U.S. softwood ruling leads to Canadian layoffs

Weyerhaeuser Co. posted layoffs in its western Canadian timber operations on Thursday and observers have warned they could be just the beginning of a long list of job losses caused by hefty new U.S. duties on Canadian softwood lumber. The U.S. company, which has extensive sawmill operations in Canada, said cedar production at three mills in coastal British Columbia will be idled, at least temporarily, beginning next week in a move that would effect about 1,000 workers. The U.S. Commerce Department, acting on a complaint by a group of U.S. lumber producers that say their Canadian rivals are subsidized, last week slapped a 19.3% duty on imports of Canadian softwood such as pine, spruce, cedar and fir. Canada, which supplies nearly a third of the softwood lumber sold for building construction in the United States, has strongly denied the subsidy accusations and vowed to fight the duty order in U.S. courts. In announcing its mill curtailment, Weyerhaeuser echoed a complaint from other producers that red cedar should not have been included in a duty order primarily designed to protect U.S. producers of less valuable softwood. "Cedar is not a structural product. It's a high-value, appearance-grade product.

The percentage-based duty announced last week will disproportionately damage cedar and other higher-value coastal products,'' Weyerhaeuser said in a statement. Weyerhaeuser also exports other types of softwood lumber from British Columbia. The company will idle mills in Vancouver, New Westminster and Port Alberni for at least two weeks. They have an annual production capacity of 275 million board feet, up to 80 percent of which is shipped to the United States. Industry observers have predicted the duties will lead to sawmill shutdowns if Canadian producers - especially smaller firms -- are unable to pass the cost to consumers or post the larger bond payments that will be required to continue shipping to the United States while the trade dispute drags on. British Columbia-based Doman Industries Ltd. has warned it could soon cut as many as half of its 4,000 employees because of the duties, which came at time when the company was already struggling with massive debt. Some producers curtailed output in the weeks leading up to the duty announcement. The earlier curtailments were designed, in part, to counter U.S. producers' argument that the end of a previous trade accord between the United States and Canada on softwood trade would lead to a "wall of wood'' from Canada. But U.S. trade official accepted that argument and made the duty retroactive to mid-May.