Evidence of meeting #17 for Natural Resources in the 39th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mills.
A recording is available from Parliament.
President, Communications, Energy and Paperworkers Union of Canada
Yes, it's the costs. And we don't make that much pulp in relative terms, except in the west. It's mostly newsprint, fine grade papers, and they're in the tank.
Conservative
Joe Comuzzi Conservative Thunder Bay—Superior North, ON
I agree with Mr. Tonks. What we need is exactly what you enunciated, and, Mr. Chairman, I don't think we can waste a whole bunch of time in getting to that point.
I hate like heck to.... I wish he'd take off his microphone, but we have here one of the leaders in the forestry industry in all of Canada. He ran Bowater for a good number of years. He knows that business. He knows it so well that they took him out of Thunder Bay and made him part of the Algoma Steel empire, and you know what's happened with Algoma Steel in the last little while. Then he also brought people together to combine our energy policy with St. Mary's power and Algoma Steel, so he's been a facilitator in this business.
We have to get to what you said, Mr. Tonks. If we can impress anybody, Mr. Chairman, we have to do it very fast, because it's a disaster.
Mr. Coles, I handled the softwood lumber issue from the time that we inherited it, when there was a 50% duty, and then we decided that the best deal we could make was a quota system. I can recall vividly selling the quota system to about 20 softwood lumber producers, and they all thought it would never work. I think the quota system during that period of time was 5.5 or 5.6 years. Those were the best years the softwood lumber industry ever experienced in the history of Canada. I was also at the table when the softwood lumber industry decided they no longer wanted the quota system. They thought they should have free trade; the horror stories started from there.
What I found--this is a point I want to make and I want your comments on how the hell we're going to get around it--was that nobody was coming together on the fundamental issue of what was wrong in the softwood lumber industry. I found that the corporations, the owners, the sawmills were spending more time on negotiating with themselves than on negotiating with the United States. They weren't looking after the needs of the communities. As we go down this road again, I want to know that we never make those mistakes again. I want your comments on that.
President, Communications, Energy and Paperworkers Union of Canada
You've hit the ball right out of the park. It's the same issue in the pulp and paper industry. I have been pleading with it. When I met the Prime Minister of Canada, he whacked me between the eyes and said the industry can't speak with one voice. That's the problem there.
On the softwood lumber dispute, the industry spoke with multiple voices. That's why I think--and it's why I disagree with Mr. Lemay--that we need to have the federal government facilitate and force all the players to the table. I'm not sure what mechanism would stop the softwood lumber producers from making that error again, but they screwed up big time. We were not in favour of open free trade; our union wanted managed trade, and you didn't inherit that--you inherited a mess.
I think it requires some strong leadership, both on the pulp and paper side and on the solid wood side, and it requires that the government force all the players together at the table so that we come out with a solution.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Comuzzi. You're out of time.
We go to the official opposition. Mr. Alghabra, you have five minutes.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
Thank you, Mr. Chair.
I want to thank all of the witnesses for coming here today.
We've been hearing about the struggles and the challenges facing industry, employers, and workers. This committee is trying to come up with a list of recommendations to the government, regardless of which government. We are trying to come up with a list of proactive measures that will help smooth out the cyclical nature of the industry, because as we heard earlier today, it's part of a cycle. Right now it's in need; in the future, I think it will be helping other industries that are in need. I believe the government has a role to play in smoothing out that transitional period.
I think there's a consensus here today about research and development; as well, I'm hearing about a summit that would bring in all stakeholders. We do have some recommendations from FPInnovations about what type of measure is needed for research and development. I'm interested in hearing Mr. Coles give the union's specific recommendations on how the government can help in enhancing research and development.
President, Communications, Energy and Paperworkers Union of Canada
We may sound like a broken record, but you have to start with a summit. You have to get all the key players...and I'm not talking about low-level players, I am talking about the CEOs of the corporations. I have been phoning them across Canada, and there is a desire to have such a summit. If we could get that together, with the best minds in the government, the opposition, and the environment, that is where you start. It then takes the creative minds of industry, universities, communities to put together a research program that makes sense, that follows some of the models in Scandinavia.
We don't manufacture any pulp and paper equipment in Canada any more because we gave it up. We need to have industry and development look at it on a go-forward basis, not what we did wrong in the past. It has to start with the fundamentals of getting everybody in the room.
We then have to put real money aside. For example, on the west coast there is a tree called hemlock. It is underused. It is a great fibre, but no one is doing good research on it. We need it done. All the speakers on the right know there are areas that need specific research on products we could produce.
So that is where we start from.
Liberal
Omar Alghabra Liberal Mississauga—Erindale, ON
But surely you acknowledge that it is going to be difficult to reach a consensus, even though I agree there needs to be a bringing together of the stakeholders.
President, Communications, Energy and Paperworkers Union of Canada
I am not so sure there's going to be, because at the time of great danger it's all right to walk across the bridge with the devil--until the danger has passed. With the phone calls I'm having with the CEOs and CFOs of the corporations, there is a desire. They wouldn't be saying that if they were going there just to shake their head.
I think we're in deep trouble. I'm meeting the CFOs and CEOs of AbitibiBowater at two o'clock this Sunday in Montreal. There is a desire to try to resolve this, because the ship is sinking. All we would have to do is move it off course a bit and we won't hit the iceberg.
Conservative
The Chair Conservative Leon Benoit
Mr. de la Roche has asked to respond to your first question, Mr. Alghabra.
Go ahead, please.
President and CEO, FPInnovations
Very briefly on the summit, I think the important thing is to get alignment. But I think it's more than bringing the same group together; it has to be something that moves forward.
The future industry is not necessarily going to be the same one we have, or even the same players. We have an opportunity to start bringing the energy and oil people into this meeting. They're looking at alternative fuels: EnCana, Petro Canada, etc. What we are lacking in this industry is cash. It's investment opportunities. They have the money. They know the distribution of these new products that will come out of a biorefinery. We know everything about how to handle fibre, how to move it, and everything else. It's a marriage in heaven, and I think more and more we're going to see that type of thing.
I'm only suggesting, sir, based on your comments on the summit, that maybe we go outside the traditional area, step back, and say, where does this country want to present itself vis-à-vis our forests and our strengths?
Conservative
As an Individual
Yes. I think the summit is an excellent idea, but the summit should be focused on developing a policy, provincially and federally. It cannot be focused on what we are going to do to the existing pulp and paper industry. It cannot do that.
Pardon me, again, but the best pulp mills in Canada are 1,500 tonnes a day, or 2,000. They're 3,500 in India and China. They're 4,000 in South America. Paper machines in Canada making 700 tonnes a day.... You can't compete with those guys.
The question I heard is what happened. The technology moved faster than the capital, and it did that 10 years ago. The Scandinavians and Europeans exported the technology to build these paper machines because they had the fabrication facilities. They sold technology and they sold metal. That's what moved it around.
We have to do that by getting into biofibre and selling that technology and the metal that comes behind it. We have to.
Conservative
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
I think I have most of the answer to the question, but if anyone else wants to comment on Joe's remark about pulp prices being basically at a peak and us not being able to compete, go ahead now.
February 28th, 2008 / 12:55 p.m.
Conservative
As an Individual
Pulp prices are at a high, but the margins that pulp makers are making in North America leave enough to sustain the industry, not improve it. No new craft mill is going to be built anywhere in North America, ever. Again, the environmentalists won't permit it, but they permit them in South America and China and India and Indonesia.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So it's a mixture of productivity, which is what you were saying in your previous answer, and environmental regulations.
As an Individual
Yes.
I want to make one point. When you clean your glasses now with Kleenex, it leaves lint. All of us were taught that was really bad. The South Americans taught us that's soft. Okay, that's eucalyptus, that's the lint. It's the eucalyptus fibre.
President, Communications, Energy and Paperworkers Union of Canada
Very quickly, I have a buttress remark. The mill I was at in South America processes 1.5 million tonnes a year, one machine, 300 to 305 workers, zero effluent, close-loop burning eucalyptus, at the dock, $220. We ain't going to build another craft mill like that in Canada.
Conservative
Director, Research, Communications, Energy and Paperworkers Union of Canada
So the question is, why now? Why are these things falling off the edge of the cliff today rather than a few years ago? That is where the value of the Canadian dollar comes in. When the dollar was 60-something cents, these mills could survive. They could do fairly well. If they had had these prices five years ago, they'd be doing great. They'd be minting money. But because the dollar went up so fast and so high, these mills are now just barely sustainable. Therefore, the ones that aren't are toppling over the edge of the cliff, and those that are just sustainable are staying open for now, while the prices are still high. But when the prices go down again--it's a cyclical industry, we presume they will go down--they too will fall off the edge of the cliff. So part of what's happened has been currency driven, especially by the tremendous--
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
The one remark I would have is that we're always making a comparison with the American dollar, and most of these other competitors...and I realize our currency has appreciated against just about everyone, but not as quickly against many other currencies as it has against the American. So that's one thing.
My final comment or question is this. Some of the problems that were mentioned--the high currency, demand shortage in the U.S., etc.--are cyclical or are things that will work themselves out. My question is, what will be there, and what will revive when those cycles and those things start to come out?
I keep hearing about R and D. R and D is great, but if it takes 10 years and if I live somewhere in B.C. or in northern Ontario, I'm not going to be living there and waiting 10 years until these new jobs come. I need help now, as an individual.
Go ahead, and both of you gentlemen take it away.
Conservative
President and CEO, FPInnovations
You're bang on. A lot of the transformative stuff we're talking about, even taking lignocellulose to make ethanol, let's say--trees to make ethanol--is going to take some time. So let's park that a minute, the stuff that's longer-term. And by time, I mean five to ten years.
As to the hydrogen economy, people will talk 25 to 50 years, so that's a long....
But let's talk about today. One of the big things is that there is a lot of low-hanging fruit. There is a lot of technology out there right now. It's not rocket science. It can be implemented right away.
Why isn't it being implemented? We've heard the fact that there is a climate that is not conducive to be investing in, in terms of equipment, in terms of technologies.
The other thing is receptor capacity. If you go to a pulp mill now, these operations don't have the engineers, the people they used to have. That's where they did the cutbacks because of the difficulties.
There are solutions, and we proposed one in our brief, and it's one we've had a lot of experience with. We have a program called the value to wood program, which is targeted to value-added small and medium enterprises.
What we've done through federal investment over the last eight years, leveraged 12 times by provincial investments--it was $1 million federal, now it's $12 million with provincial investments--has allowed us to put over 50 industrial advisors all across the country. There are 10 to 12 in Quebec right now and the same amount in B.C., and they're all over the Maritimes.