Natural Resources Committee on Nov. 1st, 2017

[Glenn Mason]

I mentioned the cluster to indicate how far industry has come and that we're not talking about just kind of pie-in-the-sky ideas from analysts in government. This was industry that came together, with $400 million of funds that they're prepared to invest.

Now, they are not finalists in the competition, right? They're down to nine and then they're bringing that down to five. My personal mission is to figure out how to help them stay alive because of the momentum that will bring. It's everything from Canfor investing in new bioenergy facilities in Prince George to some other opportunities in the Ontario space, particularly around chemicals. There's the Thunder Bay to Sarnia “maritime highway”, if you will, of turning some of the waste products in the Thunder Bay area into chemicals that could be used—sugars, lignins, and things like that—in the chemical industry in the Sarnia area.

So we have one cluster around Ontario, and then I would say the other core cluster would be around British Columbia. Then it would be hard not to mention the cluster around Montreal and Quebec City.

[Marc Serré, Liberal, Nickel Belt, ON]

You indicated $1.5 billion in China. How many jobs does that represent?

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there, Mr. Serré. Sorry about that.

[Marc Serré, Liberal, Nickel Belt, ON]

That's okay.

[The Chair, Liberal, James Maloney]

It's not easy being me, some days.

[Voices]

Oh, oh!

[The Chair, Liberal, James Maloney]

Ms. Stubbs, you have five minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

In a show of friendliness, Mr. Mason, I'd welcome you to answer my colleague's question.

[Glenn Mason]

There's not a simple answer, but I can tell you that then minister Pat Bell from British Columbia in about 2011 had sent an email to staff saying there were 22 mills in British Columbia that were operating because of the China market. Whether or not that number is precise, there's no question that at least 10 mills are basically just sending their product to China.

China has served a number of purposes. One, let's be clear, they have taken a lot of low-grade beetle-killed wood out of North America, which otherwise would have depressed prices. That then allowed other parts of Canada to have more access to the United States just because of the volume that had to come off the land. But the Chinese market is changing, and it's not just concrete forming. There are a lot of interesting things happening in China with the focus on green building in particular. The Government of China knows it needs to clean up its cities, and that's an area where wood has an opportunity.

When I was over there with Minister Carr in June, he opened the Sino-Canadian eco-city in Tianjin, which is a new growth area about two hours outside of Beijing where there are a whole lot of townhouses and other buildings being built out of wood. I tweeted a picture of some OSB made in Maniwaki that was in a building there.

There's a lot of opportunity. It's not single-family homes. Let's be clear that really the future in China is the multi-storey and the multiple buildings. We see an enormous opportunity for infill walls being made out of wood, because when you buy a condo in China, you don't buy a finished apartment like you do here. You buy a square cement block, and then you send in the decorators, and you finish it. That's why there's a lot of jackhammering going on after buildings are completed in China. But there's enormous opportunity.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thanks, Mr. Mason; I'm going to run out of time. But I appreciate your comprehensive answer.

I'm sure you know that when the Minister of Natural Resources appeared at this committee last, he said, “It is my job, as Canada's Minister of Natural Resources, to respond to any countervail in order to protect workers, communities, and producers.” And I think that's a sentiment with which we all agree.

A colleague of ours, Todd Doherty, asked the minister when he was in that committee whether or not Canadian remanufacturers would be included. The minister, just unfortunately at that meeting, was unable to answer the question. The minister said it apparently had “flummoxed an entire department”. To that end, has the department an update on any assistance that is being offered for remanufacturers? What is your assessment as a department of the opportunities, the threats, and the risk facing remanufacturers in Canada?

[Glenn Mason]

The remanufacturing industry is very important. It employs thousands of Canadians. There is no question that it's an important industry. The duties that are unfair for the entire sector are at the moment doubly unfair for them, to be clear. My staff were meeting with the remanufacturers this morning, so we're very familiar with their concerns. Their concerns are real.

In terms of going forward, I can't say a lot more than that, because we're in a situation where we don't know what the U.S. Department of Commerce is going to do. We expect them to bring forward their announcement imminently, and we will find out a number of things at that time. Will there be maritimes exemptions? Will there be more border mill exemptions? Will there be remanufacturers exemptions, or treatment like the last time, which was more or less net fair? Will there be treatment for high-value producers like the cedar folks on the west coast? We just don't know at this time.

I would simply say that we're well aware. We're not flummoxed. We're well aware of the issues facing the sector. They are real, and at the moment they are deeply unfair.

[Shannon Stubbs, Conservative, Lakeland, AB]

I appreciate your answer. To that end, has the department or another government department done an economic impact analysis on the state of remanufacturing in Canada right now, and is there any estimate on the potential job losses—as we have said, thousands of Canadians do depend on the industry for their livelihood—in the scenario of continuing countervailing duties, just to be prepared?

[Glenn Mason]

On that very specific question, I would defer and get back to you on that.

[Shannon Stubbs, Conservative, Lakeland, AB]

Okay. That would be great.

How much time do I have, Mr. Chair?

[The Chair, Liberal, James Maloney]

You have 30 seconds.

[Shannon Stubbs, Conservative, Lakeland, AB]

Okay.

I was going to invite you to share any other notable examples regarding Canada's track record of world-leading natural resource development right across the board, to see if there were any specific examples you wanted to share about responsible achievements in the secondary supply sector of forestry. But maybe you'll have to do that with some other colleagues.

[The Chair, Liberal, James Maloney]

I think he will, unfortunately.

Mr. Tan, over to you.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you, Chair.

I want to follow up with a question about this big Chinese market for our wood products industry. Last year, while I was on a parliamentary trip in China, I visited an international fair in Beijing. That fair included a Canadian pavilion set up by our wood council and a couple of Canadian wood product companies. They were there trying to promote their wood products to the Chinese housing market. They told me that for some years the government didn't do a good enough job to help them to carve out this big market in China. As a result, they have had to rely on themselves to get into that market. Right now, it's become more and more difficult. This is quite similar to what happened to our nuclear industry, our CANDU technology.

Can you tell me what changes you or your colleagues or your department have made to foster a new global market—for example, the Asian or Chinese market? In your opinion, what is needed the most to best help the industry? Should we provide a better policy or more incentives or more advocacy? What kind of help can we provide to the industry that can achieve the best results?

[Glenn Mason]

Just for clarification, those were Canadian companies saying that?

[Geng Tan, Liberal, Don Valley North, ON]

Yes.

[Glenn Mason]

Do you want to go ahead on that?

[Robert Jones]

Sure.

As you know and you probably referred to, we've had a program for a number of years called Canada Wood. This program is meant to bring wood products associations from across the country who represent many companies, and then they can promote wood products in a given market. China happens to be the main thrust of our activities for this current year. The federal government is putting about $2.5 million into market development in China, and this amount of money is cost-shared with the forest industry and the provinces, so our $2.5 million leverages probably another $2.5 million.

Quite a wide array of activities are being conducted in China, ranging from supporting associations at trade shows to promote Canadian wood products, to working with government officials to change codes to be more amenable to wood, to having construction specialists on site who will help the Chinese builders and developers build with wood. Building houses out of wood is a fairly recent phenomenon in China, so we've spent a lot of time educating builders on how to safely construct a house out of wood while conforming to the building code.

You asked what the biggest challenges are. China being a huge country, first I think the biggest challenge is to educate consumers that wood is a viable product and a very liveable product for housing. Second, and I mentioned this earlier, is training builders on how to build safely out of wood. Third, with the new softwood lumber action plan money, we have increased resources to fund demonstration buildings. You can build these buildings and people can see that, yes, they are constructed safely. They are very friendly.

I was there just last week, and I was amazed at the number of people I talked to who said, yes, they just love being in a wooden house; you can see the wood panelling, the wood flooring. We need to be portraying that message and getting to the Chinese consumer, because as you probably realize, with the growing middle class, more and more people in China are going to be wanting, and be able to buy, houses, and not necessarily single-family. We're looking at multi-storey houses.

We have had a program. Mr. Mason mentioned some of the successes of that program. When we ask the industry where the next market is that they think we should be developing wood products for, they just say, “China: more China”. We focused a lot on the eastern side, and now we're looking more in the interior of the country.

[Geng Tan, Liberal, Don Valley North, ON]

I have no time left, Mr. Chair? Zero?

[The Chair, Liberal, James Maloney]

I can't change the clock, unfortunately. Sorry, but that's all the time we have.

Thank you very much for joining us today and getting us off to a good start on this new study. We appreciate your being here.

We will suspend for a couple of minutes. Then we'll start the second hour.

[The Chair, Liberal, James Maloney]

Let's resume now and get going. We have to stop a tad early to do about five minutes or less of committee business.

We are joined this hour in person by the Association of Lumber Remanufacturers of Ontario—thank you, gentlemen, for being here—and by video conference two representatives from J.D. Irving, Limited; we thank you for making yourselves available by video conference and accommodating our schedule.

The process is that each group will be given up to 10 minutes to make a presentation in either or both official language. You should have translation devices available to you, and hopefully you do in New Brunswick as well, following which we'll open the floor to questions.

Gentlemen, you're here, so why don't we start with you?