Thank you very much, Mr. Chairman. I'm glad to be here.
I want, as David said, to repeat a couple of things.
The pulp and paper industry is merely a hundred years old. For the first seventy years, up until about 1975, it enjoyed a very good life. It always had its three- to five-year cycles. They were tied to wage negotiations or inventory levels.
Canada had five manufacturers of paper machines, and paper machines in those days were $50 million. In the seventies, they were $225 million projects. So it was a pulp and paper industry with a huge manufacturing component.
Margins up until the seventies were 20%, and consumption of paper was increasing by 1% to 2% a year. Things started to change in the 1970s. The power went from the producer to the consumers, and the consumers were both the publishers, which grouped together--some 10 to 12 publishers now in all of North America buy 60% of the newspaper produced--and the consumers. They started to advocate for recycling mills and things like that.
In the seventies, business in North America, more than ever, was done north-south, but our infrastructure was east-west. So we started to see things like shipping to San Francisco from the middle of the country being three times as expensive as shipping to Japan. You could ship from central Ontario to Vancouver to Japan for less than half the price of shipping to San Francisco.
Technology was not in Canada by the 1970s. It had moved to Finland, Sweden, and Germany. A radical shift happened. We all went from North America. The paper machine suppliers disappeared in the seventies, and we went to Sweden for the technology.
Twenty-four newsprint machines were under construction in the early 1980s, almost 100% supplied by Scandinavia and Germany. The demand for fibre was huge, and it was fueled by increasing demand plus a policy that said we're going to subsidize the construction and import of some of these technologies. Stumpage came in to take advantage of that. The industry responded. There were five-year contracts. Things started to change. Some years had zero. There was more tonnage to drive down the cost. So every mill made more and more. And mills became publisher-owned.
In the 1990s, we saw fibre pressures and cost pressures. South America and China, by that time, were building more machines and faster machines. The technology is now over there. We're behind. We cannot compete.
I agree with Lynn. It's not a sunset industry, but the technology has moved offshore.
What I think we need to do is look again at the pulp and paper industry in the guise of a biofibre industry that includes paper, lumber, and products like that. The industry has to reinvent itself, and the federal government has to provide the national policy that will allow that to happen. I don't think it's a question of 100% aid. As long as oil is $60 a barrel or more, the pulp mills will survive and can compete.
Thank you.