Natural Resources Committee on Nov. 22nd, 2017

[Bob Matters]

I think the long-term future, the bioenergy and the bioeconomy that the previous speakers were talking about, has tremendous opportunities, not just in northern Quebec but all through the northern boreal, where the forest type is such that a two-by-four or a two-by-six aren't the primary end products.

In time, when we get the proper research and the proper experimentation done, those mills will have an outlet for those chips. I'm no expert, but I don't think there's going to be an outlet tomorrow.

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

Okay, thank you.

The next question is for my neighbour opposite. What are the difficulties in developing the secondary and tertiary transformation of wood?

What are the difficulties in transforming the second and the third transformation of the wood?

[Shawn Moore]

Sorry was that for me?

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

Yes, it's for you.

Do you want me to repeat it?

[Shawn Moore]

Yes, please.

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

What are the principal difficulties for the development of the second and the third transformation of the wood?

[Shawn Moore]

Our difficulties were in drying it and having the space to dry it properly.

In an urban application, you don't necessarily get the choice to harvest it at the proper time. You could be harvesting trees full of water, different species that have lots of water in them. When you go to extract large amounts of water, with green leaves and all that sort of stuff, you have to slow down the drying process or you risk devaluing the lumber.

It's the ability to slowly air-dry it first and then finish it off in the kiln, and having the space to do that. The process of cutting it is fairly easy. When you want to dump moisture and control your moisture because of taking it down in an inappropriate season, that's where we run into our challenges. It's a little longer drying process because of that.

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

Thank you.

Mr. Matters, how do you see the labour challenge in the future?

In the Saguenay—Lac-Saint-Jean, the problem is not a shortage of wood, but rather a shortage of workers. Outside the Produits forestiers Résolu company on Quen boulevard, right now there are signs advertising an urgent need for labour and that women are welcome.

What is your response to that?

[Bob Matters]

Unfortunately, we see it right across the country, to be honest with you. Particularly because of the economic downturn—I keep referring to 2006 to 2009—the forest industry has not had any great track record of having a few consecutive good years. Subsequently, employment was quite precarious unless you had been a very long-tenured employee. For a while, many claimed that the industry was dead and/or dying. The image of the industry for a long time was that it was not a place you wanted to be.

I think the industry has done a very good job recently of trying to change that. I know that they've been working with various agencies, both provincial and federal, to try to do that. Ironically, the problem we have today with softwood.... I know that it's hitting Quebec in particular, more than it's hitting anywhere else at this point in time. Despite that, I believe the future is great for the forest industry, for those companies that remain viable in the short term.

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

Thank you.

For my friend from Edmonton, what is the perspective for the future, for the emergence of products that could help the traditional forest enterprise be more diversified?

[Shawn Moore]

I'm not sure I understand your question.

[Richard Hébert, Liberal, Lac-Saint-Jean, QC]

I will repeat it in French.

What is the outlook and what emerging products could help traditional forestry companies diversify?

[Shawn Moore]

As I said, I think that if we process more of the lumber here.... I had a small forestry company that just took down trees. I had to add the next steps in house in order to be able to overcome some of my challenges, namely, keeping employees, versus the seasonality of logging or tree take-down.

Some of the solutions would be to add more of the processes, rather than just making the two-by-four. Make the two-by-four, and then take the two-by-four and turn it into something else within the industry to sell as a value-added product, not just as raw material.

We found from the take-down right up to building a high-end product and putting the tree in the ground, that we could keep the jobs and keep the guys busy. That was our best success—taking it to some of the further steps that we weren't doing. It takes five minutes to take down a tree. You have to take down a whole bunch of trees to survive the whole year; whereas a house takes six to eight months to build. That's where we found we could stay on site with a few trees, and we would be employed for a whole year.

[The Chair, Liberal, James Maloney]

Thank you.

Next is Mr. Schmale for five minutes.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, gentlemen. We appreciate your comments so far.

Mr. Matters, I would like to pick up where you left off. At the beginning of your statements, you were talking about exports from Finland or the EU into the United States. Can you expand a bit more as to why that is and what's causing that new market?

[Bob Matters]

Well the primary cause—and I know it was talked about in the earlier presentations—is that we're currently enjoying some fairly high lumber prices, record territories, in fact.

To countries like Finland, whose industry is really built around pulp and paper, lumber is—as some companies here might think—more of an input than a final product. The fact that we have the record high prices, the fact that the industry in Canada has diversified and has continued to try to diversify offshore does leave holes in the U.S. marketplace. These guys, because of the prices, are able to avail themselves of that.

One of the critical pieces in our ask during the softwood lumber negotiations is that if we're going to have a quota system—which we didn't support—we need to have a hot market trigger mechanism so that we can re-access the market if there's a demand. Obviously, there's a demand today. If the Europeans can bring lumber in, there's obviously a demand. All of us in this room know that the U.S. production facilities cannot meet their needs.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

As this softwood lumber dispute drags on and on, is there a fear that the U.S. businesses will get very used to the supply coming in from the EU, and maybe not need Canada as much?

[Bob Matters]

For dramatic reasons, I'd like to say yes, but in all honesty, the Europeans are being opportunistic because of the high prices. My suspicion is if markets normalize—whatever that means—that price advantage could very well disappear, but that does not take away from the fact that if we have a quota, we have to make sure we can access those hot markets at the same time as these other guys do.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Are you looking forward to the text of a deal for the TPP to be released? Would that be of help to you in terms of diversifying markets? If you can access an Asian market with an economy of trillions of dollars and a growing middle class, depending on the wording, would that be of benefit to you if you're looking for ways to diversify?

[Bob Matters]

My obvious answer would have to be yes, if we can access that kind of marketplace duty-free. I say that with the backdrop of this industry, with support from FPI, from the provinces, and from the federal government, having done a wonderful job of opening up markets, particularly China. If they can grow what they want to do today with China, it's conceivable that there's going to be a day when we're not going to need to rely on the U.S. for our lumber products, except we will because they're closer and we're lazy. The industry is lazy—marketers....

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

You'd be calling for talks to resume ASAP with the TPP. I'm glad to hear that. I worry that the U.S. sees the market with the EU, since they're doing business with them now, and is getting very comfortable, but I'm hoping we're able to gain that market back should things change.

You talked earlier about support for sawmills in Canada and that type of thing. Can you expand a bit more on that? It was somewhere in the middle of your statement. Government support for sawmills.... I think it was you who said that, Mr. Matters. I just wondered if you could clarify that a bit. What did you mean by government support for sawmills?

[Bob Matters]

It's things like what was mentioned earlier, procurement policies so that we in Canada can incentivize more purchasing of our products. Even more important than that, it's getting our primary industry to diversify a little more. Maybe “lazy” was not the appropriate word, but the industry is comfortable. Two-by-four manufacturers are comfortable making two-by-fours. Two-by-six guys are comfortable doing two-by-sixes. They don't necessarily like stepping out of bounds.

I have talked to a number of CEOs in the last three months, trying to convince them that instead of investing in the U.S., they should be investing in CLT operations here in Canada. That kind of support and that kind of investment in Canada is what's going to stabilize the industry on a long-term basis.

[The Chair, Liberal, James Maloney]

We're going to have to stop there. We're right on time.

Gentlemen, thank you both very much for joining us today from here in Ottawa and from Edmonton. We're very grateful for your testimony. It will be a tremendous help to what we're doing here, so we appreciate it.

The meeting is adjourned.