04/26/2017 13:13 EDT | Updated 04/29/2017 00:53 EDT

Canada's small, medium lumber producers to feel U.S. retribution the most

OTTAWA — Some softwood lumber companies could begin issuing layoff notices as early as next week as they begin to feel the impact of punishing new tariffs President Donald Trump's government has imposed on Canadian softwood, a B.C. MP warns.

Conservative MP Todd Doherty says several small and medium-sized businesses are already considering the steps they might be forced to take as early as next Monday.

Several, Doherty warned, aren't sure how they will make the immediate cash deposits that will come due next week to pay for the new tariffs.

"It's a dark day and it's going to have some very serious impacts and right away," he said in an interview. "One of the companies we have spoken to says as early as Monday they will be looking at what they need to do."

The U.S. Department of Commerce said this week it would subject Canadian lumber imports to tariffs ranging from three to 24 per cent. Canada's wood comes mostly from Crown land, with artificially low prices giving Canadian companies an unfair advantage, the U.S. administration alleges.

Canada and the industry say the U.S. is completely wrong and that the U.S. Lumber Coalition is not using the same types of logs for comparison when arguing Canadian prices are lower.

The vast majority of Canada's softwood operators — small and medium-sized businesses — will also be forced to pay the duties retroactively on any shipments made to the U.S. since Feb. 1.

Canada's largest companies are exempt from that retroactive payment for reasons nobody in the industry can yet explain.

"I don't understand it," said Doherty. "They know also this will put small-medium producers out of business."

Bill Kordyban's family has been in the softwood industry since 1951. His company, Carrier Lumber, has to spend millions of dollars next week on the retroactive tariff.

They expected the tariffs, Kordyban said, but not the decision to exempt big companies from the retroactive charges.

"It puts us at a huge competitive disadvantage," Kordyban said from his office in Prince George, B.C..

"The fact that Trump is targeting the small and medium-sized companies and basically letting the large multinationals go is a real ... kick in the teeth."

Kordyban said his mill in Big River, Sask., will take a bigger hit because it sends as much as 70 per cent of its production to the U.S., and can't really ship to other markets in Asia given where it's located.

He said the larger companies are somewhat insulated from the financial hit, since they have bigger balance sheets and many own U.S. sawmills that could help them diversify their operations if U.S. prices go up.

Canada's top five forestry companies account for 43 per cent of the softwood production in Canada.

During the last softwood lumber dispute, Canada shed 20,000 forestry jobs between 2000 and 2006, and about 400 sawmills closed entirely between 2004 and 2009.

Derek Nighbor, president of the Forest Products Association of Canada, said it's true small companies are the least prepared to manage the hit, but even the big operations will be hurt, he warned.

"They are going to have some tough decisions to make and soon," said Nighbor. "Everyone is going to be in cost-management mode."

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