Natural Resources Committee on Nov. 3rd, 2025

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Mr. Nighbor, you talked about competing with the Europeans and diversifying. What is required to compete with the Europeans and what should the government do to help the industry compete with the Europeans?

[Derek Nighbor]

I think the challenge now is that the Europeans have a huge cost. They have a huge market opportunity because of the delta between the tariffs they're paying and the tariffs we're paying. If that gets levelled out somehow, that's going to help.

It's not just Europe. The B.C. government or one of the Crown corporations in B.C. has just opened up an office in the U.K. What are the opportunities there? No stone can be left unturned now.

Canada Wood Group, which does a lot of export market work with the support of industry and government, is looking at what more we can do in Japan and what more can we do in China. We have an almost $4-billion business in China, but unfortunately, after the Russian invasion of Ukraine, Russia didn't have any more places to sell its wood because of trade actions or markets being closed to them, and we lost a lot of market share in China. That was another geopolitical thing that happened beyond our control.

There are opportunities in India and opportunities in Vietnam and South Korea, and there can be in the case of Japan. Japan wants high quality. We have some mills that have retooled specifically for a Japanese customer. I share that because it's possible. It's probably not possible at scale for all 500 mills, but that's not a reason not to do it. What mills can realize that incremental benefit and innovate for the future?

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

What can the government do specifically to facilitate that transformation? Does the $500-million program help in that case?

[Derek Nighbor]

It's a good start. As I said, we'll find out. That's not rolling out until April. It would be nice if we could move on that a little more quickly, but those dollars are exactly for that.

I'd prefer not to see a sprinkling of money all over the place, but have some very dedicated focus on connecting the value chain and meeting opportunity. I hope that in the application process, that's the lens through which the applications will be looked at.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Well, the $500 million is dependent on having a budget. Hopefully, the opposition parties will support it so you can get the $500 million.

You talked about the transformation of markets. How about the transformation of products? What can the industry do for both the primary producer and pulp and paper? What kind of product transformation can we encourage to help the industry in general?

[Derek Nighbor]

I'll start on the pulp and paper side.

I was talking with a mill in western Canada. They can go up a grade to a new, in-demand paper of high quality, and they know they can take out a U.S. competitor in doing that. That's not a massive investment, but that's a great opportunity.

We're seeing a cogeneration of energy. We're seeing biogenic carbon capture and storage ideas in parts of the country where that's possible.

On the lumber side, I talked a bit about mass timber modular prefab. How can we support those connection points in a really strategic way?

There are a lot of innovative opportunities. That's the money coming through the IFIT program and some of the other NRCan funding, and hopefully the strategic response fund funding out of ISED as well, which is pretty robust.

Our home, per se, in government is at Natural Resources Canada. Over time, a lot of the big money has moved to industry. We need to remind industry that we love being at NRCan. There is a lot of great support there. However, when it comes to the dollars, we have to get our elbows up a bit more to get our fair share of the money. I think Minister Joly gets that, but we'll continue to hold her and the government to account for it.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

I suspect you're in conversation with Minister Joly's office, us and NRCan about the progress of the $700-million distribution. Have you been told that, no, there won't be more money, or is everyone watching how the program is going?

[Derek Nighbor]

Yes, everybody is watching the program. The program was just launched, so again, I'm happy to share back....

I think we need to be doing some very collaborative scenario planning at a common table with government, labour and industry to get ready. In case this thing gets really bad, we need to start working on it now—on what the other programs might be. Mr. Simard talked about just one example of them.

[The Chair, Liberal, Terry Duguid]

Thank you.

This brings this hour to—

[Mario Simard, Bloc, Jonquière, QC]

Sorry to interrupt you, Mr. Chair. I would like to ask Mr. Nighbor a question. He just said something important about cogeneration.

Mr. Nighbor, I believe that you had a brief on this topic, unless I'm thinking of the Quebec Forest Industry Council. We can see a disconnect with the clean fuel policy. Could you send the committee some information on this matter? It's for our study report. It would be quite useful.

[The Chair, Liberal, Terry Duguid]

As Mr. Simard said earlier, we appreciate any amplification briefs on responses, with more fulsome answers to some of the questions you were asked today. They are all welcome.

Let me thank both of you, Mr. Geffros and Mr. Nighbor, for appearing before our committee today. It was a very informative hour. We really appreciate you coming to see us.

Colleagues, we're going to suspend for about five minutes to receive our second panel.

[The Chair, Liberal, Terry Duguid]

Colleagues, we're reconvening.

For the benefit of those joining us by video conference, please click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. Also, at the bottom of your screen, you can select the appropriate channel for interpretation: floor, English or French. Those in the room can use the earpiece and select the desired channel, but there is no one in the room at this time.

This is a reminder that all comments should be addressed through the chair. There was a little banter starting there, but that is okay.

Let me welcome our witnesses on Zoom for our second panel. We have, from Chantiers Chibougamau, Frédéric Verreault, vice-president, corporate affairs. We have Michel Vincent, chief economist for the Quebec Forest Industry Council. Finally, from Unifor, we have Simon Lavigne, national representative, research department, and Daniel Cloutier, Quebec director.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Good job, Mr. Chair.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Guay.

Witnesses, you will have five minutes or less for your opening remarks. I understand that some of you are together, so it is five minutes per group.

We're going to start with you, Monsieur Verreault. You have the floor.

[Frédéric Verreault, Vice President, Corporate Affairs, Chantiers Chibougamau]

Thank you, Mr. Chair.

I want to thank the committee for taking the time today to delve deeper into the issue of our industrial sector and the disruptions and perfect storm under way. We appreciate your interest in our sector, given your key role, of course. I heard witnesses on the previous panel refer to the budget. However, you play a key role in public policy in Canada. With that in mind, I want to thank you for taking this time.

I'll start by introducing Chantiers Chibougamau. We're a family business with 1,700 employees, mainly in Quebec. We have facilities in Chibougamau, in Lebel‑sur‑Quévillon, in Landrienne near Amos, in La Sarre, in Béarn in Abitibi‑Témiscamingue, in Matagami and in Montreal.

We process just over 15% of Quebec's coniferous forest. This amounts to around 700 million board feet of lumber leaving our sawmills each year. This places us in the top 10 largest softwood lumber producers in Canada. We also have a major presence in the engineered wood, light‑frame floor systems and I‑joist sectors.

Our Chibougamau plant produces floor joists that can be used to build 55,000 new homes per year. For the record, Quebec builds 14,000 new residential units per year. We make a huge contribution to residential construction across North America. We also have a kraft pulp mill. Every place that you visit in Ottawa may contain kraft pulp from our Lebel‑sur‑Quévillon mill. The mill also generates renewable energy to supplement the process. That's our organization in a nutshell.

I'm here today to talk about the aforementioned perfect storm and what we can do about it. In the forestry industry, we've always talked about this topic by focusing on the industry, the workers and companies such as ours. We lose sight of the medium‑term and long‑term perspective, meaning the supply chain to which we belong.

However, now more than ever, as we stand at a crossroads in this perfect storm, mobilize for Build Canada Homes, face a housing shortage in the country and in the North American market and hope to see reconstruction soon in Ukraine and Gaza and a revival of a Russian economy currently under pressure, an exceptional amount of wood has become available.

That said, let's take a step back and remember the year 2021.

In 2021, there was no Ukraine or Gaza to rebuild. We didn't have the current construction backlog in the United States. The economy wasn't slowing down. We didn't have a lumber shortage in North America. We believe that our current focus should remain on the pressure facing the supply chain. This should drive our efforts to support the response to this perfect storm.

Our companies are quite large and solid. However, the problem lies with our subcontractors. They can get lost in the fog of this perfect storm. Remember that a chain is only as strong as its weakest link. We need to keep these companies in mind now as we search for ways to weather the storm.

We have a great deal of work ahead of us. Certain government measures are currently being implemented. We're saying [Technical difficulty—Editor] that we need to step up our efforts to address the current crisis. I would be happy to elaborate on this in the next few moments [Technical difficulty—Editor].

Thank you, and [Technical difficulty—Editor].

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Verreault.

We will now go to Monsieur Vincent.

You have five minutes or less.

[Michel Vincent, Chief Economist, Quebec Forest Industry Council]

The Quebec Forest Industry Council serves as the voice of the forestry sector in Quebec. We represent the pulp and paper and sawmill industries. You just heard from one of our members, Chantiers Chibougamau. We're proud of this company.

We want to thank the committee for giving us the opportunity to speak today.

This summer, Prime Minister Carney announced $700 million in assistance. This led us to believe that the government immediately recognized the economic value of our industry in terms of employment, economic benefits, the trade balance—an often overlooked factor—and the fight against climate change. We would also like to acknowledge the work of the Business Development Bank of Canada. In just a few weeks, it managed to turn the announcement into a fully implemented program.

With this in mind, we in Quebec find it hard to understand the federal government's strategy. It overlooks the forestry sector in its negotiations and fails to consider the sector as valuable as the aluminum or steel industries. At least, that's our impression.

For example, a softwood lumber mill in Canada or Quebec that exports to the American market must currently pay a tax that amounts to 30% more than it paid last June, even though prices have increased by only 5%. The additional tax has risen from 14% to 45%. The industry is currently absorbing over 80% of this tax. This places a significant strain on sawmills, as you can imagine, but also on the entire forestry industry. As we heard earlier, the sawmill industry is the gateway to fibre.

These challenges could lead to the temporary or permanent closure of sawmills. This could force pulp and paper mills to shut down owing to a lack of supplies. This could create a vicious cycle, leading to the closure of even more sawmills. We're in a precarious situation. As Mr. Verreault said, it's a perfect storm that will lead to job losses and devitalization.

Prime Minister Carney's announcement also included a plan to build over 500,000 homes per year in Canada. We fully support this plan, of course. Although the goal of increasing production from 250,000 homes per year to 500,000 homes per year is quite ambitious, it would allow Canada to maintain a volume of around 2 to 2.5 billion board feet. Compared to the 10 to 12 billion board feet currently exported to the United States, this may seem small. However, the United States absolutely needs our wood and this volume is not insignificant. We must boost our efforts to achieve this goal as quickly as possible.

For the fourth time in 40 years, the softwood lumber industry is facing free trade negotiations between Canada and the United States, or among Canada, the United States and Mexico. This follows similar negotiations in 1989, 1993 and 2020. For the fourth time, it seems impossible to include softwood lumber in the trade agreement. We're asking the Government of Canada to show that it sees the forestry sector in the same light as other key sectors, such as aluminum and steel. We want it to succeed where every other government has failed in the past, by including softwood lumber in the next version of the Canada‑United States‑Mexico agreement, under conditions acceptable to all parties.

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Vincent.

Now we will go to Monsieur Lavigne.

You have the floor for five minutes.

[Simon Lavigne, National Representative, Research Department, Unifor]

Mr. Cloutier will be making our presentation. Thank you.

[Daniel Cloutier, Quebec Director, Unifor]

Thank you, Mr. Lavigne.

Mr. Chair and members of the committee, thank you for welcoming us here today and giving us the opportunity to contribute to your study on the forestry industry.

I am the Quebec director of the Unifor union. I am accompanied by my colleague Simon Lavigne, national representative in the research department.

Unifor is the largest private sector trade union in Canada. We represent more than 325,000 members, including 55,000 in Quebec. In forestry, Unifor has 24,000 members across the country, including nearly 14,000 throughout Quebec. Our members work in all stages of the forestry chain, including silviculture, firefighting, forestry operations, sawmilling, pulp and paper manufacturing, engineered wood, bioenergy and more.

I will get straight to the point, as I know your time is limited. Here are some of our main concerns at this time.

First, if the Government of Canada considers forestry to be a strategic sector of the Canadian economy, its actions must reflect that importance. Forestry must be a central link in the ongoing negotiations with the United States. It must also be a priority in the government’s engagement with labour and industry partners. This dialogue with the parties must be strengthened. As we have seen with steel, aluminum and automobiles, it is necessary to establish formal forums for consultation. Partners in the forestry sector are increasingly talking to each other and coordinating their efforts. It is imperative that these efforts be expanded and that they include greater government involvement.

Secondly, if the Government of Canada wants the forestry sector to weather the current storm, it must ensure that support measures are adequate and can have a concrete impact on the ground. We are facing an unprecedented trade attack, with 45% tariffs on softwood lumber since mid-October. In less than two months, tariffs will reach 30% on furniture and 50% on wood cabinets. The worst part is that there is no guarantee that this list will not grow. As a result, the response to this attack must be direct and targeted, first and foremost for workers. The implementation of income support measures is essential. This assistance must go beyond employment insurance to ensure the economic security of our members, who are facing slowdowns, stoppages and closures.

If you want to retain workers and have a skilled regional workforce available for the recovery, you need to protect their incomes with enhanced and direct assistance. Think of it as a direct transfer to Canada’s rural economies, which are footing Mr. Trump’s bill for all Canadians. Few industrial sectors are under such direct attack as forestry. The danger of industrial dislocation is very real: if we lose these people, they will not come back, it will be over. Many forestry contractors, the first link in the harvesting chain, are also facing a catastrophic situation. Some are on the verge of throwing in the towel. We need to find additional ways to help them.

There are also ways to support employers. The smaller players are wondering when and how the money announced this summer will reach the field. The deployment of aid measures is opaque, and this unpredictability is hurting them. This will have to be addressed.

For the larger players, who have greater resources, the recommended solutions are different. They are less interested in receiving new loans or guarantees. What they want, above all, is to get back their own money, which is currently being confiscated at the border.

Unifor therefore supports the proposal to buy back 50% of the anti-dumping and countervailing duties every month from now on until the dispute is resolved. These sums have value. The government must show solidarity with producers, and it will be the first to be repaid when the dispute is settled. This solution has the merit of maintaining current production activities, protecting future ones and keeping our members at work.

Third, if the Government of Canada wants to build a more resilient forestry industry, it must act decisively. It must first review its industrial strategy and reduce our dependence on U.S. exports. We support the diversification of export markets, but past experience tells us that these efforts are neither easy nor quick. In the current context, we believe that the first step is to promote demand for Canadian wood here at home and focus on added value. This demand must be guided by public policies that support the development of domestic manufacturing and consumption.

The strengthening of Canadian purchasing policies and the establishment of a national residential construction project are encouraging developments. However, more needs to be done. Here are some possible solutions.

First, an exceptional revision of the National Building Code is needed. The use of wood products must be increased significantly, particularly in the commercial, institutional and industrial sectors, where the gains to be made are greatest.

Second, recognizing and regulating the intrinsic carbon content of buildings would be a way to send a concrete signal to producers and builders and have a direct impact on national demand, while meeting our greenhouse gas emission reduction targets.

Finally, targeted investments must be made in the conversion and adaptation of production sites. Companies are often wary of the risks associated with developing new markets. The government can play a key role in facilitating this transition and transforming manufacturing capabilities. It must at all costs avoid spreading money too thinly and taking half-measures—

[The Chair, Liberal, Terry Duguid]

Mr. Cloutier, you're over time. Perhaps you could wrap up in a few seconds.

[Daniel Cloutier]

I’ve finished.

[The Chair, Liberal, Terry Duguid]

Okay.

[Daniel Cloutier]

Thank you for your attention. We are available to answer your questions.

[The Chair, Liberal, Terry Duguid]

Well done, and well done by all of our witnesses. Thank you very much.

We'll move on to our round of questioning, and we'll start with Mr. Malette for six minutes.

Colleagues, I was remiss in not welcoming both Mr. Dawson and Mr. St-Pierre to our committee. I understand they will be participating in this round, so we look forward to their questions.

Go ahead, Mr. Malette.