Ontario's Forestry Markets Appear to be on Upswing

 

After some tough times, the future is finally starting to look bright for members of the Ontario Forest Industries Association (OFIA), wrote Jamie Lim (photo), president and CEO of the OFIA, in a report that ran this week in the The Daily Press, Timmins, Ont., Canada. 

 

"We were pleased in September when we received a letter from Prime Minister Justin Trudeau’s government acknowledging, and I am quoting: ‘Canada’s prosperity starts with its middle class, and trade industries pay, on average, 50% higher wages than non-exporting industries, which will give Canadians more money in their pockets,’" said Lim. "We all recognize the Ontario forest products sector has always relied heavily on exports to the U.S. for its prosperity, and I guess what was good news in 2015 is that we finally started to see our sector recovering.

"The mills and the companies that survived this prolonged recession finally were investing again and ramping up, either building new mills or creating additional capacity. That’s all because the U.S. housing market, after being stagnant for almost a decade, was starting to grow again. That growth is expected to continue for the next five years," Lim said.

Lim and the OFIA want to capitalize on that trend by encouraging the U.S. to look to Ontario to meet that demand.

"We hope that Premier (Kathleen) Wynne’s government will work with our member companies to ensure the answer is Ontario," Lim continued. "I can tell you without a doubt, the OFIA’s member companies definitely want the answer to be Ontario.

"During the early part of this year, the Ontario Chamber of Commerce issued an economic update recognizing that foundational sectors, like forestry, would provide the main support for economic growth in the North. They reported the strength of the U.S. economy and a rebound in the housing markets bode well for Ontario’s forest products producers. Overall, forest products shipments climbed 12% in the first nine months of 2015 compared with the same period in 2014," Lim added.

The good news contained in the Ontario Chamber of Commerce report was tempered slightly, however.

"The report cautioned that to capitalize on increasing demands, forestry products firms along with the provincial government have to continue to address the competitiveness challenges," Lim explained. "The association is 73 years old, and we have member companies that have been operating in Ontario for five or six generations, up to 150-plus years. Our members take great pride in that history and the fact they have been growing local economies by harvesting and growing trees. Sometimes we lose track of that fact that trees grow. In Ontario and in Canada, forests are regenerated after harvest because it’s the law. In Ontario, we are very, very blessed that we have 85 billion trees, according to the MNR, that cover two-thirds of our province.

"When we talk about this natural resource we have, it is important to always remember as citizens of Ontario, we own Ontario’s Crown forests and as owners of something, we should always be interested in the return on investments we get from the responsible use of these Crown forests," Lim pointed out. 

The Ontario forest products industry sustainably uses less than 1% of those Crown trees annually.

"The sector is able to support 170,000 families directly and indirectly across the province and I think that’s an awesome return," Lim said. "You use less than 1% of a renewable resource and you can employ 57,000 people directly. That’s a pretty awesome opportunity for us in the North and yet there are these environmental groups, professional panic merchants, who want the public and even the government to think using less than 1% of a natural, renewable resource is still too much and that harvesting destroys forests and causes deforestation. That’s just not true. Deforestation is the result of harvesting and then not planting trees or not letting the forest naturally regenerate because the land is needed for another alternative social need like farming or the creation of urban centers. Toronto was once a forest, so I think it is important for us to remember that forestry does not cause deforestation.

"Trees are a renewable crop for us. Like farmers, we harvest our crop and then we plant again and we wait to harvest again. The only difference is that obviously our crop takes longer to grow. Harvesting and planting trees is what we have been doing for generations. We harvest, plant, repeat. We are not in the business of destroying forests because that would be really shortsighted. We are in the business of managing Ontario’s renewable resource responsibly for the benefit of our communities and our province," Lim said.

A Forest Products Association of Canada report suggests by 2020 $20 billion in additional economic activity could be generated, with that additional economic activity creating 60,000 new green jobs.

"Obviously, the affected stakeholders I work with throughout the year, the mayors, the chambers of commerce across the North and across rural Ontario, want to ensure Ontario gets its share of that growth," Lim noted. "They want to work with the provincial government to ensure we grow Ontario’s natural advantage. At the lowest point of the recession we were probably harvesting about 10.5 million cubic meters in 2010 and in 2015 we were probably closer to 15 million cubic meters, but in 2004 our sector was sustainably harvesting 20 million cubic meters annually. So, I think affected stakeholders, mayors, First Nation communities, and the industry obviously see an opportunity for growth. I think everyone recognizes with increased harvesting we would still only be using 1% of Ontario’s forests. Increased harvesting would translate into increased direct jobs, and since 2011 we have probably created 2,000 green workforce jobs in the North and in rural Ontario.

"The big question is will forestry be Ontario’s greatest opportunity? We say why not? The timing is perfect. This is our sector’s time. The world is experiencing this wood renaissance right now. The 17th and the 18th centuries were sort of the era of brick. The 19th century saw steel frame, the 20th century was sort of the era of concrete, and the 21st century is the era of renewable timber. That’s a sentiment that has been embraced to some extent by those in the construction industry, as well. Wood has become a very, very sexy building material," Lim said.

"The world wants it and Ontario has it. Architects and engineers are designing and building taller and taller wood buildings and our sector has the capacity to innovate and produce the timber systems and our governments, municipal, provincial, and federal have the capacity to adapt building codes to reflect the realities of today’s building options. At our 73rd annual meeting in February, we had an architect (Brock James) and an engineer (David Moses) from Toronto addressing the audience and they are actively building mid-size wood buildings in Toronto and across North America. Brock James built the new Scarborough Public Library in Toronto. It is a beautiful wood project. It is just awesome. David Moses has been working on mid-rise wood buildings, six-storey facilities. Consumers are excited about using a renewable building material and the smart consumers today understand that trees grow.

 

"The second reason forestry can be Ontario’s greatest opportunity is that trees are the answer. Not only do they grow, they contribute to supporting Ontario’s low-carbon economy.

"We have a record of performance for the current operating pulp and paper mills that shows we have reduced absolute greenhouse gas emissions by greater than 64% since 1990. An independent study in March of 2016 showed Ontario’s pulp and paper sector is one of the lowest carbon-intensive producers globally. Customers are recognizing they can purchase Ontario forest products and know they are making sound environmental choices," Lim emphasized.

The OFIA hopes the provincial government will take the steps necessary to ensure Ontario maximizes its participation in this wood renaissance.

"If we have the right pragmatic government policies, we can continue to use this renewable resource to support hard-working Ontario citizens, families, the local communities," Lim said. "We have identified two major challenges. No. 1 challenge is less wood, which would translate into fewer jobs and less innovation. We are witnessing federal and provincial policies which challenge access to industrial fiber. We are witnessing policies that when applied to the forest management plans and annual work schedules are actually shrinking Ontario’s industrial fiber basket.

"A lot of this policy is being passed without prior socioeconomic impact analysis and without prior transparent and meaningful consultation with affected stakeholders. It is shocking the number of affected stakeholders that don’t even know that these policies are coming forward.

"We think this is a challenge but it is also an opportunity for the affected stakeholders, for the industry, and for the provincial government to work together to say how can we better develop policy that is currently having a negative impact on our province being able to grow its naturally renewable advantage, which is forestry," Lim said.

The second challenge is what Lim and the OFIA call "misinformation campaigns" that target or harass customers of Canada’s forest products.

"We were so pleased in July 2015 when Natural Resources and Forestry Minister Bill Mauro talking to the media about Ontario’s sustainability campaign said, and I quote: ‘We are going directly to customers to ensure that they understand and as clearly and unequivocally as we can state the case that here in Ontario we are sourcing and harvesting fiber in a very, very sustainable way.’

"We are so pleased he was sending this clear message to a lot of American customers who were being harassed by these professional environmental groups. We were also very, very pleased with northern mayors and rural mayors who stood up for the facts on forestry. You have mayors in Northeastern Ontario like Mayor Roger Seguin (Hearst), Mayor Alan Spacek (Kapuskasing), Mayor Peter Politis (Cochrane), and Mayor Steven Black (Timmins) who understand the facts and are willing to ensure it is the facts that consumers are aware of and not this fear mongering.

"To grow Ontario’s renewable natural resource, forestry companies, regardless of if they are big or small, new or existing mills, need two main things to keep their mills open and to keep people working. They need access to wood and they need customers," Lim insisted.

She is confident the OFIA and its members can overcome these challenges.

"We believe overcoming challenges is in our nature," she said.

"We survived one of the most prolonged recessions that we have witnessed in our lifetimes and we believe that if Premier Wynne believes in the forestry sector, believes in the responsible use of a natural resource, and recognizes that we should be able to get back to where we were before the recession when we were employing more than 90,000 people directly in the province of Ontario, and we should aspire to that again. We are prepared to do our part. We want to work with the affected stakeholders, our mayors, First Nations, to ensure we have long-term, viable access to affordable wood and have confident customers.

"We believe with those two things, we can be a cornerstone of Ontario’s green economy, Ontario’s foundational economy, and that we can grow this natural resource but we need to have the right public policy in place," Lim said.

A recent wood-supply analysis by OFIA’s woodlands committee, which is made up of professional foresters, suggests that if provincial policy unfolds the way it thinks it will, there could be a wood-supply reduction of up to 30%, which would create shortfalls.

"We want to ensure we work constructively proactively with government, and do some due diligence on that provincial policy to ensure it is not creating huge reductions because quite frankly less access to wood will result in fewer jobs," Lim warned.

 

"Our sector has a history of providing for all three pillars of sustainability. It is not about choosing the economy over another pillar, it’s about creating policy that respects and acknowledges all three pillars of sustainability, social, economic and environmental.

"The introduction of new policies that reduce access to wood supply can threaten our collective aspirations today and for future generations," Lim concluded.