'We knew this was coming': Manitoba lumber company prepared for Canada-U.S. trade spat months ago

As Canada's lumber industry reacts to punishing duties imposed by the United States on softwood lumber exports this week, at least one Manitoba company says it started preparing months ago.

Spruce Products Ltd., a softwood lumber producer and wood products manufacturer based in Swan River, Man. — about 400 kilometres northwest of Winnipeg — has been shipping to Canadian and international markets since 1942.

However, one country it has not been shipping to lately is the U.S., which announced on Tuesday that it's levying countervailing duties — import taxes imposed to level the playing field when a country believes that another country's product is unfairly subsidized — of between three and 24 per cent on Canadian imports.

"We knew that this was coming, as did all lumber producers in Canada, and so in anticipation of it we had stopped shipping to the U.S. in late fall of 2016," company president Ward Perchuk said Wednesday.

"We were fearful of a retroactive duty and we weren't sure when it could come into play."

Perchuk said a large share of Spruce Products' volume was shipped south about a decade ago, but in recent years it hasn't shipped "a consequential amount at all" to the U.S., as the company has been mainly working with domestic markets.

"We think we're prepared for it," he said. "We don't have any visions of any layoffs at this point, and certainly [we] have to be mindful of our costs and I'm sure we can keep this operation going forward."

Spruce Products employs about 100 people directly and up to another 150 on contract, Perchuk said.

The forestry industry in Manitoba generated more than $60 million in revenue in 2014, while the wood product manufacturing industry generated over $414 million, according to government numbers.

The pulp and paper product manufacturing industry generated almost $345 million in 2011, says the province, citing Statistics Canada data.

In terms of trade, the province says its forestry-related domestic exports in 2015 totalled more than $391 million, while its imports totalled over $508 million.

U.S. is 'being a bully,' says MP

Tuesday's announcement marks the latest chapter in the decades-old softwood lumber debate between the two countries, stemming from a long-standing dispute over whether Canadian companies' access to public land constitutes a subsidy.

But Manitoba Conservative MP Robert Sopuck, who represents the Dauphin-Swan River-Neepawa riding, said the argument that Canadian softwood lumber is subsidized and therefore cheaper than U.S. lumber is "nonsense."

"I used to work for the Pine Falls Paper company and even though we logged on Crown land, we paid for fire protection, we paid a stumpage fee, we paid for reforestation and so on. So this notion that Canadian lumber is subsidized is nonsense," Sopuck said.

"By the way, every time the dispute went to trade tribunals, be they a NAFTA or a WTO adjudication, Canada always won. So the U.S. in this case is just being a bully."

Perchuk said while his company is prepared for the latest trade spat, he added that the Canadian lumber industry overall needs American markets — and the U.S. needs Canadian lumber, too.

"On the U.S. side there's simply more demand than supply, so they rely on Canadian lumber," he said. "The irony is the very people that voted for the current president will consequently pay more for lumber with this trade action."

Perchuk said he expects to see lumber prices in Canada slip in the month ahead, with more production staying on this side of the border.

Sopuck said he's already heard concerns from people in his constituency, particularly in the Swan River area, about the potential impact of the U.S. decision on forestry operations.

"It's a thriving little community based on forestry, agriculture and tourism and, again, that kind of diversification is what you need to have rural communities thrive. But they're all important and if one suffers, the entire region suffers," he said.

Perchuk said he believes the federal government is doing all it can to manage the softwood lumber file, but Sopuck said the Liberals could have started talks on the issue earlier.

Sopuck said he'll be in Swan River on Saturday to meet with community leaders and producers.