Evidence of meeting #11 for Natural Resources in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
Liberal
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Mr. Nighbor, the forestry sector is facing a major issue. It's difficult to obtain financial support from the federal government.
In 2022, I believe that we calculated that the forestry industry in my region, Saguenay—Lac‑Saint‑Jean, contributed more to government revenues than the total government support provided to the forestry sector across Quebec. Of this support, 75% came in the form of loans.
A primary processing company—such as a sawmill—that wants to modernize its facilities and that tries to do business with federal government funding agencies, including Canada Economic Development for Quebec Regions, is immediately referred to Global Affairs Canada. Generally, the answer is no. The risk of violating our trade agreements with the Americans is considered too high. This leaves little room for primary processors in the forestry sector to obtain financial leverage from the federal government.
I would like to hear your thoughts on this. Have your members also found it difficult to access funding?
President and Chief Executive Officer, Forest Products Association of Canada
I think time is going to tell if the BDC dollars will roll out. I can't emphasize enough the CDEV dollars for the larger companies. We have to find a path there. I believe Algoma Steel is the only large player that's been able to access those dollars. That's a bit of a red flag to me, so we're digging into that.
In the last softwood lumber package that then minister Jim Carr rolled out in 2017 for the sector, there was not a lot of uptake with some of the stuff in it because of the challenges with the loan guarantee program. We've been assured that this program is better than that one, so we'll monitor it. I would be happy to report back to you once we have a bit more experience under us.
Bloc
Mario Simard Bloc Jonquière, QC
I'm curious about this.
We received some figures from the Business Development Bank of Canada on Friday. If I do the math for all the players in Canada—including the players in British Columbia, Quebec and Ontario—a total of $700 million in loan guarantees seems quite low, with a maximum of $20 million.
Since the sawmills in question are often smaller, with fewer employees and fewer people who can take these steps, I'm afraid that the most vulnerable players will end up running out of money. Instead of operating on a first‑come, first‑served basis, shouldn't a more detailed analysis take place in order to give a helping hand to the companies that really need it?
This question will ultimately remain unanswered, since my time is up.
Bloc
Mario Simard Bloc Jonquière, QC
If Mr. Nighbor wants to submit a written response, it would be appreciated.
Liberal
The Chair Liberal Terry Duguid
Good idea.
Mr. Martel is next, followed by Mr. Guay, wrapping up this round.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Thank you, Mr. Chair.
I'll be sharing my time with my colleague, Mr. Malette.
Mr. Nighbor, I'm wondering something.
The Americans need our wood. The Americans need our aluminum. The Americans have needs. Yet so far, these needs haven't been felt here. We're seeing the Americans getting their materials from other places. Doesn't it worry you when people say that they need us? If they really need us, what do you think will happen in the long term? People say that they really need us. However, it seems that they're getting along just fine by sourcing their supplies from other places.
President and Chief Executive Officer, Forest Products Association of Canada
It's a good comment. We're starting to see signs of softness in the U.S. economy. It's taken a painfully long time for the impacts of these tariffs to flow through to consumers. In the homebuilding space and the home renovation space, we are seeing it.
The U.S. housing market is a huge indicator for us. For every house that's built in Canada, there are seven built in the U.S., and that's why the scale of the U.S. market is so important to us. They have proven that they can go elsewhere, such as Europe, but right now the Europeans, through the negotiated deal the Europeans have with the United States, are paying a 15% tariff on their exports to the U.S., while we're paying a 45% tariff. Unfortunately, the Europeans have not only the wood but also a 30-point advantage in the market right now.
That said, the European fibre basket is getting tighter. The commitments on the fibre basket, or the wood supply, are getting tighter. I'm not sure about the years ahead, but in the immediate, yes, the U.S. is finding other options.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
I want to make sure that I understand correctly.
The Americans need wood. They need 30% of our production to meet their needs. Is that right?
You're telling me that, since 2017, we've lost 6% of the market. In your opinion, if the expected agreement drags on and nothing gets resolved, as is currently the case, how much market share will we lose within a year?
President and Chief Executive Officer, Forest Products Association of Canada
It's a good question. It's tough to answer, but there are couple of factors here.
First, does the U.S. economy bounce back? The market is very weak in the United States right now. If it picks up a bit, that's an option for us.
Second, if we see, after hurricanes and natural disasters in the U.S., that we can get wood there quicker, what does that look like for the next year? The third piece is, what does the European forest basket look like?
At some point, we'll need to rebuild Ukraine and Gaza, and Europe is probably going to supply those markets. The other thing we're already thinking about is this: If and when that does happen, how can Canada backfill where the EU is selling?
It's a good question, but it's probably too difficult to give you a clear answer.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
So far, since the current Prime Minister took office, $47 billion in investments have left the country in all kinds of sectors.
Have any people in your organization left Canada to settle in the United States?
President and Chief Executive Officer, Forest Products Association of Canada
No, we're a bit different, and it is because of the.... There have been closures, but we've also seen a lot of closures on the U.S. side in the last year or so, which speaks to the weakness in the market, both in pulp and paper and on the solid wood side.
We have seen mill closures. It's a bit tougher to just up and move to Illinois, like an auto plant. You're not going to do that because the wood is here, for the most part.
The big ask we have is to get moving on the trade stuff. Let's fix the regulatory impediments and get moving. Also, hopefully, markets are going to pick up to give some of our communities a fighting chance.
Liberal
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Okay. I'll give the rest of my time to my colleague, Mr. Malette.
Conservative
Gaétan Malette Conservative Kapuskasing—Timmins—Mushkegowuk, ON
There are all these measures in place, but if we do not have a trade agreement, we're in big trouble. What the government seems to not recognize is that for some of these 300 communities, there are no other options. When you're shut down, it's a disaster.
How long can we survive? Coming from your sector, we're seeing it every week.
President and Chief Executive Officer, Forest Products Association of Canada
As I've said, we've lost almost 2,000 jobs in the sector since April. If this drags out, if markets continue to be slow, there are going to be thousands more. There's no doubt about that.
Conservative
Gaétan Malette Conservative Kapuskasing—Timmins—Mushkegowuk, ON
We need an agreement. It's the only way out. It doesn't matter what program.
President and Chief Executive Officer, Forest Products Association of Canada
We would love to see the best agreement we can get for Canada.
Liberal
The Chair Liberal Terry Duguid
Thanks to both of you.
Mr. Guay, you will wrap up this hour. You have five minutes.
Liberal
Claude Guay Liberal LaSalle—Émard—Verdun, QC
Thank you, Mr. Chair.
I am glad that Mr. Malette has a magic wand and knows exactly how to deal with Mr. Trump to have an agreement.
Conservative
Liberal
Claude Guay Liberal LaSalle—Émard—Verdun, QC
I suggest you talk to Mr. Martel about getting the presentation that Mr. Martel, Monsieur Simard and I all participated in with the BDC on Friday, which explained the program to us.
Conservative
