Tuesday, September 18, 2007

RONA Vs Greenpeace

What is behind Greenpeace's attack on RONA three weeks ago? The Eastern Canadian home retailer, who has a strong base in Quebec.

Canada's largest home renovation retailer said yesterday it cannot comply with the more environmentally friendly lumber standards demanded by Greenpeace.

About 75 per cent of the lumber products sold at RONA Inc. stores meet the environmental standards of three certifying bodies, a company spokesperson said. But of that 75 per cent, only 15 per cent of wood meets the standards of the Forest Stewardship Council, often considered the most stringent certification program.

Earlier this week, Greenpeace blasted RONA and other retailers for using suppliers that chop down trees from endangered areas of Canada's Boreal Forest.

Canada's forest companies are no angels. For more than a century after Confederation they were, in fact, looters. But government-mandated reforestation and advances in silviculture since then make it hard to swallow Greenpeace's claims that Canada's boreal forest is "indisputably" sick.

What's indisputable is that the boreal forest is a massive storehouse of greenhouse gases that covers 58 per cent of Canada's territory. That 70 per cent of it is commercially inaccessible. That only 0.5 per cent is logged in any given year. That Canada has a deforestation rate of zero. And that in Ontario and Quebec, Abitibi and Kruger are cutting much less than their annual allotment in the face of slumping lumber prices.

What's more, forestry engineers - a group that indisputably loves the forest every bit as much as Greenpeace - marvel at the boreal forest's capacity to regenerate itself more than any other type of forest in the world. Experts are also finding that self-regeneration - whether after natural fires, insect epidemics or logging by humans - may be a more effective way to promote biodiversity than intensive replanting.

All of which makes Greenpeace's attack on Abitibi curious enough. But why does Rona get blacklisted and not IKEA or Home Depot? Greenpeace says it's because the latter two retailers have made specific undertakings to source FSC products. But IKEA conceded in April that only 4 per cent of the wood used in its Chinese factories - the source of most of its furniture - meets the FSC grade.

Much of the wood used in Chinese furniture manufacturing is illegally logged in Russia and Myanmar.

Massive deforestation in Russia, Asia and South America is a real, verifiable, contributor to global warming. And when reforestation occurs, it's on plantations, as in China or Brazil, where such monoculture is biodiversity's worst enemy. Yet, those are the same countries whose low-cost lumber, pulp, paper and furniture are decimating Canada's forest industry.

RONA (TSX: RON), the largest Canadian distributor and retailer of hardware, home renovation and gardening products, has been made aware of a document published earlier today by Greenpeace and wishes to make the following clarification.

Sustainable development has long been a priority at RONA. The Company has a responsible purchasing policy that applies to all of its products. With respect to forest products, the Company does not buy any product derived from endangered species and favours the purchase of products that bear Forest Stewardship Council (FSC), Canadian Standards Association (CSA) and Sustainable Forestry Initiative (SFI) as well as ISO 14001 certifications. Furthermore, RONA ensures that all of the goods it procures, whether forest products or other, have been produced in conditions that respect human rights and the environment. RONA applies these principles in its choice of suppliers, sub-contractors and other business partners.

Over the past 10 years, RONA has recovered 3.6 million containers of paint in Quebec, or over 30% of all paint recovered in the province. Left unrecovered, old paint may be poured out into nature - a real threat to the environment. By promoting the recovery of these products, RONA is offering the public an economical and ecological alternative to burial in landfills or incineration.

From collection points at stores across RONA's Quebec network, the old paint and containers are then sent to the RONA distribution centre in Boucherville. From there, the old paint is sent to Peintures recuperees du Quebec. About 80% of the old paint is reconditioned and put back on the market. Leftover latex and alkyd paint, stain and varnish are all accepted in the recovery and recycling program.

RONA (TSX:RON), the largest Canadian distributor and retailer of hardware, home renovation and gardening products, has announced a 9.1% increase in sales and an 11.6% increase in operating income for the second quarter of 2007. This increase in sales and income can be attributed to acquisitions made in the last 12 months and additional measures taken at the beginning of the quarter to stimulate sales and earnings growth in a business environment that was more difficult than anticipated.

Net earnings increased by $6.2 million or 7.7%, from $80.0 million in the second quarter of 2006 to $86.2 million in the second quarter of this year.

Operating income reached $161.8 million in the second quarter of 2007, an increase of $16.8 million, or 11.6%, over 2006. EBITDA margin rose from 10.8% in 2006 to 11.0% in the second quarter of 2007.

Net earnings for the second quarter of 2007 stood at $86.2 million, or $0.74 per share, diluted, compared to $80.0 million in 2006 or $0.69 per share, diluted. This represents an increase of 7.7% in net earnings and 7.2% in diluted earnings per share.

Well its a back handed attack on Abitibi which is in merger talks with American forestry products company Bowater.

In a recent report, Greenpeace cited logging and pulp companies such as Abitibi-Consolidated, Bowater, Kruger and SFK Pulp as being directly responsible for destroying nearly 200,000 square kilometres of boreal forest.

The activists charged pulp manufacture, SFK Pulp, with purchasing wood
chips from destructive logging operations. Two of the main suppliers of wood
chips to SFK Pulp, Abitibi-Consolidated and Bowater, log in the last remaining
intact areas of the Boreal Forest, in the habitat of threatened species as
woodland caribou, and in areas where industrial logging is opposed by local
First Nations.
"Logging companies like Abitibi-Consolidated and Bowater continue to deny
that there's anything wrong in Canada's forests," said Ferguson. "But anyone
who's seen the satellite images showing massive fragmentation, the scientific
reports showing species extirpation, and the news reports describing closure
after closure of mills and towns knows different."

A detailed new Greenpeace report,Consuming Canada's Boreal Forest: The Chain Of Destruction From Logging Companies To Consumers, traces the journey of clear-cut trees from virgin boreal stands to retail store shelves.

The group fingers what it calls the worst despoilers of northern timberland: Abitibi-Consolidated Inc., Bowater Incorporated and Kruger. The first two merged last month, creating a corporate colossus with cutting rights to an area of the Ontario and Quebec boreal as big as the state of Nebraska.

Also named are a list of retailers buying products from the three – part of a campaign to get firms to buy forest products made either from recycled material or from logging operations certified by the Forest Stewardship Council.

Consuming Canada's Boreal Forest: The Chain Of Destruction From Logging Companies To Consumers,

The report release follows on the hanging of a massive banner from the Montreal headquarters of Abitibi-Consolidated two weeks ago. Canada’s Boreal Forest stretches across the north of the country, from Newfoundland to the Yukon. It represents a quarter of the world’s remaining intact ancient forests and stores 47.5 billion tonnes of carbon in its soils and trees. Ontario and Quebec's intact Boreal Forest represent 14% and 18%, respectively, of the entire country’s intact forest areas.

The demands of the Logging Companies are to:
o Cease logging in all intact forest areas, caribou habitat, and mapped endangered forests immediately, and work with governments and nongovernmental organizations to formally protect these areas;
o Shift to FSC certification across all tenures to ensure environmentally and socially responsible management of these forested areas, and ensure all products are FSC-certified;
o Commit publicly to not pursue licensing and new logging activities in currently unallocated areas of the Boreal Forest; and
o Refrain from logging without the prior and informed consent of First Nations whose territories are affected.

Left Nationalists like Mel Hurtig and Maude Barlow of the Council of Canadians may want to ask Greenpeace if this really helps Canada. Attacking indigenous capitalist industries like Abitibi and Rona.

While we ponder the silence over the sale of Abitibi to Bowater in the MSM and among the politicians. You see that was yesterday's news. Before Alcan and Stelco.

A union representing forestry workers said the move by Abitibi and Bowater should cause concern in government and community circles.

"There are many issues underlying this announced merger which should raise alarm bells in Ottawa," said David Coles, president of the Communications, Energy and Paperworkers Union of Canada. "Our forest-based industries and communities are already in crisis with the loss of some 10,000 jobs over the past few years.

"Our history with mergers and acquisitions has been that so-called 'synergies' really mean more mill closures, job losses and devastation in our communities," he said.

The deal continues a wave of consolidation in the forestry sector as companies try to get bigger to deal with increased competition and to cut an increase in operating costs due to higher fuel, transportation and raw material costs and the rising Canadian dollar.

For example, Montreal-based Domtar (TSX: DTC) is expected to soon close a $3.3-billion deal to muscle up its operations by merging with the fine paper division of U.S.-based Weyerhaeuser, one of the world's largest forestry companies.

The marriage of Abitibi and Bowater is just the latest move in a tectonic shift that sees North America forestry players jostling to grow and compete with the rest of the world, said Bowater president and CEO David Paterson, who will move to Montreal to head the new corporate entity.

"This is a continuation of what I see as a long-term trend of a globalization of the market, that North American companies have to be able to compete with Asian, South American and European producers and they have to do that from a low-cost platform and that's what we're trying to create here."

However the merger is still in the works. Abitibi-Consolidated and Bowater Provide Merger Update

And with the high dollar and housing crash in the U.S. comes the warning of more plant closings.

The double blow of slowing home construction and falling newsprint demand is hitting wood and paper companies and forcing them to try to adapt quickly. The strategies of choice: consolidation and cost-cutting.

Shareholders of Montreal-based Abitibi-Consolidated Inc. (nyse: ABY - news - people ) and Bowater Inc. (nyse: BOW - news - people ), based in South Carolina, approved a deal last month to combine the two companies. U.S. regulators still need to give approval before the two can become AbitibiBowater Inc., which would be the third-largest forest products company in North America.

The deal could close by the end of September, and may lead to plant closures.

"U.S. regulators are expected to require mill closures in order to let the merger go through," Banc of America Securities analyst George Staphos told investors in an industry update last week.

Since May, Abitibi shares have dropped 21 percent, Bowater fell 23 percent, International Paper by 16 percent and Weyerhaeuser 21 percent.

But in
Roberval–Lac-Saint-Jean it was a crucial issue, leading to the election of a Mayor who can get things done. Grease the palms, bring in a bit of largese; some federally funded development projects to offset in some small way the devastation occurring in primary forestry in the region.

Quebec experienced the greatest decline in the country, as production decreased by 20.4 per cent to 1.18 million cubic metres, or 19.1 per cent of total Canadian output.

Quebec's production has declined monthly by double digits since July 2006.

Producers face reduced overall harvest quotas from the provincial government. They have also reduced volumes to fit a quota agreed to under option B of the softwood lumber agreement with the United States.

As Jean Paul Blackburn has in the neighboring riding. After all Abitibi is the major employer in that region.

The new mega forestry giant Abitibi/Bowater will face a tremendous responsibility
to employees and their communities as the planning now begins to integrate the two paper companies.

Abitibi-Consolidated and Bowater will now put the troops to work planning detailed integration of their global pulp and paper and lumber business. Both company’s Canadian mills are being bled by high energy and fibre costs and especially by the Canadian dollar’s surge – as all products are sold in U.S. dollars. “Costs will have to be cut right across the system,” said David Paterson, Bowater’s CEO who will become CEO of the new Abitibi/Bowater. John Weaver of Abitibi-Consolidated would not comment on possible rationalization in eastern Canada, where the highest cost mills are located.
While Bowater has to pay for a less than stellar environmental record.
Bowater Inc. will pay $42.5 million to Weyerhaeuser Co. to settle a dispute over costs at a Canadian pulp and paper plant Bowater sold to the company in 1998. Bowater and Washington-based Weyerhaeuser (NYSE:WY) have been arbitrating a claim regarding the cost of environmental matters related to the mill.

And while the Conservatives assert a lassiez faire attitude to corporate takeovers, try and pawn the disaster that their Softwood Agreement onto the Charest government, they realize that Quebec expects state capitalism in some form. And that is how you keep seats.

 MONTREAL, Sept. 7 /CNW Telbec/ - A new Leger Marketing poll commissioned
by Greenpeace reveals that 86 per cent of Quebecers support the suspension of
logging in the last remaining intact areas of Boreal Forest in the province.
Additionally, only 18% per cent of respondents believe that forest
companies and the government of Quebec are managing forests in a way that
serves the public interest and forest workers.
"The public's lack of confidence in the government and logging companies
is significant," said Melissa Filion, a forest campaigner with Greenpeace.
"Without taking quick and concrete action to protect the forest, the
government and logging companies will not regain the public's trust."

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