p i t e suggestions by Byron that t h i s e f f e c t must occur. I f indeed there i s an impact on the economy, and c e r t a i n l y by the end of the s t r i k e there must have been, i t i s m a n i f e s t i n g i t s e l f i n ways other than by p u t t i n g more people out of work. The a n a l y s i s of employment, earnings, and unemployment contained i n t h i s chapter no doubt r a i s e s as many quest i o n s as i t has been a b l e to answer, an i n d i c a t i o n of how d i f f i c u l t a task i t i s to b r i n g to l i g h t even the most b a s i c of the i n t e r r e l a t i o n s h i p s among the i n d u s t r i a l s e c t o r s . While the s t a t i s t i c a l a n a l y s i s has been l a r g e l y i ncapable of p r e s e n t i n g d e t a i l e d e x p l a n a t i o n s of the economic system, i t has produced some s i g n i f i c a n t f i n d i n g s . The r e g i o n a l economy appears over the s h o r t - r u n a b l e to a d j u s t to employment f l u c t u a t i o n s without even g r e a t e r m u l t i p l i e r e f f e c t s that would l e a d to sharp i n c r e a s e s or d e c l i n e s i n employment i n other i n d u s t r i e s . The f a c t that no n e g a t i v e c o r r e l a t i o n s were found and that some of the r values are moderately high to high (the +0.5 to +0.8 range) indicates that the economy i s tied in with conditions in the forest industry, that has been assumed here to be the independent variable. However, again i t must be cautioned that t h i s i s due in part to the increasing numbers through time in employment, earnings, and unemployment. The increase over the four year period in the number of unemployed in the central i n t e r i o r indicates that i t i s at t r a c t i n g and producing more people who are unable to gain or hold employment, yet they s t i l l remain in the region. This i s of p a r t i c u l a r importance because i t emphasizes the need to investigate with care a l l aspects of development in the forest industry and i t s impact on the regional economy. 95 CHAPTER 4  Footnotes 1. Both the employment and earnings data were compiled and supplied by David Rice, Research Editor of Labour Research  B u l l e t i n ( V i c t o r i a : Research and Planning Branch, Ministry of Labour, Province of B r i t i s h Columbia). They are derived from the monthly Labour Force Survey (Cat. 72-002) published by S t a t i s t i c s Canada. 2. The "ABC" B r i t i s h Columbia Lumber Trade Directory and Year  Book, 1973 e d i t i o n . 3. Peter H. Pearse, Timber Rights and Forest Policy in B r i t i s h  Columbia ( V i c t o r i a : Report of the Royal Commission on Forest Resources, September, 1976), Volume 1, p. 231. 4. Ibid., p. 232. 5. Labour Force Survey, op.cit. 6. The unemployment data were supplied by Mr. Rod Smelser, Economist, Canada Manpower and Immigration O f f i c e , Prince George, B.C. 7. Ronald N. Byron, Community S t a b i l i t y and Regional Economic  Development: The Role of Forest Policy in the North Central  Interior of B r i t i s h Columbia (Unpublished PhD. Thesis, Faculty of Forestry, University of B r i t i s h Columbia, 1976), p. 110. 8. Ibid., p. 116. 9. Ibid., p. 119. 10. These figures are for the Prince George and Quesnel Manpower Regions only. The Williams Lake Manpower Region was excluded from the analysis of the pulp and paper s t r i k e because the area has no employment in this industry. 96 CHAPTER 5  CONCLUSIONS As was poi n t e d out i n the i n t r o d u c t i o n to t h i s study, there e x i s t s a need to b e t t e r understand the economic s t r u c t u r e s and processes of r e g i o n s and communities i n B r i t i s h Columbia i n order to adequately plan f o r and a d j u s t to i n d u s t r i a l t r e n d s . Granted that there i s not a great amount of economic data a v a i l a b l e at the s u b p r o v i n c i a l l e v e l , i t i s s t i l l p o s s i b l e to apply c e r t a i n a n a l y t i c a l techniques to that data and e x t r a c t some of the more s a l i e n t aspects of r e g i o n a l and l o c a l economic s t r u c t u r e s . The a n a l y s i s has been able to produce evidence of some of the i n t e r r e l a t i o n s h i p s of the f o r e s t i n d u s t r y , the s e c t o r encompassing the m a j o r i t y of the b a s i c employment i n the c e n t r a l i n t e r i o r , and the nonbasic i n d u s t r i e s which are dependent upon f o r e s t - r e l a t e d a c t i v i t y f o r t h e i r economic w e l l - b e i n g . A n a l y s i s of the h i s t o r i c a l development of the f o r e s t i n d u s t r y demonstrated how i t has a f f e c t e d the l o c a t i o n a l p a t t e r n of p o p u l a t i o n and i n d u s t r i a l growth i n the r e g i o n by f o c u s s i n g on those f a c t o r s which have had the most profound impact, such as the r a i l w a y system and t e c h n o l o g i c a l change. T h i s has l e d to i n t e n s e v e r t i c a l and h o r i z o n t a l i n t e g r a t i o n of the wood pr o c e s s i n g i n d u s t r i e s and a s s o c i a t e d s e r v i c e s which i n t u r n has caused even g r e a t e r c o n c e n t r a t i o n of development w i t h i n a few communities and areas, of the r e g i o n . Given t h i s dependency upon the f o r e s t i n d u s t r y , the a p p l i c a t i o n of Economic Base A n a l y s i s has been ab l e to suggest the s t r e n g t h of the r e l a t i o n s h i p , an undertaking t h a t produced an employment m u l t i p l i e r o f 2.13, and has a l s o p r o v i d e d a r i g o r o u s e x a m i n a t i o n o f the v a l i d i t y o f s e v e r a l forms o f E.B.A. D e s p i t e t h e s h o r t c o m i n g s o f t h e t e c h n i q u e s , a problem t h a t i s common t o almost any form o f a n a l y s i s , they have proved t o be u s e f u l t o o l s i n u n c o v e r i n g some f e a t u r e s o f the economic s t r u c t u r e s w i t h i n t h e communities and r e g i o n , i n c l u d i n g t h e s i z e s o f the b a s i c - n o n b a s i c l a b o u r f o r c e s and s t a t i s t i c a l l y i nduced c o r r e l a t i o n s ( a l t h o u g h not a l l s t r o n g ) between p o p u l a t i o n , l a b o u r f o r c e , and M.R. and L.Q. m u l t i p l i e r s . S t a t i s t i c a l a n a l y s i s o f employment, e a r n i n g s , and unemployment has been i n some ways a f r u s t r a t i n g e x e r c i s e . I t was unable to c o m p l e t e l y r e v e a l some o f t h e i n t e r r e l a t i o n s h i p s between t h e i n d u s t r i a l s e c t o r s which have been found o r i n f e r r e d by a n a l y s t s i n v e s t i g a t i n g o t h e r r e g i o n s and t h a t were h i n t e d a t throughout t h i s s t u d y . T h i s i s an i n d i c a t i o n o f the c o m p l e x i t y o f the i n t e r i n d u s t r i a l l i n k a g e s which do not l e n d themselves t o easy e x p l a n a t i o n s as they impact i n a wide v a r i e t y o f ways through the system and w i t h d i f f e r e n t speeds and degrees o f i n t e n s i t y . The a n a l y s i s has been s u c c e s s f u l i n p r o d u c i n g s e v e r a l s i g n i f i c a n t f i n d i n g s . The n o n b a s i c s e c t o r o f the economy e x h i b i t s s u r p r i s i n g r e s i l i e n c e t o s h o r t - t e r m employment f l u c t u a t i o n s i n t h e b a s i c i n d u s t r y d e s p i t e t h e u l t i m a t e dependence o f the n o n b a s i c i n d u s t r y upon f o r e s t - r e l a t e d a c t i v i t y . The s t r u c t u r e s o f r e s o u r c e - b a s e d economies a r e o f t e n r e g a r d e d as f r a g i l e and t h e r e f o r e h i g h l y s e n s i t i v e t o c o n d i t i o n s w i t h i n t h e b a s i c i n d u s t r y . The i m p l i c a t i o n here i s t h a t w h i l e t h e n o n b a s i c s e c t o r must e v e n t u a l l y r e a c t t o l o n g term t r e n d s i n the f o r e s t 98 i n d u s t r y , over the s h o r t run i t i s not showing a r e a c t i o n t h at can be measured by employment gains or l o s s e s . I t may be that the economy of the c e n t r a l i n t e r i o r has progressed s u f f i c i e n t l y t h a t , while one cannot l o s e s i g h t of the f a c t t h a t i t i s b a s i c a l l y a s i n g l e i n d u s t r y dependent r e g i o n , the complexity of the system a i d s i n slowing down r e a c t i o n s by the nonbasic i n d u s t r i e s to the po i n t where short-term f l u c t u a t i o n s tend to smooth out as they progress through the system. Through unemployment data and a n a l y s i s , the study a l s o found that there must be c a r e f u l c o n s i d e r a t i o n given to a l l aspects of economic development to r e v e a l hidden e f f e c t s . In t h i s case there was an i n c r e a s e i n unemployment along with growing p o p u l a t i o n and basi c - n o n b a s i c employment, thus the net r e s u l t i s a c t u a l l y a l e s s e r r a t e of r e a l development than i s r e a d i l y e x h i b i t e d . As i s o f t e n the case with analyses of t h i s type, the f i n d i n g s produce as many ques t i o n s f o r f u t u r e c o n s i d e r a t i o n as they answer. T h i s study has found i n a p p r a i s i n g the s t r e n g t h s and weaknesses of the methods of a n a l y s i s as w e l l as t h e i r r e s u l t s t h a t there are some areas of i n v e s t i g a t i o n which are perhaps worthy of f u r t h e r r e s e a r c h . Of g r e a t e s t concern i s the complexity of the i n d u s t r i a l l i n k a g e s which have remained hidden as were measured here using e x i s t i n g data. An i n t e n s i v e f i e l d survey of i n d u s t r i e s i n the c e n t r a l i n t e r i o r , which p r e l i m i n a r y i n v e s t i g a t i o n i n d i c a t e d to be an expensive and time consuming p r o j e c t , might produce s u f f i c i e n t data to allow f o r b e t t e r comprehension of how the s e c t o r s i n t e r a c t , p a r t i c u l a r l y through time when coupled with the a p p r o p r i a t e a n a l y t i c a l technique. The b a s i c - n o n b a s i c concept has i t s r o o t s i n c e n t r a l p l a c e theory and i t may be that t a k i n g the concept f u r t h e r along i n t h i s d i r e c t i o n with a more s p a t i a l approach c o u l d r e s u l t i n a c l e a r e r e x p l a n a t i o n of the r e l a t i o n s h i p s between l o c a t i o n , employment, and p o p u l a t i o n . The use of Economic Base A n a l y s i s , although dismissed as an outdated technique by some a n a l y s t s r e c e n t l y , has m e r i t . However, i t s u s e f u l n e s s can only be proven through e m p i r i c a l r e s e a r c h . I t would be a worthwhile undertaking to apply, and perhaps even r e f i n e , one or more of the techniques of E.B.A. to another r e g i o n s i m i l a r to the c e n t r a l i n t e r i o r . A d i f f e r e n t r e s ource based economy, such as mining or o i l and gas, could be chosen to determine i f s i m i l a r r e l a t i o n s h i p s and p a t t e r n s emerge. 100 BIBLIOGRAPHY "ABC" B r i t i s h Columbia Lumber Trade D i r e c t o r y and Year Book,  The (Vancouver: Progress P u b l i s h i n g Company). Alexander, John W., "The Basic-Nonbasic Concept of Urban Economic F u n c t i o n s , " Economic Geography, V o l . 3 0 , 1 9 5 4 . Alexandersson, Gunnar, The I n d u s t r i a l S t r u c t u r e of American  C i t i e s ( L i n c o l n : U n i v e r s i t y of Nebraska, 1 9 5 6 ) . 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