Natural Resources Committee on March 10th, 2015

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone. It's good to see everybody back from our constituency work week.

We're continuing our study of the renewal of Canada's forest industry. We have witnesses with us today from four different groups.

From Wawasum Group LP, we have Joe Hanlon, project manager. Welcome to you, sir.

From the Town of Atikokan, we have Mr. Dennis Brown, mayor. Welcome to you, sir.

By video conference, we think, although we're having a little trouble right now—it may be by teleconference before we're done—we'll have Jocelyn Lessard, director general of the Québec Federation of Forestry Cooperatives. Also, from the Quebec Wood Export Bureau, we'll have Sylvain Labbé, chief executive officer.

We will get to the witnesses right away.

Mr. Regan, you have a point of order.

[Geoff Regan, Liberal, Halifax West, NS]

On a point of order, Mr. Chairman, I wonder if you or perhaps Ms. Block could tell us if she has an answer to when the minister will be coming to the committee.

[The Chair, Conservative, Leon Benoit]

Ms. Block, do you want to respond to that?

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

We do not have a date set for when the minister is coming, but it's definitely being looked at right now to determine it.

[The Chair, Conservative, Leon Benoit]

I do know that congratulations are in order for the minister.

[Geoff Regan, Liberal, Halifax West, NS]

Yes, indeed.

[The Chair, Conservative, Leon Benoit]

He has a brand-new little daughter, so that's very sweet. I'm sure he's excited. I get excited just hearing about it.

[Geoff Regan, Liberal, Halifax West, NS]

Why don't you send the minister congratulations on behalf of the committee, Mr. Chairman?

[The Chair, Conservative, Leon Benoit]

I will. Thank you.

Let's move ahead. We'll deal with the technical details as we go along, but let's start with the presentations of those who are here, in the order that they're listed on the orders of the day.

Before we get started, I apologize. I have one more thing I want to mention. Thursday's meeting has been cancelled. That was a meeting on the pipeline safety act. We were to have witnesses from the NEB, and they quite rightly pointed out that it would probably be more proper if they appeared after departmental officials. We have the departmental officials appearing the first meeting after the next out-week, and then we'll have the NEB on the Thursday of that same week. That was my mistake. I should have thought of that. When they brought it up, it made sense, so Thursday's meeting has been cancelled.

Let's go ahead with today's meeting, starting with Mr. Hanlon.

Go ahead, please, with a presentation of up to seven minutes.

[Joe Hanlon, Project Manager, Wawasum Group LP]

On behalf of Chief Theresa Nelson, Animbiigoo Zaagi'igan Anishinaabek; Chief Laura Airns, Bingwi Neyaashi Anishinaabek; their communities; the board of directors of Wawasum Group LP and me, Joe Hanlon, project manager, we would like to thank the Standing Committee on Natural Resources for this opportunity to present to you today.

Animbiigoo Zaagi'igan Anishinaabek, AZA, and Bingwi Neyaashi Anishinaabek, BNA, are two first nation communities that each have a land base in northern Ontario but lack the infrastructure needed to sustain their members. The communities created a joint partnership and formed Wawasum Group LP, with the goal to construct and operate a wood pellet production facility. To capitalize on the current economic demands for carbon-neutral, environmentally friendly products, AZA and BNA applied to the Ontario Ministry of Natural Resources' forest competitive process and were successful in obtaining 113,000 cubic metres of hardwood annually.

Our goal is for the fibre to be delivered to our wood pellet production facility, then processed into wood pellets, thereby producing 60,000 tonnes of pellets annually. Our business plan shows that this project has the potential to create approximately 45 new jobs in the production facility, wood yard, and forestry operations.

Wawasum's decision to participate in the wood pellet industry was largely based on the enormous growth that is taking place in many parts of the world, such as Europe, Asia, and North America. ln 2012 an article written in Canadian Biomass indicated in part that in the next eight years, significant growth is predicted in wood-fuel pellet markets worldwide, and that Europe will continue as the largest source of demand, with markets also emerging in Asia. It said that growth in production will continue in North America, but new production is being established in nearly all wood fibre baskets worldwide

The current global market volume of biomass pellets of around 16 million tonnes annually is projected to increase to 46 million tonnes by 2020, representing a total market value of $8 billion U.S.

The adoption of the biomass fuel pellets is largely driven by policy and financial incentives in much of the world, and this will continue to be the case. Wawasum wants to be a supplier in this emerging market. We believe not only will it be a profitable venture, but it will also be environmentally cleaner and a renewable resource, unlike coal or natural gas. That is why we want to continue to advance our project. It has not come without some struggles and concerns.

We are here today to bring to the committee's attention some concepts that could assist us with our goal and could also benefit other aboriginal communities in the future.

With respect to stable federal government funding, we believe that the current system needs to be studied when it comes to funding first nations start-up businesses that want to create economic opportunities through forestry. The following comment in no way takes away from the support and the funding we have received from the federal and Ontario governments. We would not be here today without their support.

Our suggestion is that the federal government create a program that ensures secure, stable funding is made available so that a start-up business can explore and complete all pre-construction requirements.

When a community first prepares a project application, there is a lot of detail that is required in order to present a well-thought-out case for the project. Once submitted and approved, the project starts, progress is being made, and the community is encouraged. Unfortunately, without assurance from the start of a project to the completion, it can cause undue delays or even end a project. That is why it's important to establish a program that would allow for the momentum to continue and grow.

With this type of structure, first nations start-up businesses would not have to assess which programs may be available, prepare applications, deal with new people who are not familiar with the project, rehire or hire new employees, wait for approvals, and deal with questions and uncertainty from the community members. With assurance of the stability of funding, we could proceed in a more productive and cost-effective way. We could then focus our energy on providing annual financial statements and progress reports to the funder, demonstrating our advancements in order to continue.

It does not benefit our communities or the taxpayers of Canada to fund the beginning of a business opportunity and not see it to completion.

Concerning loan guarantees, to assist with first nations community growth and to create meaningful employment, we need forest industry jobs.

Many reserves are located in isolated areas surrounded by renewable forest. We as first nations people can manage the forest and ensure a balance in respect to our traditional hunting, fishing, and trapping, while also creating economic opportunities for our members. Wood pellets are in high demand nationally and globally; sawmills are rebounding; harvesting operations will be created and grow, to name a few opportunities. However, these projects require large capital investments, and in order to create economic opportunities for our communities, we need the support of the federal government.

We believe this can be accomplished in part with loan guarantees for first nations forestry-related businesses. Working together to develop loan guarantees demonstrates a pledge to first nations people and sends a message to the financial world that the Canadian government stands with and supports the creation of successful first nations businesses.

ln closing, we truly believe that the federal government's support and work with first nations communities and businesses will send a positive message to the forest industry worldwide that Canada and its first nations partners are working together to provide low-cost, renewable, and sustainable forest products that are essential in a global economy.

With consistent funding, loan guarantees, and other joint programs that promote growth, first nations communities will benefit. Canada, the provinces, and surrounding communities will also prosper from the economic spinoffs as projects are developed and come into service. This type of vision and declaration from the federal government can provide meaningful improvement to the lives of first nations people and their communities. Only through education, empowerment, employment, infrastructure, commitment, funding, and backing in the forest sector can we be a part of a progressive change.

Through the continued support of the chiefs, their councils, and the communities of AZA and BNA, Wawasum is committed to developing a wood production facility. This capacity will benefit and shape our community's long-term needs in a positive way. The support of this committee and of all political parties will assist in the development of our project, but by working together we can improve the economic and social needs of all aboriginal people across this country.

Meegwetch. On my own behalf and that of our Wawasum board of directors and the communities of Animbiigoo Zaagi'igan Anishinaabek and Bingwi Neyaashi Anishinaabek, thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Hanlon, for your presentation, and thank you for keeping it on time. We appreciate that very much.

We go now to the next presenter. From the Town of Atikokan, we have Mayor Dennis Brown.

Please go ahead with your presentation, for up to seven minutes.

[Dennis Brown, Mayor, Town of Atikokan]

Good afternoon, ladies and gentlemen. Members of the standing committee, thank you for the opportunity to present here today.

In northwestern Ontario where I live, the steady improvement in the forest products sector has become a major driver of economic recovery in our region. In communities such as Kenora, Ear Falls, Ignace, Longlac, White River, Terrace Bay, and even Thunder Bay, jobs are being created to build on the already significant impact that the forest sector has in Ontario.

In my community of Atikokan, the forest industry has been a key driver of the economy for many years. Atikokan was home to a sawmill for 45 years and to a particleboard mill, until both companies failed after the U.S. subprime housing collapse, putting more than 400 people out of work in 2008.

The impact on Atikokan was devastating. Many of our primary breadwinners were forced to commute to northern Alberta or southern Saskatchewan to work. Over the ensuing years some families have followed, but most have remained and continue to contribute to our community.

The resurgence of the forest sector has been very good for Atikokan. The old particleboard mill is in the final stages of being retrofitted as a pellet plant, employing about 40. A brand new, high-speed, state-of-the-art sawmill is being constructed on the site of the old sawmill, and it will employ about 100 workers. It is scheduled to open in May or June of this year—Canada's newest sawmill. In addition to the mill workers, there will be between 200 and 300 employed in harvesting and transportation, and many more in indirect and induced jobs. Ontario Power Generation’s coal-fired electricity generator in Atikokan has been converted to a wood pellet biomass generator, sustaining existing jobs in the area. Clearly, the forest industry will continue to be a major contributor to the Atikokan economy.

This story is being repeated in other communities in Ontario and indeed across Canada. The recovery is also benefiting many first nations communities in northwestern Ontario who are working alongside us, the municipalities, and with industry to ensure that they are able to capitalize on this rebound.

For example, six first nations communities near Atikokan recently signed a memorandum of agreement with Resolute Forest Products which has resulted in more than $100 million in new contracts for aboriginal businesses in the region.

These arrangements are becoming more and more common, and the capacity of our first nations partners to participate more fully in the regional economy is increasing every day.

With almost 350 million hectares of forest area, Canada is the world’s fourth largest exporter of forest products, providing jobs for more than 200,000 Canadians. The job numbers are growing, thanks to the recovery of the world economy, particularly in the United States.

In Ontario alone, the forest products jobs grew by almost 4% between 2011 and 2012, and the Forest Products Association of Canada forecasts that another 60,000 Canadians could be recruited to work in the forest sector by the end of the decade. On September 4, 2014, The Globe and Mail reported that forestry students have a 100% employment rate, higher than that of computer science, math, and physical science specialists.

To us, the residents of Atikokan and northwestern Ontario, these are not merely statistics. We can see these employment forecasts coming true in our own communities, with new investments and jobs on the rise, and it’s not just the jobs in the forest sector; the recovery is having spinoff effects everywhere.

But there are some troubling issues on the horizon that I want to take a few minutes to outline. The forest sector relies on two key drivers: access to a reliable, predictable, and affordable supply of wood fibre for manufacturing, and access to markets in which to sell its products. I would like to briefly discuss each of these business drivers, as they both are under pressure.

First, with respect to access to fibre, there is a growing concern that public policy is being developed, at least in the province of Ontario, that will unnecessarily reduce access to fibre with no understanding of the socio-economic impacts of these policies.

An example would be the policies related to the managing for caribou under the federal and provincial endangered species legislation. There are policies and regulations being developed at both levels of government based on limited or incomplete science that could have devastating effects on fibre supply, just at a time when communities are relying on this sector's rebound to stabilize our economies. Communities such as ours in Atikokan are concerned that if this problem is not addressed, uncertainty will be created, investments will dry up, and the stimulus will end.

Second, with respect to access to markets, we are seeing market campaigns being launched by radical environmental groups who misinform and mislead customers about forestry practices in Ontario and right across Canada. Without customers, no sector can thrive. We collectively need to rally behind our forest industry to correct misinformation and better promote the sector internally and abroad. This is so important. Our forestry practices are world-leading, and therefore our forest products should take their rightful place at the top of the customer's order file.

This is not to say that governments have not been supportive of the sector's recovery. Federal programs aimed at assisting in green energy projects, aiding in expansion into emerging new markets, and supporting science and innovation have been instrumental, and should be continued. Provincial governments have made similar investments. But these efforts will not bear fruit without a predictable and affordable industrial fibre supply and without a market strategy that ensures fact-based information about the sector.

In summary, the recovery of the forest sector is real. We are seeing the benefits first-hand in all of our communities, including the first nations in our area. Investments are happening, jobs are being created, and there is growth throughout our region. The sector is sustainable, renewable, and climate friendly. Trees grow, and the products that are made from the forest improve our quality of life.

We need to get behind this recovery and ensure that the forest sector is supported, that public policy considers the social, economic, and environmental pillars of sustainability in a balanced way, and that we promote our forest practices and correct misinformation from misguided special interests. We need all levels of government, federal, provincial, and municipal, to be much stronger in defending the social and economic interests of the communities, businesses, and working families who depend upon the forest industry.

Thank you for this opportunity.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mayor Brown, for your presentation.

We go now to two witnesses via video conference. They are both in Quebec City.

We'll start with a presentation from Jocelyn Lessard, director general of the Québec Federation of Forestry Cooperatives.

Go ahead, please, with your presentation. You have up to seven minutes, sir.

[Jocelyn Lessard, Director General, Québec Federation of Forestry Cooperatives]

Thank you very much, Mr. Chair.

I would also like to thank all the members of the Standing Committee on Natural Resources.

The Quebec Federation of Forestry Cooperatives is pleased to have the opportunity to share its comments with you and appreciates the questions put forward about contributing to forestry renewal.

The federation is composed mainly of forest workers cooperatives. For a short time now, it has also included producer cooperatives. Some cooperatives in our network are active in wood processing, but the vast majority instead do forest work. We are involved in all aspects of forestry, including seedling production, silviculture, roads, harvesting, transportation of timber and, now, harvesting forest biomass to sell for energy.

The federation's perspective in today's presentation was prepared from the standpoint of a network active in the first part of the forestry products value chain, which is forest management.

I will focus on four topics: renewal of the Softwood Lumber Agreement and its importance; a wood production strategy including an industrial shift; the use of forest biomass for heating, a topic I will spend the most time on; and lastly, recognition of the forest management segment in policies addressing Canada's forestry sector.

In terms of the need to renew the Softwood Lumber Agreement, the federation is not involved in the negotiations. However, it is well placed to comment on its importance. When our clients have conflicts, it disrupts our activities significantly.

We consider that the Softwood Lumber Agreement betrays the spirit of the free-trade agreement between Canada and the United States. Several reasons show that the barriers imposed on the Canadian industry tend to protect special U.S. interests, to the detriment of all stakeholders in Canada's forestry industry and all timber consumers on the other side of the border. However, forest cooperatives are well aware that lack of an agreement would be even worse. Therefore, the federation understands and supports the role that the Canadian government played in signing the agreement.

We recommend that the Canadian government contribute to renewing the agreement, which will soon expire. If, on October 12, 2016, we still have no agreement, the entire Canadian forestry industry will suffer greatly because markets will be very strong at that point. However, if the agreement is renewed as is, the federation hopes that article XII is addressed so that a committee can be set up to assess the relevance of considering the exemption of Quebec, since its new forestry regime is now much more based on a free market.

I will now talk about the wood production strategy and the industrial shift.

In Quebec, the minister of forests, wildlife and parks, Laurent Lessard, just received the report on the wood production strategy prepared by the dean of the faculty of forestry at Université Laval, Robert Beauregard. We do not know the details of the report, but we do know that in addition to a silviculture shift to add value to our fibre, the dean also encourages that the government support the industrial shift. This shift would make it possible to significantly increase the economic benefits and total jobs for the forestry sector. Without this shift, we would risk losing jobs in the medium-term within our industry.

In terms of bioeconomy conversion, which should play a bigger role in the Canadian economy, biomaterials, environmentally responsible construction products, green chemistry and bioenergy should be developed. The federation would like the Canadian government to be involved in this conversion, for instance by encouraging investments to help the industry position itself in these new opportunities.

I am pleased that everyone is talking today about the potential of forest biomass for heating. Since 2007, we have been working to develop the biomass industry, but with internal consumption for heating and industrial, commercial and institutional buildings. Six cooperatives have already set up centres to process and condition forest biomass in order to supply our clients through institutional partnerships, including with the Caisse de dépôt et placement du Québec, Fondaction and a few departments. The federation has conducted several economic studies that show the viability of this industry. If you are interested, we can send them to you.

Only in Quebec, outside the Montreal urban area, would it be possible to enhance the value of one million tonnes of residual biomass, which would provide major economic benefits in all the regions. This development would avoid one million metric tonnes of CO₂ emissions by using an alternative to oil and propane and other fossil fuels. This industry could create up to 16,000 jobs, over a quarter of which would be recurring, and it would improve the trade balance by $225 million.

The cost of forest biomass is very competitive. Chips cost $6.57 a gigajoule, and pellets cost $10.26, compared to oil, which costs $22.89 a gigajoule, and propane, which costs $26.36 a gigajoule. In terms of energy costs, it's very competitive.

Despite its major potential economic, social and environmental benefits, biomass has been slow to emerge. The main reasons are the lack of knowledge of potential users about this industry, the security of supply of quality fuel, and the high cost of equipment and infrastructure required to heat biomass.

The federal government could play a role in improving the third aspect by providing financial assistance for the purchase of equipment in order to reduce financing costs and the time it takes to see a return on investment.

In the March 29, 2012, budget, the federal government expanded class 43.2 of Schedule II of the Income Tax Regulations to include waste-fuelled thermal energy equipment. The March 21, 2013, federal budget allows businesses in the sector to take advantage of the applicable measures until December 31, 2015, which is fast approaching.

The Government of Quebec has brought its own measures in line with these measures, making projects of businesses that produce thermal energy eligible for tax credits for manufacturing and processing equipment.

The federal government should extend this measure well beyond December 31, for at least five years. In addition, the federal government could give the industry a much bigger boost. The current accelerated capital cost of allowance for investments in producing thermal energy is not well-suited to this industry because profit margins are very low in the first few years.

A 20% tax credit for waste-fuelled thermal energy equipment for all regions would greatly help develop the industry and would produce major benefits.

I will now move on to the last point, which is recognition of the forest management segment.

Forestry in Canada and Quebec was built on the paradigm that wealth is created only in a processing plant and that upstream activities are considered expenses that should be reduced. Other industrial sectors in Canada have much more integrated value chains that optimize the value of the whole chain. The forestry industry still believes encouraging competition among suppliers means getting the lowest supply cost.

Forest management and supply are generally outsourced with the best risk transfer possible, meaning contract work and that companies own the equipment. All of this means that innovation in forestry is limited, and it is becoming increasingly difficult to promote the forestry trades.

The federation is working with its industrial partners to improve its business relations and is investing heavily in innovation. Furthermore, we would like to thank the federal government, which is providing several programs facilitating this action.

A number of our cooperatives belong to FPInnovations, which is working closely with us on the forestry component. For a year and a half now, our federation has also been a member of FORAC—forest to customer—a Université Laval research consortium.

We receive significant funding from the Natural Sciences and Engineering Research Council of Canada. Lastly, our federation is receiving direct funding from Natural Resources Canada for a research project on processes to harvest and condition forest biomass.

Our federation hopes that the government will continue its involvement in support of forestry research because forest renewal needs a forest management segment that is as strong as the rest of the chain. It also hopes that forestry companies will become eligible for funding, including to modernize forestry equipment.

This concludes my presentation.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Lessard.

We finally go to Sylvain Labbé, chief executive officer of the Quebec Wood Export Bureau.

Please, go ahead with your presentation, sir, for up to seven minutes.

[Sylvain Labbé, Chief Executive Officer, Quebec Wood Export Bureau]

May I speak in English?

[The Chair, Conservative, Leon Benoit]

Sure.

[Sylvain Labbé]

It will ease the communication, so I'll speak in English.

Thank you to the Standing Committee for inviting me for this presentation.

I wear four hats. I'm the CEO of the Bureau de promotion des produits du bois du Québec, the Quebec Wood Export Bureau. I'm also the vice-president and founder of Canada Wood, which represents all of the wood industry in Canada for developing the export market. I also represent the Wood Pellet Association of Canada, because we have the pellet manufacturers in Quebec. We joined with the Canadian association last year. Also I'm representing Canada on the UN Committee on Forests and Forest Industry.

I will present some slides, which you have in both French and English, that will help with the comprehension of what I will present to you. I will present some facts, some trends, and a proposed vision for the future under diversification for Canada in the wood industry.

The first slide is our export of wood products. On this slide you can see that the softwood lumber exports to the U.S. have grown in the last five years. You can see the other diversification. We have softwood export overseas. We have done a very good job in the last five years of developing new markets, notably China. You can see the exports to the U.S. and overseas of other wood products, value-added wood products mainly, structural components, flooring, hardwood.

On the next slide you can see something that troubles me a bit. It is the export and import between Canada and the U.S. of value-added prefab houses and structural wood components. We call it the value-added wood industry. Since 2010, our net balance has been negative. We import more wood structures than we export. We have a problem here.

On the next slide you can maybe see one of the reasons: the productivity of the construction industry compared to the industry sector in Canada. Since 1982, the companies sector has grown to 47% and the construction industry has been stable at best, so our productivity is low.

With regard to some trends in the market, there is a trend to construction industrialization going on in the world. There's more prefabrication in the construction technique.

On the next slide, there is also a green building trend. The construction industry wants to lower its energy and carbon footprint in all developing and developed countries.

The next slide is an example of what we did in China. We had a recent big contract in China with housing. We got the contract because we showed them the carbon and energy reduction on the construction of a country house in China versus a modular home done in Quebec and exported to China. The reduction there was very high. Instead of 114 tonnes of carbon, it came to 30 tonnes. We got the contract because of this presentation.

Now on the trends of where our future market is, we know we will soon face the problem in the U.S. with another lumber V, and we have to diversify our markets. We have done a good job in the last five years. The next step is to diversify our products. We need to add value to our wood industry.

In the next slide you can see the evolution of the middle class in the world, which is the key target market for us in terms of construction. In the small circle you have the middle-class volume in 2009, and in the big circle is the middle class in 2013. I don't have to explain to you where our market will be in the next 10 years.

On the next slide you also have the main global market for prefabrication, wood prefab construction. It's the same thing. In 2008 versus 2017, you can see the growth in China is tremendous compared to all of the other markets, U.S., Germany, Sweden, wherever. China will be a big target market for raw material and value-added products.

Now I will speak to the vision.

I think we have to change our mindset to add value to what we produce. That's a Quebec vision for now, with the Quebec government, but I would like it to become a Canadian vision. The goal is we want to export some prefab construction systems for $3 billion. We export now $3 billion of wood, but I want to take $1 billion of that wood and transform that to $3 billion of value-added. That's a government strategy with industry, research centres, and everybody else involved. We are now at the stage of the strategic analysis: our weaknesses, the opportunity, the trends, and some recommendations. That should be finished by the end of this year. We will develop a concerted strategy and implement this strategy. That will need some thinking outside the box. The wood industry has normally produced wood, but we now have to think outside the box and have new allies in our industry.

The important thing you can see on the next slide is the benefit for Canada. What I present on this slide is the benefits for Quebec only, because I'm talking about $3 billion of export from Quebec only. On this schedule, you can see that in 2014, our actual export of structural wood in a prefab-engineered home was roughly at $250 million. That represents about 2,000 jobs, $8.7 million in direct tax to the Quebec government and $4.5 million for the Canadian government. If we achieve the target, and we will look at the column for 2030, that's $3 billion, 25,000 new jobs, $100 million for the Quebec government in tax, and $52 million for the Canadian government in tax, with very little investment. We need to diversify our market and diversify our products.

The last slide is an example of a contract signed in China in November during Mr. Couillard's mission in Shanghai. We signed a contract for $350 million for 500 homes—it's a Quebec company, Panexpert—and this is for the next five years. That's the first result of our efforts now. We had a $20 million contract that is finishing now, also in China, for prefab homes done by AmeriCan Structures, a small company in Quebec. So the result is already there. Just the number that we sold in the fall is more than what we expected for 2018, so it is going faster than I visioned, and I encourage Canada to develop a strategy to diversify not only our markets, but also add value to our wood industry.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Monsieur Labbé, for your presentation, and thank you to all of you for being here today. We do appreciate it very much.

We'll start the seven-minute round of questions and comments with Ms. Perkins, followed by Mr. Rafferty, and then Mr. Regan.

Ms. Perkins, you have two students from the University of Toronto at the back of the room. Perhaps you'd like to take a minute before you start your time to explain the program they're here with and maybe give their names.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Yes. Thank you, Mr. Chairman.

I'd like to introduce the committee to Sameen Zehra and Brynne Moore. They're both from the University of Toronto. They're here for the Women in House program. It's a shadow program, where an MP has the pleasure of hosting them for the day. They did spend some time with the Supreme Court yesterday, and they've now come to the House today. They've met many people and found it to be quite interesting, and I've enjoyed having them.

[The Chair, Conservative, Leon Benoit]

Thank you very much. Now perhaps we can go to your questions and comments, for up to seven minutes.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

Thank you.

I'd like to start off with our last presenter, please, Mr. Labbé. I would like first of all to say that your representing four industries is just amazing. You must enjoy this work to be involved at such a level. I appreciate everything that all the witnesses have brought here today, but I'm going to start with you. The information that you've given us here is quite intriguing.

On this prefab construction, taking $1 billion and turning it into $3 billion, and getting all that value-added, at what point are you in this process? Is it in its infancy? What is the timeframe that you actually see before it would become viable?

[Sylvain Labbé]

It's in its infancy, I have to admit, but recent results show us that the infant is growing very fast. I would say that the driver of all this is the new laws in different countries regarding carbon or energy reduction in the building sector. Why do we have this Chinese contract? It's because China signed an agreement with the U.S. to reduce their carbon footprint. A lot of regions in China are now forced to show a carbon reduction to have their permit. When we show them the study we did on the example, we got the contract because of that. We were not very competitive before compared to concrete in developing countries. The driver is environment regulations, and the benefit of wood is now recognized, so we have to jump on the train right now.

What we lack now is the productivity. We need to be more efficient in terms of production, lowering our costs, and standardization of volumes. We need to develop this strategy, probably with another industry, the infrastructure industry, with big companies like SNC-Lavalin and all the others. We need to think outside the box here.

[Pat Perkins, Conservative, Whitby—Oshawa, ON]

That's a very good prospect. There has been discussion here at home about how the wood industry is going to benefit from changes to the building code and changing the form of construction whereby anything beyond four storeys could have wood construction. I haven't really heard a determination of what the ceiling is; they've talked about 13 or 14 storeys. That's happening, and they're looking for building code changes. Will that assist you in any way?

[Sylvain Labbé]

Yes. I was part of the strategy with the Wood WORKS! program seven years ago. The Coalition Bois Québec, and Cecobois, I'm the founder of all that, too. The strategy was that we needed to do that in Canada before exporting because in Canada, we build in wood already, or 95% of our construction is in wood, but in other countries that's not the case. Before showing other countries how good wood is in construction, we need to do it. That's the strategy.

The main market for us will be the U.S. and Asia—China—in the future.