T his week:

ae ation,
“vertical and
_ horizontal

: by Ted Strachan.

The general public. doesn’t often
get: involved in forestry. issues -
‘Not because they don't:care - it’s
__ just that the jargon is often confus-
ing and many people have diffi-
-Culty -understanding- the. details
behind the those issues.

. . Last week, for example, we

closed by suggesting the forest
industry might be able to triple the
value of their production simply by
using good marketing practices. In

other words, it’s possible to get

more money out of the trees we're
. cutting right now. Or, the same
amount of money by cutting fewer
. trees. Good marketing practices,
then, could result in more forest-
related jobs and at the same time
provide the means to reduce or
possibly even avoid the economic
devastation of the Fall Down
‘Effect.

This might sound great... until
you consider the obvious question:
"What good marketing practices?”
You might ask a professional to
elaborate, but if you do, you'll
‘probably witness a number of
_ descriptive hand gestures during an

.plnation of of the he virtues of hori-
* zontal. and: ‘vertical.: integration...
This, like an explanation of double
entry. bookkeeping by an- :econ- |
omics professor, will -probably. j-
leave you more ‘confused ‘than =

when you began. .
The fact is, though, the concept

of horizontal and. vertical integra--
‘tion isn’t particularly mind-boggl-

ing and it’s certainly not new. If -
you've heard of secondary manu- -

facturing or remanufacturing, you
probably already know what hori-
zontal integration means. It simply
means broadening the scope of the
same industry to produce a greater -var-

iety of end products than we do

now.
In other words, why produce

nothing but 2x4’s when we can go -
one step further and produce door -
‘frames from a resource we already

have? And why produce nothing
but door frames when we can
produce the doors as well? The
end product is still wood but is
obviously much higher in value...

Vertical integration is just as -

simple. The only difference with
vertical integration is that the end
product is something different than

u4

He ta ia a *. «

Terrace Review —

- Wednesday, March 7, 1990 A’7

—

wood; ds pulp and paper. for example,
‘We. already Produce. pulp, of

course, but why not turn it into.
paper. instead of exporting it?
There are two or three paper mills
in B.C., but their primary produc-
tion is newsprint: Compare that

with the value of specialty prod-.

ucts such as computer or. coated
paper. ‘Coated paper is the. glossy

kind you find in some magazines. -

With very’ few exceptions, the
forest industry in B.C. manufac-
tures only larger cuts of lumber. In
general, our products are no
shorter than six feet and no smaller

-than 1x3 stock. Our mills are

geared to mass-produce basic
products at the lowest possible
cost, and whatever remains is chips
or hog fuel.

Countries like Japan, however,
will take the same tree that goes
into a B.C. mill and produce mar-
ketable products as small as a

Tea et eg yuirt BLE Et es A taee tha

VICTORIA — You be the
judge.

Regular readers will already
know my position on the
general oleaginous nature of.
former Cabinet minister Bill
Reid, Surrey’s best-known
epitome of a questionable used-
car salesman.

Now, with the latest scan-
dalous revelations from the
Comptroller-General about the
‘improper and irregular’’ use
of GO B.C, funds, I'll reserve
further personal opinion, and
leave it to you, dear readers, to
assess,

Brian. Marson, the respected
and capable C-G asked to
‘probe a $277,065 grant-to ihe
Semiahmoo House Society, had
the following to say about Mr.
Reid’s conduct in the case (and
remember, Reid was B.C.’s
Provincial Secretary and
Tourism Minister at the time):

@ ‘‘The grant... was improper
because of the close undis- -
closed relationship of the -
Minister with the‘ principals of
Eco-Clean Waste Systems Ltd.,
and ‘the manner'in whicha .:
$50,000 contribution to the: «
capital costs of Eco-Clean was
made.*’ (Eco-Clean’s principals
were:Reid’s-campaign: manager.
George Doonan and family - :

The view from
Victoria —

by John Pifer

friend Bill Sullivan, who had
been all but a son-in-law to the
then-Minister).

@ ‘Irregularities include the
decision by the Minister to
make a grant to the society,
even though they had not for-
mally applied for one.’’(!)

@ ‘The evidence suggests that
the Minister had an unusually
high degree of personal in-
volvement in arranging this
grant. GO B.C. administrators
did not receive all of the docu-
mentation until after the grant
was made.”’

@ ‘The Minister... chose to
disregard any impropriety in.
his dealings with Doonan and
Sullivan.”

@ ‘‘Eco-Clean’s objective was
that the three-bin (recycling),
system be designated by the
provincial government (i.e.
Reid) as the ‘system of choice’
for all municipalities. (They)
would have been put in the.
position of being the sole B.C.
supplier of the bins re-
quired.” (1) °

Now, if that isn’t enough to
help you in deciding how best
to label Reid’s conduct, it
should also be noted: that Reid
approved a full $23,000 grant
to the same soviety for com-
puters, when usually only one-

third of the total is allowed by
existing guidelines.

Mr. Marson generously
declines to call that move im-
proper, but did find it to be
“unusual.”’ (!)

It should be noted that an
audit of 208 GO B.C. grants
totalling more than $35 million
(yes, million) authorized by
Reid identified no further cases
of impropriety, says Marson.

Reid on many occasions ‘‘ex-
ercised his broad discretionary
powers to award grants which
did not meet published
guidelines’’ in those cases, too,
he adds.

Marson’s entire report show-
ing how the former minister
bypassed Treasury Board and
his own ministry to deal-per-
sonally with the $277,065 grant
to his buddies is a damning in-
dictment of the system.

For too long too much
discretion has been placed in
the hands of senior politicians
to dole out largesse and lottery
grants without so much as a
‘“by'your Iéave’’ to propriety
and fair play.

It is to be hoped that the
Reid caper will-prompt tighten-
ing up of those rules ands.

it.

regulations: But don’ count on le

half-inch square and six inches
long. And the products they pro-
duce are far more valuable’ than
our own. While we force feed
mills and accept whatever comes
out the other end, the Japanese
produce clear lumber that is free of
knots and imperfections. Lumber
produced in our own mills is only
‘about five to 10 percent clear. And
in the orient. the small amount of
waste that is left — knots, rot and
sawdust — is used as fuel in Japan
and tumed into particle board in
China.

If we were to follow this
example in B.C., the dollar value
of a single tree would rise dram-
atically. On the average the prod-
ucts we now produce have a mar-
ket value of about $450 per 1,000
board feet. But if we improved our
product so it was 30 to 50 percent
Clear, that value could jump to

$900 per 1,000 board feet..-And.if .
we took the: final step and kiln
dried our lumber and turned the ~~
less perfect pieces into smaller |

dimension lumber, we could pro-
duce a: product worth $1,350 per

1,000 board feet. At the same time, —
‘we would begin tuming about 85

percent of a tree into lumber in-
stead of only about 50 percent as
weare now, |.

The question of the day, though,

‘is, if we have this potential in our
‘hands why aren’t we using it? Do

we even have enough of a forest
resource left to make it worthwhile
changing our manufacturing and
marketing methods? The answer,
of course, is that we have plenty of
trees left if we begin to use them
wisely now. Next week, we'll
move from the mill to the forest
and take a look at what we have...
and what’s being left behind.

‘Not‘d:single‘senior’Socred: 2:~

has condemned the actions. In.
fact, even Reid’s longtime
friend, Premier Vander Zalm,
appears unable or unwilling to
grasp the blatant conflict of in-
terest involved.

And Reid did his cause and
his party no good at all after
the whole sordid story was re-
vealed, to declare arrogantly
that he was itching to return to
the Cabinet table.

Will he? Well, as one senior
Cabinet minister told me: ‘Do
the words ‘snowball in hell’
strike a familiar note?!”’

A quick word to those who
are predicting a spring pro-
vincial election in B.C. — and
there are many.

They have some intriguing
reasoning, and may — just
may — prove to be right.

The speculators say that
Premier Bill Vander Zalm
pulled off a major media coup
in January with his province-
wide TV presentation of why
he was staying on to fulfill his
goals.

The momentum gained by
that 20-minute free access to all
TV networks has brought the

.gocreds. up :in-the:all-important

public-opinion polls.

It also has prompted con-
siderable feeling among the
public that those party
members, MLA’s, columnists
and commentators who have
been harsh on Mr. Vander
Zalm (I plead guilty) should
lighten up... and so we have,
for now.

But a spring election, no;
this correspondent just does
not believe it. It is most unlike-
ly.

There is too much unfinished
business. The Socreds do not
have the troops, the money,
nor the inclination to do it so
soon. And they view the NDP °
as too eager, too cocky, be- ©
cause they know the earlier it is
held, the better their chances
are.

Methinks you will see a
stormy session of the house (it
begins on April 5), which will
not wind up until mid-July or
early August.

Oh sure, there will be plenty
of sabre-rattling, pontificating
and posturing from both sides,
but no vote until the fall, Trust
me. Place your bets.

_ Aes
(L; LN)

AL)

SJ

Terrace Centennial Lions

resh Shrimp - $3.00 per Ib.
_ Limited Quantity

_. Saturday, March 10

_.. Starting at 10 a.m.

Beside: Petro Canada on 7
_.. bakelse Avenue =" |

ellis Rataner tesorecen strived anedianes! te Ei rteeeie ree ms wes
- io eS “