Resolute CEO to federal government: Don’t ‘capitulate’ on softwood lumber

A Canadian industry leader in the fight against U.S. softwood lumber duties who is retiring imminently is urging the government not to “capitulate” during what he expects will be a lengthy battle with the United States.

“We believe in free trade,” Resolute Forest Products Inc. chief executive Richard Garneau said in an interview Thursday. “We believe in having strong principles and never capitulate, even though you believe that (if ) there is someone a lot bigger and stronger you have to defend your principles.”

Garneau, 70, has been the strong voice of eastern Canadian lumber, pulp and paper producers. “I was certainly not happy when in 2006 we had to pay a ransom,” he said of the last softwood lumber deal.

His comments came as weak fourth-quarter results sent the Montreal-based firm’s shares tumbling. They were down 28.91 per cent to $10.01 at close in Toronto.

“The government has made all the changes on stumpage, I think now we have to fight for free trade.”

Garneau said he is encouraged by Foreign Affairs Minister Chrystia Freeland’s tough stand defending the industry by challenging U.S. trade actions. Despite threats of doom and gloom from import duties, the industry has thrived by passing them on to consumers through higher lumber prices.

Garneau expects that once U.S. housing starts slow, lumber demand will come down and cause some pain to Canadian producers.

During his seven years at the helm of Abitibi Bowater, renamed Resolute Forest Products, Garneau has overseen restructuring that he said has made the company stronger. He has been accused of being heavy-handed by filing lawsuits against environmentalists such as Greenpeace who launched campaigns to discredit it.

Despite the battles, Garneau said he’s been able to improve relations with First Nations, small communities, mayors and unions that depend on the forest sector.

Industry analysts praised his leadership. “I will miss your honesty and more importantly your passion,” Paul Quinn of RBC Capital Markets said in a conference call.

“We’re certainly going to miss your strong voice in the industry,” added Hamir Patel of CIBC World Markets.

Yves Laflamme — Resolute’s senior vice-president of wood products, global procurement and information technology — has been appointed as a replacement effective Friday. A 37-year-old Resolute veteran, Laflamme, 61, said he doesn’t foresee conducting any major changes, including sticking with all four divisions, even though three face U.S. trade sanctions.

“I’m going to look at all opportunities but of course it’s going to be more continuity,” he said.