Natural Resources Committee on Feb. 19th, 2015

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone. We're here today to continue our study regarding the renewal of Canada's forest industry.

This study came about as a follow-up for a report this committee did in conjunction with the forest products industry back in 2008. It's meant to see if some of the recommendations from that report have been implemented, to see how the forest industry is doing today, and to see what we expect the forest industry to be doing over the next short period of time.

We have a group of witnesses here today. Actually, this meeting has been divided into two parts. The first part is from 3:30 to 5:00 and we have four witnesses for that part. Then we have a separate section of this meeting—we can suspend the meeting—to hear a witness who will be appearing separately. The reason was that we couldn't deal with language issues, so we are dealing with that by having a separate meeting. That's the way we will proceed. There will be five witnesses today in total.

Today, we have with us from the Canadian Wood Council, Michael Giroux, president. From the United Steelworkers, we have Bob Matters, chair, Steelworkers' Wood Council.

By video conference from Vancouver, British Columbia, we have two witnesses. From the Canada Wood Group, we have Rick Jeffery, president and CEO, and from the Council of Forest Industries, we have James Gorman, president and CEO.

Welcome to all.

We appreciate your taking the time to make presentations. We're looking forward to your presentations. We'll then open it up to questions and comments, as we always do.

We'll have the witnesses make their presentations in the order listed on the agenda, starting with the Canadian Wood Council.

Go ahead, Mr. Giroux, with your presentation.

[Michael Giroux, President, Canadian Wood Council]

Thank you, Mr. Chair.

Good afternoon, everybody. Bonjour à tous.

I would like to thank the committee for the opportunity to speak to you today. I know you have already heard from many of my sector colleagues, both from the public service and from industry. What will be different today, I expect, is that what I say here reflects the Canadian Wood Council’s area of focus, which is twofold. The first is maximizing the fair representation of structural wood products and wood building systems in the National Building Code of Canada and the standards related to it. The second area is maximizing market uptake through the education of construction sector stakeholders, including engineers, architects, and builders.

Hopefully, as you think of wood products in this presentation, it will be clear that I don’t speak for forestry practices or pulp and paper products, work areas for which both FPAC and FPInnovations speak on the national level.

This being said, I have four topic areas I would like to address today: the building code regulatory framework, education, public work procurement policy, and innovation and investment including demonstration.

The first area is the regulatory framework. In the 2006 timeframe, building codes moved away from being prescriptive solution based to being objective based. This move allowed for the increased uptake of new products and building techniques so long as the opportunity met the health, structural, and fire safety and accessibility provisions of the building code. So those are the key objectives of the building code.

An example of this is the use of firewalls, for which the code went from specifying masonry—using only masonry for firewalls—to specifying a two-hour fire performance requirement. This had the most excellent unintended consequence of allowing for new and innovative construction solutions, in fact, new construction choices, to come forward, allowing for decreased construction costs, whether for materials or for construction time. This translates into increased affordability for homebuyers. It was within this context that the B.C. government and CWC, the Canadian Wood Council, pushed for increased heights in areas, thus allowing five- and six-storey wood mid-rise construction to be moved across Canada.

Now, as our industry looks forward to the increased recognition of science-supported innovative products in building codes, allowing, for example, for the construction of taller buildings and/or increased span wooden bridges, there is recognition that codes must evolve further, from being just objective based to being performance based. Such an opportunity would most certainly allow for the elimination of code language like “combustible” or “non-combustible” in the documents themselves, key discriminants when it comes to what gets built.

In this context, my industry will push forward for performance-based codes; this is for the 2020-25 code, so two code cycles from now. I would like to think that government's role will be to encourage the Canadian Commission on Building and Fire Codes and the National Research Council’s codes centre to work on this evolution of the code. I know they are interested; I think it just needs to be supported. This will have the consequence of their taking on or improving on the uptake of innovation in building construction.

The second area I’d like to address, hopefully a little bit more quickly, is education. The success or failure of taller, bigger, better performing and more quickly built wooden buildings is contingent on several factors: codes, materials, locations, and budgets. Successful building requires a design team that understands wood. This has been one of the biggest stumbling blocks to achieving the great potential of wood this century. Architects, engineers, and builders must have a thorough knowledge of the three basic structural materials—wood, concrete, and steel—in order to be able to make the best decisions for the construction of these buildings. In this case, experience is one thing, but it is best served with a foundation of knowledge.

The foundation of knowledge regarding how these materials can be used should be laid early in professional training, preferably at the post-secondary level or earlier. Currently few of the post-secondary architecture or engineering programs that exist in this country have a basis in wood. This kind of training should be a part of the core curriculum for all architects and engineers so they will be as impartial as possible. Times are changing, and these universities are starting to see curriculum drivers. We’re starting to see increased height in mid-rise buildings. As far as tall buildings go, we have three tall demo buildings on the block ready or almost ready to go. These will be 13 to 18 storeys. And we are seeing an increased interest in bridges.

From an industry perspective, we're working to develop and fully supply these curricula. From a government perspective, it would be wonderful if you would see ways to encourage the university systems to foster further education in that field. One way to do that might be to link your investment in R and D to the schools.

Public Works' procurement policy is the next one. Government procurement policy can play a big role in enhancing the wood sector, as it need not be a preferred policy. I'm not looking to further an approach that looks at wood first. I'm suggesting that we could very easily go to a “wood equally” place. In this particular case, this would allow for—and I'll give an example here—at the Public Works level we would say when considering Public Works projects, you must equally consider wood along with concrete or steel. That would be a huge gain to our sector all by itself. Given that wood's performance is increasing, and the opportunities we have for better materials, we would be able to compete very easily in that arena. Add to that the environmental performance of our materials.

The next area is innovation and investment in demonstration. Thanks to the great building science brought on by organizations like the National Research Council and FPInnovations, the wood building systems of today perform much better than a generation ago. This improvement in performance capability has been driven by a desire for higher performance, a reduction in material use, and enabled by the ongoing, mostly focused, innovation.

In this particular case, I would like you to take a look at the way we invest in research and development. In particular, it's not just a matter of participating in research. It's a matter of looking at how we structure that around a vision of the future. That future looks at carbon. It looks at the lower energy performance of these buildings, and in a way it will also look at the resilience of these buildings. I'm suggesting here that we need to invest in that type of future and that the wood products sector should be going along in that area as well. That's investment with a driver in it.

In particular, I'd like to point out that not very much has been done in this country in the area of building science. We certainly support products, but the building science itself is a sore point.

To summarize my four key points:

First, there's a need for fair representation of building materials and codes to ensure their use. CWC, my council, is focused on this area, but ensuring that a performance-based code framework for the 2020-25 code cycle is in place is an area that government can help with.

Second, effective wood education is critical for the uptake of wood building systems in the future. Government can help here by pressuring institutions to provide balanced education through strategic investment in university and college research and development.

Third, Public Works procurement policies can create a level playing field by ensuring that wood is considered equally with other products. This is key to a broader uptake in the private sector.

Fourth and last, investment in innovation, particularly in building science and systems R and D, is key to aligning the sector for the future, but such investment must be aligned with the construction sector drivers for lower operational energy, lower carbon footprint, and resiliency.

On a separate note and a very key point, CWC's partnership with NRCan has been critical to our industry's success in code change. I would like to express my appreciation for this, and trust that such strategic support will continue in the future.

That's my presentation. Thank you very much. Merci beaucoup.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Mr. Giroux.

Before we go to the next presentation, I was going to mention to the committee that today we're dealing with sector and market diversification. I think that's probably obvious from the witnesses we have here. On February 24 we will be dealing with regional development from the west; on February 26, regional development east; on March 10, regional development central; and March 12, regional development north. There will be a little mixing of witnesses just because of when they can attend the meeting. We really tried to accommodate, and I think we've done a good job, but I just wanted to remind members of that. I know the clerk instructed witnesses and there will be very interesting presentations. I'm looking forward to it.

We'll go next to the United Steelworkers, Bob Matters, chair, Steelworkers' Wood Council. Go ahead, please, sir, with your presentation, hopefully up to around seven minutes.

[Bob Matters, Chair, Steelworkers' Wood Council, United Steelworkers]

Thank you very much for inviting me to make this presentation.

I am Bob Matters. I am formerly a forestry worker who lived and raised a family, or more importantly my wife raised our family, in a rural forest-dependent community.

The United Steelworkers is the largest private sector union in North America with some 250,000 members in Canada and 800,000 continent-wide.

We represent close to 55,000 workers in every aspect of forestry, from growing seedlings, to logging, to the production of lumber and finished products, again in rural, forest-dependent communities.

The last decade has been a difficult one for Canadian forest workers. Between 2000 and 2013 in Canada, forest industry employment dropped by some 41%, 150,000 jobs. That's 150,000 families, again in rural, resource-based communities which were deeply impacted.

Today there are fewer integrated forest companies that manage the forest resource from harvest to the production of a finished product. Consolidation and rationalization coupled with foreign investment have changed many of the companies operating in our country.

Long-standing firms no longer exist in Canada while Bay Street has become the new employer for many of our members working in—my theme—rural, forest-dependent communities.

Meanwhile there has been little private sector capital investment in new manufacturing in Canada, while some of our Canadian forest companies are, in fact, expanding their footprint in the United States.

There have been a significant number of mill closures over the past decade. Manufacturing capacity remains quite high while fibre supply is shrinking. We're having difficulties.

A highly productive workforce with ongoing technological change suggests further rationalization and job loss will come unless significant steps are taken to encourage the expansion of the forest products manufacturing beyond primary products such as pulp, paper, and of course lumber.

I'll talk briefly about the softwood lumber agreement because that has a huge impact particularly on smaller operations in Canada.

Canada's forest sector has had a long-established trade history with our American neighbours, and that has been and continues to be a vital part of our industry's success. ln recent history, much of the relationship has been governed by a managed trade deal, the softwood lumber agreement.

In short, we believe the current softwood lumber agreement is a one-sided capitulation to narrow American interests. The United Steelworkers would encourage the federal government to fully defend our industry, and engage with our allies both in the U.S. and Canada that support free and fair reciprocal trade.

Ownership in the Canadian forest industry today is more diverse than ever with more foreign ownership of forest assets in Canada, and likewise, many Canadian companies have expanded their presence in the United States, primarily through acquisition.

While companies have the ability to mitigate exposure to the softwood lumber agreement by investing in operations on both sides of the border, Canadian forest workers don't have that luxury.

While our union does not support the current softwood lumber agreement, we do believe any export taxes collected by government should be invested in research and innovation to expand both the products we produce and the markets that we serve.

Speaking of those new markets—a common theme—overseas construction markets, like domestic markets, must also respond to the demand for growing housing density. Generally that translates to taller, multi-home, multi-storey structures. If we are not poised to expand the use of wood in the construction of multi-storey buildings in Canada and North America, how can we convince overseas markets to do so?

Federal and provincial governments must lead by example. Ensuring that capital construction of public buildings utilize a wood-first policy is key to demonstrating to foreign customers that we believe in our industry and its potential. We must also profile the innovation in our engineered products and their expanded capacity. From structural beams to cross-laminated timber, they are not only a more green choice both in footprint and carbon storage, but they also offer endless possibilities for design and construction.

An issue we often raise, particularly on the west coast of the country, is that of raw logs. As a result of deregulation and partly in response to the softwood lumber agreement and the growing demand from China, the export of raw logs from British Columbia has increased by some 300% in the last five years, accounting for about 95% of Canada's exports of raw logs. That's enough fibre to supply 10 medium-sized mills and employ an additional 5,000 workers. That's opportunity lost in British Columbia for our Canadian workforce.

Our union is opposed to the export of raw logs and considers it a sell-off of potential Canadian jobs. While most of this wood is, in fact, exported from private land and provincially regulated crown land, there is volume exported from federally regulated lands as well. The United Steelworkers have long called for an export tax on raw logs that would incorporate the difference between the export price and the domestic price. The export of raw logs simply is an affront to the social contract on which the forest industry was built in this country. We believe, as do most Canadians, that access to our timber must generate jobs for British Columbians, for Canadians.

Briefly on capital investment, as the second and third growth forests regenerate for harvest, for which we are thankful, older mills need new technologies. Frankly, the long-term viability of these operations narrows every day as the cost of refits grow. We need to encourage and facilitate investments in our industry. That's a vital role federal policy can make.

With respect to people, whether the industry exists as it does today or shifts to a more innovative, higher-value sector, we know we need skilled workers. While the committee did not specifically ask about job training, we thought we would be remiss if we did not mention it briefly. Today the responsibility for training rests with all of us, but frankly, few of us take advantage of the opportunities. We work with some employers who embrace the responsibility and are creating apprenticeships and investing in the workforce, yet others at the opposite pole are unwilling to invest. Skills training seems to generate a patchwork of responses from employers and all levels of government. We continue to call for expanded Red Seal apprentice training and welcome an opportunity to discuss this with the committee further.

Speaking of working together, there are cynics out there, who we fight every day, who still consider the forest industry as a sunset industry. The United Steelworkers does not. It is our collective self-interest to ensure we are all working together to build a more resilient, more sustainable, more productive, and more profitable forest sector. That requires that we all work together: provincial and federal governments, industry, unions, aboriginal groups, and even our customers. We all have an awful lot at stake here. Yet unfortunately, there is little happening at the national level to bring everybody together to share best practices to maximize our impact on the markets. To achieve this, United Steelworkers supports the reformation of the national forestry council as a place where stakeholders can regularly meet and discuss with whom we build our industry and how we do that into the future.

I'd be happy to answer any questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much for your presentation, Mr. Matters.

We go now by video conference to Vancouver.

First, we'll go to Rick Jeffery, president and CEO of Coast Forest Products Association, from the Canada Wood Group.

Go ahead with your presentation, please, sir.

[Rick Jeffery, President and CEO, Coast Forest Products Association, and President, Canada Wood Group]

Thank you, Mr. Chairman.

As noted I am the CEO of Coast Forest Products—that's my day job—and I am also the president of the Canada Wood Group. By the way, I'm also a director of the Canadian Wood Council.

For committee members, the Canada Wood Group is a pan-Canadian organization that has membership from Coast Forest Products, the Council of Forest Industries, BC Wood, the Western Red Cedar Lumber Association, Ontario Wood Products Export Association, Quebec Wood Export Bureau, the FPAC, and the Maritime Lumber Bureau. We represent firms across the country.

Our primary focus and what I will talk to today is our efforts offshore; that's where we focus. As you heard Mr. Giroux say earlier, they are focused on the domestic and North American markets.

We focus on offshore. We focus on two major areas offshore. One is market access and one is market promotions. Those efforts are entirely dedicated to the topic at hand that you have before you as a committee, which is sector and market diversification.

How Canada Wood Group works is we leverage joint funding from the federal government through NRCan and the Canadian wood export program as well as moneys from the B.C. government and the Alberta government. We match that with money from industry and put together about a $15 million a year program that operates in Asia, most notably Japan, China, Korea, and just recently India, as well as the U.K. and the European Union. We have boots on the ground in all of those jurisdictions. We also deal with market access and market promotions in some 26 other jurisdictions around the world.

As I said, we work through joint funding partnerships. We work with governments, academia, and research institutions like the forest innovation initiative. They help support our activity.

The second half of what we do is we promote those products in building systems in those offshore markets.

Market access is really all about codes and standards, working with architects, specifiers, developers and builders, working on non-tariff trade barriers and phytosanitary issues to ensure that Canadian products and Canadian building systems and technologies can be used and applied in those marketplaces. I would like to tell you a story about how this works.

Recently Mr. Gorman and I had the pleasure of being in Japan to celebrate the 40th anniversary of the B.C. Council of Forest Industries and Canada Wood's presence in Japan. Forty years ago we went there and started a pioneer market. Today it is an $800 million to $900 million marketplace and is one of our most valued markets.

Fifteen years ago we started to pioneer our way through China. We had very little idea of how the supply chain worked. Today, after 15 years of effort spearheaded by Canada Wood and supported by the federal and provincial governments, China has now become our second leading market and represents about $1.5 billion per year in sales.

I just got back from a 10-day, 20-person mission in India. We have just put a person on the ground in India. Our provincial government, through forestry innovation investment, has put some people on the ground in India. As I said, I spent 10 days there and what I will tell you is that India looks to me like China and Japan looked to us 15 and 40 years ago. There is a demand for our wood there; there is a demand for our technology and our know-how there, so we need to get on with the job of pioneering there.

I think it looks very favourable in India and it is probably the next major market diversification opportunity we have offshore.

Our success has been in being able to create the environments, both regulatory and commercially, for the sale of our building materials. That is underpinned by the high-quality building systems and building technologies that we have in Canada and the export of that expertise and technology to those jurisdictions, along with the accompanying forest products that support it.

To Mr. Matters' point, we have a full-court press here domestically to expand wood's use into non-residential and commercial applications. That also holds true in offshore market applications. We are focusing that kind of effort in both Japan and China today to see if we can not only get wood used in reman applications but also increase the amount of wood that's being used in building and leveraging the greenhouse gas and environmental credentials of Canada and Canada's building materials to sell those products.

It is an innovative industry. We have launched cross-laminated timber, or CLT, in Japan. We are building the largest, tallest wooden building in Japan. It is a non-residential elderly care facility, five storeys high, made out of Midply, which is a building system pioneered here in Canada.

I will not be talking today about the suite of emerging products that we see, such as nanocrystalline cellulose, cellulose fibres, biofuels, and those things. They are all things that are in the lab or in a pre-commercial state. The federal government has a role in trying to get them from the laboratory to commercial reality, but that's for another day.

I will end this part by saying the federal government's role has been critical in creating market diversification and the success we've had offshore, through the Canada wood export program that's managed by Natural Resources Canada. We will also be reaching out to Export Development Canada to see if they can assist us in pioneering work in India.

The last thing I will leave you with is market access issues. I will tell you that we have market access issues that run from Australia to China to the Philippines to the European Union. They are around non-tariff trade barriers. They are around phytosanitary issues. We need to ensure that the federal government, through the Canadian Food Inspection Agency on phytosanitary issues and through NRCan and the Department of Foreign Affairs, Trade and Development, will help us deal with the non-tariff trade barriers and market access issues. These issues are ongoing. They require diligence and our attention, as well as the federal government's assistance and help. The federal government has been very critical in maintaining market access and will continue to be going into the future.

That concludes my remarks. I look forward to any questions the committee may have.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Jeffery, for your presentation.

We will go now to James Gorman, president and CEO of the Council of Forest Industries.

Go ahead, please, Mr. Gorman, with your presentation, hopefully for around seven minutes.

[James Gorman, President and CEO, Council of Forest Industries]

I will move quickly. Thank you for this opportunity and for accommodating us in this way by video conference

I'm going to talk quickly about three things: the importance of the forest sector to the economy of British Columbia, the industry's view with respect to the softwood lumber agreement and the U.S. market, and the continued importance of market diversification to B.C.-based companies.

First, British Columbia is the country's largest producer of softwood lumber, accounting for about 52% of overall production in this country. B.C. is home to five of the largest forest companies in the world. Certainly, West Fraser, Canfor, Tolko, Interfor, and Western Forest Products are names that are synonymous to you, I'm sure, with the forest industry in this country.

The forest industry in B.C. contributes about $12 billion annually to provincial gross domestic product. It generates $2.5 billion worth of revenue directly to three levels of government, federal, provincial, and local. Some 31% of all B.C. manufacturing sales are from the forest industry and 24% of all of British Columbia's manufacturing jobs are in the forest sector.

In terms of jobs in British Columbia, one of every 16 jobs in British Columbia is tied to the forest industry. That's 58,000 direct jobs and about another 100,000 indirect jobs. In fact, 40% of B.C.'s regional economies are dependent on forestry.

We exported $11.7 billion worth of forest products in 2013. Softwood is B.C.'s second largest export commodity. The United States is still our biggest trading partner with $2.6 billion in softwood lumber alone in 2013. China would be our second biggest market, as Mr. Jeffery has pointed out, at $1.5 billion.

It is very important to understand an important contextual piece in British Columbia, and that relates to timber supply. No doubt you are quite familiar with the devastating mountain pine beetle crisis that we have experienced in British Columbia. About 60% of all pine trees in British Columbia were wiped out. That means that the annual allowable cut in British Columbia is now on a steady decline in the interior of the province. This year we generated about 11.6 billion board feet of lumber. We expect that number to be 9.7 billion board feet by 2020, owing to the timber supply challenge that we face as a result of the mountain pine beetle crisis.

A word about the U.S. market and softwood lumber: the U.S. remains the most important wood market destination for B.C. It was about 49.5% of exports in 2013. That's about $3.8 billion worth of wood exports, softwood lumber, and other products. The softwood lumber agreement, as you know, governs that trade relationship. It was signed in 2006. It was extended in 2012, and it will expire in October 2015. There is a standstill provision in which the U.S. has undertaken not to launch a trade action for a period of one year, which would take us to October 2016.

Industry across British Columbia and across the country is united in its view that the current agreement with the U.S. should be extended. By that we mean it should be renewed in its entirety for another seven-year term with the option to renew for another two years. We've had strong support from the Canadian government in representing that view to the United States. We're of that view because we feel that the softwood lumber agreement has worked. In our view, both countries have benefited from managed trade. Past disputes have certainly been lengthy. They have been very costly.

We think it has created greater certainty for producers on both sides of the border since 2006, and in so doing has brought value and stability to the marketplace, that is, our customers. We believe it has provided a platform for the North American industry to work together with the U.S. to grow the U.S. market. That's through a mechanism called the Softwood Lumber Board, which is a binational group. The duties that have been imposed have helped to protect the U.S. industry in down markets, which was a key objective certainly of the U.S. in participating in that dispute. In fact, Canada's share of the U.S. market in 2006 was 34%. Today it's about 29%, and at the same time, the U.S. share of the lumber market in their own country has grown from about 61% to 71%.

It's important to note that in B.C., as the largest producer in Canada, our interior production is forecast to decline by 17% in 2020 as a result of the mountain pine beetle. It's a very important factor that I'm sure people on both sides of the border will be thinking about as we enter into a new phase on softwood lumber.

I think another very important point to make is to link this to the work of the Canada Wood Group, which Mr. Jeffery has talked about, that we have been doing as an industry in partnership with the federal government and the provincial government in expanding offshore markets. In 2005, British Columbia sent less than 120 million board feet to China. In 2013, that volume had grown to 3.35 billion board feet. The importance of making that market real and strong and a consistent place for us to put product is a very important part of our strategy going forward.

I'll quickly round out with some comments on the importance of China and the offshore. B.C. has become the leading market player in China, and we've gotten that place already with very hard work between provincial and federal governments and industry, and are able to grow demand for our wood products.

In 2010, we became the largest supplier of softwood lumber with a 48.7% market share. China now accounts for 26% of our total volume of exports, worth $1.5 billion. From my perspective, the growth in offshore markets is a key piece, as we think about the softwood lumber agreement. We've managed to keep our share of the U.S. market at a level well below the thresholds that are built into the agreement at 34%, in the work that we have done in a large part by growing that Asian market. In that respect, the SLA has been a contributor to the growth of those offshore markets. We're there to stay, and it's vitally important that together we continue to work to grow those markets and ensure that, as an industry, we don't become more reliant on the U.S. market. We think we're trending in the right way. We're continuing to be committed as an industry to growing that Asian market, and we would encourage the federal government to continue its support for that for many years to come.

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Gorman, for your presentation, as president and CEO of the Council of Forest Industries.

We'll go now to questions and comments. We'll start with Mr. Trost from the government side, followed by Mr. Rafferty from the official opposition and Mr. Regan from the Liberal Party.

Go ahead please, Mr. Trost, for up to seven minutes.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'd like to start today by asking what worked when it came to market diversification, particularly looking at China and exports, for the purpose of learning what we could continue and what we could apply toward other countries? India was mentioned, but I'm sure there are others.

I'll put this one maybe first to Mr. Jeffery. What worked? What did the industry do right? What did the Canadian government do right? What really caused the Chinese market to open up?

[Rick Jeffery]

I'll say that it was a concerted joint effort, so I'll highlight that right off the top.

It was critical to have the federal government funding. The Government of B.C. put funding in, and the industry stepped forward. Having that solid funding base to establish boots on the ground in China was of paramount importance.

We had to do the very unsexy stuff in China around codes and standards in order to be able to have our products and our building systems accepted in that jurisdiction. The blueprint from that, as Mr. Giroux talked about earlier, is around building codes and those kinds of things, and having the science behind us to be able to go into foreign jurisdictions like China and get building codes that use our technologies and our products established in those jurisdictions.

That was the first thing. That was very much a joint effort among academia, government, industry, and our research institutions.

The second thing was promotions. We went there and we established a Canada wood brand. You may or may not know that in China they probably don't know where Vancouver and B.C. are, but they certainly know Canada. Thank you, Dr. Bethune. Running a Canada brand there was very important in terms of differentiating ourselves and establishing a marketplace.

It was just a lot of hard work to keep on top of those codes, to focus geographically, to expand our efforts as we got successes, to keep on with the promotional efforts, and to keep educating the Chinese consumer.

We have great success there, as James has mentioned in terms of stats. What's next for us is that we have to increase the amount of wood used in building there. That means doing exactly the same things there that we're doing here in Canada—learning the lessons we have from WoodWorks and from the Canadian Wood Council, and pushing the tall buildings envelope and the innovation envelopes to say that wood can be used in things other than residential applications.

I'll stop there because I don't want to monopolize time. I could go on for a long time.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

If I'm reading you right, what we need to do more in China.... Because the other day, another guest said that China is the next China, in that there still is room for expansion.

For both increasing the Chinese market and looking into the Indian market, you pretty much want to run on the template that we've used in the past with some minor fine-tuning perhaps for local circumstances. Is that a pretty accurate reading?

[Rick Jeffery]

Yes, we're doing a little bit of a pivot in China now, where we're saying that we want to focus less on.... We've done the ground work around the codes and standards and those kinds of things to get wood accepted in building. We're pivoting now to expanding that to make sure wood is used in building across all segments of the building sector there.

As well, we are now taking a harder look at getting into the reman sector and spending more time and effort there.

One of the things I didn't mention is that we do a great deal of research in those markets, so we're undertaking a new round of research to support that pivot.

But you're essentially right. We have a template. It's a template that works, and it is also a template that is dependent on or enhanced by the federal government's contribution.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I must say I was struck, Mr. Jeffery, by how much what you're describing in international markets is very similar to what Mr. Giroux was talking about with the principles he's advocating aimed more at the domestic market. Following Mr. Giroux, I think about the comment that the four elements often reinforce each other.

I want to ask about education in particular. As the federal government, we won't go into a university and say, “In your material science class, Mr. Professor, thou shalt have this much wood discussed”, etc.

What should be done? What is the industry doing? Are you funding professors, grad students, etc.? How should the federal government be supportive of education, of course without—as you said with procurement—picking favourites or playing favourites for one material versus another? How are we supportive without being discriminatory? What is the industry doing?

[Michael Giroux]

I wish I had a good answer to that.

Our issue is that, for instance, the engineering schools—the accreditation body is Engineers Canada—set a guideline for these courses or the programs, and the architectural schools do too. At the end, almost every university goes about selecting its program within that context, and they do it according to the drivers they see. If they see cement and steel as being the drivers over time for those programs, they maintain them.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

As someone who's taken his share of engineering and material science courses over the years, these accreditation bodies are influenced by the professors, the Ph.D.s, whom you can fund through grad students. The federal government can put grants through NSERC and various institutions like that. Are there not professors at UBC, Simon Fraser, wherever, who are material science experts with wood, who would then provide input into the professional bodies? Is that a way that education could go forward to promote what you're talking about?

[Michael Giroux]

In a world where infinite money was available to fund these chairs, that would be one way to do it. The other way is to excite them by the market opportunity, by making them understand that there is new innovation in mid-rise and taller buildings and bridges, and that will get them to engage by themselves. That's where we're going right now as a council: to try to push that, make them understand that. We've run a recent professors conference, where we brought people together to discuss that. There is increased interest, but you can only take a horse to water, you can't make it drink.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to the official opposition. Mr. Rafferty, you have up to seven minutes. Go ahead, please.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, everyone, for being here.

My first question is for Mr. Matters. If Mr. Gorman would also be interested in talking about this issue, that would be great, and if other witnesses would like to pipe up, that would be welcome of course.

This question is with regard to reforestation in Canada. I realize that forestry management is traditionally a provincial jurisdiction, but given the broad decline in the forestry sector across Canada, and the need for Canada to improve our commitment in support of our international climate change obligations that we have voluntarily taken on, as well as more local environmental concerns, I wonder if you could shed some light on the issue of reforestation in Canada. Specifically, could you tell us about any ongoing reforestation efforts, and what role they can and do play in improving our environment, as well as getting Canadians back to work in the forestry sector? As a supplementary, do you believe there is anything the federal government can and should do to assist the provinces and our forestry industry in their reforestation efforts?

Mr. Matters first, and then Mr. Gorman.

[Bob Matters]

I think the supplemental is easy to answer first, and the answer is yes. I spent my career in the forest industry. The forest industry traditionally, because we haven't gotten around to diversifying properly, has been a series of good times and bad times. Through some of the “bad times” in the eighties and nineties, the federal government partnered with the Province of British Columbia and invested, if I recall correctly, “b” as in billions to deal with the then not sufficiently restocked lands. They did a great job of doing two things: catching up at that point on what was insufficiently restocked, but it also happened at a point in the downturn when a lot of the workers had lost employment, a lot of curtailments happened at that point, and that kept a lot of people working in their communities doing exactly that.

So, absolutely yes, although it is largely provincial jurisdiction, the federal government has a fantastic role to play. They've shown they can do that.

To Mr. Gorman's point, we all know in British Columbia, particularly in the interior around Quesnel, Williams Lake, up to Prince George, because of the pine beetle he referred to, there's going to be an enormous need for—my green friends don't like me saying this—mowing down what hasn't fallen down yet. Although millions of hectares of dead and dying trees are standing or lying down, that's still prime growing country for our future forests. So absolutely, there's a huge role for the federal government.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Gorman.

[James Gorman]

The total area of the province of British Columbia is about 95 million hectares. The forested land base would be about 55 million hectares, and the land available for harvesting in British Columbia is about 22 million hectares. Less than 1% of that forest is harvested annually.

In British Columbia, forest companies that harvest are required by legislation to replant within a fixed period of time. In British Columbia, for example, that means 200 million trees are planted annually with every hectare that is harvested being replanted.

It's also important to note that 52 million hectares of B.C. forests are covered by third party certification, which is more than any other single country in the world. We estimate that trees that have been planted in British Columbia capture about two billion tonnes of carbon.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Matters indicated that the federal government had a role in the past, and it would be good for the federal government to have a role in the future.

Would you agree with that assessment, Mr. Gorman?

[James Gorman]

I think this is a matter of provincial jurisdiction, and I think the necessary regulations are in place. I think industry understands that it is responsible for being a steward of the land, and that because it harvests, it is responsible for reforesting. Our companies are the ones that put those 200 million trees in the ground every year, and we think that's an appropriate role.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Gorman, you might have a quick answer for this one.

You were talking about raw logs and the percentage of raw logs that are shipped to China. I know Canada and Canadians don't have any say, of course, in how China uses raw logs, but are you concerned or are the industries you represent concerned that perhaps China will be using these raw logs, for example, for pulp and paper, and thereby undercutting some of our own companies in Canada? Is that something we should be concerned about?