Natural Resources Committee on March 10th, 2015

[The Chair, Conservative, Leon Benoit]

Just go ahead.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

My first question is more specifically for Mr. Labbé.

In your presentation, one piece of information really bothered me. It is not your fault, because those are the facts.

I had the opportunity to work for a while with Maisons Laprise. In my riding alone, we have small and medium-sized businesses such as Goscobec, Maisons Ouellet, Art Massif and LINÉAIRE-ÉCO-CONSTRUCTION. The expertise of the people in my riding means that we can build both a small $30,000 cottage and a luxurious $4 million house.

Most of them even have patents. We were talking about added value. The prefabricated and modular homes are a great example of that. In terms of the numbers, I knew there was a significant drop in the two years after the 2008 crisis. When people don't have money, they will not often build houses.

However, we are seeing some recovery. But your figures are showing that, despite the recovery, we are facing a trade deficit, meaning that we have been importing more than we have been exporting in the past three years. This trend seems to be significant. I don't understand this situation. Having worked for Maisons Laprise and being friends with people from Art Massif and LINÉAIRE-ÉCO-CONSTRUCTION, I know the people in that sector well and I don't understand what is happening.

Could you shed some light on the issue and explain this trend to me?

Furthermore, in light of the expertise and resources that we have, can we do something smart to reverse this trend?

[Sylvain Labbé]

I am going to make you even more disappointed. The situation is even more disastrous.

In the past two weeks, three or four home builders have gone bankrupt. They were selling their products only in Quebec. I will not name anyone here, but my group, the QWEB, includes home builders and structure manufacturers, such as Maisons Laprise.

The problem is that Alberta is the main importer of houses. Why is that province importing houses from the U.S. when we could provide them with houses and we could do the same in eastern Canada or in British Colombia? It is because of the price. It is cheaper to bring the homes from large U.S. factories that produce small standardized units in large quantities. We need to change our business model. In the prefabricated homes sector, our business model comes from companies like Maisons Laprise, Modulex-International Inc. and Viceroy Homes. They work with smaller and more specific contracts.

We must change our model, produce more and adopt standards. We need to change our structure to be able to increase our productivity, reduce our prices and become competitive. There might be fewer businesses, but they will be larger. The small ones will continue to operate on the local market. Once we leave our local market, we must be competitive. To do so, we must invest, whether in development, innovation or robotics. We must integrate into these new markets.

The reasons are clear: we have not been competitive and we need to be. That is the goal of the project.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

If you have any suggestions on how the federal government could support that, it would be a really good idea to make them.

[Sylvain Labbé]

Ten years ago, we had a federal program whose objective was to diversify the markets. That was the Canada wood export program, which allowed us to develop the Chinese market. Product diversification is only one aspect of the program. I feel that we also have to consider the increase in added value. That program was only $10 million a year, which is nothing. The fact remains that it helped open doors. I think the government must renew the program, which ends in 2017, and include the added value in the system.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

There is another program, the temporary initiative for the strengthening of Quebec's forest economies. Canada Economic Development for Quebec Regions was contributing to it. I don't know why that program was only a one-time thing. It only lasted from June 2010 to March 2013.

Earlier, Mr. Lessard pointed out the importance of industrial conversion and diversification. Clearly, that goal has not been fully achieved. Could you both tell me whether that program provided meaningful support and whether, since its termination, the lack of any direct support is being felt?

The program was basically for projects that helped increase productivity by acquiring equipment or new technologies or that helped improve innovation capacities.

The program ended in 2013 and I would like to know how you feel about that.

[Jocelyn Lessard]

I know that the Quebec natural resources, wildlife and parks department made that program available to support some projects. It was during a difficult time where the profit margins of companies were very low. They therefore did not have a lot of money to invest. I am not familiar with the issue in detail, but to my knowledge, the lever the program provided was very much appreciated and used.

[Sylvain Labbé]

I would add that—

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In my riding, there are also a number of solidarity co-operatives in the RCM of L'Islet, such as the Coopérative de gestion forestière des Appalaches.

Mr. Lessard, was the program just as easily accessible for the co-op movement?

[Jocelyn Lessard]

As I explained, we are working in the forest supply and management sector. It was very difficult to benefit from any assistance up front, because that was likely to violate the agreement.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

Mr. Labbé, do you have anything to add to that?

[Sylvain Labbé]

We used that program to diversify some plants, but the reality was that the wood industry was in crisis. The program helped the companies survive. The philosophy is completely different now. If we reinstate the program, the objective will be economic growth. There is some growth now. It is time to reinstate this program not to help companies survive, but to develop them. The philosophy is completely different.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Lapointe.

Ms. Block, and then an NDP, if you have questions, and then Mr. Trost.

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

I want to join my colleagues, who've already had an opportunity to ask questions, in welcoming all of you here. It has been a very interesting study.

I have questions for Mr. Labbé, but before I get to those questions, Your Worship Mayor Brown, I want to congratulate you on the recent recognition that you have served as one of the hardest working small-town mayors in Ontario.

As a former councillor and mayor of a small town, I know full well the hard work that you must be doing and how you bear the burden of wanting to see economic development in your community.

I'm pleased to hear that the resurgence of the forest sector has been very good for your community.

[Dennis Brown]

Thank you.

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

Mr. Labbé, I want to refer to your opening remarks. In the package we received, toward the end, there's a page with the title “Vision for 2030”.

Coming out of the 2008 crisis, what are the priorities of the Quebec Wood Export Bureau?

You have a vision here and there's a goal listed, and then perhaps a concerted strategy, but what are the priorities and how did you identify those priorities?

[Sylvain Labbé]

We are in the process of setting up this strategy with the industry, consultants and the government.

There are markets where we can export structure products, but as I was telling the previous speaker, our costs are too high. We need to reduce our costs by increasing prefabrication. We are currently developing a strategy to do that.

In addition, the value-added products industry is not quite ready yet to produce enough quantities and it will need time to adapt to this strategy. There will certainly be assistance programs to make the adaptation easier. We have done a really good job in diversifying the markets for our wood. We now have to work on diversifying the structure of our products by adding value. It is more complicated to do that, but we must start right away.

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

I understand that over the last decade the Quebec Wood Export Bureau has received funding from NRCan on various projects. These include helping promote Quebec wood products overseas, member support, offshore market research, and technical studies.

Can you provide to the committee an explanation of how what you're focusing on through these projects helps you to move forward with your priorities?

[Sylvain Labbé]

The assistance that we have received comes from a program that was set up in 2002. At the time, it was the Canada wood export program. This program was for all of Canada, and Canada Wood was benefiting from it. The funded activities were geared toward opening overseas offices, providing access to markets in countries in Asia, in Europe and in the Middle East, as well as promotion.

However, our objective was mainly to find a niche for our softwood lumber or hardwood lumber, because we were dealing with that American problem. Now, we have done the work for China and I propose expanding this program to diversify our products by using the same program that covers all of Canada and the entire industry.

[The Chair, Conservative, Leon Benoit]

You have a minute left.

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

Okay, then I'd like to ask Mr. Hanlon a question.

I want to ask about funding that the Wawasum Group would have received from NRCan in helping to form a partnership with Atikokan and Whitesand. This funding was primarily used, I think, for staffing and training. Could you tell us a little more about that partnership?

[Joe Hanlon]

That was before my time, but my understanding, as I said earlier, is that it was for the three mills to have a larger volume and to try to have the same equipment in order to reduce costs, so that if somebody had a part, we could trade around. Then one company sold out, but we continue to work with Great Northern Bio Energy and with Whitesand, because Whitesand is another first nation community. We'll have two-thirds of what we originally went into.

The funding has helped us—yes, you're right—to hire somebody and have the operation working, to develop our business plan, to move it to the next stage with respect to the class 20 and the class 10. It's just getting to that point. I didn't come here to shoot down the programs. When we talked, we asked what some of the things are that we could come here to talk to the panel about. It's basically just that continuity. It's trying to get a program that goes.

The other subject that I don't want to lose here concerns the loan guarantee. Many first nations don't have big pockets, and when you build a pellet plant, it's going to cost $20 million. There's a huge capital investment there.

If you go to the banks...as Mayor Dennis mentioned earlier, when a company was there, they didn't want to give money for a pellet plant. Look at first nations. This is a company that has established funds, and they don't have it.

A loan guarantee would go a long way in regard to supporting the work of FedNor and in regard to all the other funding we get. It will go there to support it, to ensure that the project goes from the beginning to the end.

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

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Block.

We have Monsieur Caron, followed by Mr. Trost.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

As the witnesses know, we are studying the renewal of Canada's forest industry. I would therefore like to ask each of our four witnesses to summarize in one minute the main recommendation that they would like to see included in our report.

In one minute, what do you think is the priority? I know that you don’t have a lot of time, but what do you think would be the most important aspect?

We will start with Mr. Hanlon followed by Mr. Brown and, finally, the witnesses in Quebec City.