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Changes in location and structure in the forest industry of North Central British Columbia : 1909-1966 Mullins, Doreen Katherine 1967

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CHANGES IN LOCATION AND STRUCTURE IN THE FOREST INDUSTRY OF NORTH CENTRAL BRITISH COLUMBIA: 1909-1966 by DOREEN KATHERINE MULLINS B.A., University of Br i t i s h Columbia, 196U A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF Master of Arts in the Department of Geography We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA September, 1967 i i In presenting this thesis i n partial fulfilment of the require-ments for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library sh a l l make i t freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of Geography The University of British Columbia Vancouver 8, Canada September, 1967. / i i i ABSTRACT-Forests and the forest industry have been dominant features in North Central British Columbia since i n i t i a l settlement of the area in the 1900's. Trees have been logged and sawed into lumber to be sold to the residents of the three prairie provinces, and more recently, peeled for plywood and chipped for pulp to be exported abroad. As a result of the region's peripheral location and dependence upon these distant markets, the industry has had to adjust continuously to external pressures. Changing conditions such as expansion or con-traction of markets, government decisions to build railways, changes in provincial forest management policies, and the introduction of a pulp economy to the area, have forced the industry to adapt i t s processes and products so that the North Central Interior could compete with other forest product regions. A gradual rationalization of the industry has occurred i n both the structure and location of producing units within the region. Several periods in the development of the industry are identi-fiable as a series of external stimuli, and internal responses. In i t s i n i t i a l years, in the early 1900's, the industry consisted of a few sawmills cutting rough lumber along the upper Fraser River. Later, i n the years prior to World War II, poor market conditions restricted the industry in size, technological improvement and areal spread. The buoyant market conditions of the 1910's and 1 9 5 0 ' s encouraged growth in the number of operations and dispersion of cutting operations into remote i v areas. At this time, shortages of labour, equipment and capital combined with an indefinite forest management policy promoted the development of a large number of small, undercapitalized operations. The growth of large-scale production units, diversification of production and areal concentration of conversion plants have been the responses of the industry in the 1960's. A number of external forces such as changes in provincial forest management policies, changing market demands and rising labour costs have encouraged these responses. This thesis presents an overview of the development of the forest industry, rather than concentrating upon the individual locative decision. Particular firms are used, however, to ill u s t r a t e changes in structure and location which are characteristic of certain periods. Emphasis is also placed upon the role exogenous forces and traditional locative factors have played in the changes. Interviews with entrepreneurs in the area, and data from trade journals and government publications provide most of the information presented here. The changes i n size and location of producing units within the forest industry of North Central B r i t i s h Columbia from 1909 to 1966 are outlined f i r s t , with particular reference to external influences and industry responses. Comparisons are made of the structure and spatial patterns of the industry in 1925, 1950 and 1966. An analysis of (a) the external forces, (b) the internal adjustments of the region and, (c) the resultant pattern of location, constitutes the major part of the study. A summary of these forces, predictions of the future pattern of development and an outline of the general findings of this examination conclude the thesis. V TABLE OF CONTENTS CHAPTER PAGE I. THE FOREST INDUSTRY OF NORTH CENTRAL INTERIOR BRITISH C O X J U M X B I A o o a o o o o o c s o o o o o a o o o o o o o 1 Changes Within the Industry o o o o o o o o o o o o o 1 MethOClOlOgjr O O O O O O O O O O O O O O O O O O O O O ^) The Study Region o o o o o o © o o o o o o o 0 0 o o 1I4 ID 3 ta SOUrCeS c o e o o o o o o o o o o o o o o o o o X^ II. CHANGE IN STRUCTURE AND LOCATION IN THE FOREST INDUSTRY OF NORTH CENTRAL INTERIOR BRITISH COLUMBIA s- 1909-1957 19 Timber Speculation. 1909-19LU « . . . . . ° . o . . o 21 Small-Scale Productions 1915-1939 « . . . . „ . . . . 26 Areal Dispersion of Logging and Sawmillings 19UO-1957 30 Structure of the Industry? A Comparison of 1925 and 15^ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3^4-Spatial Models of the Forest Industry? 1925 and 1950 U3 III. CHANGE IN STRUCTURE AND LOCATION IN THE FOREST INDUSTRY OF NORTH CENTRAL INTERIOR BRITISH COLUMBIA % 1958=1966 li8 Functional Integration and Areal Concentration of Conversion Units 0 . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ii8 Structure of the Industry? 1966 . o o . o o o o o . o 5il Spatial Model of the Industry; 1966 ...... .. .. .. 0 ih IV. AN ANALYSIS OF KEY FACTORS CONTRIBUTING TO THE STRUCTUR-AL AND LOCATIONAL CHANGES IN THE FOREST INDUSTRY OF NORTH CENTRAL BRITISH COLUMBIA . . . . . „ . . . „ . 79 Small-Scale Productions 1915-1939 0 . 0 . 0 . 0 0 0 0 79 v i TABLE OF CONTENTS (Cont'd,) CHAPTER PAGE Exogenous Forces: the prairie market „ „ . „ « o o 80 Factors Encouraging Change in Location: technologi-cal l e v e l , raw material supply „ o o o o . o o o 85 Areal Dispersion of Logging and Sawmilling: 19i|0-l°57 89 Exogenous Forces: increased demand for lumber, labour, equipment and capital shortages, lumber prices, forest management policies . . . . , « < > 89 Factors Encouraging Change in Location: lumber recovery, changes in transportation technology, » 100 Functional Integration and Areal Concentration of Conversion Plants: 1958-1966 o o o o o o o o o o o 103 Exogenous Forces: market demands, labour demands, changes i n provincial forest management policies 103 Factors Encouraging Change in Location: lumber recoveryo year-round operation, accessibility to timber supplies, labour s t a b i l i t y , control of the marketing and shipping functions « » „ „ „ , „ 0 117 V„ SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . . . 121 BIBLIOGRAPHY 0 0 0 0 o o o o o o o o o o o o o o o » o o o o 126 v i i LIST OF TABLES TABLE PAGE lo Pulp and Paper Mi l l s Proposed In the North Central IntSrlOX* o o « o . » o o « » o o . o o o . !?2 I I , Pulp Wood Chip Freight Rates, 1966 . . . . . . . . . 73 III. Effects of Depression and Drought Upon the Prairie Grain Trad©, 1928—1939 « o . © . . * « © © . . o c 83 IV. Volume of Sawmill Residue Resulting From the Manufacture of IiXinib©!* 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 V, Consumption-Pattern of Forest Products i n the United States, 1950, I960, 1980 and 2000 . . . . . . . . . . . 10U VI. Allocation of Allowable Cut i n the Prince George Forest D i s t r i c t : 1961 and 1966 . . . . . . . . . . . H I v i i i LIST OF FIGURES FIGURE ' PAGE le Log Conversion Units i n the North Central Interior: 1955 . . 3 2. Log Conversion Units i n the North Central Interior: 196b, . . k 3. Timber Scaled i n the Prince George Forest D i s t r i c t and the Interior of British Columbia, 1919-196U . . . . . . 20 ho Log Conversion Units i n the Prince George Forest D i s t r i c t . . 27 5. Number of Active Sawmills i n Northern Interior, 1920-196U. « 31 6. Simplified Flow of Lumber Manufacturing Process . . . . . 36 7. Industrial Structure, 1925 . . . . . . . . . . . . 38 8. Industrial Structure, 1950 . . . . . . < < , . . . < > 38 9. Spatial Model of the Forest Industry, 1925. . . . . . . kk 10. Spatial Model of the Forest Industry, 1950. . . . . . . b,6 11. Growing Concentration of Lumber Production i n the Northern Interior: 1925, 19U9, 196b, . . . . . . . . . . . h9 12. Industrial Structure, 1966 . . , . >;,'-. . . , . , . 60 13. Annual Log Flow to Weldwood of Canada Operations i n Quesnel . 62 l l u Annual Pulpwood Chip Flow to Prince George Pulp and Paper Co. Xitcto o o o o o o o o o o o ' o o a o o o o 70 ix LIST OF FIGURES FIGURE PAGE 15o Annual Pulpwood Chip Flow to Northwood Pulp Co, Ltd. . . . 71 16. Frequency of Truck and Rail Hauls of Sawmill Chips by Distance i n Eastern Canada . . . . . . . O . . 0 o 75 17. Spatial Model of the Forest Industry, 1966 . . . . . . 77 18. Timber Scaled i n the Northern Interior and Bushels of Canadian Wheat Exported, 1921-1938 . . . . . . . . 81 19. Average F.O.B. Price for B r i t i s h Columbia Spruce Lumber, 1^ 1,5 0 0 0 0 4 6 0 0 0 0 0 0 0 O O O O Blj 20. Merchantable Timber i n the Fort George Forest Dis t r i c t as of 1^ 37 © o o o e o o o o o o o o o o o e o 3-7 21. Forest Alienation, 1956 . . . . < > 0 . 0 ° . . o •> 95 22. Average Value of Interior Spruce Lumber and Basic Hourly Wage in North Central B r i t i s h Columbia, 1950-1966 . < , „ . . 107 23. Forest Alienation, 1961* . . . c o o . o o . o o o 110 22i. Pulpwood Harvesting Areas Awarded, 1966 . . . . . o . 113 CHAPTER I THE FOREST INDUSTRY OF NORTH CENTRAL INTERIOR BRITISH COLUMBIA Significant changes have taken place i n the forest industry of North Central Interior B r i t i s h Columbia, particularly since 1955. Logging, once restricted to lands adjacent to the railways and the upper Fraser Valley has scattered throughout the region.' Conversion plants, for several years dispersed over a wide area, have again concentrated. The Prince George area, at one time the centre of the lumber production industry, now supports not only sawmills, but also plywood, pulp and paper processing f a c i l i t i e s . A complex circulation of raw materials has resulted, i n which a wide range of grades and species of logs move to conversion plants where they can be best u t i l i z e d . These changes i n the pattern of the industry provide the major themes of this study. Specifically, changes i n the structure and location of the industry are described and analysed. Since the forest industry dominates the economy of the area, i n many cases the changes in structure of the industry have affected the area generally. Thus, this study w i l l add to the general knowledge not only of the forest industry but also of North Central British Columbia. A visual comparison of two maps, Log Conversion Plants in the North Central Interior i n 1955 and I96I4 illustrates the changes that occurred in the size, number and location of log conversion units over the last decade. Each map represents a stage in the development of the industry. In the 1950' s the industry was characterized-.by hundreds of 2 small portable operations scattered throughout the timber stands of the region. There logs were fel l e d , dragged a few yards to a crude saving "outfit" and sawed into rough, green lumber. The lumber was loaded onto a truck and transported to a centrally-located planing m i l l where i t was dressed,^" dried and marketed. Figure 1 illustrates the importance of Prince George and Quesnel as the planing centres of the region. Sawmills marketing more than one million board feet of lumber annually in 1955 are also mapped on Figure 1. These mills accounted for 85 per cent of the rough lumber produced. In addition, 300 portable mills cutting less than a million feet were scattered throughout the timber stands of the region. These mills have not been mapped because of their intermittent production and shifting locations. Only III integrated sawmill/planer units and one plywood m i l l operated in the North Central Interior at this time. There were no pulp mills. By 196I| the industrial pattern had altered. In particular, five changes had taken place, several of which can be noted on Figure 2. There was: (1) growth i n the total output of wood products (seen i n the greatly increased number of producing units); (2) expansion of large-scale operations (illustrated by the presence of larger graduated cir c l e s ) ; (3) relative concentration of a l l conversion units into urban centres; (U) the diversification of production (indicated by the presencd 2 of plywood and pulp and paper plants); and (5) a separation of logging 1. Dressing is the planing of lumber to achieve smooth, even surfaces, 2. The pulp mills shown in Figure 2 have been proposed and have secured timber allotments. Construction of two of the six mills i s complete. The other four mills w i l l be operating before 1970. Figure 1 3 Figure 2 Log Conversion Plants in the North Central Interior. 1964 5 O 10 2 0 5 0 100 2 0 0 3 0 0 o o O Millons of feet, B.M. per annum. Sawmil or sawmill / planer unit. Q Planer mill. <||) Plywood plant. 6S§ Pulp or paper mill Source' Sawmills and Planing mills by Ranger District. British Columbia Department of Lands and Forests .Victoria , B.C, 1964 Estimates of various entrepreneurs in the North Central Interior. and wood conversion. Only a few small seasonal lumber producers cutting less than five million feet s t i l l followed the dispersed pattern of the 1950 decade, and by 1967, even these sawmills had dis-appeared. The major hypothesis of the study states that exogenous forces, particularly changes i n markets for forest products from peripheral locations, determined the size and efficiency of the industry. These forces, beyond the control of the local entrepreneur, include expansion or contraction of markets, government decisions to build railways or military establishments, changes i n public policies on forest manage-ment, fluctuations i n lumber prices on the international market and the introduction of a pulp economy. The relative importance of these forces vary, and the influence of any particular factor shifts with the time period under investigation. Changes i n the structure of the industry or location pattern are internal responses of companies within the region to these exogenous forces. Increased size cf production units and their centralization i n the decade 1955-65; changes in transportation technology and i n the proportion of the log recovered are responses to a changing economic climate within the North Central Interior. Methodology. The changes demonstrated in the forest industry pose questions which are most appropriate for geographic analysis. This examination of the forest industry f a l l s into the category of traditional studies within geography which analyse the problem of industrial location in terms of factors such as proximity to raw material sources, accessibility to transportation f a c i l i t i e s , or the a v a i l a b i l i t y 6 3 of a qualified labour force. However, more classical location theory is useful in developing the study as well. Three varieties of l i t e r -ature within the f i e l d of geography aid in the development of the methodology of this study: (a) empirical studies of industrial location, (b) classical location theory, and (c) studies of forestry and the forest industry. Most empirical studies evaluate the major factors of location i n terms of their relative importance i n explaining the establishment of one or more manufacturing plants within a given region, or change i n pattern of location. It is assumed the locative decision is based either on the minimization of production costs or the maximization of profit. The approach and emphasis, however, varies in these studies. Several attempt to analyse the total industrial structure of particular regions, l i so that major trends in their development might be isolated. Some of the studies are historical i n nature, and like Lonsdale's article on the Siberian industry before 1817, examine aspects of manufacturing activity at a particular time period i n the past. A few industrial 3. For a complete discussion of various locative factors see R.C. E s t a l l and R. Ogilvie Buchanan, Industrial Activity and Economic  Geography, London: Hutchinson and Company, 1961, and E. Willard M i l l e r , A Geography of Manufacturing, Englewood C l i f f s , N.J.: Prentice-Hall, Inc., 1962, pp. 1-19. b. The articles by P. Karan, "Changes i n Indian Industrial Location," A.A.A.G., LIV (September, 196b) pp. 336-35U; G.J.R. Linge, "The Diffusion of Manufacturing in Auckland, New Zealand," Economic  Geography, XXXLX (July; 1963), pp. 23-39 and A. Pred, "The Intra-Metropolitan Location of American Manufacturing," A.A.A.G., LIV (June, 196b) pp. 165-180, i l l u s t r a t e application of this approach. 5. R.E. Lonsdale, "Siberian Industry Before 1917: "The Example of Tomsk Guberviya," A.A.A.G., LIV (December, 1963) pp. b79-U93. 7 6 7 geographers such as Stafford and Harris focus upon the role of a single variable in the location of an industrial pattern. Others are essentially evolutionary, where emphasis is placed upon the dynamic nature of a particular industry, with the current industrial pattern seen as one in a series of stages. Most evolutionary studies pose basic questions: (1) What has been the change in size, number and location of industrial units? (2)' How has the nature of the pattern changed (i.e., in terms of concentration or dispersion)? (3) How have the circulation patterns altered within the region? (!|) What factors have been responsible for these changes, and to what degree has the role of the various locative factors changed through time? This study follows the evolutionary methodology. Within this general framework the emphasis here i s upon the explanation of adjustments i n location in periods of stress. This emphasis contrasts with studies such as 8 Boas' on the American automobile industry, but follows the precedent set by the studies of Rogers and Hardwic which recognize the influence both internal and exogenous forces have had on the develop-ment of two different industries. 6. H.A. Stafford^ "Factors i n the Location of the Paperboard Container Industry," Economic Geography. XXXVI (July, I960) pp. 260-267. 7. C. Harris, "The Market as a Factor in the Localization of Industry i n the United States," A.A.A.G. XLIV (December, 195b) pp. 3l5-3b8. 8. C.W. Boas, "Locational Patterns of American Automobile Assembly Plants, 1895-1958," Economic Geography, XXXVII (July, 1961) pp. 218-230. 9. H.B. Rogers, "The Changing Geography of the Lancashire Cotton Industry," Economic Geography, XXXVIII (October, 1962), pp. 299-3H). 10. W.G. Hardwick, Geography of the Forest Industry of Coastal  British Columbia, Canadian Association of Geographers, Bri t i s h Columbia Div-ision, Occasional Papers in Geography, No. 5, 1963. 8 Views drawn from classical location theory are of use i n developing this study as well. The forest processing industry (especially i t s extractive phases) is strongly oriented towards i t s raw material source. The reasons for this orientation are numerous: the raw materials used (logs) lose considerable weight and bulk during processing, the value per unit of material is relatively low, the number of raw materials used i n the manufacturing processes can be reduced essentially to one, timber, and the possibility of substitution of this one essential ingredient is low. Location theory, stemming from the studies of Alfred Weber,offers theoretical evidence for wood processing plants being located within the general bounds of the supply area rather than the market area. Weber's loss of weight hypothesis states that i f the raw materials of an industry lose weight in the process of manufacturing so that the finished product is substantially lighter than i t s raw materials then the industry w i l l be drawn to the 11 site of raw materials. The existence of the forest industry in the North Central Interior confirms \ifeber's hypothesis at the national scale. The various processing units, the logging "show", plywood mills, sawmills and pulp and paper plants are clearly located within a supply area (North Central British Columbia) as opposed to the market areas (the Canadian prairies, Eastern Canada and the United States). Within the region i t s e l f , however, the location of industrial plants has experienced several major 11. C.J. Friedrich, Alfred Weber's Theory of Location of  Industries, Chicago: University of Chicago Press, 1929. shifts, as already noted i n the discussion of Figures 1 and 2. At this regional scale the degree of orientation toward the raw material source and the rationale supporting the location patterns ?iave varied over the years and the theory becomes less appropriate. However, Leber's concept i s applicable in the explanation of the shift i n sawmill location since 1958. Various other geographic concepts have been found to be useful in this study. The concept of i n i t i a l advantage as used by Pred is implicit in the explanation of the relatively late development of the 12 industry. The industries of the southern interior and coastal regions acted as intervening opportunities which delayed exploitation of the north. The concepts developed by Hoover concerning the nature of'transporta-tion costs have been applied i n the discussion of the expanding hinter-13 lands of conversion plants. Comparisons of the cost of different forms of transportation (truck, r a i l and water) are based on his idea that costs vary with distance and form of transport and that the most economic form for a given distance can be determined. Spatial models for the different stages in the industry's development have been constructed to i l l u s t r a t e the theoretical spacing of industrial units and flows of products. Losch's principles regarding market area 1U competition have been applied. His theory that individual market 12. A. Pred, "Industrialization, I n i t i a l Advantage and American Metropolitan Growth, Geographical Review, LV (February, 1965), pp. 158-185. 13. E.M. Hoover, The Location of Economic Activity, New York: McGraw-Hill, 1 9 U 8 . i l l . A.Losch, Economies of Location, New Haven: Yale University Press, 19514. See also S. Valvanis, "Losch on Location." American Economic Review, XLIV (September, 1955), pp. 637-6Uli. 10 areas form a continuous hexagonal la t t i c e when competition between entrepreneurs for the sale cf goods exists has been u t i l i z e d . It has been assumed that transportation costs are then minimized, every customer is served and the market areas are completely space-filling. It i s argued that as competition for manufactured products and raw materials i n the North Central Interior increased, the theoretical location pattern of producing units became hexagonal in nature. Most studies of the forest industry in the f i e l d of economic geography assume that industrial units are located within supply areas and focus upon location shifts within the region. Several studies, such as Evelyn Dinsdale's examination of the lumber industry of Northern New York, are concerned with the stages of lumbering and the role li technological change played i n determining changes i n spatial patterns. The logging technology common i n the North Central Interior during the 1920's was not unlike that employed i n both Eastern United States and New Zealand i n the early years.However, the changes i n transporta-tion technology from horse and sled to lumber truck and thence to logging truck have been recognized here as factors permitting spatial changes to take place rather than as determining factors. They are i n 15. Evelyn M. Dinsdale, "Spatial Patterns of Technological Change: The Lumber Industry of Northern New York," Economic Geography, XXXXI (July, 1965), pp. 252-27b. See also K.A. Erickson, "Isochrons of Logging on the Pacific Slope of Oregon, 1890-I9b0," Yearbook of the  Association of Pacific Coast Geographers,' XIX, 1957, pp. 19 -2i i . 16. Evelyn Stokes, "Kauri and I«ihite Pine: A Comparison of New Zealand and American Lumbering," A.A.A.G., LVT (September, 1966), pp. Ui0-U50. 11 fact dependent variables, closely related to the current economic climate within the region. In many cases technology employed i n other regions was not introduced to the North Central Interior, or i f i t was, 17 not u n t i l several years later. 1 Consequently, emphasis is placed on exogenous factors influencing the general economic climate of the area rather than on specific technological changes which developed as a result of changing conditions. Other studies have examined the role that raw materials have played. Usually these studies describe the existing timber resources during different time periods, and i n a general way relate the resources 1 p to the existing industrial pattern. A few studies, such as Helen 19 Hunter's isolate a particular phase of the industry and examine the relevant locative factors. However, few concepts have been developed i n these studies that have been found to have application i n this investigation. • Rarely have geographic studies examined the spatial pattern of each of the phases (extraction, processing and marketing) of the industry and the relationships existing between the phases to achieve a composite view of a particular forestry region. Walter G. Hardwick, 17. The logging railway which was used extensively i n other lumbering areas and which permitted the rapid liquidation of resources was never used i n the North Central Interior to any great degree. 18. See Woodrow R. Clevinger, "Locational Change in the Douglas F i r Industry," Yearbook of the Association of Pacific Coast Geographers, XV, 1953, pp. 23-31, and Robert M. Bone, "A Geographical Appraisal of the Soviet Forest Resource," The Forestry Chronical. XLI (September, 1965), PP. 3b5-351. 19. Helen Hunter, "Innovation, Competition and Locational Changes i n the Pulp and Paper Industry: 1880-1950, Land Economics, XXXI, (November, 1955), pp. 31U-327. 12 in one of the few studies of this type, traced the changes that occurred i n the forest industry of coastal British Columbia from i860 20 to I960. Besides recognizing the influence that exogenous factors such as government policy and market demands had on the industry, he also examined the component parts of the industry (the raw material and waste product flows, extraction sites and conversion plants), looked at the internal functioning of the industry by tracing corporate linkages, and constructed a number of spatial models of the industry. In his conclusions, Hardwick was able to weight the relative importance of the various factors influencing location changes, and to predict future patterns to emerge i n other forest industry regions as well as in Coastal British Columbia. This study follows the precedent set by the traditional school of empirical geographic studies, particularly the one by Hardwick as outlined above. An overview of the development of an industry region is presented rather than the analysis of a particular firm. In other words, the study is concerned with the aggregate rather than the individual locative decision. Secondly, the industry i s examined from an actual and specific demand and supply point of view. A primary concern is how the industry region has reacted to external pressures such as lumber and labour demands. Interviews with entrepreneurs i n the area, supplemented with data from secondary sources such as early 20. Walter G. Hardwick, Geography of the Forest Industry of  Coastal B r i t i s h Columbia, Canadian Association of Geographers, B r i t i s h Columbia Division, Occasional Papers i n Geography, No. 5, 1963. 13 trade journals have been used to isolate the major factors contributing to the development of the industry. Emphasis has been placed on the role the traditional locative factors played in the locative and structural changes which characterized the industry. The development of a few selected firms have been used to ill u s t r a t e the trends characteristic of particular time periods. The thesis i s , clearly, an empirical case study of an industry, but i s one which can be used to illuminate certain features of classical location and economic theory. General location principles have been employed to relate the industrial location problem of this industry to others. Four basic periods of development i n the forest industry of the North Central Interior have been identified and the series of stimuli and responses which shaped the spatial patterns of the industry i n each period have been isolated. The external forces, internal adjustments of the region, and the resultant locational pattern i n each period are outlined in the following series of statements. It is proposed f i r s t l y , that exogenous forces have been most pervasive i n the evolving geography of the industry: ( i ) in the early years with the construction of a r a i l line across the region. ( i i ) between 1909 and 1939 with the fluctuating market conditions and the intervening opportunity of other timber areas. ( i i i ) from 19liO-1958 with the increased demands for lumber products, war-time shortages of labour equipment and capital, high lumber prices and the lack of a positive management policy for the forests. (iv) after 1958 with the buoyant market conditions, rising labour costs coupled with stabilized lumber prices and changes i n provincial management policies. lU And secondly, i t is suggested that internal adjustments and adaptations of the industry region important i n developing the patterns were: (i) minimal technological development between 1909 and 1939 ( i i ) the continuing high percentage of waste per log and changes i n transportation technology from 19^0 to 1958 ( i i i ) the shift to f u l l u t i l i z a t i o n of timber brought about by the introduction of pulp mills after 1958. Finally, the patterns to develop in each period were: (i) the establishment of speculative claims in the 1900's ( i i ) the establishment of a limited number of marginal producers located proximate to the r a i l line between 1909-1939 ( i i i ) a growth in the number of lumbering operations and a movement of timber cutting and sawmilling into more remote areas. (iv) a higher per unit investment, the growth of large-scale production units, diversification of production, integration of functions and areal concentration of production after 1958. The Study Region. The North Central Interior region of B r i t i s h Columbia stretches from 'Williams Lake i n the south to the Peace River area i n the north, and from the crest of the Coast Mountains i n the west to the provincial boundary i n the east. Local differences i n the quality and type of timber stand and methods of extraction exist, but the North Central Interior as a forest industry region has a certain cohesiveness. While the Williams Lake area differs physically from the Peace River country on one hand, and the Burns Lake area on the other, a l l three are functionally tied together by their forest product 15 f l o w s . The forces influencing the development of the industry and the responses which have been made are common throughout the area. Conse-quently, a meaningful region can be defined i n terms of the forest industry for analysis and projection. Forests and the forestry industry have dominated the North Central Interior landscape since the early 1900's. Logging and saw-milling provided the mainstay of the region's economy throughout the 1920's and the depression of the 1930's. However, i t was not u n t i l after World War II that the production of the region began to contribute significantly to B r i t i s h Columbia's forest industry. The Prince George Forest D i s t r i c t , the administrative unit that encompasses the study area, now accounts for half the interior region's forest product output. The North Central Interior region is an area which has tradition-a l l y lacked a domestic market, and has been dependent upon the successful exportation of its wood products. This dependence has made the area particularly vulnerable to fluctuations i n economic conditions of other areas. As i t has already been suggested, stimulation for forest industrial development in the region has come largely from the outside. From i t s i n i t i a l beginning in 1909, the forest industry of the North Central Interior has developed in response to a number of exogenous forces and not as a result of internal stimulation generated by existing conditions within the region. Data Sources. The historical data presented in this study was obtained primarily from trade journals of the provincial forest industry. Development of the industry from 1909 to 1930 is described in reports 16 21 22 appearing in the Western Lumberman. The Dritish Columbia Lumberman proved to be an invaluable source of data for the years after 1930. Most of the historical records of individual companies have been destroyed, either during successive changes in ownership or through f i r e . Aggregate data on the growth of the log scale and the number of 23 conversion units was obtained from Forest Service data. Maps, including those showing size and location of conversion units i n 1925, 1955 and 196h, and forest alienation in 1956 and 1964, also have been compiled ,„24 25 from this data source. The Royal Commissions of 1945 and 1956 were used extensively for background material while the verbatum transcript of the 1956 Commission and personal interviews held i n the spring of 1966 provided the basic interpretive data for the study. Most companies involved in the forest industry of the North Central Interior were willing to supply data for this study. A number of individuals were particularly helpful. Mr. Conrad Pinette, Manager of Pinette and Therrien Planer Mills Ltd. i n Williams Lake, supplied general information and cost figures for the study. Mr. Harold Jacobson, General Manager, Jacobson 21. Western Lumberman. Vancouver, B.C., Business Publications of B.C. (monthly)^ The t i t l e of this journal has varied through the years as follows: Vol. I (January, 1904) to Vol. II (February, 1905) t i t l e d B r i t i s h  Columbia Lumberman; Vol. II (March, 1905) to Vol. IX (1907) t i t l e d Lumberman  and Contractor; Vol. V (1908) t i t l e d Western Canada Lumberman; 1908-1930' t i t l e d Western Lumberman. It ceased publication July, 1930. 22. B r i t i s h Columbia Lumberman. Vancouver, B.C., B.C. Timber Industries Journal Ltd., January, 1917 - (monthly). 23. Annual Report(s). Forest Service, Department of Lands and Forests, Victoria, B.C., 1925-1967. 2b,. Gordon McG. Sloan, Royal Commission on the Forest Resources of  British Columbia, Victoria, B.C., C F . Banfield, Printer to the King, 1945« 25. Gordon McG. Sloan, Royal Commission on The Forest Resources of  Br i t i s h Columbia, 1956, Victoria, B.C., Queen's Printer, 1957 (2 vols.). 17 Erothers Forest Products L t d . of Williams Lake outlined the development of h i s company i n d e t a i l so that i t could be used as a case study. Mr. Dennys Moore, Fulpwood Chip Buyer f o r Frince George Pulp & Paper Co. Ltd., was h e l p f u l i n o u t l i n i n g the p o s i t i o n of the various pulp companies i n the area. Other interviews which were p a r t i c u l a r l y valuable were given by Mr. M. Rustad, Rustad Planing M i l l s , Mr. G. Caine, Merton Lake Lumber, Mr. I. K i l l e y , Fergusson Lake Lumber, Mr. W. S t e r l i n g , Qoiesnel D i v i s i o n of Weldwood of Canada, and Mr. R. Jewisson, Prince George Pulp and Paper Co. L t d . Encouragement and h e l p f u l c r i t i c i s m were given by Dr. Walter G. Hardwick, Dr. J.D. Chapman, Mr. Gary E. Mullins and Mr. R.I. Dyer. The following chapter, Chapter II, examines the changing s i z e and l o c a t i o n of producing units within the f o r e s t industry of North Central I n t e r i o r B r i t i s h Columbia from 1909 to 1957. The general development of the industry during t h i s time i s f i r s t o u t l i n e d , with p a r t i c u l a r reference to major infl u e n c i n g factors and industry responses. A comparison i s then made of the structure of the industry i n 1925 and 1950. Major changes i n type of i n d u s t r i a l unit and linkage between units are i s o l a t e d . Two d e s c r i p t i v e models f o r each of these years are presented so that differences i n s p a t i a l patterns can be examined. The contemporary stage of development of the f o r e s t industry i s discussed i n Chapter I I I . The general development of the industry since 195C i s o u t l i n e d . Major s t r u c t u r a l changes are discussed i n terms of f u n c t i o n a l and corporate i n t e g r a t i o n . Changes i n type of unit and the raw material and waste product flows are i l l u s t r a t e d by examples. 18 A s p a t i a l model of the i n d u s t r y i n 1966 concludes t h i s chapter. Chapter IV attempts to i s o l a t e the f a c t o r s which have caused the s t r u c t u r a l and l o c a t i o n a l changes o u t l i n e d i n the preceding two chapters. Each period i n the development of the i n d u s t r y i s examined from the p o i n t of view of exogenous f o r c e s and i n t e r n a l adjustments of the r e g i o n . The concluding chapter, Chapter V, presents a summary of the b a s i c forces that have been i d e n t i f i e d i n c r e a t i n g the s p a t i a l patterns of the f o r e s t i n d u s t r y . Probable changes i n the f u t u r e p a t t e r n of development are suggested. CHAPTER II CHANGE IN STRUCTURE AND LOCATION IN THE FOREST INDUSTRY OF NORTH CENTRAL BRITISH COLUMBIA: 1909-1957 The forest industry of the North Central Interior has ex-perienced sporadic growth over the last 50 years. The annual volume of timber cut, when graphed, illustrates that the growth i n production has taken place in a few bursts (Figure 3), while in other years there is evidence of s t a b i l i t y and even decline. The periods of concentrated activity have been the result of forces external to the region itself,, Lacking an internal market, the region has been dependent upon the development of markets i n other areas„ The i n i t i a l f l u r r y of lumbering before World War I, for example, was a response to the demands of the railway builders and prairie settlement. Later, during the 1920's and 1930's low demand from the prairie market retarded the growth of the industry© In 1940 an external lumber demand promoted a period of un-precedented growth i n the industry© Most recently, an accessible pulpwood chip market, foreign capital and a stabilized forest manage-ment policy have stimulated the development of the industry© With each of these external stimuli, the forest industry of the region has been forced to change and adjust i t s internal structure and location pattern© Four periods have been identified: Timber Speculation 1909»lU| Small-scale Production in the upper Fraser Valley, 1915-19391 Areal Dispersion of Logging and Sawmilling, 1940-1957J and Functional Inte= Figure 3 20 Timber Scaled in the Prince  George Forest District and  the Interior of British Columbia, 1919-1964. I x 1 0 ' / \ \ -V-OJ Ll_ \ / — \ / o o m 1 x 10 Source^  British Columbia Department of Lands, Forest and Water Resources, Forest Service Reports, 1920-1965._ • » ' n 7 ' 1 1 1 1 ' ' 1 1 I I I • I 1 • • • 1 9 1 9 1 9 2 5 1931 1 9 3 7 1 9 4 3 1 9 4 9 1 9 5 5 1 9 6 1 1 9 6 4 21 gration and Areal Concentration of Conversion Units, 1958-1966. These periods o f f e r a meaningful framework f o r both a discussion of the de-velopment of the industry and an analysis of the factors which have contributed to the s t r u c t u r a l and l o c a t i o n a l changes. This chapter examines primarily the changing size and location of producing units within the industry from 1909 to 1957«- In addition, to i s o l a t e the major changes more c l e a r l y , models of the industry f o r 1925 and 1950 are presented and compared. TIMBER SPECULATION: 1909-1914 Lumbering i n the North Central I n t e r i o r was stimulated by three exogenous factors: construction of the Grand Trunk P a c i f i c Railway, settlement of the p r a i r i e provinces, and speculation i n timber by . American c a p i t a l i s t s . S i m ilar forces had been f e l t by the Southern In t e r i o r i n the 1880's and 1890's. I t was not u n t i l the buil d i n g of the railway a f t e r 1909, however^, that the North Central I n t e r i o r was looked upon as a region f o r timber speculation and development. The construction of Fort; George;in anticipation of the r a i l route to the P a c i f i c created the f i r s t ; s i z e a b l e l o c a l demand f o r lumber. As i n the Southern I n t e r i o r a decade e a r l i e r , small portable sawmills were established at various points ahead of the actual track laying to supply t i e s and bridging material, and-to serve the small settlements which sprang up along the route.^ M i l l s producing f o r export to the 1. Lumberman and Contractor, I I I , (October 1906), p. 55* 22 prairies were to be established later,, Speculators gambled that the Grand Trunk Pacific Railway would open up the lucrative prairie market, During the late 1890's and 1900 8s the rate of population growth on the prairies had been spectacular,, Thousands of square miles of prairies had been converted into farms 9 hundreds of hamlets had been established and several large centres had grown into populous c i t i e s . With the increase i n population, new rail° ways had been constructed on the prairies and old lines improved to take care of an increased volume of business. With the enormous demands on the lumber industry of British Columbia, saw mills i n both the Southern Interior and on the Coast had grown and prospered. Investors hoped similar good fortune would benefit those mills i n the North Central Interior, A third factor promoting: the growth of the industry of the Interior was the influx of American capital. The New England and the Southern forests had been largely depleted before the American C i v i l War| between i 8 6 0 and 1900, the forests of Michigan,, Wisconsin and Minnesota had been mined. By the turn of the century a l l the traditional timber areas processing forest products for the manufacturing belt of 2 the United States had been exhausted. As a result, the centre of the lumber industry shifted westward. Some of the midwestem lumbermen 2 , Walter G, Hardwick, Geography of the Forest Industry of Coastal  British Columbia (Canadian Association of Geographers, Bri t i s h Columbia Division, Occasional Papers in Geography, No, 5s 1963) p»5» invested in the forest land of Washington and Oregon; others looked farther north to B r i t i s h Columbia,, These untouched stands represented the last great tracts of coniferous timber in North America,, and American lumbermen rushed to gain control of any stands which might eventually prove profitable, Between 1890 and 1910 almost every available area i n the province was cruised.^ The sawmills in the Southern Interior which had the i n i t i a l advantage of location proximity-to the prairies s had readily found new marketso The most accessible and desirable timbered d i s t r i c t s 5 those i n which lumber could be produced at minimal cost, attracted the foreign investors. M i l l s cutting up to 1003000 board feet of lumber daily were located i n centres such as Fernie, Waldo, Kitchener, Nelson h and Chase, A vigorous policy of indiscriminate cutting was followed,, As a consequence, the areas flourished:and then rapidly declined as primary lumber producers<> As the country was logged off , the m i l l s , lacking readily accessible timber., closedo By the 1920's the area was producing a fraction of what i t had in 1910o The North Central Interior was not ignored by the American investors. Timber cruisers worked farther and farther north. The speculators s in the expectation; that the boom conditions of the Southern 3o Timber cruising is the i n i t i a l surveying carried out to determine the volume and species of timber i n a given area 0 h» Joseph Lawrence, "Markets and Capitals A History of the Lumber Industry of B r i t i s h Columbia (1778=1952)" (unpublished Master's thesis, The University of B r i t i s h Columbia., Vancouver, 1957), p« hZr> 21* Interior could be repeated i n the north, poured money into the purchase of the forest lands of the area,"* In 1909 the f i r s t m i l l established in the Prince George region was built to supply the influx of settlers 6 with building materials 0 In 1911 three more mills were established by American and Eastern capitalists, one on the Fraser River and two on the Nechako, Most of the ,operations were relatively small compared with those which had developed i n the south and were aimed at meeting the requirements of incoming settlers and railroad construction,, Holdings were acquired and sawmills erected east of Prince George, i n anticipation of the railway,, The typical m i l l used a circular saw and cut twenty to thirty thousand feet of lumber daily. Oxen or horses . . 7 were used in the logging "outfit 1, 1 (or later a donkey engine). Usually the area exploited consisted of one or two quarter sections of timber. A l l the mills located in river valleys along the route of the Grand Trunk Pacific Railway, Logs were felled into the rivers and floated downstream to the mi l l s , A few operations were large, l i k e that of Herman J, Rossi from Idaho, one of the prominent capitalists of the American Northwest, He headed a syndicate which secured -control of some large blocks of land i n the Grand Trunk Pacific belt and then acquired an additional 5, Lumberman and Contractor IV, (June 1907), p, 1*5><> 6« F 0 E, Runnalls, A History of Prince George (Vancouver^ Wrigley Company, 191*6)s p, 88," 7o A donkey ejogine i s a stationary-engine which drives cables and drums for yarding of logs in the "woods»M seventy-thousand acres i n Central British Columbia, His plans called for the development of the lumbering, mining and agricultural potential of the region. Plans were l a i d for the building of a new town, Fraser City, near present-day Prince George0 The c i t y was expected to be a major transportation centre, with railroads joining the Grand Trunk Pacific Railway to the Peace River country i n the north and the Barkerville area in the south. Large saw and planing mills were to be erected, an extensive logging railroad built and a large capacity pulp m i l l constructed at a later date. The collapse of the boom i n 1913 brought an end both to Rossi's scheme and to most of the other 9 proposed lumbering operations. The survival of the interior lumber industry was dependent almost entirely upon the continuation of the prairie demand and the needs of the railway builders. Both were severely curtailed i n 1913. Competi-tion by American lumbermen for the prairie market hurt the Interior industry, and then i n 19111, the start of World War I temporarily halted a l l immigration to Canada. The expansion of prairie settlement ceased. 8. Western Lumberman, VII, (-April 1910), p. l£0 9. Ho R. MacMilian attributed the collapse of the lumber industry i n 1913 to the slackening i n building operations i n the Pacific states of the United States. The American mills came to re-gard the prairie provinces as a "dumping ground" for a l l surplus products. These products were sold at greatly reduced prices. At the same time Brit i s h Columbia producers were shut out of the United States markets by t a r i f f s . Thus, the depression hit the provincial lumber industry a year prior to the start of World War I, Western  Lumberman, XII (January 19l5)s P« 21, 26 The effect on the lumber industry of British Columbia was disastrous. The small local demand was insufficient to take up the slack and one by one the mills either closed or continued operation on a greatly reduced scale. In 191U the industry of the North Central Interior had yet to develop a firm market. Its growth had been based upon considerable speculation but very l i t t l e development. Most of the mills remained small, reflecting the size of the l o c a l demand. The expectations of the investors were shattered. The favorable market conditions which had stimulated the development of the Southern Interior were not to be repeated i n the north u n t i l the IS^O's. SMALL-SCALE PRODUCTIONS 1915-1939 The number and size of the sawmills i n the North-Central Interior steadily increased in the years after World War I. Most of the mills located in the spruce-Douglas f i r belt of the upper Fraser Valley, east of Prince George, A l l were in close proximity to the prairie market and the railway. The small portable mills which had located around Prince George in 1909 and 1910 disappeared. The year 1925 has been chosen to il l u s t r a t e the pattern characteristic of this p e r i o d . ^ Figure i* shows the locational pattern to be linear, closely following 10. The years between 1925 and 1939 were stable ones i n the lumber industry, as illustrated by the fact that the number of active mills i n the region increased by only 16. LOG CONVERSION UNITS IN T H E PRINCE GEORGE FOREST DISTRICT, 1925 Some I 3 j fe £ fe Millions of feet B.M. per annum . TO C •i. CD Source. Foreit Monoqament Report, 1925, B.C. Foreet Service- rs 28 11 the Canadian National Railway route. Between 1910 and 1922 numerous m i l l s operated i n t e r m i t t e n t l y on the Canadian National Railway l i n e west of Prince George. A l l had closed down with the exception of the m i l l at Terrace which cut 12 359000 f e e t a s h i f t . M i l l s located along the P a c i f i c Great Eastern Railway north of Williams Lake are not p l o t t e d on Figure h, because of the incompleteness of data. Lumbering at t h i s time i n Quesnel and Williams Lake consisted of a few portable m i l l s serving small l o c a l 13 markets. An opening:to the p r a i r i e market was to wait u n t i l the completion of the Quesnel-Prince George P a c i f i c Great Eastern l i n k i n 1952. East of Prince George the m i l l s which began operating i n the ea r l y 1920!s dominatedithe industry of the North Central I n t e r i o r f o r the next 20-years. Eagle Lake Sawmills at Giscome and the United Grain Growers' m i l l at Hutton both cut 25 m i l l i o n f e e t of lumber i n some years. Smaller m i l l s included the Upper Fraser Lumber Company of Dome Creek, the Aleza Lake m i l l s , the Hansard Lake Lumber Company5 the Penny Lumber Company and the Gale & T r i c k m i l l at Hansard Lake, By 1925 there were 18 m i l l s located along the Canadian National 11. Following World War I P the Grand Trunk P a c i f i c Railway was taken over by the Federal Government and consolidated into the Canadian National Railway. 12. West Coast Lumberman, XL, (March 1922), p, 21, c i t e d i n Lawrence, op, c i t . , p, 57~ 13. Gordon R, E l l i o t , Quesnel - Commercial Centre of the Cariboo Gold Rush (Quesnels Cariboo Observer L t d , , 1956), p, I8I4, ~ ~ Railway l i n e between Prince George and the Alberta border i n the broad v a l l e y of the upper Fraser, a pattern which continued u n t i l 19140. Sawmills throughout t h i s period continued to be c l o s e l y t i e d to t h e i r raw material supply. In 1917 the Northern I n t e r i o r correspondent f o r the Western Lumberman stated? The p o l i c y of taking the sawmill to the timber i s one that i s thoroughly es t a b l i s h e d . Even the l a r g e r Sawmills are located i n f a i r l y close r e l a t i o n s h i p to the timber supply, as a r u l e , and i n countiy of rough topography where the transportation of logs i s more d i f f i c u l t , the l a r g e r m i l l i s replaced by the smaller s e t t i n g s , thus r e -ducing the volume of waste that has to be taken over the d i f f i c u l t hauls i n the form of lumber products. Ik it The Giscome m i l l , f o r example, had extensive timber l i m i t s ' immediately adjacent to the lake on which i t was s i t u a t e d . The technological l e v e l of the industry d i r e c t l y influenced the patterns which evolved. U n t i l 19U0 horses and sleds remained the primary means of l o g transport. In addition, the r i v e r s and lakes were used f o r both l o g storage and transport. Logging operations were r e s t r i c t e d to the distance that the logs could be moved by s l e d to the m i l l or r i v e r . Logging and m i l l i n g operations, therefore, were found i n close proximity. The sawmilling industry throughout the 1920's and 1930 3s consisted of a few marginal producers. An unstable p r a i r i e market, i l l . Western Lumberman, XIV, (September 1917), p. 30, 15o Timber l i m i t s r e f e r to Crown acreage leased to a licencee under contract f o r removal of timber under s p e c i f i c contract regulations. plus a problem of overcapacity were the causes of this situation,. The lumber operations i n the upper Fraser Valley were in part residuals of the previous era of American speculation. The opening years of the century had been followed by an over-zealous period of sawmill construction. The entrepreneurs' expectation of a revival of pre-World War I boom conditions f a i l e d to materialize. Until the l°UO's the industry was characterized by the low output and inter-mittent production of large-capacity mills, AREAL DISPERSION OF LOGGING AND SAWMILLING% 1940-1957 The war years and the post-war decade were to the North Central Interior what the turn of the century years had been to the Southern Interior, From an industry cutting 97 million feet of logs in 1925 l 6 i t rose to one cutting 67$ million per annum by 1956, In 1939, the Prince George Forest D i s t r i c t reported 43 active sawmills j by 1956 the number of producing units registered 687-, (Figure 5), A sudden and sustained increase in demand for lumber stimu-lated this expansion. With the outbreak of the Second World War, B r i t i s h Columbia became a major supplier of B r i t i s h and Canadian war needs. Construction of a i r bases on the prairies became a natural market for interior producers during the early 1940's„ In the years following the war, a building boom in both Canada and the United 16. B r i t i s h Columbia Department of Lands and Forests, Annual  Report of the Forest Service (Victoria, B,C,s Queen's Printer, 1925 and 1957), ~ States kept the demand at a high l e v e l . The result in North Central British Columbia was dispersion of producing units throughout the region. The developments which had taken place i n the area by 1955 are described i n Figure 1. The capacity of the sawmills along the Canadian National Railway east of Prince George remained relatively unchanged from 1925. New operations were established in the Peace River country, the Summit Lake region around Vanderhoof and Fort Fraser i n the west, and i n the Quesnel and Williams Lake areas south of Prince George. Construction of transportation links to the south and north opened up these virgin timber areas. The number of large stationary sawing operations did not expand greatly during this period. By 1955 only 22 mills were producing over five million board 17 ' feet of lumber annually. A major change was the growth of the small portable sawmill employing from three to eight men. With a minimal capital investment, an entrepreneur could produce lumber on a one to two million feet per year basis. The typical operation consisted of crude sawing equipment, a lumber truck and a small timber sale. V/ith the higher lumber prices and increased demand of the 19l40's and 1950,s scores of people flocked to the Northern Interior to make their fortunes in the lumbering industry. In 19ll8, 17. Br i t i s h Columbia Department of Lands and Forests, "Sawmills and Planing Mills by Ranger D i s t r i c t , " (Victorias Forest Service, 1955), (Mimeographed). t h i r t y - t h r e e sawmills w i t h i n a 30-mile radius of Quesnel were reported! 18 by 195k one hundred and e i g h t y were op e r a t i n g i n t h a t same area. The other major change from the 1920's was the development of the p l a n i n g m i l l and the subsequent d i v i s i o n of l a b o u r between saw m i l l and p l a n e r . While the l a r g e r companies i n t e g r a t e d saw and p l a n i n g f a c i l i t i e s , few of the p o r t a b l e m i l l s were l a r g e enough t o warrant the c a p i t a l expenditure, A number of s p e c i a l i z e d operations which planed o r dressed the rough lumber produced by p o r t a b l e s a w m i l l 19 operations developed. Many of these p l a n i n g m i l l s were-a c o n s i d e r -able s i z e , handling the production of 30 or more por t a b l e s a w m i l l s . As timber c u t t i n g moved i n t o more remote areas, the s m a l l bush sawmills f o l l o w e d , d i s p e r s i n g both m i l l i n g and l o g g i n g o p e r a t i o n s . T e c h n o l o g i c a l changes i n t r a n s p o r t a t i o n methods permitted t h i s spread. By 1945 a change from horse and r i v e r t r a n s p o r t t o crawler t r a c t o r s and t r u c k l o g g i n g had s t a r t e d , by 1955 i t was 20 n e a r l y complete. The use of trucks to t r a n s p o r t rough lumber from the sawmills to the plane l i f t e d the a r e a l r e s t r i c t i o n of the 1920 3s. 18. Gordon R. E l l i o t , Quesnel-Commercial Centre of the Cariboo  Gold Rush (Quesnels Cariboo Observer Ltd., 1956), p. 185. ~ 19. The planing operation i s the surfacing of lumber to s p e c i f i c s i z e s so that i t i s smooth on e i t h e r two or four surfaces. 20. W. C. P h i l l i p s , Transcript,'Hearings of the Royal Commission i n q u i r y into Forest Resources (Victoria,. B.C. 1956) p. 72UU. Mr. P h i l l i p s was the D i s t r i c t Forester i n Prince George i n 1956. 3U There evolved a pattern of dispersed logging/sawmilling units surrounding centrally-located planing mills„ The North Central Interior continued to be primarily a lumber producing region throughout the 19U0's and 1950's. Western Plywood Co. Ltd. i n Quesnel was the only veneer and plywood plant i n the area? pulp and paper mills were non-existent. Utilization remained at a low level; a l l logs were sawed into lumber regardless of species or size. STRUCTURE OF THE INDUSTRY; A COMPARISON OF 1925 AND 1950 The development and expansion of the forest industry of the North Central Interior up to 1957 has been discussed generally i n terms of external influences and l o c a l responses. A detailed ex-amination of the structure of the industry i n 1925 and 1950 w i l l help to isolate the major changes which occurred over the years. The spatial manifestations of these structural changes w i l l be examined l a t e r 0 The structure of the industry refers to the type of unit found within each phase of the manufacturing process and the functional relationship existing between a l l units. Industrial structure is more commonly used to refer to the mix of industries in a study area. The production of lumber comprises four distinct phases; the extractive stage when logs are f e l l e d , bucked, yarded and transported to the 35 21 conversion unitj. the sawmilling phase in which logs are converted into rough lumber; the f i n a l manufacturing stage, where rough lumber is planed and finished, and l a s t l y , the distribution stage. These are diagramatically portrayed i n Figure 6. The type of unit found i n each phase and the linkage existing between the unit varies, The logging operation may be large, permanent, and may function on a long term basis or i t may be small, transitory in nature, and may follow a "cut and run" policy,, Likewise, the sawmill may be moved from time to time as local forest resources are depleted; or i t may be a large 22 permanent operation equipped with gangsaw, edger, trimmer and re-saw. A high degree of functional integration may exist between the operations; or each unit may be completely separate and self-sustained. Between 1925 and 1950 major structural changes in terms of units and relation-ships between units occurred. Examples, diagrams and descriptive models are used to isolate these major changes. Structure of the Industrys 1925. The Eagle Lake Sawmill at Giseome, 21, Bucking refers to the removal of large limbs from the tree trunk. Yarding i s the movement of the logs by tractor or some other means to an assembly point where they can be either loaded onto trucks or moved directly into a portable sawmill, 22. A gangsaw is a high speed saw designed to cut logs into several boards of equal thickness. An edger i s a multi-saw piece of stationary equipment that is used to size rough lumber to varying but precise widths. A trimmer is used to cut defects from lumber and to trim lumber into specific lengths,* A re-saw is a piece of equipment with either a circular-or band saw that is. used (a) to recover lumber from mismanufactured lumber, (b) to convert a cant (squared log) into lumber, or (c) to alter the thickness and/or width of a piece of lumber,. Figure 6 36 P O S S I B L E L I N K A G E S Finished or Rough Lumber transport by rail F in ished or Rough Lumber transport by truck Rough Lumber transport by truck L o g transport by t ruck, ra i l , or horse and sled L o g skid by h o r s e , arch truck or t ractor Simplified Flow of Lumber Manufacturing Process MARKET LUMBER BROKER RAILHEAD LOG ASSEMBLY TIMBER STAND MARKETING PHASE PLANER MILL SAW MILL SECONDARY PRODUCTION UNIT EXTRACT IVE PHASE 1*0 miles east of Prince George, i l l u s t r a t e s the t y p i c a l operation i n 23 the North Central I n t e r i o r during the 1920cs and 19301s. I t s structure i s outlined i n Figure 7© The m i l l , operated by a group of American share-holders, was a large permanent operation, whose main product was low grade spruce lumber. In the i n i t i a l years of operation the lumber was shipped as a rough, undressed product. However, the maintenance of a large lumber yard f o r air=drying helped increase the unit value of the lumber. Marketing and d i s t r i b u t i n g was managed through sales agents across the p r a i r i e s . Logging operations were carried out seasonally with up to lb, crews hired during winter months. Logs were transported from a number of points, rather than from a single large logging camp. Because of the l e v e l of transportation technology during the 1920's, log assembly operations and the Canadian National Railway were located i n close proximity. As i n the case of Eagle Lake Sawmills, corporate control of both m i l l i n g and logging operations by a single holding company was the r u l e . In general the sawmiller logged h i s own l i m i t s . In contrast, on the Coast a considerable portion of the logging was carried out by indepen-dent operators who sold logs on an open market. The si z e of the log market and the d i v e r s i t y of the grades and species resulted i n the development of both large scale sawmill operators and specialized producers.2b This diversion of labour was not feasible i n the North 23. B r i t i s h Columbia Lumbermana XXXVIII, (September, 195k)s p© 18. 2b « Hardwick, op c i t . , p. 17© Figures 7 and 8 38 Figure 7 INDUSTRIAL S T R U C T U R E . 1925 Market Linkages B. Market Railhead Wholesaler Stationary Sawmill Log Assembly Timber Stand Finished or rough Lumber transport by rail Log Transport by river or horse and sled Railhead Wholesaler Planer mill Stationary Sawmill Log Assembly • — ~ Timber Stand Figure 8 INDUSTRIAL S T R U C T U R E , 1950 Linkage Finished or rough lumber transport by rail Rough lumber transport I Railhead by lumber truck | stationary Planer 1 Log 1 Portable Sawmi transport Portable Sawmill by tractor skid or arch truck T Timber Stand: Log Assembly Central region. Logging and milling were highly complementary operations i n the Interior. The logging operation was usually carried on during the winter; the milling i n the summer. Unlike the Coastal situation, extensive waterways for the easy transportation of logs were not available. The two activities remained closely tied, and the linkage minimal. The seasonal flow of logs formed the only- connection between operations. The sawmill and logging operations, i n fact, formed a functional unit in which the m i l l u t i l i z e d a l l the logs cut at the 25 adjacent logging "show". Figure 7 illustrates this relationship and also includes the r a i l l i n k with the market. The introduction of a planing unit, as i n Figure 7-B, does not alter the spatial structure of the industry. The marketing function was handled by company-owned sales outlets. At this stage, no lumber wholesalers or "brokers" were necessary for the few "export" m i l l s . Cross linkages and complexities of flows did not exist within the region; trading of logs and species between companies had not developed. Each milling/logging unit operated independently of other producers. Structure of the Industry;: 1950. During the 19h0>s and the early l950's the areal spread of lumbering activity and the growth of small operators were reflected in the changing structure of the industry, 2 5 . A logging "show" i s a complete logging unit including men,' equipment, roads, buildings and storage area. There, f e l l i n g , bucking, yarding, sorting and transportation of logs to m i l l takes place. A company may f e l l trees on a number of fronts or "sides", and move a l l logs to a central assembly point. ho Jacobson Brothers' m i l l i n Williams Lake exemplifies typical operational characteristics of the era. The company began operation i n 195k as a 26 bush mil l "skidding logs in at one end and pulling slabs out the other." The equipment consisted of circular sawj the number of employees never exceeded lOj and the total capital investment was under $10,000. Green dimension lumber was trucked to planing mills in Williams Lake for finishing. The second stage i n the development of the company was the establishment of a semi-permanent mil l at Horsefly, 30 miles east of Williams Lake. Logs moved to the m i l l from 15 miles away. Rough lumber continued to be the end product. In 1962, the Jacobson Brothers constructed their own planer at Williams Lake, supplying i t with rough lumber from the m i l l at Horsefly. The third stage, that of complete centralization of operations was not reached u n t i l 1965 when a sawmill/ planer complex capitalized at $700,000 was constructed at Williams Lake. Most of the operations i n the early 1950's followed this pattern. They were either small bush mills or larger capacity semi-permanent establishments-. Capital investments ranged from $3S000 to over $300,000.^  In 1955 i t was reported that about 17 per cent of the mills f e l l into the lat t e r category, while some 600 of the total 750 active mills were of the \ 2R small portable type. , The mills were generally much smaller than the 26. Statement by Mr, Harold Jacobson, personal interview, March, 1966. 27. W. C. P h i l l i p s , Transcript, p. 7241. 28. Ibid., p. 7241. upper Fraser mills of the previous period. The small capital investment permitted easy entry and exit into the industry. Hence, many operated for only a few months of the year, or in years of high lumber prices. Logging and sawmilling operations remained spatially and cqr-porately linked. The 1925 pattern continued during the 1950's. Most of the operations consisted of single logging/milling units. Only a few of the larger semi-permanent mills operated a number of logging "shows", The division of labour occurred between the sawing of logs and the dressing of rough lumber (Figure 8). A few planing mills existed entirely upon purchased rough lumber, but many operated a number of small, portable mills to supply their needs. Rustad Bros, planing m i l l in Prince George, for example, had approximately 12 sawmills supplying rough lumber in 1955. Four of these, supplying a quarter of the rough lumber required, were owned by the planer. The remainder were indepen-29 dent operators under contract. In some cases planer operators held the timber limits with independent sawmills acting as contractors. On the other hand, a number of sawmills existed that were not controlled by the planing sector. These operators sold their rough lumber to the highest bidder. A highly competitive and unstable open market for rough lumber was characteristic throughout this period. 29. M. Rustad, Transcript, p. 7U29. The raw material movement of the 1950's was not dissimilar to that of the 1920's. The majority of operations skidded logs a few hundred yards directly from the stump to the m i l l . Very few logs were sold or traded between companies. Logging was carried out during the winter and a limited inventory of logs were kept on hand by the sawmills for summer cutting. As a result, the log flow remained basically like that of the previous period. The change occurred with the establishment of the centralized planing m i l l . A general pattern of rough lumber movement from out-lying sawmills into centrally-located planers was established (Figure 8). It was during these years that "planer row" in; Prince George developed. The 17 planing operations which comprised "planer row1" marshalled the bulk of the timber from the surrounding d i s t r i c t , processing i t and shipping i t to markets in the United States, the Canadian Prairies and Eastern Canada. In 195b, of the 500, million feet of lumber produced i n the d i s t r i c t , 375 were dressed by these 30 mills. In both Williams Lake and Quesnel a similar pattern evolved in which a few planing mills processed the rough lumber produced i n the area. The degree of linkage existing between the individual sawmills and planers is impossible to trace i n d e t a i l . Suppliers, unless corporately a f f i l i a t e d with the planer, changed from month to month. Sawmills operating one month could be closed down the next. 30. B r i t i s h Columbia Lumberman, XXXVIII, (November, 195b)» p. 1*3 The flow of rough lumber, like the log supply of the 1920's, tended to be seasonal. In the spring during "break-up" and i n the f a l l during "freeze-up" the roads in the area around Prince George became impassable. Most of the planer mills carried a large rough lumber inventory to assure themselves of continual operation. SPATIAL MODELS OF THE FOREST INDUSTRY! 1925 AND 1950 Descriptive models for each of the periods have been constructed to summarize the spatial characteristics of the industrial structures outlined. These diagrams are the spatial counterparts of Figures 7 and 8. Two models have been constructed f o r each period; one repre-sents the resulting pattern when a number of variables are held constant; the second illustrates modifications to this pattern when assumptions are relaxed and transportation systems introduced. Figure 9-A represents an ideal m i l l layout on a f l a t , well-drained forested area in 1925. Accessibility, the quality of the timber supply and demand for lumber are assumed to be uniform over the area. The limited demand does> not require a l l available timber to be exploited. The result is a random distribution of sawing/logging units. Areal restriction of log-transportation forces the logging and sawmilling units to locate in close proximity. Surrounding each producing unit is an area of economic exploitation. Because of the limited demand and the subsequent lack of competition for forest land, the areas of exploitation are non-space-filling. ft Figure 9 kk A. Spatial Model of the Forest Industry, 1925 ^" / O x ^ Logging/Sawmilling Units * Log Flow Boundary of \ Log Supply Area / B. Introduction of Transportation Systems ^ River Railway Logging/Sawmilling Units < Log Flow Boundary of Log ) Supply Area DKM/1966 In Figure 9B, the three assumptions of equality have been relaxed and a river and railway introduced. In addition, the river valley i s considered to contain the denser, more continuous growth of timber. The random spacing of industrial units characteristic of the previous diagram disappears and the units are shown to be oriented to the river valley and railway. The elongation of the areas of economic exploit-ation results from the extension of log transportation on rivers. The continued low demand dictates that only the "best" locations are chosen, specifically where the river and r a i l routes coincide. The transportation costs for both raw material and finished products are minimized. The theoretical spatial pattern evolved by 1950 i s described by Figure 10-A. Again the area i s assumed to be f l a t , with a. uniform distribution of forest stands and equal accessibility. The demand for lumber has risen and competition for forest land exists throughout the area. Product demand has resulted i n the need for planing f a c i l i t i e s . The model represents a hexagonal arrangement of portable and semi-permanent mills spaced uniformly around a central planing m i l l . Since log transport to the sawmills remains restricted, separate log assembly points do not develop. The movement of rough lumber a- considerable distance to planing f a c i l i t i e s has been introduced. Suggested flows of logs and rough lumber by the most direct routes are; indicated. No limiting factors have been introduced and exploitation of the forest proceeds i n a l l directions away from the m i l l s , A broken line represents Figure 10 A.Spatial Model of the Forest Industry, 1950 o V-fVi o [V-4 | O 4 ! o i V i 4 i o i V— — ° T 7 T 4 co j j o i fr-O Planer Mill ^ Logging/Sawmilling w Unit . Log Flow " — Rough Lumber Flow Boundary of Log Supply Area Boundary of Area Exploited by Planer Mill B. Introduction of Transportation Systems River O Planer Mill #) Logging/Sawmilling ^ Unit « Log Flow **— Rough Lumber Flow ~"N^ Boundary of Log j Supply Area X Theoretical Area \ Exploited by Planer ) Mill Bounded by this y line 1 J Actual Area Exploited 1—1 by Planer Mill J** Railway DKM/1966 the boundary of the area from which rough lumber can be shipped economically to the planer. When t h i s pattern i s continued, i t i s found that small hexagons representing the hinterlands of the portable m i l l s "nest" within the l a r g e r hexagonal supply areas of the planers. In theory, the en t i r e forested areas would be exploited and every portable m i l l would f a l l within the supply area of a planing m i l l . Figure 10-B represents modifications to t h i s scheme when r a i l , r i v e r and roads are introduced. The planer m i l l becomes c e n t r a l l y located with respect to rough lumber s u p p l i e r s , but on the r a i l l i n e . The sawmill/logging units are oriented to roads, f o r the movement of rough lumber. The r e g u l a r i t y of the l o g supply areas suggests very l i t t l e r i v e r transportation. The actual area exploited by the planing 0 m i l l s i s i r r e g u l a r i n shape as compared to the t h e o r e t i c a l area. Road a c c e s s i b i l i t y and timber stand q u a l i t y determine the exact distance the lumber can be economically transported. Movement of materials within these two t r i b u t a r y areas (of sawmill and planing m i l l ) has been indicated by the most d i r e c t route. The major changes i n the s p a t i a l structure of the two periods as portrayed i n these models have been i n the number of operations, i n l o c a t i o n of sawmills and i n the introduction of the f i n a l manufacturing stage, the planing m i l l . Changes i n transportation technology have been permissive -factors allowing the s p a t i a l re-organization described i n the models. A growing complexity of linkages and interdependence of units i s evident i n the 1950 era. The t h i r d major s t r u c t u r a l change which occurred a f t e r 1957 i s examined i n the following chapter. CHAPTER III CHANGE IN STRUCTURE AND LOCATION IN THE FOREST INDUSTRY OF NORTH CENTRAL BRITISH COLUMBIA: 1958-1966 Since 1958, significant changes have occurred i n the size, location pattern and organization of the forest industry of North Central Interior B r i t i s h Columbia„ Three major developments have been: (l) the consolidation of the lumber producers into large-scale manufacturing units; (2) the introduction of a pulp and paper economy; and (3) the subsequent areal concentration of conversion units. Figure 2, Log Conversion Units in North Central British Columbia, 196h, illustrates these developments. FUNCTIONAL INTEGRATION AND AREAL CONCENTRATION OF CONVERSION UNITS The trend toward consolidation of the lumber industry into a few large-scale units was evident by the late 1950's.- While the annual log scale continued to grow at a rapid rate (Figure 3)<> the number of active sawmills i n the d i s t r i c t decreased from a peak of 730 operations i n 1955 to h$0 in I96I4 (Figure 5). The consolidation which has taken place since 1925 is graphically illustrated i n Figure 11. In 1925 ninety per cent of the lumber i n the area was cut by 65 per cent of the mills; in 19li9 the same proportion of lumber output was produced by h8 per cent and by 196ii the bulk of the 50 production was controlled by only 29 per cent of the mills. The growth of large-scale operations at the expense of the small portable mills has been brought about by (a) stable lumber prices coupled with rising labour costs and, (b) the o f f i c i a l guarantee of long-term timber supplies. Lumber prices held constant; wages sky-rocketed. To hold costs in line, the entrepreneurs were forced to reduce the relative importance of the labour input. Increased labour productivity could only be accomplished through sizable investment i n larger, more automated mills. Government legislation establishing annual timber quotas and a closed system of bidding provided the guaranteed timber supply necessary for this long-term financing. By 196k» sixty sawmills were reported cutting over fiv e million feet of lumber annually as compared to 22 mills i n that category i n 1956o^ " The small portable m i l l with low output and low wood recovery had become anarchronistic. The introduction of a pulp industry to the region is a second major change. World demand for pulp and paper products, coupled with maximization of production i n other forest areas, prompted the develop-ment of a pulp economy in Interior B r i t i s h Columbia. The pulp mi l l s 8 need for a long-term guarantee of pulp wood has been reflected i n changes in governmental policy. To accommodate a pulp and paper 1. Bri t i s h Columbia Department of Lands and Forests, Annual Report(s) of the Forest Service (Victoria, B.C.;; Queen's Printer, 1957 and 1965). 51 industry, and to achieve the maximum log u t i l i z a t i o n possible in the Interior, the government has introduced a third form of tenure, the 2 Pulpwood Harvesting Area 0 As a result, pulp companies can be 3 guaranteed long-term supplies of pulp logs. Six companies submitted construction proposals and have been granted the right to harvest logs in designated areas i n North Central British Columbia. Once again exogenous forces created demands and influenced the industrial organization i n the North Central Interior,, The capital involved i n the pulp expansion comes primarily from American and European sources. Table I indicates the planned capacity of the mills, the projected completion date, the estimated capital involved, and the financial backing of each proposed enterprise. Cariboo Pulp and Paper Ltd. which is a f f i l i a t e d with Weldwood of Canada Ltd. in Quesnel is the only company previously involved i n the forest industry of the region. Obviously, the established sawmill operators had l i t t l e direct influence on the introduction of the pulp economy. A combination of world demand for pulp,- the maximization of production in other forest areas, and changes i n provincial management policies have encouraged the establishment of these mills. 2. A second form of tenure, the 21-year Timber Sale Harvesting Licence, has been devised to cover areas where there are no established logging operations. This tenure now covers the Finlay Public Sustained Yield Unit in the Rocky Mountain Trench area. The Pulpwood Harvesting Licence differs from the Pulpwood Harvesting Area i n that the licencee has the right to harvest a l l timber down to a 7.1" diameter as opposed to just pulpwood species. 3» At the same time, a l l saw logs of these areas are reserved for the established sawmills. Table Is Pulp and Paper Mills Proposed for the North Central Interior Company- Location of Plant Estimated Annual Investment Capacity ($ millions) (t ons) Completion Date Financial Backing 1. Prince George Pulp & Paper Co. Ltd. 2. Interconti-nental Pulp Ltd. Prince George Prince George 3. Northwood Pulp Ltd. Prince George U . Bulkley Valley Pulp & Timber Co. Houston 5. Cariboo Pulp & Paper Ltd. Quesnel 6. Alexandra Forest Industries Ltd. Mackenzie $8U $65 $56 $75 $60 $80 260,000 July, 1966 210,00 210,000 3^5,000 260,000 260,000 1968 1966 1971 1968 Joint enterprise of Canadian Forest Pro-ducts Co. Ltd. & Reed Paper of England Jointly financed by Prince George Pulp & Paper Co. Ltd. & Feldmuhle A.G. of Germany Financed by Noranda Mines & the Mead Corp. of Day-ton, Ohio Bowater Paper Corp. and Bathurst Power & Paper Co. of Montreal Financed by United States Plywood and Price Bros. Brit i s h Columbia Forest Products Ltd., Scott Paper Co., the Mead Corp. and Argus Corp. Sources Bureau of Economics & Stat i s t i c s , Victoria, B.C. l i s t i n g compiled Sept. 1, 1965o vn ro 53 The introduction of a pulp economy has had far-reaching effects on a l l phases of the forest industry. Three significant changes from the previous period are evident, of which product diversification is the most obvious. The region is no longer totally dependent upon the export of lumber. Secondly, the pattern of log u t i l i z a t i o n is changing. In the l ° 5 0 ' s , nearly a l l trees cut were sawn into lumber. Now small diameter logs are directed to the manufacture of pulp; larger logs to sawmills; and peeler grades^ to plywood operations. Thirdly, much of what was previously waste in logging, sawmilling and plywood operations has become merchantable as pulpwood chips. Maximum log u t i l i z a t i o n can be achieved. These changes are having important ramifications on both the structure and spatial'pattern of the industry. There are significant movements toward integration of operations and areal concentration of conversion units. The pulp mills are extending the scope of their operations to both the logging and sawmilling phases of the industry. In the lumbering sector, integration of logging, sawing and planing operations is common. Puller u t i l i z a t i o n has greatly reduced the waste proportion of each log and enhanced i t s transportability. Consequently, i t i s economically feasible to transport logs a considerable distance to sawmill/planer complexes, rather than sawing the logs i n i t i a l l y i n I4. In the Interior, peeler grade logs refer to logs with a diameter (inside the bark) over 12 inches. dispersed sawmills and transporting rough lumber to c e n t r a l i z e d planers. Conversion units are l o c a t i n g at various points along the r a i l l i n e . The small outlying sawmills, t y p i c a l of the 1950's, are disappearing! the l a r g e - s c a l e , c e n t r a l i z e d plants are expanding. Units coming i n t o production since 1956 have been integrated planing/sawing operations, pulp m i l l s or plywood p l a n t s . Emerging from these changes are the integrated conversion centres of Prince George, Quesnel, and Williams Lake (Figure 2 ) . The lumber conversion centres of Fort St. James, Vanderhoof, Fraser Lake, Smithers and Chetwynd assume secondary importance. STRUCTURE OF THE INDUSTRYt 1966 The most important changes i n the structure of' the f o r e s t industry have taken place since I960. Integration between the various phases has been a key f a c t o r to these changes. Integration, both f u n c t i o n a l and corporate, has d i r e c t l y affected the type of unit and the linkages e x i s t i n g between the u n i t s . Examples within the lumber manufacturing sector and the f o r e s t industry as a whole w i l l be examined to describe the changes that have taken place. The Fort St. John Lumber Company Ltd. of Chetwyn^illustrates the pattern followed by many of the successful lumbering operations. The company, formed i n 19U3* has grown from a small bush m i l l into an operation producing 60 m i l l i o n f e e t of lumber annually and indirectly employing 330 people.'' During the 1950's a large capacity planing m i l l at Chetwynd provided the nucleus of operations. Bush mills scattered throughout the Peace River area supplied the m i l l with rough lumber. Timber holdings were controlled by Fort St. John Lumber Co. Ltd., but a large portion of the i n i t i a l sawing was contracted to independent operators. In 1961+ Canadian Forest Products Ltd. acquired the m i l l and subsequently closed the bush mills and centralized a l l sawing f a c i l i t i e s at the planing m i l l . Over two million dollars has been spent i n modernizing and diversifying production units. High speed automatic equipment has been installed throughout. Logs are weight-scaled and 7 stored i n a large dry-pond area;; barking and chipping f a c i l i t i e s have begun to manufacture pulpwood chips; a new "chip-n-saw" machine 8 now handles a l l small logs 0 Logging is carried out on a contract 5. "Fort St. John Lumbers Amazing Growth of a Bush M i l l , " The Truck Logger, XXII, (January 1966), pp. 80-83.-6.. Weight scaling is a new time-saving method used to measure the volume of wood in any one log. By this method the average scale of each truck-load is determined by i t s weight. 7. A dry-pond i s the area in which logs are stored and sortedo In early years most logs had been stored i n lakes, i n a mill-pond 0 Most storage now takes place on dry land i n the area adjacent to the m i l l . 8o The "chip»n-saw" is a new smallwood machine which w i l l mass-produce, lumber and pulpwood chips simultaneously from logs under lU inches i n diameter. 56 basis with a l l logs delivered by truck to the Chetwynd complex. The lumber output i s s o l d through the sales department of the parent 9 company and pulpwood chips are delivered to the a f f i l i a t e d pulp 10 m i l l i n Prince George. P r o d u c t i v i t y per employee has increased and economic l o g u t i l i z a t i o n has been introduced since the c e n t r a l -i z a t i o n and i n t e g r a t i o n of the company. The path of development taken by Fort St, John Lumber Company Lt d . i s common i n the North Central I n t e r i o r . The need f o r i n t e g r a t i o n between the e x t r a c t i v e s i t e and conversion plant appears to have been r e a l i z e d from the beginning. Most sawmilling and/or planing operations ensured themselves,, of a continued l o g flow by purchasing timber s a l e s . I t i s between the e x t r a c t i v e and marketing stages, however, that s i g n i f i c a n t changes are occurring. The d i v i s i o n of labour between sawmills and planers which existed i n the previous period has already disappeared. J o i n t ownership of sawing and planing f a c i l i t i e s by a si n g l e company i s the r u l e , ^ Secondly, s p e c i a l i z a t i o n of production 12 13 i n terms of e i t h e r long lengths or studs i s taking place. Both 9. Lumber i s s o l d through Eburne Sawmills, D i v i s i o n of Canadian Forest Products L t d . 10. Canadian Forest Products Ltd. has an i n t e r e s t i n Prince George Pulp and Paper L t d . i n Prince George. : 11. One m i l l i n Quesnel and two i n Prince George s t i l l e x i s t p r i m a r i l y by custom planing f o r other lumber companies, 12. Long lengths r e f e r to lumber which i s over 20 f e e t i n length. A m i l l s p e c i a l i z i n g i n long lengths u s u a l l y does not handle short logs of any type. 13. Studs r e f e r to lumber 2 inches by h inches and cut to s p e c i a l -i z e d lengths, usually between 7-1/2 and 8-1/2 f e e t . 57 manufacturing processes may be found i n the large operations, or a l t e r n a t i v e l y , i n two smaller m i l l s which are f u n c t i o n a l l y i n t e ~ grated. T h i r d l y , logging i s being contracted to independent operators and a d i v i s i o n of labour between sawmillers and loggers i s evident. And f i n a l l y , corporately a f f i l i a t e d sales outlets are taking over the marketing function performed by the independent wholesalers i n the 1950's. Other major corporate changes which have a f f e c t e d the industry.: r e s u l t from the extension of pulp companies i n t o the lumber and -plywood sectors. The companies are seeking to integrate operations^ -h o r i z o n t a l l y as w e l l as v e r t i c a l l y . Besides c o n t r o l l i n g logging,? pulp manufacture, and marketing phases, the companies wish to enter the other wood-manufacturing processes. Three factors are prompting t h i s trend: (a) the need f o r f u l l e r u t i l i z a t i o n of each l o g , (b) the r e a l i z a t i o n of economies of f r e e l o g exchange among corporately l i n k e d manufacturing u n i t s , and (c) the need f o r c o n t r o l over that part of 1U the pulpwood chip supply which comes from plywood and sawmill waste. The degree of i n t e g r a t i o n and the form i t w i l l take varies with company p o l i c y . Differences can be seen i n the i n t e g r a t i o n processes of Canadian Forest Products L t d . and Northwood Pulp L t d . Canadian Forest Products Ltd., the parent company of Intercontinental Pulp Co. L t d . and Prince George Pulp and Paper Lt d . (see Table I ) , has r e c e n t l y established i t s timber p o s i t i o n i n the Peace River and Stuart Lake areas. Fort S t . John Lumber Company L t d . i n Chetwynd and Riverbank i l l . Statement by Mr. R. Jewisson, personal interview, March, 1966. 58 Sawmill Ltd. in Fort St. James have been acquired. When Pulpwood Harvesting Area #1 was secured by Canadian Forest Products Ltd., the company was restricted from entering the lumber industry i n the immediate v i c i n i t y of Prince George."'"'' Consequently, the pattern evolving is one of areally dispersed production units controlled by subsidiary, firms. In order to build up their timber position, Northwood Pulp:.Ltd, is also acquiring established sawmill operations. Northwood Mills Ltd. was formed in 1961 "...to acquire sawmills and related timber 16 quota in the interior of British Columbia." In that year, Upper Fraser and Sinclair Spruce Sawmills were purchased. In May of 1966 the large Eagle Lake Sawmill at Giscome was acquired. The mills w i l l eventually be sold to Northwood Pulp Ltd. for co-ordination and 17 consolidation. The company's long-range plan calls for the con-struction of a large capacity sawmill and plywood plant adjacent to the pulp m i l l . Unlike the Canadian Forest Products Ltd. interests, Northwood Pulp Ltd. w i l l eventually direct a l l logs to an integrated complex i n Prince. George. 15. r As a safeguard for the established sawmills i n the area i t was .agreed that Prince George Pulp and Paper Ltd. would not enter the sawlog operating business within i t s harvesting area. "Pulpwood Harvesting Area No. 1 Agreement," between the Minister of Lands, Forests and Water Resources and Prince George Pulp & Paper Ltd, (November 22, 1962), p,, 5. 16. Mr. Adam Zimmerman, Proceedings of Public Hearings "In the Matter of the Proposal Made by Northwood Mills Ltd. for a Pulpwood Har-vesting Area to Include the following Sustained Yield Units i n the v i c i n i t y of Prince George, namely (Prince George, B.C., May 28, 196It), p. 12.. 17. Ibid., p. 13. 59 In other areas s i m i l a r trends toward the complete i n t e g r a t i o n of forestry" operations are evident. The project of Alexandra Forest Industries Ltd, at Mackenzie includes the immediate construction of pulp s plywood and lumber manufacturing f a c i l i t i e s . The l a c k of pre-established sawmilling operations i n the area committed the company to the construction of a l l three phases of the industry. Integration does not n e c e s s a r i l y e n t a i l j o i n t ownership, A f u n c t i o n a l r e l a t i o n s h i p whereby a given product of one independent operation i s directed to another can also be referred to as i n t e -gration. In the North Central I n t e r i o r the industry i s s t i l l composed of a number.-of independent sawmills who maintain pulpwood chip contracts with the pulp m i l l s . Co-operative i n t e g r a t i o n rather than corporate integration- i s s t i l l present to a considerable degree. Integration at the corporate l e v e l has brought about a complex c i r c u l a t i o n system within the industry. Figure 12 i l l u s t r a t e s the-producing units and the linkage e x i s t i n g between them. Two flows are evidents the raw material flow from the logging operations to the-conversion plants and the waste material flow from plywood and sawmill operations to the pulp m i l l s . An examination of the f a c i l i t i e s f o r handling the flows and the routes taken by the transportation of materials follows,.. The Weldwood operation i n Quesnel w i l l serve as an example of the changing raw material flow. The waste-product flow w i l l be i l l u s t r a t e d by the pulpwood chip flows to both Northwood Pulp L t d . and Prince George Pulp and Paper Co, L t d , Figure 12 60 INDUSTRIAL STRUCTURE, 1966 Linkages I Market —r~ I MARKETING PHASE Sales Outlet or Broker Dressed lumber transport by rail Pulpwood chip flow by rail or van Sorted logs transported by fork lift truck Railhead Plywood Pulp and Mill Paper Mill .—I J SECONDARY PRODUCTION UNIT Log flow by truck Timber Stand Log Assembly EXTRACTIVE PHASE Raw Material Flow. The Cariboo Division of Weldwood of Canada Ltd. located in Quesnel consists of centralized conversion f a c i l i t i e s supplied by a number of outlying logging shows. Weldwood holds quotas in seven sustained yield units and one forest management licence, plus cutting privileges in the Special Sales Area. In addition, Cariboo Pulp and Paper Ltd., an a f f i l i a t e d company, was awarded Pulpwood Harvesting Area #5. Figure 13 illustrates the log flow which supplies their sawmill, planer, stud mi l l and plywood complex. The company transports logs by river, r a i l and truck. Thirty-five per cent of the total raw material supply comes from the Forest Management Licence and Quesnel Lake Sustained Yield Unit. These logs are driven 1J5 and 65 miles down the Quesnel and Fraser Rivers. A few peeler logs ' come by r a i l from the Lac La Hache area to the south, but most of the remaining log supply i s trucked to the conversion units and then directed to-its most economic use. This pattern, whereby logs are brought from a great many sources, over a variety of transportation media to a centralized operation is characteristic of the l°603s„ It is evident in numerous sawmilling towns on a functionally co-operative basis. Located i n Williams Lake are stud mills, a veneer plant, and several dimension sawmills, one of which specializes i n long lengths. The log supply area for the mills- surrounds the town, extending a hundred miles i n 18. Statement by Mr. William Sterling, personal interview March, 1966. Figure 13 Annuo I Log Flow to Weld wood of Canada Operations in Quesnel West lake SY.U. Forest Management License No. 5M fRed Rock [stoner Woodpecker Cottonwood SY.U. = Source of Log Flow Log, Flow, l/4Nequals 1,000,000 Cubic F t t t Sourct "A Counter Proposal For the Establishment of o Pulp Mil in th* Vocinity of Quesnel" Coriboo Pulp and Paper Co. Ltd (mimeographed), December, 1964 oHbton Strathrtover Big Volley S.YU. Cottonwood SY.U. some directionso Considerable log trading between companies occurs Peeler grade logs are directed to the M e r r i l l Gardner Ltd, veneer plantj large dimension sawlogs to Jacobson Brothers Forest Products Ltd,j and small dimension logs to the Pinette & Terrien stud m i l l . In the future, pulpwood logs may be harvested and chipped by the mills for the pulp companies,, The raw material flow of the pulp mills forms a similar type of pattern,; Pulpwood logs come to the mills by truck and r a i l from a number of logging operations in the companies' Pulpwood Harvesting Areas, Again, a centralized conversion plant served by a large supply area'-is characteristic. Three methods of log transport are used i n the North Central Interior: r a i l , truck and river. Because timber stands currently-being exploited are not located proximate to railway routes most of the logs are transported by truck. Less than a million feet of 20 timber was moved by the Pacific Great Eastern Railway in 1°6$<, Much of this movement was temporary u n t i l new conversion f a c i l i t i e s are completed or un t i l another form of transportation is available. The r a i l extension north of Prince George to Fort St, James w i l l ; carry the f i r s t major r a i l movement of logs i n the area, Pulpwood 19, Statement by Mr, Harold Jacobson, personal interview, March, 1966. 20. Statement by a Pacific Great Eastern employee, personal interview, July, 1966. 6U w i l l be transported to Prince George Pulp and Paper Ltd, and Inter-continental Pulp Co, Ltd. from Harvesting Areas #1 and #1 at a cost 21 of 7/^ /100 lbs. 22 Some of the log movement is by river driving. Logs are driven in the Quesnel and Fraser Rivers south of Prince George; i n the Upper Fraser River west of Prince George; and between Trembleur and Stuart Lakes via the Tachie River. Logs are also towed eastward across Francois Lake and driven annually down the Stellako River to Fraser Lake, Where a choice of transportation methods exists a comparison of costs is made, 2' In a-, comparative cost study of river driving and truck hauling, ' i t was found that log movement by river i s cheaper. Because extra savings andrexpenditures accrue to both methods irrespective of the actual transportation of the logs, the tot a l logging operation was examined. Common log costs were f e l l i n g , limbing, yarding and skidding, bush deckings loading into the lake, scaling, booming and•••••• towing, slash disposal, road construction (bush roads) and admini-21. Statement by a Pacific Great Eastern employee, personal interview, July, 1966. 22. Trees are f e l l and stored i n the woods u n t i l spring when the rivers are at .their highest. The logs are then dumped into the river and moved by the current downstream. At a designated point, the logs are caught and l i f t e d out of the river. 23. Gormely Forest Service Ltd., "Logging Fe a s i b i l i t y Study of the Fraser Lake-Francois Lake Area for the International Pacific Salmon Fisheries Commission," (Vancouver, B.C., March, 1966)0 r 6$ stration. These amounted to a basic $16.50 per hundred cubic feet (Ccf) for each transportation system. Additional logging costs for river driving of $1.70/Ccf result from bucking, scaling, booming and towing. On the other hand, expenses for truck loading and unloading and extra capital investments amount to $2.90/Ccf for transporting logs by truck. Therefore, a saving of $1.20 i s realized by the river driving system, irrespective of the cost of transportation. Gains are also made in the movement of logs by water. Two hypothetical examples based on these cost figures have been derived: A. Ten-mile log movement Saving in logging costs of river driving system ........ $1.20 Ccf Transportation cost differential . . . . . . o . a o . . . ° . . » . . » o . o $1.25 Ccf Cost of truck haul $2.50/Ccf Cost of river drive $1.25/Ccf Total savings of river driving system $2 0li5/Ccf B. Fifty-mile log movement Savings in logging costs of river driving system .<,<><,„,„ $1.20 Ccf Transportation cost difJTsr©ni>icil •oooooe-ooooee-oooooeoooo tf>6o2J? Cci* Cost of truck haul $12.50/Ccf Cost of river drive 6.25/Ccf Total Savings of river driving system .................. $7.b5/Ccf The cost of "river driving is approximately half that of truck hauling. As the distance the logs are moved increases, transportation by river becomes even more attractive. Therefore, the hinterland of the conversion unit can be extended considerably wherever log trans-portation by water is feasible. On the other hand, with river driving, large storage areas are needed and the log flow to the mi l l becomes much more erratic. Log storage f a c i l i t i e s in the North Central Interior are located in lakes, rivers or m i l l yards. To the north and west of Prince George and in the Quesnel and Williams Lake areas, the roads become impassible for two months in the spring during "break-up" and in the f a l l just before "freeze-up,'.' For a third of each year, a large proportion of the log flow to the mills i s interrupted. Consequently, a considerable inventory of logs .must be kept on hand by the mills. The majority of operators store their logs i n the area immediately adjacent to the m i l l , the dry pond. Large areas of log storage are found in conjunction with sawmills north of Quesnel in the Two Mile Flat area and i n the Pacific Great Eastern Industrial Site in Prince -George, Both Prince George Pulp and Paper Co. Ltd, and Northwood Pulp Ltd. have storage areas adjacent to their m i l l sites. However, no major log storage area comparable to the coastal booming grounds i n the Fraser River exists in the area. 2lic E.M. Hoover, The Location of Economic Activity (New Yorks McGraw-Hill, I9I48). Hoover argues that for short distances truck movement is cheapest, for median distances r a i l has an advantage and for long distances water transport is the most economical. Also, transportation rates per mile decrease with increasing distances. See also M. Fulton and L.C. Hoch. "Transportation Factors Affecting Locational Decisions," Economic Geography, XXXV, (January 1959) 9 pp. 51-59. 67 Sorting and scaling are the i n i t i a l processes through which the logs pass. Both a c t i v i t i e s are cos t l y and time consuming. With the increased volume of logs being handled by the m i l l s more e f f i c i e n t methods are being introduced. One of the developments which appears most promising i s that of bulk scaling by weight. By conventional methods, the.load was dumped, spread, and each log scaled i n d i v i d u a l l y . Weight sc a l i n g involves "the recording of each truckload of timber,. subtraction from this of the unloaded truck weight and the application of a formula! involving weight and scale i n cubic feet of a selected; 26 sample of the timber being scaled," This type of s c a l i n g reduces both the labour and time involved, as w e l l as the area required f o r spreading the logs. Pulpwood Chip Flows, Since 1965 a growing number of sawmills have started manufacturing pulpwood chips. Both Prince George Pulp and Paper Co. Ltd. and Northwood Pulp Ltd. began s t o c k p i l i n g chips two years ago. For the manufacture of pulpwood chips, sawmills must 27 i n s t a l l two additional pieces of equipment, a "barker" and "chipper." 25. .Scaling refers to the measurement of the volume and q u a l i t y of wood i n each l o g . 26. "Bulk Scaling Logs by Weight," B r i t i s h Columbia Lumerman, L ; (February 1966), p. 20. 27o A l l pulpwood chips are manufactured from bark-free waste. Bark cannot be used i n the manufacture of sulphate pulp. 68 28 The mechanical barker i s a device whereby the log is passed through a rotating head and the bark removed by a shearing action. In the chipping machine, wood is brought into contact with blades attached to a disc spinning at high speeds. Over 30 barking/chipping units have been installed i n mills since l°65j most in mills cutting over 1$ million feet of lumber annually. For the mills i n s t a l l i n g this equip-ment, the sale of pulpwood chips is a new source of income. With the current prices, however, many operators consider the manufacture of 29 chips to be a marginal venture, ? The development of a pulpwood chip flow i n the region is a direct result of the pulp companies seeking a cheap raw material source, Mr, J.E, Liersch of Prince George Pulp and Paper Co, Ltd, stated: The only possibility of overcoming the inherent dis-advantages of an interior location compared to a tide-water location (reference to pulp mill) in the overseas markets is to obtain our wood (pulp logs and pulpwood chips) at a cost per-ton-of-pulp lower than the cost in Coast operations. Smallwood logging in the area is s t i l l i n the experimental stages and the exact cost i s yet unknown. On the other hand, pulpwood chip prices are known and have been set at approximately $10,00 a unit. 28, On the Coast hydraulic barkers are used. The hydraulic barker is a device by which logs are stripped of bark by coming in contact with, a high-pressure water jet, 29, Statement by Mr. M. Rustad, personal interview, March, 1966, 30, J.E, Liersoh, Proceedings of Public Hearings i n "The Matter of the Proposal Made by Canadian Forest Products Ltd, for a Pulpwood Harvesting Area„.„in the Vi c i n i t y of Prince George," (Prince George, B.C., November 22, 1962), p. 18. Consequently, the pulp mills are using chipped wood waste for part of their raw material supply. The per cent of purchased chips used varies from m i l l to m i l l . Half of the raw material supply of North-wood Pulp Ltd. comes from sawmill waste: none of Intercontinental Pulp Co. Ltd.'s supply comes from this source. •The 1965-66 pulpwood chip flow i n the North Central Interior is illustrated i n Figures II4 and 15. Approximately half a million units of chips moved to the two pulp mills i n Prince George. It is expected that chip production in the area w i l l increase by at least 175j000 units within the next few years as more sawmills i n s t a l l 31 chipping and barking f a c i l i t i e s . On both maps the flows from the area south of Prince George dominate. There the similarity ends,, Northwood Pulp Ltd. receives about 30 per cent of i t s supply from the mills i n the upper Fraser Valley. In contrast, the largest single, chip supplier of Prince George Pulp and Paper Ltd. is Ft. St. John Lumber Co. Ltd. in- Chetwynd. - The two flows shown in Figures 15 and 16 are by. no means stabilized. Both pulp companies w i l l lose a number of their chip suppliers when the pulp mills in Quesnel and Houston begin operation. Pulpwood Harvesting Area #k gives Bulkley Valley Pulp and Timber Co. Ltd. access to timber in the Babine and Francois Lake areas. The sawmills in Smithers, Telkwa, Topley, Burns Lake and Endako who 31o Statement by Mr. M. Rustad, personal interview, March 1966. •A •c<\ Annual Pulpwood Chip Flow to Prince George Pulp and Paper CO. Ltd. (March, I966) Pulpwood Harvesting Area I (awarded to PG.PandP Co-Ltd.) Pulpwood Harvesting Area 7 (awarded to Intercontinental Pulp Co. Ltd) Flow of Chips - 1/8" equals 10,000 B.D.U.'s Source- Compiled from B.C.Forest Service Mimeographed Lists of Annual Lumber Production of Mills. Conversion Factor of .5 used to estimate Chip Production 20 l _ 20 4 0 —I— GO 8 0 100 _ 1 _ 120 miles also draw t h e i r raw materials from t h i s area can be expected to direct t h e i r chip production to the Houston m i l l . Considerable savings i n f r e i g h t charges would be rea l i z e d , A s i m i l a r re-orientation w i l l take place south of Prince George. M i l l i n g operations i n Williams Lake, Quesnel, 100 Mile House, Lone Bute and Lac Hache w i l l probably market t h e i r pulpwood chips i n Quesnel. A change from the P a c i f i c Great Eastern Railway's f l a t rate of $2,10/unit to one based on distance would f a c i l i t a t e t h i s re-orientation. The future pattern of pulp wood chip movement can be projected as a series of directed flows focussed upon four major centres. Prince George, by vir t u r e of the number of pulp m i l l s located there, w i l l dominate, Quesnel, Houston and possibly Mackenzie w i l l form secondary centres. Almost a l l the pulpwood chips i n the region are transported to 32 Prince George i n s p e c i a l l y constructed chip cars. The Canadian National Railway rates f o r chip movement are based on distance. From Fort Fraser, 80 miles west of Prince George, $2,62 per unit i s charged? from Houston, 112 miles farther west, the rate i s $6,56 per unit (see Table I I ) . In contrast, the P a c i f i c Great Eastern Railway has set a f l a t rate of $2,10 per unit f o r a l l shipments to Prince George, The rate f o r chips moving to the Coast v i a the P a c i f i c 33 Great Eastern has recently risen from $3«$0 to $10,00 per unit. 32, Statement by Mr, D, Moore, personal interview, March, 1966, 33. Each car carries from 28 to 32 units of pulpwood chips. One bone-dry unit contains 200 cubic feet of chips. 73 TABLE l i s Pulp Wood Chip Freight Rates A. Via the Pacific Great Eastern Railway: Wood Chips From To In Cents Per Unit Carload Minimum 2 8 Units per Car i n 5600 cubic f e e t c a p a c i t y cars Minimum i n 5600 cubic ft» Capacity Car^ 2 8 Units per Car Minimum i n 6l;00 cubic f t . Capacity Car, 32 Units per Car Wi l l i a m s Lake Chetwynd ) C l i n t o n Davie Dunkley Exeter Kennedy Quesnel Wil l i a m s Lake North Vancouver P r i n c e George lOoOO 2.10 .Sources: P a c i f i c Great Eastern T a r i f f , G.F.0. No. 187-Aj S e c t i o n 2-As Wood Chip Commodity Rates, Issued March 15. 19659 p. 17. B. V i a the Canadian N a t i o n a l Railways; Wood Chips From To In Cents Per U n i t Carload Minimum C r e s c ' n t Spur) 3.06 11(0,000 l b s . based F o r t F r a s e r ) 2.62 on 3 2 U n i t s per Car F r a s e r Lake ) 3.06 Houston ) 6.56 McBride ) Princ e George 3.50 Penny ) 2 . 1 8 Telkwa ) 6.56 Topley ). 5.25 Vanderhoof ) 2.18 Sources Commodity, A p p l i c a t i o n and Rates i n Cents Per 100 l b s . s Wood Chips, Canadian N a t i o n a l Railway, Feb 0 hs 1966. 7h Although the price for pulpwood chips is higher on the Coast ($l8.00/unit compared with $10.00/unit i n the Interior), the additional freight charge prohibits the movement of chips south. Consequently, the pulp mills i n the North Central Interior are not compelled to compete with Coast pulpwood chip prices. The chip-van, a motor vehicle with a capacity of 21 units, is the alternative method of transportation for pulpwood chips. Currently, only one m i l l , located 35 miles from Prince George,is transporting chips by van. Studies i n Eastern Canada have shown that trucks are used more frequently on shorter hauls, while r a i l movement is more economical for larger distances (Figure 1 6 ) , In the future, i t is probable that more conversion plants i n the immediate vi c i n i t y of Prince George may use vans for moving their, chip production, i The structure of the forest industry i n 1966 presents a vi v i d contrast to that in 1955* Conversion units have become highly complexj linkages between the units intricate. The North Central Interior i s f i n a l l y reaching i t s f u l l potential as a forest products manufacturing region, SPATIAL MODEL OF THE FOREST INDUSTRYs: 1966 Two models comparable to those of 1925 and 1950 have been constructed to summarize the spatial pattern of 1966, The f i r s t represents the pattern resulting when a number of variables are held constant! the second, the modified pattern when transportation and topographical elements are introduced. Figure 16 Frequency of Truck and Rail Hauls of Sawmill Chips by Distance in Eastern Canada. Source- I.B. Flonn, "How Sawmill Chips ore Moved in Eostern Conodo," Forest Products Research Branch, Department of Forestry, 1964 \ / Y / \ X \ > \ \ t 1 1 / \ \ \ y ^ s 50 100 150 200 250 3 0 0 350 Distance in miles The theoretical spatial pattern evolved by 1966 i s described by Figure 17-A. Like the 1950 model, the area is assumed to be f l a t , with a uniform distribution of forest stands and equal accessibility. The demand for forest products is high: competition for forest land exists throughout the area. Change i n product demand since 1950 has resulted in the addition of a pulp economy to the area. No limiting factors have been introduced and exploitation of the forest proceeds in a l l directions from the conversion units. Placement of the boundaries of exploitation has been determined by the distance logs and pulpwood chips can be economically transported. The model resulting is comprised of a hierarchy of three hexagonal systems. At the highest level,-pulp m i l l , sawmill/planing and plywood operations form con-version centres which dominate the area. Individual conversion units (either sawmill/planer or plywood units) are spaced uniformly about the conversion complexes and direct flows of pulpwood chips to the centres. At a second level, the individual conversion units-are the focus of hexagonal areas of log exploitation. Logs are direct to these units from evenly spaced log assembly points. Logs, are also directed from assembly points to the conversion centres in the same manner. At the third l e v e l , each log assembly point is surrounded by an area from which logs can be drawn. The hinterlands of log assembly points nest within the supply area of the individual con-version units, which i n turn make up the tributary areas of the integrated conversion centres. Figure 17 77 A. Spatial Model of the Forest Industry, 1966 Secondary Log Flow to Mills Log Assembly Point Saw and Planer Mill Integrated Pulp, Lumber and Plywood Complex Log Flow Pulpwood Chip Flow Boundary of Log Supply Area Boundary of Area Exploited by Sawmill Boundary of Chip Supply Area of Pulp Mill Introduction of Transportation Systems Railway River Log Assembly Point Saw and Planer Mill Integrated Pulp, Lumber, and Plywood Complex Log Flow to Assembly Point Secondary Log Flow to Mills - Pulpwood Chip Flow » Boundary of Log Supply Area Boundary .of Theoretical Area Exploited by Sawmill Actual Area Exploited by Sawmill DKM/1966 Figure 17-b represents modifications to this scheme when r a i l , river, and roads are introduced. The conversion complexes and individual conversion units become centrally located with respect to both log and chip supplies. The planer/sawmill or plywood operations, however, tend to form nodes rather than being evenly distributed along the r a i l l i n e . These units are no longer oriented to roads as they were i n the 1950's. The hinterlands of the conversion plants are irregular i n shape, varying with the quality of timber stand and degree of accessibility. The chip supply area extends equally i n a l l directions. - Major changes from the 19^0 pattern are increases i n log transportation distances, relocation of conversion units and the emergence of integrated conversion centres. In addition, the com-plexity of linkages and interdependence of processes has increased significantly. The factors prompting these changes are isolated and weighted as to their relative importance in the following chapter. CHAPTER IV AN ANALYSIS OF KEY FACTORS CONTRIBUTING TO THE CHANGES IN STRUCTURE AND LOCATION IN THE FOREST INDUSTRY OF NORTH CENTRAL BRITISH COLUMBIA A number of changes i n the structure and location in the forest industry of the North Central region of Bri t i s h Columbia have been isolated and the spatial patterns characterizing the three major periods summarized,, Factors such as growth markets, avai l a b i l i t y of capital, government policies and technological changes have contributed to the changes in the patterns. This chapter attempts to explain the locational changes by weighting-the factors according to their relative importance. Exogenous forces influencing the general economic conditions of the region ( i . e . , encouraging the industry either to grow, decline or stabilize) are considered f i r s t . The examination of forces affecting the selection of industrial sites, and hence bringing about changes in location within the region,follows. SMALL-SCALE PRODUCTION 1915 - 1939 The major factor which encouraged the i n i t i a l exploitation of timber i n the upper Fraser Valley was development of the prairie market. Throughout the 1920ss and 1930's this market continued to be the dominating factor, structuring both the size and type of industrial development. The technological level of the industry and the raw material supply of the region dictated the area i n the North Central Interior to be exploited f i r s t . Exogenous Forces; (a) the Prairie Market. The establishment of a few marginal operators can be directly related to the market conditions of the 1920's and 1930's„ The following statement emphasizes the dependence of the mil l operators on the prairie market; Lumber exports to the United States have increased during recent years, but only a certain grade or type or class of Interior lumber can be sold to advantage in the said market. The preponderance of lumber produced i n the Interior i s of a low grade, which must be marketed in the western provinces.1 Railway construction, o i l f i e l d requirements and public works consti-tuted a portion of this market, but the purchasing power of the grain farmer continued to be the backbone of the prairie lumber demand, The relationship between the grain crop and the lumber trade is illustrated in Figure 18 by graphs of timber scaled in the North Central Interior and wheat exported from Canada, 1920-1940. The spending power of the farmers depends upon successful marketing of the grain crop. Consequently, a one-year lag i n lumber purchases is evident. The successful grain crops of 1923 and 1928, f o r example, were not f e l t by the lumbermen u n t i l 192h and 1929, Between 1920 and 1929 the rise and f a l l of wheat exports is reflected in the lumber production. In years of poor sales, several of the North 1. British Columbia Lumberman, XIV, (February, 1930), p. 13. ) Figure 18 81 I8cj- Timber Scaled in the Northern Interior  and Bushels of Canadian Wheat exported 160 -140 J 2 0 O) .a) o ^ 1 0 0 •s in c o 8 0 6 0 4 0 20 Source: British Columbia Department of Lands, Forests and Water Resources, Forest Service Reports. 1921-'41. Grain Trode Yearbook. Stanford, Evans Statistical Service, Winnipeg, Volumes 17 8 31, 1936-'37 a 1951. - 4 0 0 I h / / / A /\ N I \ v / CD CO l w -a . I \ / Mi v / \ 300 a CD c c/> cp_ (A H200 \ V CO - 100 1921 1925 1930 1935 1938 82 2 Central Interior mills were forced into bankruptcy. During the depression years, prairie agriculture maintained production at the expense of successive price declines. The two graphs in Figure 18 illustrate continued wheat export and a reduced timber scale between 1930 and 1938, By 1933 the price of wheat had been cut i n half; farm incomes had decreased by an equal amount (see Table III.) Wheat prices rose again in 1937$ but drought conditions, grasshoppers and rust combined to reduce the yield per acre to a low of 6.1) bushels. Consequently, the north central interior lumber industry, dependent upon the prairie market, remained at a low level throughout the 1930's. The average value for spruce lumber from 1910 to 1962 for 3 the province i s indicated in Figure 19 • The graph shows the declining price of lumber during the 1920's and 1930's„ The low point was reached i n 193^ 4 at $15 .15. The high lumber price of 1920 was not reached again until 19ij2. There was l i t t l e incentive for technical improvement or expansion in the lumber industry of North Central British Columbia,, 2. In 1917 Eagle Lake Sawmill went into receiverships i n 1921 Shelley Sawmills declared bankruptcy. Both were substantial mills f o r the time. Western Lumberman, XIV (June, 1917), p. 32; and Western  Lumberman, XVIII (April, 1921), p. 50. 3. Lumber prices f o r the North- Central Interior for these years are not available. Since a large part of the spruce lumber produced i n the province comes from this area, the prices for spruce lumber have been graphed. 83 Table H i t Effects of Depression and Drought Upon the Prairie Grain Trade, 1928 to 1939. „. . , /. .. Income Created Yield/Acre Domestic , * • * (bushels) r e s a l e Price* ( ? M S ? o n s ) 1928 23.5 12k 440.7 1929 11.5 124 323.6 1930 16.6 64 158.7 1931 11.8 50 92.1 1932 16.0 54 111.2 1933 10.li 68 109.0 1934 11.3 82 136.3 1935 11.3 84 141.7 1936 8.1 122 134.3 1937 6.4 131 130.6 1938 13.5 62 174.0 1939 19.1 76 212.9 *Price for Manitoba Hard at Ft. William. Source? D. MacGibbon. The Canadian Grain Trade 1931°5l» Toronto%• University of Toronto Press, 1952, p. 6. 140 120 100 80 LL ad ~o Q 60 40 20 Averag _ Spruce Source D.B e RO.B. Price for E 1 nmKcr IQIR _ IQ B.C. 62 S. Mimeographed Price L i s t , Unp \J t_ — jblished. (TO 3 1915 1920 1925 1930 1935 1940 1945 1950 1955 I960 1965 co 85 Factors encouraging change in locations (a) Technological level. Limited demand, declining lumber prices and substantial market fluctuations resulted in the development of an undercapitalized, marginal type of industry,. Most sawmills lacked the s t a b i l i t y necessary for sizable capital investments i n the machinery and equipment common to lumbering industries i n other areas. Therefore, the level of technology severely restricted the areal spread of lumbering activity and limited the possible sites which could be selected by the sawmillers. In the early years trees had been felled by axes and hand saws into the river and floated to the mil l s . As the timberline receded from the river-edge this method became impossible. The construction of temporary roads during the winter and the subsequent movement of logs by horse and sled to the m i l l or river-edge became the common method. The logging railway and steam donkey had been introduced to the southern parts of the province by 1915. Great tracts of timber had suddenly become accessible. By 1917 the southern interior operators were hauling logs 15 miles.^ Only companies with substantial capital backing, however, could afford the construction of such trans-portation lines. The sawmill operators in the North Central Interior did not have the financial resources necessary to replace horses with tractors or railway systems. In 1930 a l l the mills with the ho Western Lumberman, XIV, (February, 1917), p. 21. exception of one were reported s t i l l bringing t h e i r logs from distances "well under two miles".'' Consequently, m i l l i n g and logging operations were r e s t r i c t e d to the area immediately adjacent to the Canadian National Railway. (b) Raw Material Supply. In 1916 the Western Lumberman defined the motivation behind the establishment of sawmills i n the North Central Interiors ...plants located before r a i l construction at points l i k e l y to become centres of development; others were started up by, ranchers and land companies to supply a l o c a l demand f o r building material; but i n most cases the impelling concerns were i d e a l m i l l s i t e s going to waste, timber close at hand and assurance of transportation f o r output.00° The i d e a l m i l l s i t e had three pre-requisitess an easily-accessible timber supply, a r i v e r f o r log transport and' storage, and the r a i l l i n e f o r d i s t r i b u t i o n of nthe finished product 0 i A l l three were found i n the upper Fraser Valley. I t was the raw material supply that determined where the m i l l s located. Figure 20 i l l u s t r a t e s the areas of merchantable timber i n the Fort George Forest D i s t r i c t i n 1937. Large continuous 0 stands of timber are few; small patches of timber broken up by physiographic features common. The region with the largest timbered sections and the densest growth was located i n the upper Fraser 5. B r i t i s h Columbia Lumberman, XIV, (June, 1930), p. 3k. 6. Western Lumberman, X I I I , (July, 1916), p. 2lu Merchantable Timber in the Fort  George Forest District as of 1937 Timber Over 10 M.B.M. per Acre Timber Under 10 M . B . M . per Acre Boundary of Forest District \ ^ Boundary Enclosing Fraser River ) Headwaters, Bowron River, and ^ McGregor River Drainage Basins Source F. D. Mulhollond, The Forest Resources of  BrltisH Columbia, 1937, Dept. of Lands, Victoria, B.C., p 115 Valley around Giscome, Hansard and Penny. The area outlined on the map, containing the drainage basins of the Bowron, Fraser River Headwaters and McGregor Rivers accounted for 60 per cent of the 7 total accessible log scale in the d i s t r i c t at that time. To this region came the sawmillers. The mills located along the Fraser River in areas with maximum accessibility to timber stands. Since logging operations were areally restricted, only a fringe of the timbered area along the rivers and lakes could be considered accessible. M i l l s which located near to a supply of timber sufficient to support an operation cutting 60,000 board feet prospered and grew. Others, which happened to locate where timber stands were discontinuous i n nature, were forced to abandon and relocate operations. Thus, the Eagle Lake Company was moved from the mouth of the Willow River to Giscome to take advantage of the greater timber shed. The small size and number of early sawmilling ventures i n the North Central Interior are directly related to the lack of a local demand and the fluctuating conditions of the prairie market. The low technological level of the industry, a factor resulting from the unstable market conditions, restricted sawmills to locations proximate to the Canadian National Railway. Within this limited area of economic exploitation, the location of prime timber 7. F.D. Mulholland, The Forest Resources of B r i t i s h Columbia, 1937 (Victorias King's Printer, 1938), p. like 1 ' stands dictated the exact s i t e s chosen by the entrepreneurs. AREAL DISPERSION OF LOGGING AND MILLING OPERATIONS s l?ljO-l Q57 External forces which had a d i r e c t influence on the economic climate of the North-Central Interior a f t e r l°ljO weres (a) a greatly increased demand f o r lumber, (b) war-time shortages of labour, equipment and c a p i t a l , (c) high lumber prices, and (d) the lack of a positive forest management po l i c y . These factors encouraged the development of a large number of logging/milling operations with low output and low productivity,, Changes i n transportation technology and the low wood recovery of m i l l s were the factors which encouraged the movement of sawmills from railhead locations into timber cutting regions. Exogenous Forces % (a) Increased Demand For Lumber. With the outbreak of the Second World War, Canada assumed the role of the p r i n c i p a l Commonwealth supplier of raw materials. While the Coast shipped large s t r u c t u r a l timbers to B r i t a i n , the lumber industry of I n t e r i o r B r i t i s h Columbia was c a l l e d upon by the Federal Timber Control to supply a major part of Canada"s domestic and war require-ments. The demand from Canadian markets consisted primarily of war orders f o r the p r a i r i e provinces. Construction of army bases and a i r - t r a i n i n g centres f o r the Canadian A i r Force and the Commonwealth A i r Training Scheme were projects requiring large quantities of common grade lumber. Conditions i n B r i t i s h Columbia 90 were described as follows;: . . . i t i s the f i r s t time i n history that every plant manufacturing every species of wood i n every region of the country is operating at maximum capacity and can s e l l i t s product as soon as i t i s properly dried and ready for manufacturing,8 In the North- Central Interior, the lumber industry responded by expanding i t s productive capacity and moving outwards from the upper Fraser Valley into other timber areas. And s t i l l , " i n Northern British Columbia .„. American orders, Canadian orders and Canadian motor industry orders total far i n excess of the capacity of the mills to load and. ship,..V'^ A building boom i n both Canada and the United States characterized the post war years. The United States, with a rapidly growing population and depleted forestry resources, was becoming more reliant upon external sources of lumber« By 1952 the United States accounted for nearly half of the total value of provincial forest products exported to foreign partso The demand for lumber which was stimulated by the Second World War remained at a high level throughout the 19h0l!s and 1950'so This increased demand permitted the expansion and development of the industry in the North- Central Interior. Without i t , the level Bo British Columbia Lumberman, XXVI, (August, 19^2), p„ 27. 9e A 'oSo Nichols on, British Columbia Lumberman, XXVI, (September, 19U2), p. 25o Mr. Nicholson was the Canadian Timber Controller during World War IIo 91 of production and type of i n d u s t r i a l pattern c h a r a c t e r i s t i c of the 1920«s would have continued. This market increase necessitated an ar e a l expansion outwards to timber areas remote from the upper Fraser V a l l e y . The completion of the John Hart Highway north from Prince George t o the Peace River area and the P a c i f i c Great Eastern Railway south to Quesnel i n the e a r l y 19509s provided access t o these areas „ ^ The demand, however, di d not determine the type of i n d u s t r i a l develop-ment whidh occurred. A few large-scale firms could have dominated the industry, rather than the m u l t i p l i c i t y of small companies which developed during the 1940«s and 1950"s„ In the case of the former, a very d i f f e r e n t s tructure and l o c a t i o n pattern would have developed. The increased demand acted as a permissive f a c t o r allowing the expansion and development of the industrys - a combination of war-time shortages, high but unstable lumber prices and l a c k of government management p o l i c y determined the type of i n d u s t r i a l structure which emerged. (b) Labour, Equipment and C a p i t a l Shortagess During the war years, shortages of c a p i t a l , labour and equipment were common. The a t t r a c t i o n of s k i l l e d labour t o the shipyards and other war i n d u s t r i e s , and the enlistment of men i n the armed f o r c e s , had a marked e f f e c t on sawmilling operations throughout the province. In 1942 i t was 10. "Opening the Hart Highway a; year ago has re s u l t e d i n e s t a b l i s h -i n g a number of sawmills. About 19 m i l l s have s t a r t e d up i n the Crooked River Forest Resource, up the highway north of Summit Lake," B r i t i s h  Columbia Lumberman, XXXVII, (August^ 1953)s P» 30. reported i n the B r i t i s h Columbia Lumbermant In Northern B r i t i s h Columbia and Northern Alberta region production i s somewhat below normal as a resu l t of labour shortage, mainly caused by the movement of labour to govern-ment contracts i n that v i c i n i t y , 0 „ By 1943 i t was estimated that the pro v i n c i a l m i l l s and camps were short 4*000 menj that the Interior lumber trade was operating at only 50 per •4. 1 2 cent capacity. Compounding the problem of labour shortage was the d i f f i c u l t y involved i n obtaining logging and m i l l i n g equipment. During 1940 and 1941 the supply of equipment from the United States remained f o r the most part adequate. As the war needs demanded greater quantities of s t e e l and rubber the supply became acute. By 1943 i t was v i r t u a l l y impossible to obtain necessary machinery parts f o r r e p a i r s , ^ Productivity remained at a low level,, while the demand f o r lumber f a r exceeded the c a p a b i l i t i e s of the industry. In turn, the c a p i t a l necessary f o r investment was not readily a v a i l a b l e . The size of operations entering the lumber export industry remained severely l i m i t e d . In the immediate years a f t e r the war, equipment and c a p i t a l 11<; Nicholson, op. c i t , , p, .25, 12. B r i t i s h Columbia Lumberman, XXVII, (May, 1943)a V» 23, 13« G.R. Munro, "The History of B r i t i s h Columbia Lumber Trade 1920-1945", (Unpublished Bachelor's Thesis, The University of B r i t i s h Columbia, Vancouver, 1956), p„ 99° were required by a l l phases of Canadian industry. Although the demand f o r lumber products remained high, c a p i t a l f o r investment i n the North Central I n t e r i o r remained l i m i t e d . Since l i t t l e e xternal c a p i t a l was attracted to the area, investment remained small and l o c a l i z e d i n nature. I t i s probable that the i n s t a b i l i t y of timber supplies and the f l u c t u a t i n g lumber prices created an insecure f i e l d f o r large-scale investment. The small companies which sprang up during the war continued through the 19508s, (c) Lumber Pri c e s , Between 1940 and 1950 lumber prices increased s t e a d i l y (Figure 19), Fluctuations i n the p r i c e of spruce lumber are r e f l e c t e d i n the number of active sawmills of the region. In years of high p r i c e s , the number of operations increased s i g n i f i -c a n t l y . In 1947-48, however, when prices dipped^ the expansion of the industry was retarded (compare Figures 5 and 19), The l e v e l l i n g o f f of prices i n 1951-52 was not r e f l e c t e d i n the growth of sawmills u n t i l 1953, In general, the high l e v e l of lumber prices throughout t h i s period encouraged the growth of the small producer, (d) Forest Management P o l i c i e s , By the 19403s the government had become aware of the need f o r conservation p o l i c i e s and f u l l e r u t i l i z a t i o n of timber resources. Accordingly, the Royal Commission of 1945 was set up to inquire i n t o the future of the f o r e s t industry. The r e s u l t i n g p o l i c y urged the establishment of sustained y i e l d management of the .industry s the aim of which was to provide a "perpetual y i e l d of wood of commercially usable q u a l i t y from regional 9h LU areas i n y e a r l y or per i o d i c q u a n t i t i e s of equal or incr e a s i n g volume*," A number of Forest Management Licences were issued through which the major companies were guaranteed s u f f i c i e n t supplies of timber f o r a long-term period. In return they agreed to administer the lands, providing f i r e c o n t r o l and r e f o r e s t a t i o n . In other areas Public r Working C i r c l e s were established and administered by the Forest Service, In these areas, no guarantees of timber supplies were made and sales went to the highest bidder. In the Prince George Forest D i s t r i c t only seven Forest Manage-ment Licences were granted, one near Quesnel and the remainder i n the upper Fraser V a l l e y , The re s t of the area was reserved f o r e s t a b l i s h -ment of public sustained y i e l d u n i t s . Figure 21 i l l u s t r a t e s the f o r e s t a l i e n a t i o n i n the Prince George Forest D i s t r i c t by 1956, The established producers of the 1920's who were granted the l i c e n c e s were able to expand and plan long-term financing f o r t h e i r operations. Most of the operators however, lacked t h i s s e c u r i t y of future timber supplies and t h e i r sales remained small and intermittent. By 1951ij the Northern I n t e r i o r Lumber-men's Association desired a second Commission to look into the govern-mental p o l i c i e s because of "the l a c k of confidence within the lumber i l l , Gordon McG, Sloan, The Forest Resources of B r i t i s h Columbia 1956, ( V i c t o r i a , B.C-s- Queen's P r i n t e r , 1957) s p» U0„ " l5o Since 1957 Public Working C i r c l e s have been known as Public Sustained Y i e l d U n i t s 0 96 16 industry in the present policies and their interpretation," In the inquiry of 1956, one of the themes was criticism of the Public Sustained Yield Unit, As Mr, Walter Koemer stated: The conversion plant using logs from a sustained yield unit has not assurance of a continuous supply of raw materials. Therefore, the tendency for plants dependent upon such logs must be to l i m i t their investment. Conversion plants with a limited assured supply of wood and a low capital investment do not in general produce a high priced or readily marketable product. They cannot afford research for new developments and better wood ut i l i z a t i o n . In addition, neither they nor the logging operations are under any compulsion to operate continu-ously i n times of poor markets. They can more readily afford to shut down as their depreciation and overhead are low,17 This statement described the state of the lumber industry i n Interior British Columbia, The lack of a stabilized timber supply was not new. In 1943 examples had been cited of companies setting up operations i n timbered areas only to find other sawmills moving i n and rapidly 18 depleting the resources, A plea for a better designed forest policy with protection for the established operator had been made0 Two years later in 1945 Chief Justice Sloan i n the Commission had stated? The Interior Lumber Manufacturers Association has recommended for the Interior that " a l l existing operations should be brought under licence and no new operation should be licenced u n t i l the a v a i l a b i l i t y of timber i n the area affected, sufficient to guarantee the maintenance of that operation on a sustained-yield basis i n perpetuity has been determined," 16,. British Columbia Lumberman, XXXVIII, (November^ 1954) s p, 22, 17, Sloan, 1956, op, c i t , , pp, 137-138, 18, B r i t i s h Columbia Lumberman, XXVII, (June, 1943)» p, 30, In my opinion this recommendation should be implemented. It is a much better policy to plan and manage any Interior sustained yield unit so that one m i l l may be assured of continuity of supply and permanent operation than to allow the productive capacity of an area to be divided between four or five mills with the result that none of them has a sufficient supply to ensure an economic production, thus leading to the ultimate disappearance of them a l l . Ghost towns i n the Interior bear distressing and silent witness to the past policy of too many mills cutting out areas that could have supported i n perpetuity, on a system of planned management, the potential capacity of probably half of them.*? Such a system of licencing, i f i t had been implemented, would have produced a different industrial structure. Instead, a method of restricting entry into the industry, and of guaranteeing already invested capital was not introduced u n t i l 1961, With the advent of the Sustained Yield Unit i n 19kSs a restriction i n the allowable cut of forested areas came into effect. Established operations had limits placed upon them. If six companies were operating on an allowable cut of 2li,000,000 board feet, for example, each on the average could expect to use hs000,000 feet annually. I f , however, three additional mills entered the area, the cut of each was reduced. During the 19l40»s and 1950's the system of auctioning timber offered no guarantee to the original six sawmill operators that they could obtain additional blocks of contiguous 19. Gordon McG, Sloan, Royal Commission on the Forest Resources of  Br i t i s h Columbia, (Victoria, B.C.s C.F. Banfield, Printer to the King, 19U5), PP° H47-1U8. timber stands. Timber was acquired by the highest bidder. And i n some cases speculative bidding carried the price far above the profit margin of the established operator. The forest management policies helped to perpetuate the large number of undercapitalized producers. In the Public Inquiry of 1956 evidence was heard to indicate that capital investments i n the lumber industry of the North Central Interior were given l i t t l e security. Hans Roine of Clearlake Sawmills Ltd, whose investment at this time totalled $110,000 stated that his timber supply was guaranteed for only 18 months i n advance. In addition he made the following comments I feel that being an established operator i n an area should carry some certain protection. 0,,we have realized for some long time that we must come to a greater u t i l i z a t i o n of forest products which we are totally unable to do today i f we are only going to know within one or two years as to what period of time we can remain in operation. ^ Large-scale operations were not encouraged in their development, nor attracted to the area. Some of the operators i n the sustained yield 'units set up voluntary associations to control the distribution of the allowable cut. In the Prince George area four such associations were set up in the Crooked River, Westlake, Willow River and Naver 21 Sustained Yield Units, For the majority of sawmilling companies, however, continued operation remained guaranteed on a short term 20. Mr, H, Roine, Transcript, Hearings of the Royal Commission Inquiry into Forest Resources, (Victoria, B,C, 1956), p. 76llu 21. Ibid., p. 7615o basis only. The increased demand of the war needs of the 1940>s and the building boom of the l°£09s necessitated the rapid expansion of both lumber production and number of active sawmills. The re s u l t i n g structure was that of a number of marginal and often seasonal producers. I t was an i n d u s t r i a l l y immature region i n which sawmills operated on an ad hoc basis and few entrepreneurs had a developed business sense. The minimal barriers to entry into the industry encouraged a large: number- of m i l l s to operate intermittently! namely i n times of high lumber prices, r e a d i l y accessible timber supplies and dry weather. When physical or economic conditions became less than " i d e a l " , a large number of these small marginal operations closed. The north central i n t e r i o r industry of the 1940 8s can i n many ways be compared to the coastal industry of the 1920 ss. At that time a large number of small companies were cutting timber up and down the coast', most-of whom vanished during the depression.of 1929, The dispersed location pattern which characterized the North Central I n t e r i o r at this time p a r t i a l l y r eflected the type of market open to the entrepreneur. The m i l l operators could s e l l one product only, lumber. Any wood not suitable f o r the manufacture of lumber was l e f t behind or burned. This single product market, combined with the type of sawing equipment common i n the region, created an industry i n which the lumber recovery was p a r t i c u l a r l y low. 100 As timber cutting moved away from the established m i l l i n g areas, i t became uneconomical to transport the logs when perhaps only $0 per cent of each log would eventually be cut as lumber. This s i t u a t i o n , plus the application of new forms of transport media, encouraged the relocation of m i l l s within cutting areas. Factors encouraging change i n locations (a) Lumber recovery. In 1956 a study was carried out on 12 m i l l s i n the Prince George area to determine the amount of sawmill residue resulting from the methods of manufacturing lumber. Five of the m i l l s were cutting more than 20 M. bd„ f t , | seven cutting less than 20 M. bd„ f t . The results were as followss M i l l s cutting more than 20 M, f t , b,m,/ 8 hrs. 20,8 18,7 39,5 M i l l s cutting less than 20 M, f t , b,m,/ 8 hrs, 23,0 17,9 40,9 On the average, about 40 per cent of each green log was c l a s s i f i e d as 22 Table IVt Percentage of Residue Volume of S o l i d Residue Volume of Sawdust Total 22, C F , McBride, '"Sawmill Residue i n the Prince George area of B r i t i s h Columbia," Forest Products Laboratories D i v i s i o n , Department of Northern A f f a i r s and National Resources, V-1013. 101 sawmill residue and 60 per cent was converted into lumber. Variations could be found throughout the area with the large stationary m i l l s having a higher recovery, and the small portable m i l l s with less e f f i c i e n t equipment producing at a lower levelo And secondly, the recovery factor varies with the diameter of the logo The lumber recovered from a 6-inch log i s only 72 per cent of that recovered from a 20-inch l o g . In some of the stands of timber to the west of Prince George and i n the Dry Belt to the south the recovery e a s i l y averaged less than $ 0 per cento (b) Changes i n Transportation Technology„ The single f a c t o r which permitted the movement of the sawmill into the timber-cutting regions was the introduction of truck logging,, Since equipment and fuels were d i f f i c u l t to obtain during the war, horses were used extensively f o r logging u n t i l about 19iiS>o A change to crawler t r a c t o r s , arch-trucks and lumber trucks characterized the post-war years„ The under-financing of the industry and the low wood recovery discouraged the use of logging trucks and loading equipment. I t was the lumber truck that revolutionized the region. The i n i t i a l c a p i t a l outlay f o r a lumber truck i s considerably less than that f o r a logging truck. In addition the movement of rough lumber i s less expensive than the transportation of logs. The sawmiller pays $ l l o 0 0 - $12 0 00 per Mo bd, f t , to transport logs h 0 miles, as compared to $i)«50 - $5»00 102 0*3 p e r M. b d 0 f t . f o r r o u g h s cut l u m b e r . J To j u s t i f y the b u i l d i n g of a c e n t r a l i z e d c o n v e r s i o n p l a n t and t h e moving of l o g s liO m i l e s , an a d d i t i o n a l $7.00 p e r M . bd„ f t . has t o be g a i n e d . Today, the h i g h lumber r e c o v e r y and the advantages o f l a r g e - s c a l e , c e n t r a l i z e d o p e r a t i o n s have more t h a n o f f s e t the cost of l o g t r a n s p o r t a t i o n . T h i s was not the case i n 1 9 5 0 , The t r a n s p o r t a t i o n sav ings r e a l i z e d from the reduced volume and weight of rough lumber d i c t a t e d the l o c a t i o n of the s a w m i l l a t the t i m b e r - c u t t i n g s i t e , A second change o c c u r r e d i n the movement of l o g s from the stump t o the m i l l . T r a c t o r s k i d d i n g r e p l a c e d the horse f o r t h i s o p e r a t i o n ^ 2U but the s k i d d i n g d i s t a n c e was s t i l l r e s t r i c t e d t o two m i l e s . I n 1955s the i n t r o d u c t i o n of the a r c h - t r u c k extended t h i s d i s t a n c e 10 m i l e s . The a r c h - t r u c k was designed t o t r a n s p o r t l o g s i n t r e e - l e n g t h s from the l a n d i n g t o the m i l l by h o i s t i n g the l o a d a t the f r o n t and a l l o w i n g the t r e e ends t o drag b e h i n d . The investment necessary i n an a r c h - t r u c k was c o n s i d e r a b l y l e s s than t h a t needed f o r a t r u c k and t r a i l e r . I n a d d i t i o n , the cost o f a t w o - m i l e h a u l by a r c h - t r u c k was 25 $2,00/M, b d , f t , as compared t o $3,75 f o r t r u c k , t r a i l e r and l o a d e r . The combinat ion of a r c h - t r u c k and lumber t r u c k proved t o be the most 23, Statement by M r , Conrad P i n e t t e , p e r s o n a l i n t e r v i e w , A u g u s t , 1966, Ik, Statement b y M r , G, C a i n e , p e r s o n a l i n t e r v i e w , M a r c h , 1966. 25, R, K e i t h T a r d l y , "Truck-Mounted Arches i n B r i t i s h Columbia N o r t h e r n I n t e r i o r , " B r i t i s h Columbia Lumberman, L I V , (November, 1960)5 p p , 25-26. 103 economical, as w e l l as most f l e x i b l e , f o r the sm a l l operator w i t h l i m i t e d c a p i t a l a v a i l a b l e f o r investment. By extending the supply area of the m i l l from two to 10 m i l e s , the arch-truck encouraged the c o n t i n u a t i o n of the resource-oriented conversion u n i t 0 FUNCTIONAL INTEGRATION AND AREAL CONCENTRATION OF CONVERSION PLANTS s 1958-1966 C o n s o l i d a t i o n of the lumber i n d u s t r y i n t o fewer l a r g e - s c a l e u n i t s , and the subsequent a r e a l c o n c e n t r a t i o n of the u n i t s have been two trends c h a r a c t e r i z i n g the i n d u s t r y s i n c e 1958, Three exogenous f o r c e s appear to have been i n f l u e n t i a l ? (a) market demands, (b) labour demands, and (c) changes i n the p r o v i n c i a l f o r e s t management p o l i c y . To cope w i t h c o n d i t i o n s brought about by these f a c t o r s , entrepreneurs have been f o r c e d t o increase c a p i t a l investment i n s p e c i a l i z e d equipment, t o develop l a r g e r - s i z e d conversion p l a n t s and t o i n t e g r a t e as many f u n c t i o n s as p o s s i b l e . I n t u r n , f u l l e r u t i l i z a t i o n of wood products has lessened the t r a d i t i o n a l t i e t o raw m a t e r i a l sources. Factors encouraging the s h i f t of conversion p l a n t s to c e n t r a l i z e d r a i l h e a d l o c a t i o n s ares (a) higher wood recovery, (b) year-round o p e r a t i o n , (c) a c c e s s i b i l i t y to timber s u p p l i e s , (d) labour s t a b i l i t y and (e) c o n t r o l of the marketing and shipping f u n c t i o n s . The three exogenous f a c t o r s and the entrepreneurs responses w i l l be examined f i r s t . Exogenous forcess: (a) Market Demands 0 Growing markets f o r I O U wood products other than lumber as w e l l as demands f o r a standard-iz e d higher grade of lumber product have had a pronounced e f f e c t on the f o r e s t industry, Since the United States i s B r i t i s h Columbia's 2 6 l a r g e s t customer of f o r e s t products, the changing trend i n product q u a l i t y and mix dic t a t e d by t h i s market i s r e f l e c t e d i n the adaptation of the p r o v i n c i a l industry. The following f i g u r e s i n d i c a t e the probable t o t a l consumption pattern of f o r e s t products i n the United 2 7 States f o r the years 1 ° 5 0 , I 9 6 0 , 1 9 8 0 and 2 , 0 0 0 , Table Vs Consumption Patterns of Forest Products i n the United States 1950 % I960 % 1980 % 2000 * Lumber ( b i l l i o n bd, . ft ,) 4 2 37 33 —————=-31 Plywood and Veneer -( b i l l i o n s , f . 3/8") 3 8 16 2 6 Pulp ( M i l l i o n s short tons) 17 27 hi 76 The study i n d i c a t e s that a decline i n the r e l a t i v e place of lumber versus plywood has taken place and a l s o , that substitutes are taking over some of the functions of wood, p a r t i c u l a r l y i n the s t r u c t u r a l uses. 26„ E i g h t y - f i v e per cent of p r o v i n c i a l lumber exports and 89 per cent of newsprint exports are marketed i n the United States, 27o The B r i t i s h Columbia Forest Industries 1 9 6 5 - 6 6 Yearbook (Vancouver?- M i t c h e l l Press Ltd,, 1 9 6 5 ) * p. F 2 , ~ 105 The fourfold increase i n the volume of pulp required is emphasized. It i s this growing demand for wood products other than lumber that has been f e l t i n the North Central Interior, Since 1950 three veneer and/or plywood mills have begun operation, with three more i n the planning stages. In addition, six pulp mills have recently opened, or are under construction in the region. Secondly, the lumber producers have been faced with market demands for a higher quality product. To compete with other lumber producers,the sawmillers have had to standardize their lumber grading system and invest i n additional equipment. Where previously i t was possible to ship rough, green lumber, i t has now become mandatory to export dressed and dried lumber. Drying is accomplished either by 28 ai r drying for a number of weeks or by k i l n drying in a matter of days. Either method necessitates the investment of capital; the former i n large lumber inventories, and the la t t e r in actual equipment. In addition to buyer demands, the transportation savings gained from the reduced weight act as incentives for the installation of drying 29 f a c i l i t i e s . The demand of European markets for packaged lumber i s 28o Drying lumber i n a ki l n i s accomplished by means of gas fired burners and high temperatures. The drying time varies with the thickness of the lumber, A rule of thumb used is a day of drying for each quarter inch of lumber, 29, The r a i l rates for lumber shipments are based on specified weights. If the shipper's weight for a carload of lumber i s under the specified weight he saves money. If the carload exceeds the specified weight he pays extra for the transportation. 106 also being f e l t by the sawmillers„ The packaging i s accomplished by strapping and wrapping dried lumber i n water resistant kraft paper or polythylene as protection against moisture and d i r t . Again, additional expenditure i n equipment and labour i s necessary to market lumber i n t h i s form, A small under-capitalized sawmill i s unable to meet these demands. (b) Labour Demands; Labour demands have forced the higher c a p i t a l i z a t i o n of the average conversion unite In 1953 the basic rate f o r common labor i n the North Central I n t e r i o r was $1,35 1/2 per 30 hour, f o r a Gang M i l l . Sawyer ;$1,95 1/2 pe r faburW~-r;: ^JDe^ember 1, 1966, the basic hourly wage of a labourer had risen to $2,26, while the Gang M i l l Sawyer earned $2.86 and Sawyers on automatic carriages more than $3«00 an hour-^ (see Figure 22)„ Employees also gained benefits of additional paid statutory holidays and vacations, national pension plans and increased workmen's compensation benefits. However, during that same thirteen-year period the market price f o r dressed lumber did not increase at the same rate. As Figure 22 i l l u s t r a t e s , the value f o r spruce lumber i n 1953 was $5U.93/M. bd, f t . j i n i960 i t sold f o r 32 $50„95s and i n 1965, the value increased to $59o97<> Between 1953 30, Master Agreement, Forest Products Industries, Northern I n t e r i o r Region, B o C , September, 1953, P P o 23=25, 31o Agreement Between the Members of Northern Int e r i o r Lumberman's Association and International Woodworkers of America, Local l4|2l i , September 1, 196U to August 31s 1967$ pp.. 32-38. 32, The wages indicated i n Figure 22 refer d i r e c t l y to those paid i n the North Central I n t e r i o r , Higher wage levels existed on the Coast and i n the Southern I n t e r i o r , Figure 22 107 Averoqe Value of Interior Spruce Lumber and Basic  Hourly Wage in North-central British Columbia, 1950-1966 1 9 5 0 1 9 5 5 I 9 6 0 1 9 6 5 SOURCES-' | . Master Agreements between Northern Interior Lumbermen's Assoc. and the International Woodworkers' of America, 1953 - 1 9 6 6 . 2 D . B . S . Mimeographed Tables (unpublished) 1 0 8 and 1 9 6 5 wages increased by 80 per cent and lumber prices by 10 per cento The entrepreneurs were caught in the familiar predicament of having to increase labour productivity to maintain f a i r returns on their investments, To hold costs i n l i n e , management has reduced the relative importance of the labour input. The introduction of equipment such as automatic debarkers, linebar resaws, shadow-line trimmers and automatic lumber stackers has cut the manpower needed. In the Jacobson operation in Williams Lake, 2 0 men produced 23sOOO feet of lumber per shift in 1950s in 1966 that same number of employees 3 3 produced 9 0 , 0 0 0 feet per shift. The use of automated equipment in a well-designed plant has permitted a continuous flow through the m i l l . Consequently, each piece of machinery and hour of labour achieves i t s f u l l potential. From log entry to finished lumber, the economy in manpower has moved to a level where there is l i t t l e 3k likelihood of further improvement, (c) Provincial Forest Management Policies % Two aspects of the provincial forest policy appear to be influencing the forest industry? (1) timber supply stabilization and ( 2 ) the introduction of a close u t i l i z a t i o n policy. Although the concept of sustained 3 3 » Statement by Mr, Harold Jacobson, personal interview, March, 1966, 3 4 , Statement by Mr, G, Caine, personal interview, March, 1966 0 The one area i n the sawmilling process that remains to be automated i s the sorting of lumber,, yield came into effect i n 1 9 h 5 § no guarantee of future timber supplies for established operators existed. In 1961, timber supply s t a b i l i -zation was introduced. F i r s t l y , an inventory of the sustained yield units was taken and allocation of annual allowable cut made to the established operators on the basis of their previous three year's performance. Secondly, bidding practices were changed so that operators who requested the timber sales put up for auction were permitted to meet the highest bid. The completion of the quota allocation and the altering of the bidding system effectively closed the lumber industry in established areas to new companies. These policies permitted larger capital investments i n individual operations and encouraged the corporate consolidation of the industry. The only avenue open for individual expansion now is the purchase of other quota holders. Table VI illustrates the changes which occurred in the number of quota holders i n sustained yield units between 1961 and 1966, Figure 23* Forest Alienation 196lj, locates the units l i s t e d in Table VIo In nearly every cases the number of quota holders has decreased substantially. In the Moberly Public Sustained Yield Unit, the number decreased from 2li to 2 in the five-year period. The second management policy influencing the industry is the promotion of f u l l u t i l i z a t i o n of forest resources, A close u t i l i z a t i o n policy which not only provides the basis for the substantial pulp m i l l development in the region, but also influences wood ut i l i z a t i o n throughout the industry,has been developed. The policy is aimed at 28 F O R T S T J O H N PEACE RIVER • 52 38 74 51 72 69 40 23 18 V I H O U S T O N | OA 5 0 , STUART LAKE 44 1J0 PRINCE G E O R G E , LAKE iSSA 78 53 37 50 .13 42 20 \39 55 73 ft \§0 WILL IAMS L A K E Forest Alienation, 1964. Forest M a n a g e m e n t L i c e n c e s (either a w a r d e d or r e s e r v e d ) 1. Eag l e L a k e S a w m i l l s , L td . 2. Church S a w m i l l s , L t d . 5. Western P l y w o o d , Co. ,Ltd. 2 8 . She l l ey D e v e l o p m e n t , L t d . 2 9 E a g l e L a k e S a w m i l l s . L t d . 3 0 . S inc la i r S p r u c e L u m b e r Co., L td . 31. Upper F r a s e r S p r u c e M i l l s , L t d . 3 4 . Church S a w m i l l s , L td . Publ ic Su s ta ined - Y i e l d Units 4. Bab ine 4 4 . N e c h a k o lO.Big Va l ley 5 0 . O o t s a 11. B lueber ry 51. Pa r sn ip 13. Bowron 5 2 . P e a c e l5 .Burns L a k e 5 3 . P u r d e n 18. Ca rp 5 5 Q u e s n e l l L a k e 2 0 . Co t tonwood 5 9 R o b s o n 2 3 C r o o k e d R i v e r 6 9 . S m i t e r s 2 8 F i n l a y 7 2 . S t u a r t L a k e 37. L o n g w o r t h 7 3 . S t u m 3 8 M o b e r l y 7 4 T a k l a 4 0 Mor ice 7 8 . W e s t l a k e 4 2 N a r c o s l i 8 0 . W i l l i a m s L a k e 4 3 . N a v e r 8 1 Wil low R iver . . . O t h e r Publ ic Units - S .S .A. Spec i a l Sa le A r e a . , V j 59 | QUESNEL LAKE Source B r i t i s h C o l u m b i a , Deportment of L a n d s , Forest and Water R e s o u r c e s , Map from Forest Serv ice Report 1964, entit led "Statue of Sustained - Y i e l d r~"N Forestry Programme " i '•> -v. 1. I l l TABLE Vis Allocation of Allowable'Cut i n the Prince George Forest Districts: 1961 and 1966 0 ^ Q ^ ^ No0 of Licencees Sustained Yield Unit M/cu, f t . . (as of 1966) 1 9 6 1 1 9 6 6 Big Valley, No<, 1 3sooo 3 6 Big Valley, No„ 2 3 s ooo„. 5 U Blueberry iiS283" 5 3 Bowron, Noe 1 ii ,30G 1 1 Bowron, Noc 2 3sooo 3 2 Canoe 3S35Q 3 pending' Carp, No. 1 3*600 10 6 Carp, No. 2 2,000 3 2 Carp, No. 3 1,000 3 2 Cottonwood 5,350 8 2 Crooked River 7 5 Longworth 9^ 200 17 . 9 Moberly 5,Uoov . 2U 2 Monkman h 3 Narcosli lj,000 7 Naver, NoD 1 1,000 5 l» Naver, No. 2 1,500 2 1 Naver, No„ 3 3,810,, "6 6 Nechako (a new unit) 11,262". . 51 Parsnip 7,000 15 12 Purden Lake 3,250 7 5 Robson U,ooo 12 9 Stuart Lake 7,5.00 12 7 Westlake 59ooo 10 9 Willow River 7sooo 2 h 111 .r Priority systein of allocation of volume (quota) has not been established pending completion of removal of timber below proposed Mica Creek Dam floodline 0 Annual quota has increased since 196l<, Sources Br i t i s h Columbia, Department of Lands and Forests, "Allocation of Allowable Cut," Victoria, B<>CoS: Mimeographed l i s t s , 1961 and 1966c increasing wood recovery by using small logs and logging residue previously l e f t behind i n the woods, Its success depends upon the establishment of pulp mills and the extension of established logging and sawmilling operators into smallwood u t i l i z a t i o n and chip production. To achieve these ends, the government has introduced new forms of tenure, modified stumpage rate schedules, altered freight rates and enforced new standards of utilization,, To encourage the establishment of a pulp m i l l economy, the Provincial Government introduced the pulpwood harvesting area. The harvesting areas are confined to public areas which are established as public sustained yield units and administered by the Forest Service, Pulpwood Harvesting Area #3* for example, comprises the Bowron, Long-worth, Monkman, Purden and Robson Public Sustained Yield Units, The licencee of the harvesting area is entitled only to the wood unsuitable for sawmilling. Saw and peeler grade logs are reserved for saw and plywood mi l l s . The five pulpwood harvesting areas which have been granted in the North-Central Interior are shown on Figure 2U, The establishment of these harvesting areas has super-imposed a pulp economy upon an existing sawmill economy and yet provided every phase of the industry with i t s raw material needs, A second aspect of the close u t i l i z a t i o n policy i s i t s effect on the sawmilling industry. On January 1, 1966, the f u l l program of the government's policy came into effect. The new program calls for the calculation of allowable cuts to a 7" diameter as compared to an FINLAY SUSTAINED YIELD UNIT PHA 7 Pulpwood Harvesting Areas Awarded, 1966. P.H.A. I Awarded to Pr ince George Pulp and Paper Co.,Ltd. covers Big Valley, Carp, Crooked River, Nover, Nechako, Parsnip, Stuart Lake, Westlake and Willow River Public Sustained-Yield Units. P.H.A. 3 Awarded to Northwood Pulp Co.,Ltd. covers Bowron, Longworth, Monkman, Purden.and Robson Public Sustained-Yield Units. P.H.A.4 A w a r d e d to Bulk ley Va l ley Pulp and T i m b e r Co. ,L td . covers Babine, Longworth, Monkman.Purden.and Robson Public Sustained-Yield Units. PH.A. 5 Awarded to Car iboo Pulp and Paper, L td . covers Narcosli,Cottonwood,part of Stum,and Quesnel Lake Public Sustained-Yield Units and part of an unregulated area. P H . A . 7 Awarded to Intercontinental Pulp,Co.,Ltd., covers Peace and Tokla Public Sustained-Yield Units. o l d standard of 11" diameters« The operators must now cut and l o g these logs with diameters between 7 and 11 inches that were previously l e f t behind. Scaling practices have also been changed and trees previously considered of l i t t l e economic value' must now be logged. The sawmiller must now handle not only a greater volume of logs, but also smaller diameter l o g s . This requires a c a p i t a l outlay i n a d d i t i o n a l equipment. The market demands, labour demands and changes i n f o r e s t management p o l i c i e s have necessitated increased c a p i t a l investment i n the f o r e s t industry of the North Central Interior,, To meet these demands, and to achieve the greatest returns possible on investments, the industry has made several responses? ( l ) consolidation of the producing u n i t s , (2) i n t e g r a t i o n within the industry and (3) special-, i z a t i o n of functions. The market demands f o r a more standardized and higher q u a l i t y lumber product has meant changes p r i m a r i l y i n the planing, drying and shipping operations rather than i n the i n i t i a l sawing stages. The i n t r o d u c t i o n of a new market f o r pulpwood chips has f o r the f i r s t time permitted the l a r g e r operations to s e l l a portion of t h e i r waste products. The bush sawmill, unable to add the necessary equipment f o r the manufacture of high grade lumber products and pulpwood chips have 35o RoGo W i l l i s t o n , M i n i s t e r of Lands, Forests and Water Resources, "Address to 56th Western Forestry and Conservation Conference, December, 1965s" c i t e d i n The Truck Logger, XXII, (January, 1966), p, 31« gradually had their sawmilling function absorbed by the large-scale integrated sawing/planing plants. The small entrepreneur of the 1950 era has been forced into a non-competitive position. Secondly, rising labour costs in a mileu of stable prices have necessitated increased labour productivity for the survival of sawmill operations. Two basic techniques used to achieve this end have beens (a) larger-scale of operation, and (b) the use of automated equipment. The size of mills has i n part been dictated by the production rate of the saw machinery. The minimum size of sawmill, for example, that can amortize the investment i n a barker and chipper i s one producing 10 to 15 million feet of lumber annually. The investment i n these large pieces of heavy machinery dictates a permanent rather than portable m i l l . Consequently, the sawmill operators have had to re-assess their choices for the location of lumber production. The capital outlay required for pieces of equipment such as planing f a c i l i t i e s , smallwood equipment or chipping and barking machinery can only be justified as a long-term investment. The stabilization of timber supplies has permitted borrowing and long-term planning within the industry. If no future guarantee of continued operation had been made, i t i s unlikely that the industry could have 3 6 0 Statements by Mr. C. Pinette, Mr. M. Rustad and Mr. Go Caine indicate that the minimum size of m i l l that can i n s t a l l a barker and chipper is one producing 10 to 15 million feet of lumber annually. Personal interviews, March, 1966„ 116 met the market and labour demands. With long-term planning a possibility, the integration of wood conversion from cutting through sawmilling, drying, planing, packaging and sometimes remote warehousing is a logical method of achieving even greater economies. Savings result from greater management control over existing capital investment, and from an improved product flow from start to f i n i s h . These same economies are sought by the pulp mills by the integration of a l l manufacturing processes. Forest management policy and again economies of production are leading to greater specialization i n the industry. The introduction of smallwood u t i l i z a t i o n is encouraging the growth of permanent mills which process small diameter logs. These stud or scrag mi l l s , as they are called, usually mass-produce a single dimension of lumber. The cutting of either smallwood or large timbers requires equipment which becomes uneconomical i f large volumes of suitable timber are not available. The new "chip-n-saw" machine, for example, handles only 37 a llj-inch diameter of log or less. Forest management policy has enforced f u l l u t i l i z a t i o n of resources by a l l conversion plants. M i l l s that are too small to i n s t a l l f a c i l i t i e s for the manufacture of waste material are being forced to close. At the same time, u t i l i z a t i o n standards are encouraging the integration of larger units so that the 37. The Bri t i s h Columbia Forest Industries 1965-66 Yearbook, p. C l l c per cent wastage can be lowered i n a l l manufacturing phases. The net structural effect of a l l three factors has been to create a lumber industry i n which a smaller number of operators are producing a greater volume and diversity of lumber products, as well as saleable waste products. Factors encouraging changes i n location, (a) lumber recovery. The areal concentration of conversion units summarizes these structural changes. F u l l u t i l i z a t i o n , necessitated by both forest management policies and market demands, has meant that each log transported from the woods contains a decreasing proportion of waste material. This factor has reduced the relative importance of log transportation costs. With the lumber recovery factor at 50=60 per cent during the 193>08s, i t was economically unfeasible to move logs. In 1966, eighty per cent or more of the log can be recovered in saleable products and the additional 3 8 cost incurred by log transport can be offset. The introduction of the heavy duty diesel logging truck i s a second factor permitting the long distance movement of logs. The gas trucks of the early 1950!s had prohibited long distance hauling. The combined effect of the higher wood recovery and transportation technology changes has been an increase i n the maximum hauling distance from 15 miles i n 19$k to a 3 8 0 See Chapter 17, p,101 for cost differences existing between transportation of lumber as compared to logs. 118 39 100=*nile distance i n 1966. This increase has permitted the intro-duction of centralized conversion plants at railhead locations. (b) Year-round operations. To keep the per unit cost of production as low as possible, the conversion plants of 1966 must operate on a year-round basis. Locating the m i l l i n an area with various services such as f i r e protection or repair services close at hand, lessens the probability of a prolonged closure. The seasonal nature of roads in the North- Central Interior i s a second factor. The flow of lumber from an integrated operation located i n the "bush" is directly affected by "break-up" i n the spring and "freeze-up" i n the f a l l , A centralized m i l l with an inventory of logs i s not directly affected by the seasonality of trucking services, (c) Accessibility to timber supplies. A plant located i n a centralized position permits access to a wide range of forest resources. This is particularly important for specialized operations such as plywood or stud mills which use only a small per cent of any given timber stand. The m i l l can receive logs from a number of scattered stands rather than from a single.source. In addition, the logs can be sorted and directed to the appropriate manufacturing process. Consequently, the Weldwood plywood plant in Quesnel draws i t s log 39. Estimates given as to the "maximum economic distances logs could be hauled" varied from 60 to 120 miles. The farthest distance logs are being transported known by the author is 100 miles. More common maximum distances are 75 miles. 119 supply from six different public sustained yield units. (d) Labour S t a b i l i t y and accommodation. Labour s t a b i l i t y is an important factor favouring urban locations for plants. The m i l l of the 1950's required neither a large nor s k i l l e d labour force. For efficient operation the highly capitalized sawmill, plywood plant and pulp m i l l of the I96011 s need large pools of s k i l l e d labour. It has become impossible to engage and retain s k i l l e d men i n operations 40 remote from urban centres. A more stable and dependable labour force results when employees can l i v e at home with their families and enjoy the benefits of an urban l i f e . In addition to coping with labour problems, entrepreneurs of outlying mills must provide room and board f a c i l i t i e s for their employees. The cost of operating a cookhouse and bunkhouses has been estimated at $1.00 per M„ bd. f t . Ill of lumber cut. An urban location eliminates these extra costs 0 (e) Marketing and shipping. Finally, factors favouring centralized locations are benefits realized from the marketing and shipping of products. A railhead location provides access to a wider market for waste products, namely pulpwood chips, sawdust and 40. Statement by Mr. H„ Jacobson, personal interview, March 1966. 41. Statement by Mr. C. Pinette, personal interview, March, 1966. 120 1*2 hog fuelo If a conversion plant is not on the r a i l line or within a few miles of a pulp mill, i t is unlikely that chips could be sold profitably. In addition, the entrepreneur is able to keep in much closer contact with wholesalers and is able to f i l l orders more rapidly from a more accessible location. In view of the competitive nature of the industry today, this contact is looked upon as a critical factor. The higher recovery of saleable wood products and changes in transportation technology, together with the need for a year-round operation and a stable labour force offer explanations for the growing areal centralization of conversion plants in the North Central Interior, Lesser economies realized by the mills from not providing housing facilities, from gaining access to a wide range of raw materials and from using ancilliary amenities of urban centres (such as electricity, fire protection, machinery repair services and tradesmen in related occupations) have also influenced the entrepreneurs11 decision to relocate operations. It is suggested that the influence of these variables will increase in strength and result in further areal concentration of conversion units 0 ll2. It is probable that some of the pulp mills will be purchasing hog fuel from the sawmills in the future. Hog fuel is waste material unfit for pulp manufacture. It contains bark as well as wood waste and is used primarily as a fuel, h 3 o Statement by Mr, H, Jacobson, personal interview, March, 1966. CHAPTER V SUMMARY AND CONCLUSIONS Per i p h e r a l l y located raw material supply areas respond to ex-t e r n a l forces such as market demands, c a p i t a l supply and changing economic conditions. These are not uniform f o r c e s , but vary over time. Their t o t a l e f f e c t i s to change not only the r e l a t i o n s h i p of the supply region to other producing and consuming regions, but to i n i t i a t e a gradual evolution of s p a t i a l and corporate r a t i o n a l i z a t i o n within the supply region i t s e l f . As general economic conditions change, a resource industry adjusts u n t i l a new equilibrium i s attained. In the f o r e s t industry, the raw materials, the basic manufacturing processes and the products have remained v i r t u a l l y unchanged. Adjustments i n the structure and l o c a t i o n of the industry have res u l t e d from changing f o r e s t product supply and demand conditions, and from changing economic conditions within the region. By following the North Central I n t e r i o r through i t s four basic periods of development, i t has been possible to i l l u s t r a t e a p a r t i c u l a r s e r i e s of demand changes and adjustments within an industry-region. Before 1900, the world demand f o r lumber was not s u f f i c i e n t to stimulate the development of a f o r e s t industry i n a remote area l i k e North Central B r i t i s h Columbia. The timber supplies of the North Western States, of coastal B r i t i s h Columbia and of the Southern I n t e r i o r of the province were adequate to meet current demands. 122 Settlement of the p r a i r i e provinces and the apparent end of alternate supplies of timber changed t h i s s i t u a t i o n and resulted i n the establishment of speculative claims on forest land, together with the building of a few conversion plants i n prime timber areas along the new railway route. The demand f o r timber products from the region abruptly halted with the outbreak of World War I , however, and the North Central I n t e r i o r was l e f t r e l a t i v e l y unchanged. The supply and demand conditions did not change s i g n i f i c a n t l y during the 1920's and 1930's. The world economy stagnated and major investments of a l l kinds were halted. The productive capacity of the region and abundant resources were under-utilized because of the depressed world demand and alternate supplies i n other timber areas. Irregular plant operation, no speculative cutting, no technological improvements and r e s t r i c t i o n of the areal spread of operations constituted the adjustment of the region, to these conditions. The second world war and the post war years were characterized by a demand f o r lumber greatly i n excess of the world productive capacity. This change i n demand, coupled with i n s u f f i c i e n t invest-ment c a p i t a l , labour and equipment f o r the development of large-scale operations, resulted i n the rapid expansion of a large number of small, seasonal producers into a l l accessible parts of the North Central I n t e r i o r . An increasing but diversifying demand, the enforcement of 123 specific management policies for the ut i l i z a t i o n of forest resources, and competitive marketing conditions are external forces characterizing the l Q60's. Rising labour costs and the availability of capital for investment have again changed the economic conditions within the region. The adaptions of the industry have been corporate integration, the development of large-scale production units, the diversification of production and the areal centralization of conversion units. The evolution of the forest industry in North Central Interior Br i t i s h Columbia demonstrates several basic principles of development and location. The trend in recent years has been for industries to be less seriously affected i n their location by the location of their raw materials. The forest industry-region discussed i n this thesis, however, has been typical of resource industries engaged in the i n i t i a l extraction and processing of products in which the raw material pro-curement costs have remained c r i t i c a l locating factors. That the forest industry (and other resource industries i n which the materials lose considerable weight and/or bulk during manufacturing) is attracted to the site of i t s raw materials was established at the outset of this examination. Two further generalizations can now be made concerning the type of development and spatial pattern which characterize the resource industries located i n raw material supply or resource regions. A distinction must f i r s t be made between a resource industry located in a region of balanced economic growth and a resource industry located i n a resource region. In the case of the former the market and 12U the supply region may be the same area; while i n the case of the latter the supply and market regions are distinct entities. I t is evident from this study that the demand factors for a resource product which originate within the resource region are not important in determining the development of that resources. In a l l such cases the demand area i s significantly larger than the supply area so that national or world aggregate demand looms important. The development of the industry i s , therefore, determined by general economic conditions and the world supply and demand situation for the product, and not by regional or local forces. This principle has conditioned the develop-ment of many resource industries, in particular those connected with the mines, farms and forests. Thus, in'the North Central Interior the local conditions have been influenced by provincial and national developments, which have i n turn resulted from world economic forces. Secondly, a resource region responds to these external forces at a given level of demand at a given price. The level of economic development within a region is determined by the capability of resource and factory management to adapt their processes and products so that they can compete at the prevailing price level. A l l factors of technological improvement, corporate adaptations, maximum raw material ut i l i z a t i o n and the development of investment-generating forest management policies i n the 1960's led to a situation i n which the North Central Interior could compete. The timing of changes i n price and demand, coupled with the changing economic environment of the 125 region, determine the time at which changes in industrial location occur. The spatial pattern i s , therefore, a dependent variable, reflecting the entrepreneur's concept of best coping with changing supply and demand situations. Future adjustments i n both the structure and location of the forest industry in North Central Interior B r i t i s h Columbia can be expected. It i s anticipated that the economic demands presently influencing the industry w i l l not change i n the immediate future, but that the rationalization of producers and manufacturing processes w i l l continue u n t i l a new equilibrium is attained. At this point the industry w i l l be highly centralized into a few conversion centres, integrated to a significantly greater degree, and dominated by a few large corporations. BIBLIOGRAPHY A. BOOKS The B r i t i s h Columbia Forest Industries 1965-66 Yearbook. Vancouver? M i t c h e l l Press Ltd., 1965. Conversion Factors f o r P a c i f i c Northwest Forest Products. Seattle, Washington: In s t i t u t e of Forest Products, 1957» E l l i o t , Gordon R. Quesnel, Commercial Centre of the Cariboo Gold Rush. Quesnel, B.C.: Cariboo Observer Ltd., 1956. E s t a l l , R.C, and Buchanan, R.0„ I n d u s t r i a l A c t i v i t y and Economic  Geography. London: Hutchinson & Co., 1961. F r i e d r i c h , C.J. A l f r e d Weber's Theory of Location of Industries. Chicago: University of Chicago Press, 1929. Grain Trade Yearbook. Winnipeg, Manitoba: Stanford Evans S t a t i s t i c a l Service, XVII and XXXVI, 1936 and 1951. Guthrie, John A. and Armstrong, George R. Western Forest Industry. Baltimore: The John Hopkins Press, 1961. Haig-Brown, Roderick. The Li v i n g Land. V i c t o r i a , B.C.: The B r i t i s h Columbia Natural Resources Conference, 1961. Hardwick, Walter G. Geography of the Forest Industry of Coastal B r i t i s h  Columbia. Canadian Association of Geographers, B r i t i s h Columbia D i v i s i o n / Occasional Papers i n Geography, No. 5» 1963. Hoover, E.M. The Location of Economic A c t i v i t y . New York: McGraw-H i l l , 19ho\ Isard,-Walter. Location and Space Economy. New York: John Wiley and Sons, Inc., 1956. Losch, Ac Economies of Location. New Havens Yale University Press, 195h Lower,:A.R.M. The North American Assault on the Canadian Forest. Toronto: The Macmillan Company of Canada Ltd., 1938. MacGibbon, Duncan A. The Canadian Grain Trade 1931-1951. Toronto: University of Toronto Press, 1952. M i l l e r , E. W i l l a r d , A Geography of Manufacturing. Englewood C l i f f s , New Jersey: Prentice-Hall, 1962. Runnals, R.E. A History of Prince George. Vancouver: Wrigley Co., 191*6. B. PUBLICATIONS OF THE GOVERNMENT B r i t i s h Columbia Department of Lands and Forests. Annual Report(s) of the Forest Service. V i c t o r i a , B.C.: King's P r i n t e r , 1917-1965. Flann, I.B. "How Sawmill Chips are Moved i n Eastern Canada,'' Forest Products Research Branch, Department of Forestry, Vancouver, B.C. Contribution No. P -86, 1961;. McBride, C.F. "Barking and Chipping i n the Interior of B r i t i s h Columbia," Forest Products Research Branch, Department of Forestry, Vancouver, B.C. Contribution No. V-1013. Mulholland, F.D. The Forest Resources of B r i t i s h Columbia, 1937. V i c t o r i a , B.C.: King's Pri n t e r , 1937. The Pulp and Paper Industry of B r i t i s h Columbia. I n d u s t r i a l Development Department, B r i t i s h Columbia Hydro and Power Authority, Vancouver, B.C., 1966. Sloan, Gordon McG. Royal Commission on the Forest Resources of B r i t i s h  Columbia, V i c t o r i a , B.C.:: C.F. Banfield, P r i n t e r to the King, 19U5. Sloan,-Gordon McG. The Forest Resources of B r i t i s h Columbia, 1956. V i c t o r i a , B.C.: Queen's P r i n t e r , 1957 (2 v o l s , ) . ~ Transcript. Hearings of the Royal Commission Inquiry into Forest Resources, V i c t o r i a , B.C., 1957. Whitford, H.N. and Craig, R.D. Forest Resources of B r i t i s h Columbia. Ottawa, Ontario: King's P r i n t e r , 1918. C, PERIODICALS Bone, Robert M. "A Geographical Appraisal of the Soviet Forest Resource, The Forestry Chronicle, XLI (September, 1965), 3U5-351. Boas, CM. "Locational Patterns of American Automobile Assembly Plants, 1895=1958," Economic Geography, XXXVII (July, 1961), 218-230. B r i t i s h Columbia Lumberman, Vancouver, B.C.: Timber Industries Journal Ltd., Volumes XIV, XXVI, XXVII, XXVIII. "Bulk Scaling Logs by Weight," B r i t i s h Columbia Lumberman, L, (February, 1966), 20-24. Clevinger, W.R. "Locational Change in the Douglas F i r Industry," Yearbook of the Association of Pacific Coast Geographers, XV, 1953, 23-31. Dinsdale, E.M. "Spatial Patterns of Technological Change: The Lumber Industry of Northern New York," Economic Geography, XXXXI (July, 1965), 252-274. Erickson, K.A. "Isochrons of Logging on the Pacific Slope of Oregon, 1890-1940," Yearbook of the Association of Pacific Coast  Geographers, XIX, 1957, 19-24. "Fort St. John Lumbert Amazing Growth of a Bush M i l l , " The Truck  Logger, XXII (January, 1966), 80-83. Fulton, M„ and Hock, L. "Transportation Factors Affecting Location Decision," Economic Geography, XXXV "(January, 1959)* 51-59. Karan, P. "Changes in Indian Industrial Location," Annals of the Association of American Geographers, LIV (September, 1964), 336-354. Harris, C. "The Market as a Factor i n the Localization of Industry i n the United States," Annals of the Association of American  Geographers, XLIV (December, 1954), 315-348. Hunter, Helen. "Innovation, Competition and Locational Changes in the Pulp and Paper Industry, 1880-1950," Land Economics, XXXI (November, 1955)* 314-327. Linge, G0J.R. "The Diffusion of Manufacturing in Auckland, New Zealand," Economic Geography, XXXIX (July, 1963), 23-39. Lonsdale, R.E. "Siberian Industry Before 1917J The Example of Tomsk Guberviya," Annals of the Association of American  Geographers, LIV (December, 1963), 479-493. ~ Lumberman and Contractor, Vancouver, B.C»: Business Publications of B.C., Volumes III (June, 1906) and IV (June, 1907). Pred, A, "Industrialization, I n i t i a l Advantage and American Metropolitan Growth," Geographical Review, LV (February, 1965)* 158-185. Pred, A. "The Intra-Metropolitan Location of American Manufacturing," Annals of the Association of American Geographers, LIV (June, 196U), 165-180. Rogers, H.B. "The Changing Geography of the Lancaster Cotton Industry," Economic Geography, XXXVIII (October, 1962), 299-311*. Stafford, H.A. "Factors in the Location of the Paperboard Container Industry," Economic Geography, XXXVI (July, I960), 260=67. Stokes, Evelyn. "Kauri and White Pine: A Comparison of New Zealand and American Lumbering," Annals of the Association of American  Geographers, LVI (September, 1966), i4llO-li50. Western Lumberman, Vancouver, B.C.: Business Publications of B.C., Volumes VII (April, 1910), XII (January, 1915),"XIII (July, 1916), XIV (February, June, September, 1917), XVI (March, 1919) and XVIII (April, 1921). Williston, R.G., Minister of Lands, Forests and Water Resources. "Address to the 56th Western Forestry and Conservation Conference, December, 1965," The Truck Logger, XXII (January, 1966). Yardly, R.K. "Truck-Mounted Arches in British Columbia Northern Interior," British Columbia Lumberman, LIV (November, I960), 25-26. D. UNPUBLISHED MATERIALS' "Agreements Between the Members of the Northern Interior Lumbermen's Association and International Woodworkers of America, Local I - I 4 2 I 4 , " Prince George, B.C., September 1, 1953? 195h, 1956, 1958, I960, 1962, 196lt, 1965. British Columbia Department of Lands and Forests. "Allocation of Allowable Cut in Public Sustained Yield Units as of November, 1961 and January, 1966," Prince George, B.C. (Mimeographed). British Columbia Department of Lands and Forests. "Circular Letter to a l l Timber Sale Licencees; Re: Close Utilization Policy, 1966," Victoria, B.C. (.Mimeographed). Brit i s h Columbia Department of Lands and Forests. "Forest Management Report, Fort George Forest D i s t r i c t , " Victoria, B.C., 1925. Br i t i s h Columbia Department of Lands and Forests. "Sawmills and Planing M i l l s by Ranger District , " Victoria, B.C., 1955 and 1961*. (Mimeographed). "Commodity, Application and Rates i n Cents per 100 lbs.: Re:: Wood Chips for Manufacture and Reshipment via Canadian National Railway," Ta r i f f Bureau, Canadian National Railways, February, 1966. (Mimeographed). "A Counter Proposal to the Honourable R.G. Williston, Minister of Lands, Forests and Water Resources, Province of British Columbia for the Establishment of a Pulp M i l l i n the Vici n i t y of Quesnel," Cariboo Pulp and Paper Co. Ltd., December, 196h. Dominion Bureau of St a t i s t i c s . Price l i s t of Lumber i n Bri t i s h Columbia, 1915-1962. (Mimeographed). Francis, R.J. "An Analysis of British Columbia's Lumber Shipments." Unpublished Master's Thesis, the University of British Columbia, Vancouver, B.C., 1961.' Lawrence, J. "Markets and Capital: A History of the Lumber Industry of British Columbia, 1778-1952," Unpublished Master's thesis, the University of British Columbia, Vancouver, 1957. "Logging Fea s i b i l i t y Study of the Fraser Lake-Francois Lake Area for the International Pacific Salmon Fisheries Commission," Gormely Forest Services Ltd., Vancouver, B.C., 1966. Munro, G.R. "The History of the British Columbia Lumber Trade, 1920-19li5>" Unpublished Bachelor's Thesis, the University of British Columbia, Vancouver, 1957. Paul, N.V. "Pacific Great Eastern Railway Company Wood Chip Commodity Rates," Pacific Great Eastern Railway, Prince George, B.C., March, 1966. Proceedings of Public Hearings in "The Matter of the Proposal Made by Canadian Forest Products for a Pulpwood Harvesting Area to Include the Following Public Working Circles or Sustained Yield units i n the Vi c i n i t y of Prince George, namely: Parsnip, Crooked River, Carp, Stuart Lake, Mechato, Westlake, Naver, Big Valley, Willow River," Prince George, B.C., November 22, 1962. Proceedings of Public Hearings "In the Matter of the Proposal Made by North-wood Mills Ltd. for a Pulpwood Harvesting Area to Include the.Following Working Circles ar Sustained Yield Units i n the V i c i n i t y of Prince George, namely Monkman, Purden, Longworth, Bowron, Robson, Canoe," Prince George, B.C., May, 196lu (Mimeographed). Pulpwood Harvesting Area No. 1 Agreement between the Minister of Lands, Forests and Water Resources and Prince George Pulp and Paper Co. Ltd.," Victoria, B.C., November, 1962. (Mimeographed). E, PERSONAL INTERVIEWS Caine, R.G., President and Manager, Merton Lake Lumber Con Ltd,, Prince George, B.C., March, 1966, Dressier, H,C,, Manager, A„L, Patchett & Sons Ltd., Quesnel, B 0C 0, March, 1966. Dybhavn,"R., Manager, Strom Enterprises Ltd., Prince George, B.Cj, March, 1966. Gallagher, R.J„, Manager, Northern Interior Lumbermen's Association, Prince George, B.C„, March, 1966. Hamilton, T., Forest Ranger, Department of Lands and Forests, Williams Lake, March, 1966. Jacobson, H,M,, General Manager, Jacobson Brothers Forest Products Ltd,, Williams Lake, B.C., March, 1966, Keefe, R,, Forest Ranger, Department of Lands and Forests. Quesnel, B.C., March, 1966. K i l l y , Ivor., President and Manager, Ferguson Lake Sawmill Ltd,, Prince George, B.C., March, 1966. Moore, D., Chip Buyer and Quality Control, Prince George Pulp and Paper Co, Ltd,, Prince George, B.C. March, 1966. Pinette, C , General Manager, Pinette & Therrien Planer Mills Ltd., Williams Lake, B.C., March and August, 1966, Rustad, M., President and Manager, Rustad Planing Mills Ltd,, Prince George, B.C., March, 1966. Sterling, W„, Manager, Cariboo Division of Weldwood of Canada Ltd,, Quesnel, B.C., June, 1966, 

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