Land of the bottom line | Lack of visas for Canadian loggers exacerbates already difficult issues in Maine's forestry workforce

Of the 10 cut-to-link machines at Gerald Pelletier Inc., a Millinocket-based wood harvesting company with operations near the Canadian border, three were on stand-by last summer due to a lack of trained loggers to run them. The idle machines, which harvest, de-limb, measure and pile logs for transport, caused a 10%-15% loss in production for nine months, according to Reggie Beaulieu, the firm's controller. In logging, says Beaulieu, "Everyone's job is contingent on the other person. If one isn't there, the other can't ship it out. If there's a piece of the pie missing, everyone else is going to wait."

And, since last year, the missing piece of the pie has been the Canadian workers who make up a significant portion of Maine's logging workforce. Last summer, due to a catch in the federal law that provides visas to temporary international workers, many of Maine's logging contractors were unable to hire the Canadians who have traditionally filled the holes in their workforce. The H-2B visa, or bonded labor, a problem, which also affects Maine's tourism industry, sent a ripple effect through the timber industry. Because Canadians with H-2B visas produce about 40% of the wood harvested annually in Maine, according to Patrick Hackley, northeastern technical division forester for the national Forest Resources Association, production falls without them. As a result, lumber costs skyrocketed. And without H-2B workers, the number of loggers available to harvest the wood that the mills demanded to stay afloat was compromised. "It was a classic supply and demand scenario," says Hackley.

The loggers who were available gained pricing power, with mills paying landowners and contractors pulpwood prices 25%-30% above normal, according to Hackley. Patrick McGowan, the state's commissioner of conservation, reports that the cost of pulpwood ˆ— wood used for paper ˆ— rose to an all-time high of $40-$50 a ton, reflecting the increase in prices for all wood in the forest. That meant landowners gained short-term profits, according to Hackley, but other parts of the supply chain fared more poorly. "Many of the sawmills came very close to closing," he says, adding that the forecast for the 2005 season doesn't look much better. "At this point, we're looking at a repeat of last summer."

Although high prices are good for everyone in the short term, according to Hackley, he says "it's a long-term competitive issue for Maine's mills when they have to pay above and beyond the going rate."

Solving the visa problem, and getting the Canadian workers back into the woods, is a difficult task inextricably linked to the tourism industry's challenges with the visa problem statewide. Sen. Susan Collins recently proposed the Summer Operations and Seasonal Equity Act of 2005, which would exclude from the cap returning workers who were counted against the cap within the past three years. The bill addresses the regional inequities in the current system by requiring that no fewer than 12,000 visas be made available in each quarter of the fiscal year. Any new rules established by her legislation would go into effect for the current fiscal year. (The bill is currently under consideration by the Senate Judiciary Committee.) In the meantime, though, the logging industry is looking at other ways to address its workforce problems, including creating new training programs and considering ways to improve wages.

According to Patrick Hackley, there is a "growing realization by [forestry] industry members that we need to do a better job recruiting our local talent."

Forest for the trees
To understand the impact of the visa problems, it's helpful to understand the timber industry supply chain, which begins with the landowner. According to Peter Triandafillou, vice president of woodlands for Huber Resources, a land management company based in Old Town, a landowner can make a direct sale to a mill, negotiating a price and volume commitment. To harvest the wood, landowners hire contractors, often larger companies that subcontract the job to so-called "owner-operators," loggers and truckers who own and operate their equipment. Landowners with smaller parcels tend to hire a contractor who buys the wood at a net price from the landowner, takes on the market risk and then sells it to the mills.

Until the 1970s logs were moved on the rivers, says Triandafillou. In the St. John River Valley in northwestern Maine, the rivers along the border between the United States and Canada flow north, so Canada received much of the wood harvested in northern Maine due to ease of transport. In essence, it's the region's geography, rather than its political boundaries, that has driven workforce development in the industry. During World War II, for example, when many Maine loggers were sent off to battle, Canadians picked up the slack in the historically unsettled forests of northwestern Maine ˆ— an arrangement that has endured despite protest.

Then, in 1990, Congress passed a law allotting 66,000 H-2B visas nationwide, which made Maine's Canadian loggers legal. (The H-2B is available to temporary international workers in seasonal industries that have recurring labor needs for 10 months or less.) For years, though, far more than 66,000 visas were issued annually, due to a tracking system that could only tabulate the number of visas issued after the fiscal year ended.

For a decade, Maine received visas for more than 900 Canadians for logging positions each year. But after Sept. 11, 2001, the U.S. Department of Homeland Security got serious about monitoring foreign workers. When the U.S. Department of Labor and the U.S. Citizenship and Immigration Service (formerly the Immigration and Naturalization Service) cracked down on the number of allotted H-2B visas last year, Maine's summer logging industry took a hard hit.

The problem comes from a hitch in the way the USDOL doles the visas out. Applications for H-2Bs can only be processed 120 days prior to the worker's employment start date. The USDOL begins accepting applications each year on Oct. 1. With the agency's first-come, first-served process, southern states, with seasonal labor seasons that start well ahead of Maine's, apply earlier and collect most of the visas. This year, all the visas were gone by Jan. 3.

Last year, Maine couldn't bring in any foreign workers from May until October. During that time, says Hackley, Maine's already sparse woods labor workforce lost an estimated 700 Canadians, leaving many contractors near the border in the lurch.

Generation gap
But the H-2B shortage has only exacerbated the fact of the matter, which is that the logging workforce has taken a hard hit in recent years, says Hackley. The shrinking number of loggers is partly a matter of geography. Due to the lack of infrastructure in northwestern Maine, most Maine loggers come from Fort Kent or further, according to Beaulieu of Gerald Pelletier Inc. The company is one of many contractors near the border that rely on Canadians to fill the void that Maine's geography imposes, filling the vacant positions with certified logging professionals from small Canadian towns just over the border. "A person would not drive from Fort Kent to our woods operation," says Beaulieu. "He'd be on the road more than he'd be working."

Another factor in the worker shortage is that logging, traditionally a profession passed down to subsequent generations, is no longer seen as a desirable job, according to Patrick McGowan. An owner-operator in Fort Kent who asked not to be identified agrees. "My dad used to drive trucks. I've been in it for 35 years," he says. "But I'd just as soon [my kids] not work in the woods. Why work 60, 80 hours a week when you can make a better living working 40?"

Rep. Troy Jackson (D-Fort Kent), who is also a logger, says the rising cost of living and high insurance and workers' compensation premiums, combined with fuel prices nearing $3 per gallon, means loggers simply can't afford to stay in business. The economics were apparent last summer, when wages for mechanized operators increased $2-$3 per hour, according to Hackley. The better wages drew many of Jackson's logging friends back into the business for the few summer months bonded labor wasn't available.

But according to a 1999 economic analysis of Maine's logging industry and the bonded labor program by Pan Atlantic Consultants, a Portland market research firm, strong indications exist that "raising wages would not attract enough U.S. workers to the logging industry to meet current labor requirements. Demanding working conditions, commuting distances and other issues mean that the general population views traditional logging work as unattractive, even when it would mean a raise in pay relative to jobs in other industries." (No such extensive analysis has been done on the logging industry since this report, but industry experts say it remains the basis for decision-making and strategic planning.)

Since no one expects the U.S. Department of Labor to raise the bonded labor cap anytime soon, the industry is taking matters into its own hands. According to the Pan Atlantic study, one way to entice young people to the industry is a re-evaluation of the prevailing wage rate, the average wage paid to similarly employed workers in the same field with the same equipment, as determined by state and federal Departments of Labor. (When advertising for contract logging positions, employers must list the position at the prevailing wage.)

Doing so would require contractors to pay a higher base rate per hour due to the increasing costs of owning and operating modern logging equipment. Cable skidders and chainsaws have been replaced in the woods by more expensive, computer operated feller-bunchers, delimbers and other equipment. And, according to Adam Fisher of the Maine Department of Labor, the prevailing wage rate for that equipment is dated. "Equipment rates only pertain to older types of equipment," Fisher says. "Now loggers are using equipment that's worth six figures."

Fisher says the MDOL has petitioned the USDOL to consider allowing updated equipment rates to be factored into the prevailing wage rate. "If that's allowed," he says, "that may resolve some of the [shortage] issue."

Still, the pay issue is delicate, according to Hackley. "We want to [pay above the going rate], but when one part of the supply chain gets hit hard, it's like water," he says. "It finds it own level and pushes up."

Another way to address the shortage of loggers in the Maine woods is to create more loggers, perhaps by getting across the idea that the industry has changed dramatically in recent years. Young people "don't understand what it's like in the woods nowadays," says Paul Davis, senior resource forester for Plum Creek Timber Co., a Seattle-based company that owns several hundred thousand acres in Maine. "It's not guys in flannel shirts with suspenders and saws anymore."

According to Davis, new loggers are emerging from recently formed training and education facilities at landowning companies across Maine with well-financed, high-tech pieces of equipment. In addition, both Plum Creek and St. John, New Brunswick-based Irving Woodlands have this year initiated partnerships with local community colleges that give would-be loggers the opportunity to earn a certified logging professional certificate and receive basic training in the woods. (See "School days," p. 25.) The idea, says Davis, is to create a pool of Maine workers so the industry can reduce its reliance on Canadian bonded laborers.

In the end, says Hackley, "From a trade perspective, we're looking for equilibrium in labor and supply."