Subcommittee on Canadian Industrial Sectors Committee on March 12th, 2009

[The Chair, Conservative, Dave Van Kesteren]

Sorry, Mr. Bouchard, we're following the same order.

Monsieur Gourde.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

It's a pleasure for me to welcome the witnesses. I'm pleased that you are here because the forest industry is a concern for me as well. My question is for all of you.

Have research and development programs been useful for the forest industry?

[Avrim Lazar]

It's absolutely necessary. When businesses can pay less for research, government support is very important. That helps us a great deal because, in future, we'll have to find new products and new ways of manufacturing those products. Our future depends on our ability to find them. However, if we don't survive, that investment will be lost.

[Guy Chevrette]

I'd like to add that that depends on the type of assistance the program would provide. If it's a tax refund and we don't make a cent, we'll be in the hole. That doesn't help. It has to be a direct refund from the government to business; otherwise that wouldn't be much of a gift. We would invest, and as we wouldn't make any money, there wouldn't be a tax refund. So everything depends on the way it's written in the program. It quite often varies from one department to the next.

However, I think that research is essential, particularly since some believe that processing is a matter of spontaneity. It often takes lengthy studies on markets, the product and a product's resistance. When you listen to some politicians talk about secondary and tertiary processing, you'd think it simply springs into being and in the world the next morning. Sometimes it takes 10 years to put a product onto the market, as you know.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chevrette.

We're currently experiencing a market crisis. Fewer lumber, chip and pulp products are being sold, and prices have declined. Will that market pick up again, or will emerging products offset them and secure the forest industry's future?

[Guy Chevrette]

If the primary processing industry doesn't deliver a quality product at a reasonable price, the secondary and tertiary processing industries will suffer. The primary processing industry must be competitive and deliver a high-quality product at acceptable price in order to enable the secondary processing industry to come up with emerging products. In Quebec, we are number one in Canada for emerging secondary and tertiary processing products, and that's never said. Ontario is roughly on the same footing as Quebec in that regard. We're on each other's heels, but we're far ahead of British Columbia.

It's true that the variety of our basket of products will count for a great deal in future. The more we diversify our products, the more we'll be able to export internationally. Not being a prisoner of a single market like the United States would no doubt be a major advantage for the Canadian Industry.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

So you acknowledge that the Canadian government's efforts, through certain programs of the Department of Natural Resources, to diversify new products—

[Guy Chevrette]

We can't blackmail you into providing assistance. We can't threaten you with producing somewhere else, like Chrysler and Ford, in the automotive industry do when they say they'll shift their production to the United States.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Mr. Chevrette, have the programs put in place by the Department of Natural Resources over the past 15 years helped develop new products in Quebec?

[Guy Chevrette]

Yes, some products have been launched, of course.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Will there be commercial successes in future?

[Guy Chevrette]

If you don't help the industry, those companies that have launched new products won't be able to continue. People don't seem to understand the urgent nature of the situation. The automotive sector, Mr. Gourde, needs to get its head above water and to breathe in order to be able to continue; you must understand that the forest industry, which has 325,000 more workers, is asking you for the same thing.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chevrette. I have other questions.

Do your members use EDC and the Business Development Bank of Canada to get financing?

[Guy Chevrette]

They will if you offer them an acceptable commercial rate. I told you that it was Export Development Canada... Call that agency if you want, but establish a special envelope for the forest sector.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Are your members already going through those agencies?

[Guy Chevrette]

Yes, some are through the cooperation of one minister.

[The Chair, Conservative, Dave Van Kesteren]

Sorry, Mr. Gourde, your time is up.

Mr. Gagné, you wanted to jump in on that last one, so I'll give you a minute to do that.

[Renaud Gagné]

Mr. Gourde, it's true that R & D investment is very important. However, given the industry's current situation, if you can't get through the crisis, you'll be facing a problem when the recovery comes. People don't register for training courses because their parents who work in a plant lose their jobs. There won't be any young engineers or technicians. We absolutely have to provide support at the grassroots level if we want to get through the crisis.

We're starting to develop a policy on wood utilization in Quebec. For example, the Chantiers Chibougamau company is building a soccer stadium using wood beams. That's what we're all seeking in the case of federal and provincial public buildings.

[The Chair, Conservative, Dave Van Kesteren]

Mr. Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Gagné, you made a number of public demands in recent years that assistance be offered to the forest industry, demands that were focused particularly on workers, your members.

What was the nature of your demands, and was there a response to them?

[Renaud Gagné]

As part of the consolidation, we know that, for all kinds of reasons, the forest sector in Québec did not produce as much as expected. So there have been reforms to reduce wood volumes. We've taken part in all kinds of ways to consolidate this industry. If we wanted to retain the young labor force, we needed to enable older workers to leave the industry, and we requested a program for older workers. It's all well and good to have an initiative to enable workers to retrain at the age of 55, but when an individual has been working at a sawmill for 30 years, as a region, it's hard to think about retraining that individual. I have friends in the Outaouais who have enrolled in the program. There are eight individuals in the program. There was available money, but people weren't registered. So the former POWA program would have given us a real hand in retaining the young labour force. We currently have plants that have managed to finance themselves out of workers' pay. Either they have contributed more to the pension fund or they've cut their vacation pay to enable people to retire. Why? To retain the youngest workers because tomorrow, in two, three or five years, we won't conceal the fact that they'll be leaving plants by the hundreds. So people 52, 53, 54 years of age are in the plants and aren't eligible for retirement. Within five years, if we can't save this because no one is registered for training, we'll have a serious problem in our communities. That's all across Quebec and particularly in Lac-Saint-Jean. We were talking about AbitibiBowater; we have 20 days left to resolve that issue.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

What was the government's response to your request?

[Renaud Gagné]

We've had no response to date, apart from the announcement of $170 million over two years, which unfortunately won't save what we have in place. So we've obtained nothing for training or an extension of or access to employment insurance. So it's quite clear that, if we think of the bankruptcy situation in the communities, the solvency of pension plans, less 35%, these people won't be able to spend in the regional economies. It's all that will follow. We haven't received that support.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I have a question for Mr. Chevrette concerning loan guarantees. We know that the government's ministers defend the U.S. position on loan guarantees. Doesn't it appear to you that the government is torpedoing the forest industry?

[Guy Chevrette]

I'm going to let you select the terms you want to use, but what troubles me is that, as a result of fear regarding the softwood lumber agreement, we're about to ask ourselves whether we want an industry in Canada, on the pretext that no one can grant loans at a commercial rate, a legal rate, a market rate, and even the provinces will be forced to consider whether we want to have a forest industry in Canada that creates 825,000 jobs. It will go that far. I repeat: we aren't in a position to blackmail the Canadian government like the major automotive companies have managed to do, to confuse the two governments and enter into agreements between the U.S. and Canadian governments.

In the softwood lumber case, you'd say that the Americans are there, thinking: if they can suffocate, if they can die... Even if it's not entirely legal, they're nevertheless going to resort to arbitration, and we'll play the game and do nothing. That's where I ask you the ultimate question: do you want an agreement at any cost, to the detriment of an industry's survival? The matter can go that far. And we'll be forced to ask ourselves that question one day if the governments do nothing. I could tell you that AbitibiBowater is in Quebec what GM might be in the United States, all other things being equal. No one gets worked up over that in Quebec. We'll have to start getting a bit excited and to consider the facts. That company has 9,000 retirees who work in 25 municipalities in Quebec alone, not including British Columbia and Ontario. It creates 10,000 to 12,000 direct jobs, which means approximately 20,000 direct and indirect jobs in Quebec. What would become of all that industry's subcontractors if it fails? We'll say we complied with the U.S. agreement? Come on, we have to react! We have to take minimum precautions, yes, but the government has no right to let it go, in my opinion. Parliament can't either, and I think you have a role to play, everyone. With respect to you, if the government comes up with a specific envelope and a fast track procedure—provided it avoids duplication with the provinces, because otherwise we'll have the familiar conflicts over traditional areas of jurisdiction—I think we'll all applaud and congratulate you.