Thank you for the opportunity to share perspectives from Canada's forest sector and its workers.
FPAC represents Canada's wood, pulp, paper and wood bio-products manufacturers. We're a $73-billion annual industry, directly employing some 230,000 Canadians across over 600 communities.
FPAC is grateful for the Government of Canada's and provincial governments' recognition of the essential nature of our sector, our products, our supply chain and our workforce.
Rarely have Canada's forest products been of such high profile. From a 241% increase in the demand for toilet paper to the need for sanitary wipes and paper towels and pulp that goes into protective masks and hospital gowns, wood pellets, biofuels to green energy that feeds heating systems in provincial power grids, we've embraced our role as an essential provider. Our workers and partners along the supply chain have been incredible. Mary talked a bit about that. We can't say thank you enough to our mill workers, our further manufacturers, truck drivers, railroaders, retailers...I could go on.
Given the moments of protectionism we've seen in recent weeks, I'm also proud that we have this sustainable and valuable natural resource right here at home so we can provide for Canadians.
Despite the current headwinds, I must say that our sector is quite optimistic about the future, but there's no doubt that the next two to three quarters are going to be brutal.
That said, we are looking to 2021 and beyond, and we view our sector as having an opportunity to be one of the bright lights in Canada's economic recovery, especially in our rural and northern communities. Wood products are increasingly becoming the building material of choice. They come from a renewable source and from among the best-managed forests in the world. Our wood waste isn't wood waste at all. Wood chips from our sawmills are being turned into everything from toilet paper to bioplastics. Paper towels are being turned into biofuels. It's our contribution to a more circular and lower-carbon economy.
Our industry is not looking for a bailout. What we're looking for is bolstered cash flow supports to keep our businesses operating through these difficult next two to three quarters. Remember, we're an industry that hit our low point in the market in 2018, and 2019 was difficult. About $3.6 billion of Canadian industry softwood lumber duties are sitting in a U.S. bank account now, and we can't wait to get that.
Across the country, over the next 36 months, we have hundreds of millions of dollars in shovel-ready projects, ready to go, that will further improve environmental performance, drive economic growth, and sustain jobs in northern and rural communities, where there are often few options, or in some cases where we're the biggest game in town.
The rest of 2020 is going to be about survival.
Thus far, well-intended federal programs like the wage subsidy program are leaving a large majority of players in our sector and our workers behind, and the effectiveness and speed at which we need liquidity supports remains a big question mark.
This is what we're facing. Lumber markets have collapsed, with a nearly 40% decline in prices in recent weeks, leading to the temporary closures of dozens of sawmills. At last count, we were at 39 sawmill closures across the country, and this has put thousands out of work.
As well, some of those essential products that I talked about earlier are made possible because of Canada's pulp mills, but with sawmills going down, our pulp mills are starting to suffer. They can't get the chips they need to make their in-demand products, so some of them are starting to announce downtime as well.
In addition, with offices closed, stores closed, advertising revenues down and schools out, our newsprint and paper markets are collapsing around us as well.
Despite falling markets, with increased supports there is an opportunity to keep more of our mills operating and more of our people working. Right now, most sawmills in Canada have come out of their winter harvests and our log yards are pretty full, so it would be great to process more of our log inventories. This is where an improved wage subsidy program would be of interest.
We're a highly integrated sector. Our sawmills are our industry's heartbeat. We need to find a way now to keep our sawmills operating so chips can continue to feed our pulp and paper mills. If we don't have chips flowing, our industry's biggest artery is cut off, and thousands more will be out of work.
Here are a couple of proposed fixes on the wage subsidy side.
Many of our companies have multiple segments and mills, and they just don't meet the criterion of a business with a 30% revenue decline. If there were a measure to consider a mill-by-mill approach or a more segmented approach, thousands more people could continue to work.
We're also a proponent of a sliding-scale approach. We found the 75% threshold to be very generous and of great interest, but we'd be equally interested for our companies facing a 10% or 15% decline to maybe qualify for a 40% or 50% subsidy. That creativity would be a big help to us as well.
Wage subsidies aren't a magic bullet. Our biggest issue—and I think it's similar for our friends in agriculture—is about liquidity: managing increased operating costs, working through falling prices and markets, and making our credit payments. We've just not seen the evidence yet that the BCAP out of EDC is going to deliver what we need.
We need supports now that move with speed and ease in the face of markets that are falling off a cliff, measures that are not going to force companies to provide more security. Many just don't have the flexibility to do that. We need measures that are responsive to the reality of the crisis, and we need our lenders to be prepared to take more risks than our main street banks.
We have a few other ideas. I'll defer those, maybe, to the Q and A portion. I have a couple of suggestions around worker supports that we're working on with our friends at USW and Unifor. I'll defer those to the Q and A as well.
I look forward to your questions. Thank you.