Natural Resources Committee on Nov. 1st, 2017

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay.

Mr. Ekstein, can you just explain to me this business of the double duty and the challenges you're facing? I'm just a bit confused. If you could, please do it in a minute.

[Rick Ekstein]

Yes, I'll do it in a minute. I'll try to do it very quickly and simply.

The sawmills pay the duty, the tax, on their lumber when they ship it across. We bring that lumber in at—just to pick a number—let's say $300. We add $200 of labour to it, we add waste, we add profit, etc. Then we have to pay the tax as it crosses the border.

So instead of paying the duty on $300, as we have in previous deals, we're now paying the duty on $600, the value as it crosses the border, which effectively is double the duty on the lumber. That's what's killing us right now.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Were your products included in the previous SLAs?

[Rick Ekstein]

In the previous deal, we had something that was...the tax was on what was called “first mill”, so we only had to pay the tax on the $300 that we paid for the lumber as it entered our plant.

[The Chair, Liberal, James Maloney]

Thank you.

Ms. Ng, you're next....

Yes.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I have a question, just quickly.

On that last comment, you said under the “deal”, but there is no deal. Do you mean in the absence of a deal as it is today? And you're referring to wood product that you're bringing in to remanufacture from which jurisdictions?

[Rick Ekstein]

We're bringing in wood from all over Canada into our plants in Ontario. Under this scenario, in the absence of a deal there is going to be a duty. Then we're going to have to fight it. If the duty is the same—

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Is there a duty imposed today?

[Rick Ekstein]

There is a duty today, which is less than the duty was four months ago. Four months ago it was the equivalent of about 50% for us; today it's the equivalent of about 14% for us. They keep changing things. Depending on the announcement that comes out of the States today, we're anticipating—it's all we can do is anticipate—that it's going to go back up again. In previous iterations it was on that first mill basis.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Right. I understand. Thank you.

Jerome, just quickly, if there were one single thing that we could do as the federal government, or that the provincial government could do, to lend assistance to remanufacturers and to the industry as a whole, not only in New Brunswick but in Atlantic Canada, what would that be? You have operations in Nova Scotia as well, I understand. What would be the single biggest thing that the federal or provincial government could do, or work collectively on, to try to help the industry?

[Jerome Pelletier]

I think the biggest threat to our industry today, other than the SLA, is the spruce budworm. When you look at the volume of the acreage destroyed in the province of Quebec, it's unreal. We're looking at it very seriously for New Brunswick. We've been proactive, spraying in certain areas to stop the pest, but we need to spend more time, energy, and money to keep fighting the spruce budworm. Otherwise, we could see our resource being destroyed in a very short period of time.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Is this joint approach to the spruce budworm a public-private approach or is it a whole-of-government approach?

[Jerome Pelletier]

The private sector has been involved with both the federal and provincial governments. I know there was a petition circulated a few weeks ago to ask the federal government to participate more actively in the initiative. We haven't heard back yet, but that's very important to us.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Okay.

Thank you.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you, everyone, for coming and giving us your testimony today.

I just want to ask some basic questions around jobs training and that sort of thing.

To the folks at Irving, can you help me understand how jobs in secondary remanufacturing compare with those in primary?

[Mark Mosher]

From a pay-scale perspective?

[Mary Ng, Liberal, Markham—Thornhill, ON]

Well, from a numbers perspective. I've been reading that there is a greater number of jobs in the secondary manufacturing market versus the primary. I just want to get a sense of that, and then I'll ask about jobs training in a second.

[Jerome Pelletier]

Maybe I can speak for sawmills. In our sawmill division, we operate sawmills, but we also have two value-added facilities. When we compare wages, they're very similar. Most of our plants are unionized. Wages for a labourer, an operator, or a loader operator are basically the same, whether they work in the sawmill industry, primary transformation, or secondary transformation.

In terms of jobs created, yes, it's true that the second manufacturing tends to be more labour intense. It's a good thing short term. My humble opinion here is that, long term, if we want to be competitive in the forest product second manufacturing sector, we need to automize our remanufacturing plants so we can keep producing with a higher yield and also be cost-competitive in that business. Otherwise, it'll become very difficult to export our products because the labour costs to produce the product will be too high.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Right.

I have a different kind of question for you. I was looking at some of the work that Irving does around Pathways to Shipbuilding. I thought it was really interesting, because it's such a really great program that collaborates with partners in the first nations, in the industry, and in government. I wonder whether or not you have something on the forestry side that actually helps with those young people and particularly with the indigenous community. I think that it's a great thing you've done, and maybe you can talk to us about whether or not you're doing something like that in forestry as well.

[Jerome Pelletier]

In forestry we're looking at, for example—we've been very active here—the foreign recruitment side. We've been working with different provincial and international organizations to see how we can recruit skilled operators to work in our forest operations in our woodlands division.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I'll ask a similar question to ALRO. Thank you for your testimony. With regard to skill development and so forth, do you do anything of that sort as well around the suite of companies that you represent?

[Rick Ekstein]

Yes. I'll talk particularly about our company. We believe very heavily in investing in our people. We have full-time trainers on staff. We believe in promoting internally. The current president of our company started off 30 years ago piling lumber in our remanufacturing plant, and that's quite the testimony of what can happen. That's very important to us.

I would like to just comment on one thing that the gentleman from Irving said. They are probably the greatest integrated company in Canada from top to bottom in terms of value added, and they deserve a lot of credit for that. But there are still certain products—like this—that we buy from Irving as well...that it comes to a point where they have to move it on. They are the “poster child”, if I can use that term, for fully integrated and value added in the system.

If I could just have two seconds, I have one other final thing. Years ago I was talking to the president of the parent organization in the States for the sawmill industry, and he equated us, being the remanufacturers, to innocent victims of a drive-by shooting. He said, “Rick, you're not our targets. The sawmills are our targets. You're the inadvertent collateral damage.”

You've heard me being very impassioned about jobs today. But if Minister Carr is truly going to call on the people around this table to help decide what to do in the event of a quota agreement or anything else, please help us not become that innocent victim again.

[Mary Ng, Liberal, Markham—Thornhill, ON]

I think what the committee wants to do is actually understand what the opportunities are in this secondary value-add industry, so that we can actually think about—

[Rick Ekstein]

Lots.

[Mary Ng, Liberal, Markham—Thornhill, ON]

—how we could be of assistance there.

I've run out of time.