Thank you Mr. Chair, ladies and gentlemen, for welcoming me. As I only have 10 minutes, I will speak French, but during the discussion, I can answer in English.
The point is to be effective in my message.
The Canadian forestry sector is extremely important. The two previous witnesses made excellent presentations on the crisis we are currently facing. According to them, the crisis is having more of an effect on rural Canada. Bear in mind, however, that 85% of the population of Canada is in urban areas. This crisis has made us forget that Canada as a country depends on forestry, and that our forests can help generate wealth and confirm Canada's identity.
We are facing five challenges. The first one deals with streamlining. In a recent report entitled Mission Possible: Sustainable Prosperity for Canada, the Conference Board of Canada states that given international standards, our conventional industry must be streamlined and become significantly larger. Our companies will have to get much larger, which could mean going from 80 pulp and paper mills to about 15. You see the size of the job.
However, not only does our traditional sector need to get much larger, and to generate more economies of scale, but it must also be modernized. Finland, a forestry-dependent country par excellence that dominates the pulp and paper world, invested $2 billion in the industry in 2007. Let's look at an economy of similar size: Quebec. That province invested a mere $300 million in the forestry sector. That hardly covers maintenance of our old mills, which are 30 years old on average. In Finland, the mills are an average of seven years old. We are competing with them, and we have a problem.
We are facing three challenges: streamlining, modernization, and creating a value chain. We are no longer competitive because we have lost our competitive advantage along the chain, from the stump right through to the final consumer. We are operating on automatic pilot. We must look at all opportunities for savings to reduce the cost of the raw materials, the cost of manufacturing and marketing, and to recover our competitive advantage in the context of a strong dollar.
If we rise to these three challenges, that will mean huge job losses. So that means dealing with a fourth challenge as quickly as possible: developing new products. Wood products are clearly the avenue to explore to develop new products. Non-commercial construction uses a mere 3% of wood materials. There is a huge market to conquer if we can emphasize the environmental properties of wood as compared to concrete, plastic and aluminum. Canada is a forestry country.
We must also develop green energy. Sweden is a very interesting case. Sweden has made a commitment to replace 42% of oil, particularly by making more room for wood, by the year 2020. By 2012, in the energy supply pie chart, wood should represent 12% of requirements. At present, it is a mere 3%. That is the target for 2012, in other words four years from now. Sweden will develop a technological lead that we currently have.
The notion of green chemistry, all of these products... A cellulose molecule is 10 times more complex than an oil molecule. You are aware of all of the products that we can make with oil, be they plastic, or synthetic chemical products. We can make 10 times as many. We are leaders in this technology. The Canadian government, through its granting councils, saw that coming. We have new wood products that use wood chemistry. All that is missing is the industrial development.
However, the real challenge is employment, and the previous speakers clearly pointed that out. For all of these people who lose their jobs, the situation will continue, because rationalization, modernization, and the search for enhanced productivity through the refinement of the value-creation chain will lead to job losses. We must find something to offer to these people, not only because we are sensitive to the fate of rural forestry communities in Canada, but also because we need these people to reinvent the forestry industry, to make it into a knowledge industry.
The manpower challenge is crucial. If you compare current figures to those of 2006, you can see that job loss is about 20%. Over the next year, we will probably realize that one third of jobs have been lost. Out of 300,000 jobs, that means a lot of people. But we need these people. Putting them into early retirement is a waste of talent and energy as well as a waste of money. It is very costly, especially given the fact that the age of the largest cohort of workers is between 35 and 49. It is true that in the pulp and paper industry, workers are slightly older. However, in the wood industry, we are dealing with young workers. We must benefit from their ingenuity and from the fact they have been sidelined to increase their skills.
A report published about a year ago by the Canadian Forestry Service painted a picture of forestry and the mill workers. This study shows that in the forestry sector, both in the mills and in the forest, workers without high school diplomas are the most numerous. The smallest number of workers with a technical diploma. In Sweden and Finland, it is exactly the opposite. The forest is recognized as a resource that can generate wealth. Workers in that area are valued.
We are facing a crisis. So I propose that we draw some inspiration from the Danish model and that we begin work immediately on a flexible security program. That will give the industry the flexibility at needs to streamline and modernize their operations. This flexibility will enable them to hire fewer people, but in exchange, they will be in a position to offer income security to people who have been laid off.
What will we expect of people who will be offered income security during the layoff period? We will expect them to improve their skills. They will have to receive training in order to develop their skills in the area of computer literacy. It is somewhat astonishing to see, in our plants and in the forests, the extent to which people are lacking skills to deal with the knowledge economy, which requires mastery of computerized tools.
Tailor-made training programs will also have to be developed. Considerable time is wasted when people who have been laid off are sent to develop the skills needed to draw up a resume. That is not what we need. We must also take advantage of the fact that these workers have in-depth knowledge of what happens in the mills. It is important to take advantage of this work stoppage in order to enable a few of them or the older ones to reflect on ways to enhance productivity. We must practice what management experts call organizational innovation. Good ideas to improve efficiency are close to the machines and not in the head of high-level planners.
In order to improve skills, we will need to focus on more community-based institutions. You should focus on joint undertakings between the unions and the companies. For the time being, the companies are looking for compensation and want to open collective agreements in order to reduce wages and benefits.
In exchange, workers are being offered a possibility, hypothetically, to keep their jobs. I think they should be offered to possibility to participate in the new forestry industry that will continue to manufacture basic products, but that will invest a new production base on what we call precision cut, green energy and green chemistry. To do that properly, we will have to benefit from our domestic market. Canada is an exporting nation, but in the case of developing new products, there is nothing better than starting with our domestic market to differentiate our products internationally.
Thank you, Mr. Chair, ladies and gentlemen.