Natural Resources Committee on May 12th, 2015

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone.

We're here, as you all know, to continue our study of the renewal of Canada's forest industry. This study was initiated as a follow-up to a study that was presented to Parliament in June of 2008. It was a fairly comprehensive study on the forest industry, and this is to take a look at how the industry is faring now after these years and to see what became of the recommendations from the study of 2008.

We have with us today for the first part of the meeting, which will be from 3:30 until 5:10, four groups of witnesses, and then at 5:10 we'll suspend just for a minute and go to a teleconference with three witnesses from one group from Quebec, but we'll talk about that when we get to it.

Right now we'll start with the witnesses we have here for the first part of the meeting. From Ontario Wood WORKS! we have Marianne Berube, executive director. We have from Kruger Inc., Daniel Archambault, executive vice-president and chief operating officer, industrial products division. We have from the Wood Manufacturing Council, Iain Macdonald, who is the chair, and the managing director of the centre for advanced wood processing at the University of British Columbia. We also have with us by video conference from the University of British Columbia John Innes, professor and dean of the faculty of forestry.

Thank you all very much for being here with us today. We know that it takes valuable time from other duties but it is important to the study. I look forward very much to the information that you will present to the committee and then to the answers to questions here today.

Let's start with the presentations for up to seven minutes in the order presented on the agenda. We'll start with Ms. Berube from Ontario Wood WORKS!

Go ahead, please, with your presentation for up to seven minutes.

[Marianne Berube, Executive Director, Ontario Wood WORKS!]

Thank you, and we certainly appreciate this opportunity to present to the standing committee regarding forest renewal.

I'm going to focus on three main points, more in line with strategic innovation: the recent mid-rise opportunity, tall wood buildings, and innovative wood products that result from these. I had put together a presentation. I don't know if any of you have a copy, but I think it was sent to you by email and that is more or less what I'll be following.

Effective January 1, Ontario changed its building codes to allow six-storey wood-frame construction. This is something we have been asking for since 2009 when B.C. passed such a change. When we look at urban densification plans and urban sprawl, there will be fewer single-family homes. This opportunity falls nicely into plans for the GTA and Golden Horseshoe.

From what we see currently happening in B.C., we will have two to three times the construction, so we're expecting in two to three years that roughly 500 of these buildings will be under construction. Ontario Wood WORKS! does a lot of education and promotion, providing technical support to the users out there, and there has been a huge uptake. We do a lot of educational events and anything right now is in huge demand. We've been doing B.C. tours and workshops, and we've published guides. We've also been working with the Ontario municipal associations and the FCM, which strongly supports it.

Changes to the national building codes have recently been announced and will take effect by the end of the year. I know you've heard about mid-rise before, and it's been happening in B.C., but Ontario has 40% of the construction market in Canada, so this is going to be a huge opportunity.

Concurrently, there are also the demonstration tall wood buildings. There's one in Quebec City that was recently announced, and right here in Ottawa, the Windmill Group is proposing a roughly 12-storey office building. As well, there will be a 16-storey or 17-storey residence on the UBC campus.

I'm highlighting both these opportunities because I know you're looking at what kinds of new innovative products will happen. The biggest thing will be systemized construction or panellized wood systems. We've done tours in B.C., and they are still doing some stick-frame building because they already can't keep up with panellized systems. This will be cheaper construction and quicker construction, so there's a huge opportunity for industry to look at these types of systems. They can go up really quickly, as fast as one storey a week.

There is also cross laminated timber, or mass timber when you look at the tall buildings, and we've already seen several in Ontario and across the country. There is the Wayne Gretzky centre, and in Ottawa there is Playvalue. Again, that's an innovative product that we can do a lot with, that can compete. There's laminated strand lumber, manufactured in Kenora, Ontario, right now. Companies are filling in the gaps and looking at different forms of mass timber.

Also we'll be seeing more hybrid technology, wood in different forms, with concrete and steel, in different combinations and buildings. Unfortunately I can't show you the pictures. Actually we do have some awards books. I have a copy for each of you here, right behind me, so please pick one up. A lot of these projects have already happened at the UBC campus and different demonstration buildings. They're showing the advancement and what we can do.

I have one ask for the committee. We've been working for several years with the federal government, trying to look at procurement policy and getting more wood and these types of systems, and we see advancement in technology and code changes. Why can't we get the federal government buildings to be built with wood? We're asking for support in changing that and making that possible.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Ms. Berube.

We now go to Daniel Archambault from Kruger Inc. for a presentation of up to seven minutes.

Go ahead, please, sir.

[Daniel Archambault, Executive Vice-President and Chief Operating Officer, Industrial Products Division, Kruger Inc.]

Thank you, Mr. Chair.

Hello. I would like to thank the committee for inviting me here to take part in the study of the renewal of Canada's forest industry and to share some thoughts on today's topic, strategic innovation.

Kruger Inc. is a third-generation family business headquartered in Montreal. The company has over 5,000 employees in Canada and the United States, although most of our employees are in Canada.

Ever since it was created in 1904, Kruger Inc. has distinguished itself internationally by reinventing itself over the years and positioning itself as a leader in the industry sectors in which it operates.

The company has built a solid reputation around the world in traditional sectors such as pulp and paper, lumber and wood products, residential and commercial tissue products, as well as containerboard and packaging.

Kruger Inc. is also a major player in renewable energy, recycling and biomaterials. In addition to that, we are also active in the wine and spirits sector, which has nothing to do with the forestry industry.

I'd like to take a few minutes to talk about the importance of R and D, or research and development, for the industry in Canada.

Kruger believes that major investment in research and development to develop new technologies and products is essential, if we are to succeed in transforming the Canadian forest industry. Similar investments are also needed to modernize mills and/or build new facilities that will make use of these emerging technologies at the commercial level.

One example of the benefits of such investments has been the creation of the world's only cellulose filament demonstration plant, located in Trois-Rivières and developed by Kruger in partnership with FPInnovations. The plant, which was dedicated in June 2014, operates on a simple and efficient chemical-free process that involves mechanically peeling the filament from wood fibres.

Cellulose filament is a new material extracted from wood pulp that is revolutionary because of its unique property that it is in fact a powerful strengthening agent. It has major potential for Canada's forest sector because of its wide range of applications in the traditional sector of pulp and paper, but also in all kinds of products outside the pulp and paper world. This is really a game-changing technology. Thanks to the Trois-Rivières plant, Canada is now at the pole position of global competition to develop this technology as well as new applications of cellulose-based materials that will be used in products for everyday life.

As an example, there are all kinds of applications in composite materials and plastics. The characteristic of this product as an additive is to increase strength, so that for a given piece of manufacturing product, you can use less raw material and reduce weight. You get the picture of the impact. It could go into all of the automotive industry and everywhere where weight is an issue.

This project includes a $25-million research and development program to support the industrial scale-up, jointly with industries and/or companies that could benefit from including cellulose filament in their products.

This groundbreaking research and innovation project represents a total investment of $43 million. It's a three-year program. This includes funding from the Government of Canada through the IFIT program. I take the opportunity to thank NRCan, who believed in us from day one, for their support, as well as the financial support from the Government of Quebec, the Government of British Columbia, Kruger, and FPInnovations.

I also want to talk about the role of government in the process of the renewal of the forest industry.

We can't stress enough the importance of support for this kind of strategic innovation in the forest industry. Government support for the development and deployment of these technologies is crucial.

Canada must continue to lead the way in developing a reliable, sustainable source of fibres at competitive prices for its industry. In order to achieve that, forestry research is crucial.

One of the biggest challenges we are facing, particularly in today's newsprint industry, is developing R&D projects in a declining market with very limited means. It is therefore important for governments to ensure that we have access to the necessary resources to allow Canada’s newsprint industry to make whatever transition it needs to make in order to survive.

As you know, there has been a sharp decline in the demand for newsprint around the world, and competition is fierce in the marketplace, which is why paper mills need to continuously adapt and compete in order to survive. Our industry is committed to doing just that, but it will be impossible for us to do so without government investments and policies that, fortunately, have been contributing to the renewal of the industry for several years now. This kind of support from various levels of government is essential to the sustainable growth of Canada's forest industry and its future viability.

I would like to thank you once again for giving us the opportunity to speak before your committee.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Monsieur Archambault, for your presentation. I'm sure there will be questions for all of you later. We're here today, of course, for our second meeting on innovation in the forest sector.

The next speaker is Iain Macdonald. He is from the Wood Manufacturing Council.

Thank you very much for being here today, Mr. Macdonald. Please go ahead with your presentation. You have up to seven minutes.

[Iain Macdonald, Managing Director, Centre for Advanced Wood Processing, University of British Columbia, and Chair, Wood Manufacturing Council]

Thank you very much.

My name is Iain Macdonald. Today I am speaking as chair of the Wood Manufacturing Council. I am also the managing director of the Centre for Advanced Wood Processing at the University of British Columbia.

The Wood Manufacturing Council is the national human resources sector council for the secondary wood products manufacturing industry, with a mandate to plan, develop, and implement human resources strategies that support the long-term growth and competitiveness of the sector. We work with companies, employees, the education system, industry associations, and government to research and respond to the changing needs of the industry as well as to develop strategic plans to address key issues such as shortages of skilled workers and the need for national standards for worker competencies.

I'll focus my remarks today on the secondary manufacturing subsector of the forest industry; that is, companies that make value-added products such as furniture, doors, windows, architectural millwork, cabinets, and engineered building components.

Canada's value-added wood products are known for their quality and are exported widely. Total direct employment in the sector in 2013 was approximately 90,000 people, with 41% of those in the wood furniture and 23% in the cabinet subsector. Employment has declined over the past decade, particularly since the U.S. housing crisis, prior to which it had been growing.

Three provinces—Ontario, Quebec, and B.C.—account for a large share of the employment and the output. Much of the industry is located in or close to urban areas. The sector benefits both from new construction and from renovation. It has been impacted significantly, as we said, by the U.S. economic downturn. The overall value of the industry in the value-added sector was $17 billion in 2006, and despite the recession, remained at $17 billion in 2010, even with the loss of approximately half of our export sales. Canadian companies were successful at finding domestic customers to make up for that loss. Employment itself decreased by 20%, but productivity improved.

A major reason for promoting value-added wood products is the opportunity to derive more jobs and GDP from each tree harvested. A study carried out in 2000 found that Canada created just $123 U.S. per cubic metre of wood harvested, compared with $290 for the U.S. and more than $600 for Japan and Germany.

The secondary wood products sector is faced with a number of challenges. Ninety-seven per cent of the industry is made up of small and medium-sized enterprises with fewer than 100 employees. SMEs bring specific challenges, such as a lack of formal management skills, difficulty in accessing capital for investment in technology, poor economies of scale in production, and difficulty in releasing key employees from the production floor for training. The sector tends to be less technology-intensive than is the case for some of our competitors, resulting in productivity and efficiency gaps.

The sector has challenges in finding and retaining employees particularly at the entry level due to competition from the oil, gas, and automotive sectors and perceptions of the industry as offering unattractive career prospects to young people. Some elements of the sector, particularly wooden furniture, have suffered harsh competition from offshore imports, predominantly from China but now shifting to Cambodia and Vietnam. Finally, secondary manufacturers have difficulty obtaining lumber inputs from Canadian mills due to their focus on volume rather than value-based production and distribution.

The Wood Manufacturing Council has attempted to address these challenges in various ways, based on detailed labour market studies and close consultation with manufacturers. We've created a management skills training program designed to equip participants with skills and knowledge to move into management and supervisory roles within the industry. Our aim is also to help entrepreneurs who have established and grown businesses based on their technical knowledge to learn about and implement formal management systems in order to be able to delegate responsibility within their companies and focus on business growth.

Expanding the reach of recruiting and retention efforts to equity groups has been identified as a promising means to address skill shortages. WMC offers the wood employee readiness curriculum, which is a program that provides technical and essential skills training to individuals from equity groups interested in entry-level positions. Recruitment is from first nations, Inuit, Métis, new immigrants, women, and persons with disabilities. We've carried out programs from coast to coast with highly positive employment results. We're currently undertaking an initiative supported by Status of Women Canada to advance women's successful participation in the sector through the piloting of a mentorship system.

Higher education is also playing a significant role in addressing sectoral challenges. UBC's wood products processing bachelor's degree program is North America's largest program specializing in training management-track personnel for the wood products sector, and enrolment is currently at an all-time high. Our graduates are in high demand, and 94% of them find long-term careers within the sector. Average salaries among our alumni are second only to the faculty of medicine.

Our centre works closely with industry on new product development, manufacturing improvement, and technology transfer, and we see tremendous opportunity for a resurgence in the value-added sector in coming years for a number of reasons.

Offshore imports have become far less competitive. Typical wages have increased in China from $65 a month in 2000 to over $500 a month today. Industrial energy costs, previously subsidized, are no longer so. State-owned enterprises are now required to repay public loans, previously not the case as long as they were creating employment. Job creation is no longer the main driver for industrial investment. The 2008 Lacey Act revision in the United States requiring importers to prove that wood used is from legally harvested sources has also raised material and administrative costs for importers and is serving to persuade some of them to focus instead on Chinese and other Asian markets. Finally, concerns over the health aspects of finishes and adhesives used in some imported products continue to be of concern to North American consumers.

We now have a climate in which Canadian value-added wood products can compete for a larger share of the North American market if well-designed, efficiently manufactured, and adeptly marketed. In addition, looking to the construction sector, we see tremendous opportunities for our manufacturers due to recent building code changes, as the previous witness pointed out. Canada has the chance to develop a leadership position in structural engineered building products and systems that can go into structures such as schools, hospitals, industrial and institutional buildings, and tall wood buildings, such as the 16-storey student dorm scheduled to start construction next year at UBC. If we fail to do so, however, more mature players from Europe will be only too happy to service this emerging market.

To help Canadian companies fully exploit these opportunities, we will need to continue to invest in the sector by supporting industrial innovation in product development, manufacturing, and business processes, as well as in human resources and skills development. We suggest that the sector council model, which supported many highly effective human resource councils such as the WMC, be revisited, and we propose that there's a need for an umbrella organization that can provide a unified voice for secondary manufacturers throughout the country.

We must ramp up R and D efforts that are closely aligned to the needs and opportunities of industry, and provide avenues for innovative and energetic Canadian companies to attain and deploy the technology and training to be globally competitive. It's great to see the first to market with a new product or technology finding government support, but to build a globally competitive industry we need many viable producers of each product type. We must encourage and support enhanced partnerships and synergies along the supply chain and encourage primary manufacturers to move up the value chain, leveraging their economies of scale and access to capital to compete against the highly competitive products being produced in Europe and elsewhere.

Thank you for the opportunity to address the committee.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Macdonald, from the Wood Manufacturing Council.

We go now by video conference to Vancouver, to the University of British Columbia and John Innes, professor and dean of the faculty of forestry.

Go ahead, please, Dean, with your presentation. You have up to seven minutes.

[Prof. John Innes, Professor and Dean, Faculty of Forestry, University of British Columbia]

Thank you, Chairman. Good afternoon, members of the committee.

lt's a privilege to have been invited to appear before you this afternoon. As dean of Canada's largest faculty of forestry, the renewal of Canada's forest industry is obviously of great interest to me.

You've asked me to speak about the third theme of your committee, namely strategic innovation. Within this area, you have identified a number of subthemes although my main focus today will be on the later themes.

lt's now 30 years since Peter Drucker published his seminal book on innovation and entrepreneurship. I believe that the two go hand in hand, and particularly within the context of economic benefits, they cannot be separated. We can all have good ideas, but unless we understand how to commercialize these ideas successfully, we will fail to benefit from them and our economy will fail to benefit from them.

I will not add to the material that I am sure you have already had from other witnesses on the subjects of improving existing forest products and developing high-value products for future markets. Both of these areas have been studied in detail by the excellent work undertaken by the Forest Products Association of Canada and by FPInnovations.

This is an exciting area of future growth and at UBC we will be addressing this through the introduction of a master of engineering leadership in green bioproducts, subject to approval by the B.C. Ministry of Advanced Education. This program will closely follow the industry value chain, from biomass fundamentals, through biomass processing, to bioproducts and bioenergy. Uniquely, 40% of the content will consist of a leadership platform designed to enhance the business, communication, and soft skills of the program participants. This is one of a suite of new programs designed to provide our current and future forest sector professionals with both business and technical skills.

I am pleased that you are considering the optimum use of wood residues. Canada's forest industry has a strong record of improvements in energy efficiency, often through the burning of residues to provide energy. Other residues have been incorporated into forest products or been utilized by pulp mills.

More recently, there have been rapid developments in the wood pellet industry, sourced primarily from residues. The primary market for these pellets has been Europe, although Asian markets are now growing.

The European market is dependent on politically driven requirements related to energy policy. For example, if the new government in the United Kingdom were to loosen its ties with the European Union, as has been threatened, this could affect Britain's energy policy and subsequently its demand for wood pellets. Even without such considerations, I find it rather ironic that many consider the burning of residues to be an optimal use for biomass, when so much research has demonstrated that there are many other potential products that could be generated.

I believe that Canada's universities have a major role to play in the development of Canada's bioeconomy. This is recognized and the FIBRE networks run by the Natural Sciences and Engineering Research Council are an example of successful cooperation between the Canadian forest industry and universities.

This program, which is coming to an end, has however had some significant shortcomings, the most important being the exclusion of many stakeholders in the development of a holistic innovation system for the forest sector. With one minor exception, the FIBRE networks focused on the innovative use of products, the so-called downstream end of the value chain. This has left a major gap, namely in our understanding of forests and future timber supply. With Canada predicted to have a 25% fall in timber supply due to natural disturbances and regulatory changes in the provinces, the importance of this gap cannot be overstressed.

Coming from one of Canada's eight accredited forestry schools, I have been dismayed at the lack of attention being paid to the supply side of the forest equation. We need healthy and sustainable forests if those forests are to support a vibrant forest industry. ln particular, we need to assure customers buying Canadian forest products that they come from sustainably managed sources.

While the long-term impacts of climate change on Canada's forests remain uncertain, there is already evidence that climate-mediated disturbances, including fires and insect and fungal outbreaks, are affecting timber supply. Most models anticipate that the frequency and severity of these disturbances will increase. We need a better understanding of these processes so that we can better ensure the continued supply of high-quality fibres to the forest products industry. If we fail, then we will jeopardize the competitiveness of Canada's forest industry and the natural wealth associated with our forests.

We also need to recognize that the political, economic, and social aspects of the forest landscape are changing rapidly. The Tsilhqot'in decision by the Supreme Court of Canada has radically changed how crown lands are viewed, and new models of land governance are emerging. We are getting much better at valuing our forests for all the services they provide, rather than just the timber. For example, economic value can now be attached to carbon in forests, and in many parts of the world, mitigation banking has become a major business opportunity.

Finally, the ways in which Canada's forests are viewed by our urban populations—who make up the majority of voters, I might add—is changing; and the half-hearted attempts to educate this public about the benefits of well-managed forests have had little success to date. There is likely to be increasing pressure to preserve Canada's boreal forests from economic activity, including forestry. The Boreal Birds Need Half campaign, launched on March 16, 2015, arguing for 50% retention of boreal forests is an example of that.

Managing these demands on land use is what we as foresters are trained to do, but strategic innovation in this area remains remarkably limited, given Canada's size and the value of its forest resources. Such innovation is needed urgently. Without it, the continued uncertainty facing forestry companies operating in Canada will ensure that the current flight of capital that we have seen recently to the American southeast will continue.

Thank you for your attention.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Dean Innes from the faculty of forestry of UBC.

We go now to questions and comments from members, starting with a seven-minute round, and we'll start on the government side with Mr. Leef.

You have up to seven minutes.

[Ryan Leef, Conservative, Yukon, YT]

Thank you, Mr. Chairman.

Thank you to all of you, for your presentations today.

Ms. Berube, you mentioned the construction change in the national building code, the six-storey change. That's obviously going to generate construction growth, as you mentioned. Is that the ceiling or is that just the starting point?

[Marianne Berube]

That's a good starting point. It's ever-evolving, and new research and development, new products, and code changes are allowing us to catch up, if I may say it that way. Europe has been doing this for a number of years. We've always been behind what's happening in Europe. Really going to six-storey wood frame construction all started in 2009 when B.C. changed the codes first. That's because it couldn't get the Olympic village built in wood. Yet other jurisdictions even in the States and Europe have allowed it, so getting to six storeys took a lot. There was a lot of research and science behind this.

We're kind of on the radar now. We're getting a lot of comments from competing materials. But we do intend to aim for taller buildings with the next code changes, five years from now, in 2020. That's why there are some demonstration projects happening now to research and test them and prove.... Once you go above six storeys, it's a different way of building, because you can do stick frame and mass timber up to six storeys, but above that, it will have to be newer products such as mass timber. It's going to keep growing.

[Ryan Leef, Conservative, Yukon, YT]

That's perfect.

Mr. Archambault, is this the kind of R and D you would be involved in, as well, construction above...?

[Marianne Berube]

We have strong partners—FPInnovations, National Research Council, the industry itself—that do more on the research and development side. At the Canadian Wood Council and Wood WORKS!, we do more the education, promotion, and getting it out to the marketplace. The Canadian Wood Council also works on the code changes and evolvement.

[Ryan Leef, Conservative, Yukon, YT]

That's super.

You heard Mr. Innes' comments about the sustainable forest. Do you have any role to play? I think it was an important comment that he made that Canadians need to know that the end product has a sustainable supply and that there is some advocacy or some reasonable support of that. What kind of work do you do to educate Canadians on that, and how confident are you on that?

[Marianne Berube]

I started the Wood WORKS! project in Ontario 15 years ago. We've been in existence in B.C. for 16 years, and before that there was no wood advocacy program in Canada getting this out to the market and educating. We reached out to architects, engineers, and municipalities. I live in North Bay, Ontario—in northern Ontario—so it's easy to tackle municipalities that rely on the wood industry to support this, but it was somewhat daunting hitting southern Ontario and the Toronto area.

Canada is a world leader in forest sustainability. We still have 91% of our original forest cover. We're doing a great job, and this is the message. Now we have a huge role to play in climate change. Again, it's all about education and getting this out to people.

[Ryan Leef, Conservative, Yukon, YT]

I don't have tons of time, but maybe if I could just touch on each one of you starting in this order and ending with Mr. Innes. Could you each just comment on what role the federal government can play if we are to have world-class sustainability? What role can the federal government play in helping to get that message out and to educate the consumer, both domestically and internationally, that Canada's forests are well sustained?

[Marianne Berube]

The role, as I mentioned in my presentation, is that we'd like to see the federal government at least consider wood on an equal playing field because of all the new advancements in technology. We have worked on numerous projects with Public Works Canada. Even NRCan had a renovation job done a few years ago, and just to get interior-facing, not structural, wood in it was a huge feat. There's a huge role right there. We're not asking for a wood first...just an equal playing field to be considered in projects fairly.

[Daniel Archambault]

In the same way industry and everybody in Canada has promoted sustainability over the years, I think the government has got to promote the use of wood. We are all proud that we have a sustainable harvesting practice from coast to coast, from north to south. If we believe we have a natural resource that is renewable, one thing we can do to promote that is to use wood and show that we believe in the resource.

[Ryan Leef, Conservative, Yukon, YT]

Definitely. Thank you.

[Iain Macdonald]

There are already some good efforts happening, for example, in B.C., where I'm from. There are some real synergies between what Wood WORKS! is doing and what the universities and FPInnovations are doing to get the message out that wood is a sustainable material and there are tremendous opportunities in building. I would say that we need really good R and D support to back up with scientific information these code changes that are being made. There are some perceptions out there that there are some risks around fire and seismic protection and durability against moisture and that kind of thing. These all have to be backed up with scientific evidence. That work is ongoing but it's very important, and we could definitely do more.

Similarly, on the forest sustainability side in terms of helping to mitigate climate change effects, Canada could play a huge role worldwide with its forest cover. But we need to be able to back that up with scientific information.

[The Chair, Conservative, Leon Benoit]

Professor Innes, the same question.

[Prof. John Innes]

Thank you.

Canada has the highest proportion of certified forests of anywhere in the world so the quality of management that we have I don't think is disputed. We do, however, need to monitor what we're doing and be able to maintain the claims that we are the world leader in sustainability. That requires good information. I believe we do need advocacy on the part of the federal government and the provinces, and it's not just in the field of wood. Everyone knows wood is a beautiful building material. I don't think that's the message we have to emphasize too much. But we do need to inform, particularly, the urban public that we know how to manage our forests well and that the effects of forest management are minor compared with many other natural disturbances. I think the need to promote the use of wood in as many different areas as possible is good, and the possibility of promoting wood through a federal wood first program excites me. I like that idea.

Overall, I think we do need to be very careful to make sure that we can back up any claims we make that we are the best managers of forests anywhere in the world, and that does require a significant amount of investment in monitoring and to a lesser extent, research.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Go ahead, please, Monsieur Aubin, for up to seven minutes.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair. Thank you for this thoughtful gesture and for not cutting my time short.

Thank you to all the witnesses who are here with us today sharing their experiences and their expertise. They are definitely providing us with a clearer picture, which will guide our work and help us achieve two goals: to provide an update on the forest industry since the 2008 study, and to see how the federal government can be the best possible partner in developing this industry.

My first questions are for Mr. Archambault, not because Kruger has a plant in Trois-Rivières—as we know, the company has locations all over—but because I have been following the company's development for quite some time. My grandfather worked there to provide for his family, and I also worked there, as a student. A pilot project on cellulose fibre was launched last December. Research and development is absolutely crucial to success, especially the kind of success that Kruger in Trois-Rivières seems to be experiencing.

R&D projects in forestry do exist. In my region, there are also R&D projects in the aircraft industry, and in many other sectors. Based on discussions I've had with many entrepreneurs in my riding, it seems that there is no consistency in how R&D projects are assessed. Depending on the office one is dealing with, whether in Quebec City or Montreal, there is no consistent criteria.

Has this ever been a problem for Kruger? That would be one way for the federal government to be a better partner in the event of serious problems in that regard. This is what has come out of some of the discussions I've had with entrepreneurs. Have you had that problem?

[Daniel Archambault]

We have paper mills in Trois-Rivières and in the Sherbrooke area, in Quebec, as well as in Newfoundland and Labrador. Are you referring to the R&D tax credit?