Catalyst Paper Corp., the forest products company that has led a business tax revolt in British Columbia, is being courted to relocate its operations to more tax-friendly jurisdictions.
While the B.C. Liberal government has fashioned itself as friendly to industry, the company described its out-of-province suitors as refreshingly pro-business.
Lyn Brown, Catalyst's vice-president for corporate relations, said the company isn't interested in shuttering its B.C. operations - at least not yet.
"More than anything, it's refreshing to hear from legislators and civic leaders in a manner that suggests your presence is welcomed and desired," she said. "That's what we take from those invitations."
The company has held up two recent unsolicited invitations to relocate as a warning to communities that have balked at requests to reduce their industrial tax rates. The company refused last year to pay its full tax bill in four B.C. communities, but has since paid its 2009 taxes and signed a new tax agreement with Powell River.
Port Alberni mayor Ken McRae inadvertently played matchmaker in February when he introduced business officials from Yancheng, China, to Catalyst executives, believing they might be interested in investing in the cash-strapped paper firm.
Instead, the Chinese proposed shutting down the Catalyst mill in Port Alberni - which would put 280 people out of work - and relocating it to China.
"This project has received enthusiastic support of the local government and professionals," Yang Yucheng, one of the business delegates, wrote in a proposal to Catalyst CEO Richard Garneau. "The experts suggest that the paper manufacturing in Alberni can move to Yancheng City and set the raw materials production in Canada."
This would be a huge blow for the struggling Vancouver Island community, which earlier this month was ranked by MoneySense magazine among the worst Canadian cities to live in. The town has lost 6,000 unionized jobs as a result of the collapse of the coastal forest sector.
There are precedents in B.C. for dismantling and shipping defunct forestry mills to China, but this offer raised eyebrows because Catalyst's Port Alberni mill is currently operating.
Mr. McRae said he was simply trying to help line up a potential investor for Catalyst, and is angry that the company is using the offer as a pressure tactic. "That kind of gets my back up a bit," he said. Port Alberni, like Campbell River, is actively negotiating with Catalyst on a new tax regime.
Residents of Port Alberni will get new tax assessments this week with a 23-per-cent rate increase as the community seeks to shift the burden off its industrial payers. Mr. McRae said the change recognizes the economic reality faced by Catalyst and other forestry companies.
"The cash cow we had for the last 50 years is gone," he said. "We want to keep the jobs here."
The next invitation Catalyst received was from the Governor of Idaho, Butch Otter. "In Idaho, we are deeply committed to maintaining the fiscal discipline necessary to give predictability to our businesses," Mr. Otter wrote. "We know that business, not government, is the economic engine that will lead our state to a robust recovery. As such we will endeavor to minimize the regulatory and tax burdens on our entrepreneurs."
Earlier this year, the B.C. government responded to Catalyst's concerns about tax rates by appointing a committee to review municipal rate structures. That committee, dominated by municipal and provincial officials, is due to report by the fall.
"We are hoping that the issue flagged as a crisis by the B.C. Business Council will indeed [lead to]looking for game-changing solutions," said Ms. Brown of Catalyst. If not, she suggested, the company may be more amenable to the siren call of other jurisdictions.