A US forestry company with most of its mills and 1,700 employees in British Columbia has filed for bankruptcy protection – it is the first major corporate failure in what many say is the industry’s worst downturn in memory, according to a report in a local paper. Portland-based Pope & Talbot filed for protection after failing to meet obligations to its creditors on several occasions. The move is likely first of many inevitable closures according to industry analysts who believe BC has too much capacity in a period of weak markets.

Kevin Mason of Equity Research Associates said while Pope & Talbot was under bankruptcy protection, it would only deepen the financial crisis for its competitors in this province: “Other producers are definitely hoping these [operations] will shut down,” he said. Companies under creditor protection usually keep running for whatever cash flow they can generate when, under other circumstances, they would shut down. Pope & Talbot has said it intends to keep operating. An announcement on the company’s website said it would continue to pay staff and that Pope & Talbot would continue to manage the business based on market conditions: “This protection is a necessary and responsible step for the company at this time,” President Harold Stanton said in a news release. Three of Pope & Talbot’s four BC sawmills are currently shut down temporarily. Its two pulp mills are operating although one is only running two of its three production lines. Market conditions, the high Canadian dollar and difficulty getting wood fibre are the conditions that have made it tough for the company to meet its obligations to creditors, a company spokesperson said.