Labor talks begin at British Columbia timber firms

VANCOUVER, British Columbia, June 12 (Reuters) - Contract talks have begun for unionized sawmill workers in most of the Western Canadian province of British Columbia as the lumber industry struggles with the collapse of the U.S. house construction market.

The United Steelworkers and employers in the northern and southern interior forestry regions of British Columbia were exchanging initial proposals this week to replace current contracts, which expire at the end of June, a union official said.

"Even with the current state of the industry, we think there is still room to build a progressive collective agreement," said Bob Matters, head of the union's Wood Council.

Matters declined to elaborate on what the union would demand in the talks or on the length it is seeking for contracts.

The weak lumber market has forced nearly every sawmill and logging operation in Western Canada to curtail or halt production. Some mills have gone out of business.

British Columbia supplies about half of the softwood lumber that Canada exports to the United States each year, where it makes up about a third of the market.

Matters said that under normal conditions the talks would involve contracts for up to 12,000 workers, but he estimated the number is now probably closer to 9,000, including employees who are on temporary layoff.

Labor contracts for British Columbia's timber industry are negotiated on a regional basis. Most companies, including privately held Tolko Industries, negotiate through employer bargaining associations.

The two biggest firms, Canfor Corp (CFP.TO) and West Fraser Timber Co Ltd (WFT.TO) bargain independently.

Representatives of the employers declined comment on the talks or did not return phone calls.

The union has not decided yet which of the various sets of negotiations might be used to establish a pattern contract for the rest of the industry.

"We'll have to see what the proposals are," Matters said.

Current contracts were negotiated in 2003 during the U.S.-Canada softwood trade fight, with the sides agreeing then on longer-than-usual six-year deals because of the economic uncertainty caused by the dispute.

Sawmill workers and loggers in coastal British Columbia work under a different regional labor contract that does not expire until next year. (Reporting Allan Dowd, editing by Peter Galloway)