Imagine if Howe Sound Pulp and Paper (HSPP), the Sunshine Coast's largest private employer, were to close its doors and lay off its staff and the effects that would have on employment, the Coast economy, property values and taxes.
It's purely a hypothetical scenario and all indicators suggest it's not going to happen, but that's what local governments hired Michael McLaughlin, economic development officer with Best Coast Initiatives, to do.
McLaughlin presented his report to the Sunshine Coast Regional District (SCRD) corporate services committee on Thursday, May 6.
McLaughlin's report concludes if HSPP were to close, 450 jobs at the mill would be lost immediately, 698 jobs in the forestry sector that supplies HSPP would be lost, and another 157 "induced" job losses (jobs that would be shed in the pursuant shrinking economy) would follow.
But he emphasized that his data relied on a hypothetical situation and many assumptions that may not be so. McLaughlin started research for the report when the recession was just hitting and other pulp mills around the province were closing.
McLaughlin concluded about half those employed by HSPP or its suppliers would list their homes for sale within a year, which would result in a downturn in Coast property values and a corresponding drop in assessments and tax revenues for the local governments.
"If HSPP closes, best case scenario, you're going to have a 10 per cent reduction in housing assessments. Worst case - 25 per cent," McLaughlin said.
But just as keeping smoke alarms in a house does not mean one expects to have a house fire, McLaughlin emphasized the report exists only as a matter of prudence. He said it will also be useful as a tool for lobbying senior levels of government.
McLaughlin said there is no reason to panic about HSPP's future, pointing out at the meeting that commodity prices for kraft pulp, which HSPP produces, are up $120 USD per tonne - a 16 per cent increase since the start of 2010. And HSPP has had a number of investments made in it over the last several years, making it more competitive than most other mills.
SCRD directors accepted the report, but agreed the situation presented by McLaughlin seemed to be a worst-case scenario, not likely to happen in the near future.
Gibsons director and mayor Barry Janyk pointed out other towns in B.C. have not been so lucky, adding he has complete confidence in HSPP.
"They do create an excellent product. They have a 50 per cent Asian partner, which allows for access to markets that other mills don't have, and there was modernization of the plant that took place in 1991," he said. "I think we can go to sleep knowing that if pulp mills are going to be closing on the coast of B.C., in all likelihood, Howe Sound Pulp and Paper will likely be one of the last ones to close."
Halfmoon Bay director Garry Nohr said he agreed with Janyk, adding the SCRD should be working with HSPP to make sure SCRD policies are not unduly contributing to any woes HSPP may have in the future.
