Natural Resources Committee on Nov. 27th, 2025

[The Chair, Liberal, Terry Duguid]

I call this meeting to order. Good morning, colleagues.

Let me start as we always do by acknowledging that we are meeting on the unceded territory of the Algonquin Anishinabe nation.

Welcome to meeting number 16 of the House of Commons Standing Committee on Natural Resources.

This meeting is taking place in hybrid format, pursuant to the Standing Orders. For interpretation, those in the room can use the earpiece and select the desired channel. I'll give a reminder that all comments should be addressed through the chair.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, September 18, 2025, the committee resumes its study of the forestry industry.

We welcome our witnesses.

From the Association of Lumber Remanufacturers of Ontario, we have Steven Rustja, president.

Steven, welcome.

From FP Innovations, we have Stéphane Renou, president and chief executive officer.

Welcome.

Thank you for taking the time to appear with us. We will begin with opening remarks. You each have five minutes.

We'll start with you, Mr. Rustja. You have the floor.

[Steven Rustja, President, Association of Lumber Remanufacturers of Ontario]

Thank you, Mr. Chairman, for the invitation.

My name is Steve Rustja. I'm the president of the Association of Lumber Remanufacturers of Ontario and the co-chair of the Pan-Canadian Value-Added Alliance.

I've been in the lumber business for over 40 years and have spent the last 25 years at one of eastern Canada's largest remanufacturers, including the last 15 years as both a partner and the vice-president of trading.

I have served on the board of the North American Wholesale Lumber Association since 2018. I was on the executive committee from 2020 to 2024 and was chairman in 2023. NAWLA is the industry's largest association and represents wholesalers and manufacturers in both countries. I've been actively involved on the softwood lumber file since 2006.

These roles have allowed me to develop a relationship with leaders on both sides of the border, as well as given me a deep understanding of the impacts on their businesses.

ALRO and the pan-Canadian alliance represent independent remanufacturers across the country.

No group in Canada has been hit harder by the duties than ours. Here's why.

When anyone exports softwood lumber to the U.S., duties are imposed on the value of the goods crossing the border. For primary mills that includes the price of the lumber FOB mill. For remanufacturers, it includes not only the price of the lumber, but also our domestic freight, our labour, our milling, our waste, our overhead, our rent and even if we can make them, our profits. Our studies have proven that this effectively doubles the duty paid on the lumber itself.

This is by far the most punitive duty applied to any segment of the lumber industry, and yet we have never been accused of being subsidized. We have no tenure. We buy wood at full market price. We pay the same price or more as our U.S. counterparts pay, and our transactions are all at arm's length. Simply put, we are innocent victims in a drive-by shooting.

Remanufacturing is labour-intensive. This is why our sector exists, because primary mills cannot economically produce low-grade lumber. An ALRO study showed that we employ seven times more people per board foot than our primary mills do. Every piece of low-grade lumber must be remanufactured somewhere. The only question is where and by whom.

Under the 2006 softwood lumber agreement, independent remanufacturers in Canada thrived. We used our profits and duty refunds to reinvest heavily back into the Canadian economy, Canadian plants, Canadian equipment and Canadian workers. However, with the 35% retroactive duties—I can explain that if you want—and 45% deposits, we cannot survive. The only thing we can do now is export our jobs.

Most independent remanufacturers are small or mid-sized companies. They cannot operate at a loss for long. Shutdowns happen fast, and they're happening right now. Companies are laying off workers. Some are preparing to close permanently.

We've been pushing relentlessly for negotiated settlements since 2015. In 2018, at a round table with Minister Ng, we said that if you're going to make a bad deal, it's better to make a bad deal now. Back then, Canada was arguing for 29% market share. The U.S. was at 27%. Today, Canada is shipping around 23% and falling. A bad deal then would have been a good deal today.

I'm here with the clearest message I can give: The time is up. Our industry cannot wait another year. Without immediate action, there will be almost nothing left to save. Our industry will be decimated.

Therefore, I repeat our message from 2018 even louder today: If we're going to make a bad deal some day, it's better off that we make that deal today.

We need the Government of Canada to take two urgent steps.

The first is to make a deal now.

The U.S. may not prioritize softwood lumber. I get that—that's their decision—but Canada can and must. We must tie softwood lumber to what the U.S. does care about.

Don't sign a CUSMA if the softwood lumber issue isn't resolved. Don't agree to the golden dome if softwood lumber isn't resolved. Make it clear that Canada is prepared to ship less, if that's what it takes. Do whatever needs to be done.

The second thing we need to do is keep the industry alive long enough to reach that deal.

There's no single fix. There's no magic bullet. Some companies can survive with the BDC loans that the government has put out. Others would benefit from the government buying back duty deposits. Some require assistance to lessen the impacts of high deposits. Retooling and new foreign partnerships may help further down the road, but those will take time.

The truth is that we need all these supports and more, and we need them immediately.

When a deal is finally reached, independent remanufacturers must be explicitly enshrined in the softwood lumber agreement, as we were in 2006.

We will need direct quota allocations and the duty must be based on first mill value, exactly as the Canadian and U.S. industries supported in the last agreement. Under those conditions this sector can once again become a Canadian success story.

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Rustja.

We'll now go to Mr. Renou.

You have five minutes or less.

[Stéphane Renou, President and Chief Executive Officer, FPInnovations]

Thank you, Mr. Chair.

Good morning. My remarks today will be in English, but I'll first speak a bit in French just to say thank you.

I thank you all for your invitation. My opening remarks will be in English, but I will be pleased to answer your questions in the language of your choice. I promise to make the same number of grammatical mistakes in both languages.

I would like to start by thanking the federal and provincial governments for all their help and leadership in their recent announcements. This will help. It's a piece of the puzzle, but it's a good piece.

Let me first underscore the situation we're facing today, as my colleague here said.

A few years back, the return of capital in the lumber industry was, let's say, less than 5% overall, which was barely making it, and that was with a 15% tariff. Now we're facing tariffs of between 35% and 45%. Most of the mills are actually operating at a loss today, just hoping to keep market share and getting into a competition of who's going to be the last one standing.

That's the situation. Today, I'm going to make a case for transformation, but before I do that, let me introduce my organization.

We are FPInnovations, a not-for-profit independent research and technology centre operating across Canada. We have offices in Vancouver, Montreal and Quebec. Our mission is quite simple. We're there to help the forestry sector be more competitive, more diversified and more innovative. We do not develop technology to turn a profit. We do not pursue science for the sake of publishing. We are not an industry lobby. Our job is to bring clarity to a world that is crowded with misinformation, hype about science and, I would say, crazy dreams about what it can do. We are there to be honest brokers of science. We bring science and data to the table for all to see and analyze. We try to innovate in the mills, not in labs and not in papers.

Regarding where we are in the industry, Canada has a highly integrated forestry industry. This means if one falls, the other falls. It's complex. Tariffs are disrupting that equilibrium right now, and it's not just a passing crisis. If we resolved the tariffs tomorrow, we would still have challenges that need to be addressed. Tariffs just enhance the challenges we're facing.

Transport costs, long distances to move fibre and constantly changing rules about access to fibre have been eroding competitiveness year after year over the last 10-plus years, especially compared to the Europeans and South Americans, who are operating on plantations. It's agroforestry, if you like. It's highly efficient. We're not there.

On top of that, the complex system of construction in Canada increases the cost to a level where making an investment here may be a lot more expensive than elsewhere from a pure construction cost and return perspective.

Fundamentally, we have to remember that we have the largest forest resource in the world, or close to it. We only harvest 0.2% of it. We don't have a problem of overharvesting in Canada—to the contrary. We have a problem of getting our act together for the industry.

What should we do?

First, we have to remove our rose-coloured technological glasses. There is no magic solution, only hard work going forward. We need solutions that are grounded in reality, and that's the scientist talking to you, by the way. We all have dreams. We all have skeletons in our closets and bad decisions we made in the past. We need to move past all that and look at the economic and science data and make an educated choice. We must modernize our industry and diversify quickly.

Canada should invest in the small number of mills that will survive and be globally competitive. Yes, I said “small number”. Not all of them will make it. Sawmills need to be modernized and be key players in addressing the housing crisis, of course. This can be achieved through vertical integration into higher-value markets, like my colleague talked about. Engineered wood, mass timber and energy generation also need to be thought about. Co-locating those activities around a sawmill to make it resilient and grounded is capital. Transport costs are often our biggest challenge.

Another point is we need to adopt a regional approach. There is no one-size-fits-all solution. All solutions are regional. Each region has its own fibre basket, transport realities, energy demands and community contexts and constraints. These communities are often rooted in forestry for generations. They are essential partners, and they are the first partners, because they will fight for their industry.

We must look at the problem from a regional development perspective and a sustainability perspective and support high-potential areas. Not all areas are created equal. The faster we come to that realization and help the ones that can survive, the better off we will be as a country.

Where do we need help? Support innovation, not invention, not development of new knowledge, but innovation. These are things that work in a mill for real now. We don't need shiny objects for press releases. It's innovation at the mills.

This is a team game. This is not a blame game. It's a shared problem across jurisdictions. On the federal side, the tariff file is highly important, of course. The fibre access file is mainly a provincial file, but it's not independent. Industry must play its role in modernizing and diversifying quickly. Institutions like mine need to focus and forget about the long-term future or the fun things and focus on what helps now.

Transformation is our only option going forward.

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

We're now going to our rounds of questions.

We are going to start with Mr. Tochor for six minutes.

[Corey Tochor, Conservative, Saskatoon—University, SK]

I thank our witnesses for being here today.

Mr. Rustja, what are the people like, who you represent who work in forestry?

They are good, hard-working people, I'm assuming.

[Steven Rustja]

I consider myself to be one of them. Yes, I think they're very hard-working people.

The lumber industry in Canada is older than Canada itself. It's interwoven throughout the country. There are literally towns that are solely dependent upon the lumber industry for their own existence.

I would suggest that they are very hard-working people.

[Corey Tochor, Conservative, Saskatoon—University, SK]

They're good Canadians. They play by the rules. They pay their taxes. They follow things.

For the last 10 years, they've been kicked around and have suffered because of the mismanagement by the Liberal government of many different files. We talk about the transportation costs being through the roof. The carbon tax did not help that and now they're shifting it to the industrial carbon tax, which is just a shell game to hide from Canadians how much they're actually paying.

As frustrating as it would be, for the last 10 years the Liberals have been obsessed with reducing emissions and chasing different technologies to capture carbon. The real-world solution to that, and the most simple and most Canadian thing, is to take a Canadian tree with carbon, cut it down and make it into products, like tables, chairs and houses. Instead, we've seen this government go on a billion-dollar spending spree on a whole bunch of wild ideas that would actually do what trees can do and what our industry can do.

How do your members feel about the last 10 years of all these wild policy changes that the Liberals have brought in?

[Steven Rustja]

It's a great question.

The last 10 years have been extraordinarily frustrating. It's been frustrating from the perspective that we had an industry that was thriving under the last agreement. It expired and there hasn't been a renegotiated settlement.

[Corey Tochor, Conservative, Saskatoon—University, SK]

On that front, Justin Trudeau had this great relationship with the U.S., apparently, when it was a Democrat in the White House, but he was unable to get tariff deals like when the Conservatives were in power. Is that correct?

[Steven Rustja]

That's correct.

[Corey Tochor, Conservative, Saskatoon—University, SK]

It must be incredibly frustrating for you and for Canadians across Canada when we get into an election. For the last 10 years, they've vilified the Americans and—let's call it out—the Republicans in the States. Every chance they got, they ran down the Republican Party and the different leaders in a different country. It is bizarre in itself to try to influence another country's politics. An election happens in the States and a Republican gets in and they seemingly keep poking him in the eye, wanting a fight for political benefits. After the election, it's been written how the Liberals have benefited by having this blowout with the States for their political benefit.

Is that a sentiment shared within your industry?

[Steven Rustja]

Listen, I can't speak for people's political views in terms of how everyone is reacting toward the scenario you spoke about.

I can tell you that the frustration exists because there's been a lack of a deal. The coalition on the U.S. side is a strong organization. I will tell you that U.S. law really does support industry. That petition was done in 2015 with less than 20 petitioners or companies suggesting that Canada was subsidizing the industry. The U.S. government has been fighting that battle for the last 10 years.

[Corey Tochor, Conservative, Saskatoon—University, SK]

I understand that for partisan reasons, you don't want to speak for your membership, but the frustration is that you have been used as a political football. I think the Department of Industry in Canada is seemingly picking winners over losers. They're aggressively mentioning other industries but ignoring softwood lumber in the last few quarters.

Is that accurate?

[Steven Rustja]

I would suggest that over the last couple of quarters, the Government of Canada has stated repeatedly that lumber has been a priority. I personally sat in a couple of committee meetings with some ministers who have said that directly—

[Corey Tochor, Conservative, Saskatoon—University, SK]

What are their actions? What do they deliver with those kind words?

[Steven Rustja]

Thank you. I was going to finish the statement.

I have personally been in there when they've delivered those statements, when they said that Canada's priority.... The communication I get back is that the U.S. is not interested in playing, that they don't want to have a conversation. The frustrating part, as I mentioned in my opening statement, is that Canada could choose to make it a priority.

I get that the U.S. does not, but Canada, in my opinion, could choose to make it more of a priority.

[Corey Tochor, Conservative, Saskatoon—University, SK]

When you hear statements like, “who cares”, would that fit their actions? Seemingly, their words aren't lining up with their actions. It seems like their actions would fit with the words, “who cares”.

[Steven Rustja]

I can't speak to the “who cares” statement. I believe there's more that could be done to push this agenda to the front burner and make sure that the Canadian industry is taken care of and made a priority.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you so much for your testimony, and I thank the hard-working men and women in your industry.

I do think there's a bright future for forestry. We're in a lumber town. Ottawa was built as a lumber town. It is a solution for many of the ills that face our country. We just need a government that does care.

[Steven Rustja]

Thank you for your questions. I appreciate them.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Tochor.

Thank you, Mr. Rustja.

Next is Mr. Guay for six minutes.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

I want to thank the witnesses for being with us this morning. It's much appreciated.

Despite what Mr. Tochor said, we do care. Things taken out of context often lead to this.

Yesterday we announced a series of measures. You both referred to that, and I'm assuming you both read those.

I fully agree with your statement that it's a basket. You both went there, about this basket. This is not one silver bullet that's going to address the industry.

We have the BDC—you mentioned that—adding another $500 million to the $700 million. We have the transformation program, the $500 million that was announced prior, specifically for transformation.

I would like to hear from you, Mr. Renou, on what the best use of that $500 million is. You talk a lot about encouraging transformation for the industry. We know this whole trade war with the Americans has been a 40-year problem. It comes and goes under all kinds of governments, by the way, so I don't think we should debate that too long.

I'm really interested in hearing from you—and if you have something to add, Mr. Rustja, I'm also interested—on the transformation required for the industry and how we can best use that $500 million.

[Stéphane Renou]

It's a great question. It's a difficult one, but it's a great one.

I think it's being honest with ourselves about what can happen in the amount of time that we have to transform this industry. That's the most important thing. We often fall in love with great principles and dreams that will not be achievable. We over-constrain our problem. One of the biggest difficulties in transforming industry is certainty—certainty of policy and certainty of access to fibre. Any mill can make a business case if they know that they will have this access to fibre over the next 10 years. In several provinces, you don't know in one year where you will be harvesting and if you will be capable. That's a challenge.

Other constraints come from the other levels, including the federal level. Will it be from the environmental side or from the “how you can use the money” side? It's not one party versus the other. It's overall. Everybody is fighting for their piece. I invite everybody to look at it the other way. What are the options for transforming in a certain amount of time that is reasonable, and how do we enable them and not push on them? All management problems go “up down” or “down up”. Government has a tendency to create things and push down. We need to hear what's feasible from the down. It's typical for a sawmill to do one more product. Then they need certain things to get there. If we gather that and we link that with the fibre they have access to, we have a chance, but we have to be really granular and look at each ecosystem, one after the other.

I will go back to ecosystems and finish there. I want to give some time to my partner here.

Don't look at sawmills, pulp mills or forest workers independently. Look at regions. If you see a pulp mill go down, in the next month you'll see four sawmills go down and vice versa. If the sawmills are not making money, the pulp mill doesn't have chips. It goes cold.

We need to look at the ecosystem and resolve it as a business problem and as an economic problem regionally. That will be the best thing that we can do fast.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Mr. Renou, may I ask you, on behalf of the committee, if you have ideas like that about different regions or different products, if you would be kind enough to submit them to the committee in writing? You must have studied this. We won't have time to debate all of this today. It would be much appreciated. We would love to incorporate that into our findings.