By: Rob Linke – New Brunswick Telegraph-Journal – June 4, 2008
Prime Minister Stephen Harper should convene a national summit that brings together the federal government, the provinces and the private sector to renew the ailing forest industry, says a unanimous report from the Commons natural resources committee.
The report contains 23 recommendations, many aimed at improving the bottom line for companies so they will be in a position to invest in new equipment and develop higher-value products.
The private sector must restructure to seize new opportunities emerging from global trends that should improve in the medium term, says the report.
“We believe (our recommendations) will take the industry in the direction needed to have it prosper again,” committee chairman Leon Benoit, a Conservative MP from Alberta, said Tuesday.
The forest industry has closed dozens of mills and thrown more than 30,000 employees out of work in the past five years.
The industry has not hit rock-bottom, either, warned Avrim Lazar, president and chief executive officer of the Forest Products Association of Canada, who predicted more mill closures before things turn around.
Yet Lazar gave the report enthusiastic praise, saying the committee “got right” the role government should play in creating the right business climate for the industry.
“Every single one of these recommendations is do-able,” said Avrim Lazar. “All of them are within reach. None of them are hugely expensive. All of them are things that if the government chooses, the government could do within the next year, the next budget.”
Mark Arsenault of the New Brunswick Forest Products Association said that forestry has so many stakeholders, a national summit could build valuable consensus – but waiting for a conference should not be a reason to delay.
“We need action now,” said Arsenault.
Recommendations that call for more support for bioenergy and cogeneration, as well as silviculture all bode well for New Brunswick, said Arsenault, as does a call to recognize progressive forest management practices as sources of carbon offset credits.
“That’s important in light of all the talk we’re hearing about cap-and-trade and a carbon tax,” said Arsenault.
Forestry giant J.D. Irving, Ltd. spokeswoman Mary Keith described the report as forward-looking and “a vote of confidence in a strong future for Canada’s forest products sector – for the environment, the economy as well as people and communities.”
Keith said in an e-mail the company is encourages by recommendations that recognize the benefits of wood as environmentally sustainable source of fibre, fuel and as part of Canada’s approach to climate change, including support for planting trees, an offset program and extension of the capital cost allowance.
Tobique-Mactaquac Conservative MP Mike Allen, a member of the committee, expressed confidence the Harper government would adopt the recommendations.
“I feel pretty confident actually,” said Allen. “Some of these things we’ve started now, like the accelerated capital cost allowance.”
Apart from a national forestry summit, the committee recommended:
- A national federal-provincial forestry innovation;
- Funding for and research on bioenergy;
- Investment in innovative programs that led to the kinds of industrial forestry clusters Finland has;
- Extending the accelerated capital cost allowance for five years.
A number of factors have converged to result in mill closures, layoffs and reduced profits. They include a downtown in the U.S. housing market, global competition from countries that have newer mills, lower costs and faster-growing fibre and the rapid rise in the Canadian dollar.
Demand for newsprint, for example, has collapsed. Down 30 per cent since 2001, it in expected to fall even more as consumer prefer the Internet over newspapers.
Prices from framing lumber are the lowest they’ve been since 1991.
Several witnesses also said the forest industry is in trouble partly because companies failed to invest in research and development and new equipment, or focus on higher-value products.
Canadian mills are buying logging equipment, paper machines and technology from Finland.
As a whole, Canadian mills rely on equipment that’s older and less efficient than their global competitors’ technology.
Energy and transportation costs have also climbed.
New Brunswick suffered 3,149 forest-sector layoffs from January 2003 to January 2008, according to Natural Resources Canada, or 9.6 per cent of all such losses in Canada.
Canada’s total forest product exports were worth $38 billion in 2006.
