Industry Committee on June 15th, 2006

[Jean Lapierre, Liberal, Outremont, QC]

Yes, let's talk about those adjustments. Take the Saguenay-Lac-Saint-Jean region for example, or other similar places. There are not only your plants' employees, but also subcontractors. For example, I know a 58-year-old logger who was told that there were no more quotas, there was no more wood and that he was to go home. He is 58 years old. He doesn't know what to do anymore. He goes back to his village and has nothing else in life. He has worked his entire life on his machine, often at night. I get the impression that there's a problem for older workers. They will have difficulty finding other work. They are not necessarily the most mobile people. Their houses are paid off, their family is raised, and so on; they're at home and their roots are set down.

One day when I was in Bonsecours, a fellow pointed that out to me. He told me that people are like maple trees. When they are young, they can be transplanted, but if you try to transplant an old maple tree, you'll kill it. Are there any programs that would be helpful? I get the impression once again that simple people and simple workers are bearing the brunt of this restructuring. For the moment we are letting them fend for themselves, in a way. Do you have any programs or pension plans? In any case, what I have seen is not very impressive.

[Marta Morgan]

Governments and industry must work together to try to facilitate this transition. In the past, communities, employees and governments have worked together and with a great deal a success. The situation requires us to join forces and work together to deal with the problem.

[Jean Lapierre, Liberal, Outremont, QC]

Everything is happening so quickly now. We see closure announcements and there are adjustment committees, but what are we helping these workers adjust to? I get the impression that it is not enough, because while we are speaking, industries are closing, people are loosing their jobs and the only thing left to them is employment insurance. Is this not an urgent situation? The restructuring is not over and I get the impression that your announcements are going to continue.

[Tom Rosser]

You are completely right.

There is a restructuring going on, and there's no question it causes difficulty for individuals and communities.

I would make the point, though, that over the long term--if you look over a 30-year period--employment levels in the industry have been very, very stable, despite steady increases in productivity. The reason is we produce products today that we didn't produce 30 years ago. We've increased production in certain areas.

Nobody knows what the future holds, but we envision the same thing will happen again. Over time we will be producing new products, new services. While there may be capacity reductions in some areas of the industry, we think there are very bright prospects for growth in new and emerging products.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We'll go to Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm going to split my time with Mr. Shipley.

[The Chair, Conservative, James Rajotte]

If there is time.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay, a quick question.

Just looking at some of the statistics, I'm curious. I see we've grown our industry, but we've lost major markets in the rest of the world, except for China, the Netherlands, and Taiwan. The simple question is, how did we lose that, what's going on, and why are we losing that segment of the market?

[Shawn Dolan]

The decline in exports is due to many factors, largely competition from lower-cost producers. For example, Brazil is coming online with a lot of wood these days, and some species in Brazil grow four times faster than they do here, due to the climate. So their cost structure is much lower, and in some of these markets they're “eating our lunch”, to use a phrase.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Why, for instance, are the Dutch or the Taiwanese...? Why haven't we lost market share? These are the statistics I'm getting from the Library of Parliament; these aren't statistics you've given me. I'm just reading their report.

I was just curious. Why? Is there any other reason, or is it just good old competition, that we can't compete with them?

[Shawn Dolan]

To go back to what we were saying earlier, Scandinavian countries are aggressively promoting their own products to their own people. Both industry and government are doing this. Governments are fully and overtly backing using wood as a building material versus using concrete or steel.

[Marta Morgan]

In this industry over the last 15 years or so, global trade has increased dramatically and has put much greater competitive pressure on us in many markets than we had in the past. Even within what we would consider to be our domestic market, which is North America, you would see significant increases in imports to the United States from countries such as Brazil, and also, as Shawn mentions, Europe, which has taken quite an aggressive approach in promoting its industry. That probably would account for what you're seeing.

I can't comment on the specific countries you've mentioned, but despite these challenges, forest products remain Canada's number one export to emerging economies such as China, Korea, and Japan. We continue to be quite a successful exporter, though perhaps in more targeted markets where we've been able to stand our ground and fight for that market share.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

As a government, do we have to do a little bit better job with trade negotiations to open new markets?

[Marta Morgan]

I think the trade policy frameworks are a critical aspect of this. We still face tariff barriers in many countries, particularly on the solid wood side, while they've mostly been eliminated for pulp and paper. Emerging economies like India, where there's tremendous potential for paper exports, still have high tariff barriers. Some of the other more difficult issues to get at are the Chinese industry, where the industry is expanding partly due to the availability of low-cost capital in an industry where it otherwise would have very, very limited natural advantages.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

It wasn't that short, but if you want to go--

[The Chair, Conservative, James Rajotte]

You have one minute.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Just a quick one. At the start you talked about the huge concern about the pine beetle infestation. We've gone around a whole lot of issues about the dollar and exports and our inability to compete, but you're saying we'd be out of business. Can you help us a little bit? You said it might wipe out the industry. Can you talk to us just quickly? How much of that is in our industry in B.C., and how do we deal with the pine beetle infestation?

[Shawn Dolan]

Forestry is 10% of B.C.'s GDP. So $1 in $10 in B.C. is due to the industry.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

In terms of our Canadian industry, how much comes from B.C.?

[Marta Morgan]

About half.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

So you're saying if we lose our industry in B.C. because of the pine beetle infestation, we've lost half our industry, regardless of what we're all talking about here.

Are there any resolutions for that?

[Marta Morgan]

Most predictions on the pine beetle wouldn't predict that we would actually lose our industry, but that we're going to have quite a significant surplus of wood over the next 8 to 10 years. After that, our annual allowable cuts will shrink considerably. So it will still be a vibrant industry, but smaller once the mountain pine beetle wood has been felled and processed.

[The Chair, Conservative, James Rajotte]

Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Ms. Morgan, I would like to come back to your concerns about the Competition Act, and in particular to your comments with respect to the single rail line, which constitutes a monopoly for many of your members. I take it then there are no alternative means of transportation that would help. Is that correct?