Natural Resources Committee on March 10th, 2015

[Joe Hanlon]

I guess I'm going to sound like a broken record: continuity. We want consistency from the start to the end. We want to ensure that if we're going to do the work to access the fibre, to get a guarantee of the fibre, to do the business plan, to develop it, to meet with and talk to customers about potentially buying our product at the end of the day, and then build the facility...and that is where the loan guarantee comes in.

We have a renewable resource, poplar, in northern Ontario. It works for us, and we'd like to see it progress in a more timely and assured.... It's more the question of its being assured. If we have the backing of the federal government, that goes a long way when talking to a bank or to industry and saying that we're not sitting asking for handouts.

We're asking for that cooperation and that help to ensure that we get the project done.

[Dennis Brown]

As I said earlier, businesses need certainty in order to continue to operate and anything the federal government can do to support forestry.... The other side of the things we haven't talked a lot about is there is some misinformation that takes place and anything the federal and provincial governments can do to correct that information would help. There are groups that are making statements that just aren't correct, and somehow that is hurting the customers. One company, Resolute, is a big company in northwestern Ontario and as they lose customers, they lose jobs and eventually mills shut down.

I hope the federal government can somehow show more concern and more support for the forest industry and for the jobs there are now, because they're very important.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Labbé, the floor is yours.

[Sylvain Labbé]

I will answer in less than a minute.

Since 2002, we have had the market diversification program, which will end in 2017. This program should be renewed and it would not be very expensive to do so. It costs $10 million for all of Canada. The development of added value in the U.S. should be included because this program was strictly for overseas for the primary sector. It should be renewed by increasing its funding so that the entire value-added Canadian wood industry can access it. Its main market will be the U.S. These products are not part of the softwood lumber dispute.

The innovation program should be renewed as well. That program was implemented at the same time as the diversification program, and it included the added value that we talked about. The essential part is to establish a strategy and to implement programs adapted to the strategy. We now know where we are going. The programs therefore need to be renewed accordingly.

Thank you.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Lessard, go ahead.

[Jocelyn Lessard]

I will focus on the forest biomass component.

In that sector, the hardest thing is to create the chain so that there is consumption on the domestic market. That requires stability because the clients to whom we provide the installation services for biomass equipment must count on a certain level of stability. When a program such as the one set up by the federal government ends so quickly, there is a major impact.

Our proposal is very concrete: there should be a section in the legislation that entitles people to tax credits, and the thermal energy equipment initiative should be renewed. In the rest of Canada, a domestic biomass market needs to develop. To do so, stable measures are required.

[The Chair, Conservative, Leon Benoit]

Merci, monsieur Caron.

Finally, Mr. Trost, and after Mr. Trost, the witnesses will leave. I want to have a brief discussion on a proposal from Ms. Block regarding maybe an extra meeting for industry officials for the pipeline safety study.

Go ahead, please, Mr. Trost.

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

Mr. Labbé, your graph is interesting with future markets and evolution of the middle class and things of that nature. We've had previous witnesses here and I asked one of them a question about export markets. British Columbia had been doing well, and I got the feeling from that witness that they didn't seem to think that Quebec and eastern Canada and maybe even northern Ontario, though that wasn't in the discussion, could really reach into China and the Asia market and so forth.

I get the impression from what you have here that you don't necessarily agree with that. Can you tell me why you think, if I'm reading it right, all of Canada has a very good ability to sell into India and China and places like that?

[Sylvain Labbé]

I agree with what the member just said.

In terms of softwood lumber and commodities, unlike western Canada, the cost of transportation from eastern Canada to China is taking us off the market. We are selling a value-added product, hardwood lumber. In the east, what we are selling in China are value-added products, and transportation has a much lower impact than in the case of commodity lumber.

We have no intention of selling softwood lumber in China because we are not competitive. We are going to process it and sell finished products to China, India and Europe. At the same time, we are increasing the value of those products.

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

I know what some of my voters would immediately say to me. They would say that this is a great idea, but China is really good at manufacturing, and so, whatever we do here on manufacturing, aren't they eventually going to just want to buy raw logs from British Columbia and then turn around and either use the product domestically or, as they used to say a bit tongue in cheek, sell it right back?

Is that a possibility? What do we need in our productivity, in prefab and other value-added lines, to keep the competitive edge that you are alluding to?

[Sylvain Labbé]

That is the key to the problem. In China, people can copy us.

I opened the Canada Wood office in Shanghai in 1999. At that time, the Chinese were sending us furniture and finished products made from our wood. We were sending them raw logs and they would send us back the finished products.

All that has changed. China now has a domestic market. There are 10 million housing starts a year in China. Let me remind you that the U.S. has less than 1 million. With the new rules, concrete is no longer their ideal product. They are using wood in 10% of their construction. That is becoming a new U.S. market. It has become a country that even uses value-added products such as those built from wood.

In the long term, we are clearly not going to sell finished homes from Canada. In the partnership, under the agreements signed last year, the first year, we have to send the wood, the finished products, the panels and then build a plant in China in partnership. The Chinese will then use our wood with our technologies. We are partners.

It is a whole new dynamic. We are going to create Cirques du Soleil with the wood industry rather than making only basic products.

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

My time is essentially up, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Yes, Mr. Trost. Thank you very much.

I'd like to take time now to thank the witnesses once again. Thank you very much for being here and for the information you have given to the committee. It will be very helpful in our study.

To our witnesses, from the Wawasum Group LP, Joe Hanlon, project manager; from the Town of Atikokan, Mr. Dennis Brown, mayor; and by video conference from Quebec—and let me apologize for the quality of the video connection, but we got it done—from the Quebec Federation of Forestry Cooperatives, Jocelyn Lessard, director general; and from the Quebec Wood Export Bureau, Sylvain Labbé, chief executive officer, thank you all.

We'll suspend now for a minute as we get ready to have a very brief discussion on future business.

[ Proceedings continue in camera]