Thank you. Good morning, everyone.
My name is Andy Rielly. I am the board chair of the Independent Wood Processors Association of BC. Our organization has 60 member companies, mostly located in the Lower Mainland and on Vancouver Island. Member companies are small and medium-sized firms, all non-tenured, engaged in the value-added manufacturing process of B.C. softwood. We represent roughly $2 billion in sales and employ 3,800 people directly. Roughly 70% of our production ships to the United States.
I have been employed in the B.C. value-added industry since 1984, having worked at Sauder Industries and MacMillan Bloedel. In 1995, I started my own company, Rielly Lumber.
Over the past 41 years, I have witnessed a great deal of change in the forestry industry. This is the fourth time I have experienced a softwood lumber dispute with the United States. In my four decades of enjoyable and rewarding work in the value-added business, I have never seen a critical situation facing us like we have today. I would like to offer my perspective as the association board chair, employer, investor and business owner, particularly as it relates to the softwood lumber dispute.
I'd like to stress what the committee needs to understand. First is the critical urgency of the situation facing the forestry industry and the value-added sector; second, the financial and emotional strain small and medium-sized companies are facing; third, some ideas on how to resolve the present crisis; and lastly, the potential good news, if the right things are done quickly.
In the past 10 years, the forestry industry in British Columbia has been reduced by roughly 50%. If we want to reduce it by another 50%, let the situation continue that we have now, and that will happen in five months. The only companies left in the value-added sector here in British Columbia are the survivors. These are well-financed second- and third-generation companies that have established supply lines and customers. These companies react quickly to situations, but if they face an extended period of losses, they will close or move to the United States. The very bad news is that once they are gone, they are not coming back.
The committee needs to understand the raw numbers facing the softwood manufacturers in Canada. Most small and medium-sized companies need to secure a U.S. customs bond with cash or a credit line. In most cases, when Canadian companies ship to the U.S., they get a weekly bill for the duties and tariffs. That duty bill is due before the customer pays them.
Rielly Lumber manufactures western red cedar, which is the most expensive species in British Columbia. This week we shipped one truck of finished products to the U.S. The value of the truck was $197,000 U.S., and the duty and tariff portion was $61,000. That bill will come to us this morning, and it's due to be paid to U.S. customs next Thursday. Add in the threat of a retroactive increase in duties that have already been paid for in 2023 and 2024. This situation is not for the faint of heart. That bill could be over a $1 million for our company alone.
What are the options to resolve this? There are two options.
We need a trade deal that involves softwood. The very best way to move forward is this option. If the U.S. says it does not want to talk about softwood now, Canada has to pivot and say, “If you want to talk about energy, critical minerals and the golden dome security strategy, we have to include softwood.” We have to create some leverage, as the WTO and CUSMA are ineffective at this time. A trade deal provides certainty to enable companies to invest and employ.
If option one is not there, the federal government must buy the duty deposits that each Canadian company has at the border. This provides liquidity for the affected companies. It ensures the government has the incentive to retrieve the deposits. The expenses will be somewhat secured, as, historically, a good portion of these deposits have come back to Canada. At this time, our company has paid over $13 million, and that money is at the border now.
The good news is that the possible silver lining is based on my historical experience. Once a softwood trade deal is reached, our biggest market will be more open to us than it is now. Some level of certainty will encourage Canadian companies to invest and employ in our country. The drain of companies relocating to the U.S. will be stopped. Any duty deposits that return to Canada will be reinvested at home, fuelling growth. After the 2006 settlement, the B.C. value-added sector flourished for 10 years.
The value-added business has been good to me. It's been good to our family. I'm proud of it. I think it's worth fighting for, and I hope you agree.
Thank you.