Mr. Chairman, thank you for the opportunity to be here. We appreciate the invitation by you and other members of this committee.
Let me begin by introducing my colleague next to me, François Séguin, the general manager of Bois Daaquam, a company that we own and a border mill in Quebec.
As some of the others have done, let me begin with a little bit of background on Canfor. Canfor is a leading integrated forest products company based in Vancouver, British Columbia. The company is the largest producer of softwood lumber and one of the largest producers of northern softwood kraft pulp in Canada. Canfor also produces kraft paper, plywood, remanufactured lumber products, oriented strand board, hardboard paneling, and a range of specialized wood products at facilities located in British Columbia, Alberta, Quebec, Washington State, and North and South Carolina.
We employ approximately 9,300 people directly and indirectly, with operations in 16 communities in B.C., Alberta, and Quebec. We produce about 5 billion board feet of lumber annually in 14 sawmills.
Over the past 10 years, Canfor has invested significantly in our supply-chain management systems to target the home building and retail lumber markets in the U.S. Our business strategy relies on a stable and predictable trading relationship with the U.S. to allow us to serve our customers south of the border.
The results of the strategy have led Canfor to become the largest supplier of lumber to Home Depot, Lowes, and Centex Homes, and other established customers in the U.S. market. This position of preferred supplier is based on long-term relationships with our U.S. customers. Today, approximately 70% of Canfor's lumber production is exported to destinations in the U.S.
There is no question that the absence of a lumber agreement with the U.S. hurts our industry. The uncertainty of litigation and the punishing impacts of the duties have drained resources from our company financially, and have occupied the time of executive members of the company who would otherwise be focusing on our core businesses. This hurts our bottom line and makes it difficult to undertake the long-term business planning that is necessary for our company to grow.
Although litigation results have largely been in Canada's favour, it is obvious that the rule of law is not binding in the instance of softwood lumber. Our neighbours to the south have managed to prolong court proceedings and have become masters of the appeal processes, thereby delaying absolute decisions in this case.
The U.S. Department of Commerce and the U.S. trade representative have made it very clear that they will exercise every avenue of appeal to protect the interests of lumber producers in the U.S. Realistically, this will push the horizon for a solution even further into the distance.
A clear win in litigation also does not prevent the possibility of yet another challenge by U.S. producers or, as you have heard it referred to, Lumber 5. This prospect does nothing to establish certainty for our industry and is therefore unacceptable.
The term sheet signed by both the Canadian and U.S. governments on April 27 is a major step forward. It represents the establishment of positive negotiations between our two governments, which began with the previous administration in Canada and have carried on under the current one.
Is the proposal perfect? No. Does it give us everything that we might want? Of course not. But the question we should be asking is, does it represent a compromise that bridges the gap between two long-standing adversaries and establish long-term certainty for our industry? The answer to that question is yes. In the words of British Columbia's premier, Gordon Campbell, "We should not let the pursuit of a perfect deal prevent us from agreeing to what can be considered a good deal".
Canfor has, for some time, encouraged provincial governments and the federal government to take the lead, to show courage and achieve agreement. Eventually, governments had to realize that no agreement based on negotiation was going to be achieved that would make every company in every region of the country totally happy. We applaud the Government of Canada and the provinces for bringing us to this point.
Canfor has the largest amount on deposit at the U.S. Treasury, approximately $760 million U.S. This is a significant amount of money that is not being invested and that is not creating shareholder value or enhancing the communities in which we operate. Under the agreement, after taxes, Canfor should see approximately $460 million Canadian make its way back to the company. This money will not simply go into general revenue for Canfor; it will be put to work investing in our mills, establishing new strategic markets, creating shareholder value, and enhancing the communities in which we work. The return of these duties will help Canfor provide stable, long-term employment for employees in communities across the country. To not take advantage of this opportunity, to be blunt, would be a disservice to our hard-working employees and to shareholders, who have entrusted our board and our executive with pursuing a deal that provides value.
As I mentioned before, this deal is not perfect. There are policy and timing issues that need to be worked out, but let's not stand in the way of allowing the two governments to negotiate these sticking points, and let's judge the agreement once it is final. The process being followed in fleshing out the agreement is allowing ongoing input from provinces and the industry. At Canfor we believe that the policy issues outstanding have been clearly identified and can be solved.
In conclusion, honourable members, I suggest to you that we embrace the opportunity we have before us. I have been on this file far too long not to know an opportunity when it presents itself. Litigation is a long road, fraught with endless appeals and offers no guarantee of victory. What we have before us, although not perfect, is far better than the alternative.
Thank you very much.