Natural Resources Committee on Nov. 6th, 2017

[Ted Falk, Conservative, Provencher, MB]

Good. Thank you, Mr. Foster.

Mr. Atkinson, I'd like to engage you as well. You talked about a lot of raw, unprocessed lumber being exported out of the country, and you said there's been an increase in that. I'd like you to comment on that a little further. Where do you see that lumber going?

[Keith Atkinson]

What I was referring to is the challenge we're having with the lack of manufacturing facilities in B.C. We have seen very little investment in the last couple of decades to replace the older, primary forest manufacturing facilities. Instead of welcoming that and seeing that investment take place in the province, companies have decided not to do that, and now we're seeing an increase in raw log exports. It's not in the lumber so much. That's creating a backwards movement away from the innovation we want to see.

[Ted Falk, Conservative, Provencher, MB]

Is there any connection of that to the lack of a softwood lumber agreement?

[Keith Atkinson]

Our experience with recent versions of the softwood lumber agreement is that each time we go through a softwood lumber agreement, smaller companies end up dying and going out of business and we get a reduced number of larger companies, so we have fewer and fewer corporate holders of the woodlands producing softwood lumber in B.C. Now we're struggling with finding people. The uncertainty of investment here is what causes us to lack that investment in new manufacturing.

[Ted Falk, Conservative, Provencher, MB]

You talked about employment among your first nations community, especially for your youth, and you also talked about value-added and secondary processing for wood products. Can you give me any examples of how your communities have been creative in creating employment in that vein?

[Keith Atkinson]

The main one I talked about was the bioenergy. Because of the mountain pine beetle epidemic, we had resources and investment to work, so we prioritized our efforts and wanted to participate in the bioeconomy by utilizing the dead pine. Numerous small ventures were created through that.

[Ted Falk, Conservative, Provencher, MB]

I'd like you to expand on that further, but I'm going to run out of time here in about three seconds.

[The Chair, Liberal, James Maloney]

We're running late. Usually I'm quite happy to extend time, but we don't have that luxury today.

I'm going to go to Mr. Cannings and then over to Mr. Falk briefly. We're going to extend the first hour a bit just to complete the first round.

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

Thank you all for coming here today.

I'm going to start with Monsieur Verreault.

I think you talked about 2,000 projects using solid wood, but very few of them were generated by the provincial or federal government. You talked about how most of your projects seemed to be down in the United States. Why do you think that's happening? Is it something about the way we approach building with wood here? What positive role could the governments play to change that?

[Frédéric Verreault]

In my humble opinion, that all rests on whether or not the will exists to find an innovative solution to meet the government's needs. For example, if the government shows its intention to reduce the environmental footprint of its methods of transportation, there will be an enthusiastic reaction in equipping the fleet of public vehicles with electric ones. However, in the case of wood construction, the intention expressed is not to use better construction to adapt government-owned buildings to the toughest standards. Instead, they say that they want to consider wood in order to help the forestry industry.

In that case, the message being sent loud and clear is that it will be complex and expensive. In the entire chain leading to the completion of a project, we see a very serious lack of interest. As soon as they can, people say that the option is being put to one side, that the matter is settled, that the political movers and shakers are satisfied and that, in response to the demand, the intention, that they had expressed, they have been shown that wood has to be set aside, or that using it is more complicated. They can then move on to something else and work in the same way as they always have.

There really is a resistance to innovation in general. The other key factor is motivation. In terms of using wood, that is what causes it to be ignored as an option.

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

When you're shipping to the United States, are your solid wood products subject to the softwood lumber tariffs?

[Frédéric Verreault]

Not at all. According to the principle that determines the categories of products subject to countervailing duties in the United States, if a product can go through American customs and then be divided into softwood products like 2 x 3s, 2 x 4s, or any other size, it can be subject to countervailing duties. At least, that is the logic the American Congress uses, and the American producers.

I-joists, the light framing referred to earlier, solid wood products, and glulam panels and columns are products that cannot be broken down and put back into their softwood state once they are through customs. Therefore, no duties apply. But that directive was updated after the duties in the new conflict were imposed. So it was specific.

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

Okay, thank you.

I have to keep moving along here because we don't have much time.

I want to go to Mr. Atkinson.

You talked a lot about the challenges that the industry faces, particularly in British Columbia, with declining annual allowable cuts, the beetles, reduced old growth, the fires, etc., and the challenges of government policies, especially towards your operations and operations in your communities.

As we all know, forestry tends to be managed by the provinces. First nations concerns are more of a federal issue. What would you recommend that we could do at the federal level to move those questions along, especially when it comes to changing the forest tenure system that I think you implied was causing a lot of the problems, at least in British Columbia? How we could perhaps start to see that change from the federal end?

[Keith Atkinson]

Great. Thank you for that question.

I think that's part of what I was challenged with in presenting to you today. What it really boils down to, in our opinion, is about the federal framework on policy for the manufacturing sector, the federal commitment to a reconciliation with Canada's aboriginal peoples.

In a large way, the relationship between Canada and our first nations is a fiduciary role. Being able to bring our communities to a place where they are able to participate in a manufacturing sector is where I'm hoping to guide it.

The other thing I was trying to raise in connection with some of the issues and barriers that we hit on the policy front were the jurisdictional issues between fuel management in wildfire protection leading to bioenergy projects on Indian reserve land. There were cross-jurisdictional problems with power supply agreements with hydro and that kind of thing.

The policy framework and being enabled through policy are important, as well as the fiduciary role and supporting aboriginal peoples in their reconciliation and with the provinces, which, as you say, control the forest lands and the sector primarily. We're struggling to reconcile those relationships in tenure reform, or land reform. We need support at the federal level to make that happen.

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

Thanks. I have one minute.

Mr. Foster, you touched on this idea that new codes would result in higher prices for homes, especially if you're moving to net-zero ready. Then you hinted that this might not always be the case. I heard someone say that.

Can you expand on that, in a very short order?

[David Foster]

Simply put, the position we've been putting forward at a policy level, and certainly in the code process, is that we're not arguing against moving to net-zero ready by 2030; rather, we're saying let's figure out how to do it without increasing the cost of the house.

That's a really big challenge. We think it's doable, but unless the process has that as a goal, it's unlikely to happen. What tends to happen in code is that everybody sticks something in that they think would be good to have there, but there's not a lot of thought about how you do all of this and try to maintain affordability.

We think it's simply taking on a bigger challenge, figuring out not just how to.... We can always spend money and build a better house. Can we build a better house without spending more money? I think that's a more compelling challenge.

[The Chair, Liberal, James Maloney]

Thank you. I'm going to have to stop you there.

Go ahead, Mr. Falcon-Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Thank you very much, Mr. Chair.

My thanks to the witnesses for being here today. We are glad to have you with us.

My questions go to Mr. Verreault.

What is stopping your company from producing more secondary products?

Should the federal government be more proactive in terms of buying construction products so that jobs are created here and so that the products are processed using energy-efficient materials?

[Frédéric Verreault]

Actually, the federal government is already doing some very good things. For example, I'm thinking of Natural Resources Canada's project to build wood high-rise buildings, which is about four years old. Structurlam has already done this in Vancouver. In Quebec City, we did it with the Origine condo tower. The tower has 13 floors, including one of concrete and 12 of solid wood. The project was carried out through a Government of Canada initiative for demonstration projects that focused on the entire technology development component of the project, not the cost of the wood. That kind of support is very positive.

We are able to offer products like cross-laminated timber (CLT) today thanks to partners like FPInnovations. In 2009, FPInnovations mentioned to us that there was a mission to Europe for a new solid wood product, cross-laminated timber. So we went to Germany and Austria, as suggested by FPInnovations. All our product validation technology processes that we were developing were supported by FPInnovations, actively and loyally supported by the Government of Canada, which is very strategic.

What can we do to make more products? Clearly, it's a market issue. We have been talking about the National Building Code for a few moments. The Code is restrictive for innovation; it does not say that the project must meet safety objectives, for example, in case of fire. The Code does not say that we have to meet such and such objective in terms of the environmental footprint. The Code requires us to take this product or that product. This is where the requirement obsturcts innovation.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I would now like to ask Mr. Foster a question.

This one's related to the building code.

You talked about codes and officials. How do we create mass products to make housing cheaper for more people using mass industrial procedures, thereby ensuring that we can actually have the people who do the building codes involved in creating innovation, so that these two things can meld together and we can support the industries here in Canada?

[David Foster]

Mr. Verreault touched on one of these.

Increasingly, we want to see codes move to performance outcomes rather than prescriptive outcomes. It doesn't tell you how to do it, but it tells you what you must achieve in terms of safety, environmental features, durability, and that sort of thing. That move in code will open it up for innovation.

Code should not stop you from innovating. It should tell you what you have to achieve when you innovate. It's a big transition, and I think there's a lot of interest in the code process to try doing that.

Everyone involved in the code must realize that we need to carefully balance the costs and the benefits sides of things so that we don't have a process that's always additive. Sometimes you have to make choices about how far to open the door to let through an innovation, yet keep it affordable.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

You talked in your presentation about the secondary products, such as the mass-produced walls for homes. I would expect that to actually reduce costs because in the end, that would probably be cheaper to do in a large-scale building. People would be doing the same task over and over again without having to make measurements.

Why have we not seen a reduction in the cost of new homes for young Canadians or in first nations communities? Is there a way of increasing the industrial procedures or processes here in Canada to make us more efficient and to make it cheaper?

[David Foster]

We did have a major developer in Alberta that produces a thousand homes a year go from on-site construction to preassembly in a factory. Then they just put the pieces together on site.

His experience wasn't that it necessarily saved him money in fabrication, but it allowed him to be more precise and to have much more precise tolerances, which meant fewer warranty claims, fewer on-site problems, and fewer weather delays. It also allowed him to deal with labour shortages that were a huge issue in Alberta a few years back and will be an issue in our industry going forward.

Where we see that happening, it's for economic reasons, but the lower cost per square foot of the materials is not necessarily the driver. It can be labour utilization, better precision, and fewer warranty and performance issues because you have a more precise product. Those are still very good reasons.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I just have one final question. It's for Mr. Keith Atkinson. You mentioned there were some manufacturing issues that were making it more difficult for first nations involvement. I was wondering if you could talk about how we can increase the number of jobs for first nations in this sector.

I see some stats here from the Library of Parliament, with 211,000 people directly involved in forestry, and of that, 9,700 jobs for indigenous people, so that's a rough estimation of around 5%. Indigenous people make up a greater percentage of the population where the forestry products are, generally. What can we do to increase, not the percentage of aboriginal people participating, but the number of jobs that are located where people are working?

[Keith Atkinson]

Thanks for that.

It's actually been one of the keystone programs of our organization in the last six years to try to enhance the potential for aboriginal people in the forest sector workforce.

The manufacturing sector has been an interesting component that we've been really challenged by, since traditionally the manufacturing sector has held onto great jobs to offer the community, with a line-up of very skilled workers and people ready to take those jobs. It is an environment where very few aboriginal people are employed, so there is no cross-cultural awareness and programming within those companies and probably a negative historical relationship. There's a problem with a negative perception in our community of the forest sector because of the lack of involvement and the lack of benefit over the years. It's a message to our youth that it's not really a place to look for employment.

We're trying to change those kinds of cultural barriers. I think we need to see some work done to help transition communities that have been in an unhealthy condition due to the sad history of residential schools and the education programs that affected our people. We know we're in an unhealthy condition in that environment, and there are programs that try to support the transition into that workforce. Probably the biggest thing is having the sector actually embrace that concept and invite those jobs into their organizations, which we are getting some traction with.

In the last 10 or 15 years, there haven't been very many jobs to fill. The forest sector has maintained a very skilled workforce that's growing older. In B.C. in particular, it's actually been diminishing, not growing, so there hasn't been a need for workers. It's only now that we're seeing a high demand, and there's a generational gap in skilled workers. We're rushing. That's why we call it an urgent opportunity with our large youth demographic to try to prepare those people for that opportunity and not miss it while we turn over that large segment of the workforce.