Natural Resources Committee on Nov. 16th, 2020

[Susan Yurkovich]

I mentioned in my comments that it's a very significant spend. People tend to think that this is just jobs in rural communities and outside the Lower Mainland. In terms of B.C., 42% of all the forestry jobs are in the Lower Mainland and southwest part of the province. Our spend is huge in Vancouver, in fact. Those are jobs that people don't traditionally see as being linked to the forest sector. They're jobs in technology, marketing and logistics, etc. I think that's really important.

There are jobs and economic activity in B.C. in absolutely every region. When you're thinking about something to help lift our economy up—which is what you are thinking about in your committee—this is a place where we have been able to get up and running more quickly. It's devastating for restaurant owners and tourism operators. We have, though, largely been able to operate safely.

When you're picking some Clydesdales of the economy—some big horses that can pull very strongly—this is a sector that's very strong in British Columbia, as it is in many other parts of this province. It can deliver a significant lift if we can get some of the foundational challenges met.

There are some. We operate in a global context. We don't operate within the borders. We have three people from different parts of the province, but we actually don't compete against each other. We're competing against companies in the world—in Sweden, Finland, Russia, etc. That's who our competition is. Making sure we are able to compete and making sure we have good fundamentals is really important, so that this industry can lift communities up.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

I couldn't agree more.

In the key actions for the federal government to take, you mentioned doubling down on market and product diversification and expanding markets into Asia by B.C. as being a really good example.

Could you comment a little bit about the relationship NRCan has with COFI, the ability of NRCan and what it should do to help support more market and product diversification going forward?

[Susan Yurkovich]

As a result of the pine beetle epidemic in the early part of the 2000s.... There's nothing like a burning platform to help you move, diversify and change the way you do business. B.C. really did lead the charge into Asia. Sylvain says we do have a logistical advantage into Asia, but there are other markets in Europe and other places that are looking for low-carbon solutions.

It's really hard to do this. There are things the government can do, in terms of opening up markets, that industry can't do. As well, there are things industry can do, in terms of the commercial relationships, that the government can't do. It's really important that it's a partnership. It has been a strong partnership. To Sylvain's point, there's more work to do and there is more room for us to double down on that.

Industry-government partnerships are not always successful and do not always deliver results. This isn't perfect, but I would say that, in our view, this is a very good example of an industry-government partnership working very well and delivering results.

However, I think there's more work to do. There's an opportunity for Canadian forest products right now, when people are looking for low-carbon alternatives and things made from fibre, whether it be packaging for your food, two-by-fours to build your house or some value-added products that are being produced in Quebec, Ontario or elsewhere. This is the time for us. It's really important that we take advantage of this opportunity.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Great.

You mentioned building on our reputation in building with wood. I'm just wondering if your membership has been able to take advantage of some of the programs that were announced in budget 2019, like the forest innovation program and the investments in the forest industry transformation program, to support this and other types of innovative products for the forestry sector.

[Susan Yurkovich]

We have, but I would say that the first thing we could do is use more of our products at home. We have a ton of headroom for that. There are a lot of five- and six-storey buildings being built across this country that we should be championing and that we should be building with wood. However, we have to work with developers, specifiers, architects and engineers to get them more comfortable building with wood, just as we have in Asian markets.

We've done a really good job of starting to turn people's attention to wood in some of our export markets, but we have work to do at home. There's nothing like demonstrating your leadership by doing what you can do at home.

I think there's a lot of opportunity for us to do that, but we need government in all forms and we need all members to be championing this important industry that can not only lift up the economy, but also is perfectly positioned to take advantage of a world that's looking for a carbon solution.

[The Chair, Liberal, James Maloney]

Thanks very much.

Thanks, Mr. Weiler.

Okay. Up next, we have the representative from the Bloc. I'm not sure who's here now.

[Mario Simard, Bloc, Jonquière, QC]

I'm back, Mr. Chair.

[The Chair, Liberal, James Maloney]

Okay. You have six minutes.

[Mario Simard, Bloc, Jonquière, QC]

I'd like to thank the witnesses.

Mr. Labbé, during your presentation, you placed a lot of emphasis on market diversification.

Recently, we did the calculation for the federal government's market development program. I'm not telling you anything new when I say that when you look at jobs related to the forest industry, 31% of them come from Quebec, 27% from British Columbia, and 21% from Ontario. The largest job pool is in Quebec.

In reviewing the market development program, I realized that 78% of the budget envelope had been allocated to British Columbia. I wondered if that was because Quebec was not applying. What is the reason for this distortion?

You probably know this, but for your information, it was still a $64-million program in 2019.

Why is it that Quebec receives such a small share of the market development program? Do you have any idea?

[Sylvain Labbé]

Thank you, Mr. Simard.

I will say this in English for the benefit of my friends from Canada.

I think the idea here is not just to search for something, such as what should we do regarding the east and west? I think we have to do both: developing our export market and developing new products for diversification.

The idea here is not to reduce the existing effort we have developed with Canada Wood, COFI and the rest of team, but that we now see a good opportunity for developing more diversification of products, with Quebec, Ontario and the Maritimes mainly, on the value-added side. We probably need to improve and bonifier this program for this value-added sector, without touching the effort of what we're doing now in diversification of markets.

Therefore, it's a double effort. The amounts are not that big. I think it's a strategic move that we need to decide on right now, because the option for the east will also to create value and lessen our dependence on the U.S.

[Mario Simard, Bloc, Jonquière, QC]

Thank you for your answer.

I fully understand that it isn't your job, but that of a politician, to point out this distortion.

In your presentation, you said that the benefits are four times greater when you focus on value-added products. If I understand correctly, you've just told me that the market development program may not be looking specifically at value-added products.

Have I understood that correctly?

[Sylvain Labbé]

The program was started almost 20 years ago. I think it started in 2000. I was one of the founders of the program. I think that at the beginning the idea at the time was to expand into new markets, mainly into the emerging markets such as China, Southeast Asia and the Middle East. That was the idea. We were afraid of including the U.S. because of the potential risk of the softwood lumber agreement.

This risk is now clear. For value-added products like housing kits or engineered wood, there's no tax, there's no duty and there's no blockade in the U.S. Slowly the program switched to include, two years ago, value-added in the U.S. It's just the first step. I think we need more funding and more openings for the SMEs in Quebec, Ontario and the Maritimes to develop this specific value-added potential.

[Mario Simard, Bloc, Jonquière, QC]

I'd like to come back to what you just said about better financing for value-added products.

What might the federal government's strategy in this regard look like?

[Sylvain Labbé]

I think there's not only the market, but that the strategy here should have a lot of different aspects. The first is the market development regarding the program of Canada Wood and EMO, but there's also a big effort that we need to make in innovation and new product development.

We are in the process of establishing a numeric world, like wood construction 2.0. As you know, we are still doing our buildings here like Noah's ark. We just change the hammer for an electronic hammer.

But a new industrialized technology is in development and it's growing very fast. We can feel it. We have big companies like Katerra or Polcom in Poland. The Germain Hotels just built two hotels, one in Calgary and one in Newfoundland. The Germain Hotels used Polcom, a Polish company, to do those prefab hotels here in Canada. What's that? They told me they were not ready to quote for it because they were not structured enough with the new numeric system. Wait a minute: What is our role here in the future? Do we want to sell 2x4s to Poland to make them ship housing kits back to Canada?

We need to wake up fast because this growing demand for wood frame construction because of carbon regulation in the world will create a big demand for these structural components and value-added products. We need to act now.

[The Chair, Liberal, James Maloney]

Thank you. I'm going to—

[Mario Simard, Bloc, Jonquière, QC]

I would have a quick little question to wrap up, Mr. Chair.

[The Chair, Liberal, James Maloney]

If it can be asked and answered in about 25 seconds, I'm going to say yes. I will cut you off otherwise.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Labbé, wouldn't it be essential to have a carbon footprint criterion in the awarding of government procurement contracts? It seems to me that this could support the forest industry.

[Sylvain Labbé]

Absolutely. In the world, the systems with more results are not the “wood first” policy or “please use wood”. The system is a performance-based carbon with mandatory fixed numbers. This pushed everyone to use wood without saying the word “wood”. Wood becomes the material of choice because of the benefit and the performance.

[The Chair, Liberal, James Maloney]

Thank you, sir. I'm going to have to stop you there. We are behind schedule.

Mr. Cannings, you're last up for six minutes.

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

Okay, thank you.

I'll let Monsieur Labbé finish that thought about government procurement and setting targets—and thank you to Monsieur Simard for asking about government targets for using wood in buildings by making it a carbon sequestration target in building supplies. That's what my private member's bill, introduced in the last Parliament, was all about. It's in the Senate now, and hopefully coming this way.

Perhaps I'll wrap all of this up by asking Monsieur Labbé and Ms. Yurkovich about where we are in Canada with engineered wood, mass timber construction. I have two big plants in my riding, Structurlam and Kalesnikoff, and more are probably on the way. You mentioned Katerra, which is just across the border from us in Spokane, Washington.

Where are we in providing government supports for that industry and technology, in terms of codes and looking for markets and government procurement? How are we stacking up? I was concerned to hear about this Polish company doing business in Canada when we should be leading the way here in the world.

Perhaps Monsieur Labbé could respond, and then Ms. Yurkovich could jump in.

[Sylvain Labbé]

Ladies first, I think.

[Susan Yurkovich]

Thank you, Sylvain.

Sylvain is right that we have a lot of work to do in this area.

In British Columbia, there's an initiative under way to focus on building and advancing manufactured mass timber components. That's really important. However, the first thing you have to do for that is to grow demand. You must have demand. The market is actually quite efficient: If you have demand for a lot of mass timber buildings in your province, you are going to get more people producing.

It's unusual. You have to have a cost advantage to send these structures which are...I have two boys. They're older now, but I played a lot with Lego. These are sending Lego blocks to construct buildings on site. These are very heavy. If the transportation costs are going to be high, you're better off utilizing the product close to where it's produced. We have the opportunity to do that, but we have to actually grow demand.

The first thing we need to do is to grow demand for those buildings and those products here, because that will send a signal to the market to put more of those manufacturing plants in place that deliver significant jobs.

I have to go back to what I said in my remarks. The single biggest deterrent to people making those investments is this uncertainty that we have around access to fibre at a reasonable cost. If people are making a significant investment decision, they're going to be making that with a 20- or a 25-year payback period. They have to be able to know that they're going to have access to fibre at a reasonable cost for a long period of time to justify making significant investments.

That's really critical. It's why some of these fundamental challenges around access to fibre, regulations and the ability to compete are so critically important.

I have one last comment to make before I turn it back to Sylvain. Value-added manufacturing in all of its forms is not just mass timber. We produce a whole bunch of things that people don't even know about, everything from mass timber to guitar tops. It's a big long list. Sylvain said we've got this opportunity. We've got everybody looking to fibre as a way to make products that have a lighter touch for the planet, but there's a whole range. We need to double down on those efforts. I could not agree more with Sylvain.

[Sylvain Labbé]

Regarding the performance, the procurement policy of the federal government has a key role here. If your procurement policy on federal buildings is funded by the federal government, it's time to put mandatory performance regulations on energy consumption or carbon, as it is done in Europe.

The Americans were probably behind us, but following the new election in the U.S., they might go fast and catch up on those carbon regulations soon. Therefore, it's good timing to do that, because in Zurich, Switzerland, they test this performance carbon calculation per square meter regulation. They then increased wood construction in two years by 50%. It's much better than a technology prescriptive policy or a “wood first”, “please use wood” policy because wood is good.

Let industry decide what is better by fixing strict mandatory performance and we, the industry, are confident that we will win the war on this. It's also a question of legality. If you set the mandatory material to be used, you will face some legal problems from our friends from the concrete, steel and other industries. So the trend is there. Some examples from the federal departments would be very key here.

[The Chair, Liberal, James Maloney]

Mr. Cannings, you have about 20 seconds.