Natural Resources Committee on Nov. 27th, 2025

[Stéphane Renou]

What I can offer to the committee, if it's helpful, is the process of getting you that data and what needs to happen to get that data. We have most of those pieces of data. They need to be linked. It's not a research project, so don't be worried; it's just how we assemble it. I have made those studies under a confidentiality approach, I will say, for several provinces in the past, and I will keep doing that.

You're a politician. I'm not. For me, it's easy. I'm a scientist. I just put data on the table. As a politician, you know the implications of that data. That's why I will offer a process and I will leave it up to you to ask for more.

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

I want to give some time to Mr. Rustja.

One of the measures we announced yesterday was lowering the transportation costs, or the government subsidizing half the transportation costs, and massive changes in trying to move the product here in Canada. I'm assuming that your stakeholders would be more than willing to participate in Build Canada Homes and all the RFPs from the government.

If we move market shares to Canada, does that help? What else can we do here? I won't get into the negotiation and the tariffs, because the Prime Minister is doing that right now. I'm looking at what NRCan can do additionally to help you. I can assure you that the Prime Minister is very aware that we need to move, but he wants a long-term deal.

[The Chair, Liberal, Terry Duguid]

Mr. Rustja, that will have to be a pretty quick answer. You have about 20 or 25 seconds.

[Steven Rustja]

It's hard to answer that, but assisting in freight for sure will help, especially developing offshore markets and finding new things. I know that's a priority for the government. In terms of the Canadian market share, the Canadian economy is too small to support all the lumber that would come to this market. It would just saturate it. That's not a long-term solution.

There are some other things that have been brought up, but I think I'm out of time.

[The Chair, Liberal, Terry Duguid]

That was a good short answer. Thank you, Mr. Rustja.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Gentlemen, thank you for being here. I see similarities in your presentations. I am looking to send a very clear message to the committee, and I will explain why.

You said something very important, Mr. Rustja, namely that your industry cannot wait another year. The government must be made to understand the urgency of taking action. I am receiving messages from many people in the forestry industry telling us that, with the current countervailing duties, anti-dumping duties and customs duties, some people are reaching a breaking point and there will be consolidations. This is inevitable.

As you explained well earlier, retooling takes time. We don’t have the luxury of adopting government strategies that aim to change the configuration of the forestry sector over 10 years. We need an immediate measure. In this sense, I’ll ask you both a question.

There is a proposal circulating, and I find it quite acceptable. It comes from Chantiers Chibougamau, Domtar, Arbec Forest Products, the Groupe Rémabec and the major labour unions: instead of buying back the $11 billion in rights that are currently dormant in the United States, we could buy back 50% of the countervailing and anti-dumping duties at the end of each month. This would ensure that the American market remains open when construction resumes, and it would allow sawmills and forestry contractors to maintain their jobs.

Do you support this kind of measure?

[Stéphane Renou]

I have already heard the proposal from all these stakeholders, including Mr. Verreault from Chantiers Chibougamau. It’s enticing. Once again, it will be one of the pieces of the puzzle to put together. The industry must undergo an in‑depth transformation if it wants to navigate the upcoming turbulence. Currently, there’s a crisis, and there will be several more. So, for the moment, it’s probably a good solution. I’ll let the bankers handle the equations, since they probably know more about it than I do, but in the long run, we must not forget the rest. Otherwise, we’ll find ourselves in the same situation every time.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Rustja, what do you think?

[Steven Rustja]

I agree with my colleague that this is not a long-term solution. We need to find a.... I won't even repeat what he said because that is correct.

In terms of the buyback program, that Chantiers Chibougamau proposal, I've read that. There are a few other versions of that proposal that people are offering.

What I like specifically about the one you mentioned to me is that the issue going forward is this: How do you conduct business? Specifically for remanufacturers, we're a little different from primary sawmills. We work on margins. At the time of an order, we can buy something, and then we can sell something. We know our remanufacturing costs. If there is no opportunity to make money, you simply don't do the business, which means that you shut down or you close.

Having the government buy back some of those duty deposits will allow us to enter the U.S. market because we'll now be far more competitive. There is no scenario in which you can pay 45% duties on a remanufactured product and enter the U.S. market. It doesn't happen. Well, nothing is absolute. I'm sure there are a few people who could do a couple of things.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

I’m sure this will come through in the report, because many of you have said that there’s no scenario that would allow people in the forestry sector to get by while facing countervailing duties and tariffs totalling 45%.

Furthermore, you emphasized the need to reach an agreement as soon as possible. You did well to do so, and I think it should be repeated for the purposes of the report. We need to put the forestry issue back on the agenda. Unfortunately, the last indication I received from the government is that it was seeking an agreement on aluminum, steel and energy. The forestry sector did not seem to be part of the discussions, and I don’t know why.

There may be some distortion, but it seems that people in the aluminum sector are suffering greatly, even though they’re able to pass on the customs duties to the next player through the Midwest premium, which is not the case in the forestry industry. That said, I don’t want to criticize them, since it happens here too. We must therefore keep up the pressure. I’m sure that Mr. Guay understands this very well.

I’m not revealing a secret, we’ve already spoken, Mr. Renou, but I noticed in your opening presentation that even your organization needs to review the way it does things. You said something quite interesting: Let’s stop looking for a magic solution and instead focus on innovation. That resembles the discussion we had. I want to hear your thoughts on that.

What could be done in the medium term to promote innovation? I understand that we can’t just settle for basic products, but how can we help people in the sector innovate more in the medium term?

[Stéphane Renou]

I will respond to you in French, since I failed to keep my promise last time.

When I arrived at this organization about eight years ago, they had already started this transformation. It’s about returning to innovation rather than focusing on invention. Instead of dreaming about what could be, we need to think about what we can do in the short term, over a period of one year, two years or three years. It’s not the time to dream or promote something new, but rather to promote what helps the industry.

What’s most difficult in innovation is not being in a lab to do math and experiments. We can do that, it’s easy. What’s difficult is bringing people from the industry together at the same table to work together to solve the problem. Something needs to force this connection, regardless of the reason or approach chosen, so industry people sit down with us to explore the possibilities.

Should we show them a catalogue of options to ask which ones they want to explore?

Should they have recognized industrial participation in all programs?

What I always hear when I go looking for funding here and there, since it’s part of my job, is that an equivalent proportion of money must come from the industry, among other sources. However, in the current context, there’s none. We’ll leave it there.

[The Chair, Liberal, Terry Duguid]

Thank you.

Colleagues, we're going to our second round of questions.

Mr. Malette, you have the floor for five minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Merci.

Monsieur Rustja, with the sawmill closures all over but in the region, how has this affected the supply chain to your members?

[Steven Rustja]

Obviously with fewer people we can buy from it means there's less ability for us to have a competitive market out there for us to buy lumber and access fibre that we need at the time. The best thing for our members is to have a robust supply base as big as it can be. It's an adverse inference to us. It's a bad thing for us to have that.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

If the sawmill closures continue, is there a danger that you will have less supply to the point that you may have to shut down some of your operations?

[Steven Rustja]

The answer to that question long term is yes, but in the short term no. The market, as we talked about earlier, is oversupplied right now because that wood is not flowing to the United States. They're trying to find Canadian homes. To your point, in times like COVID when things were in demand, having less fibre produced would be problematic and would cause us to shut down.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

On that same point, with the U.S. market being shut down, how long will it take before there's an oversupply for the Canadian market?

[Steven Rustja]

There is an oversupply in the Canadian market right now, which is why you're seeing mill shutdowns and things like that. You can look at the price and you can see whether it's oversupplied or not.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

This year compared to before 2015, how much loss have you had in market share? How many million board feet would you have produced in 2015, 10 years ago, compared to how many million board feet your association would produce now?

[Steven Rustja]

That's a great question. It's a difficult one to answer.

I will give you an answer based on our own company. Our association is made up of a bunch of competitors and we don't share that information as robustly so we don't have as accurate information as we could have. I will share, if I have some time, the experience that we had at our company.

In 2010 we had one company and 70 employees. By 2021 we had seven companies and 525 employees. Over the last year or so, we've shut down two remanufacturing facilities and we've gotten rid of about one-third of our employee base.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

When things get settled, if we get eventually to a lumber trade, will these industries have the capacity to reopen?

[Steven Rustja]

The ones that are being shut down typically are shut down permanently. They would have to start from scratch. They'd be greenfielded or brownfielded. They're not easily restarted.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

Monsieur Renou, you've said we have to be innovative and that there's no magic solution. Can you expand on that? You've talked about it, but I'd like to hear a bit more about that. What can be done?

[Stéphane Renou]

Let me describe a bit more what innovation is.

People think innovation is a brand new shiny thing that scientists invented in the lab. It's not. Innovation just means you make something happen—a new process, a new product—and you put it on the market. For most of our sawmills, innovation is in the form of a new grade, a new product of construction that they do differently and they penetrate a new market. It's not a new, fancy molecule that you create. It's simply, “Oh, I got this. I can do that differently, and I can penetrate that market.”

What does it mean? Very practically, it means there's a new market. What are the specs for that new market? What are the norms? Do I understand them? Can I make them? What are the machines I need to have? Then I make or buy the equipment, and then I go there.

If you are a small company with one engineer—which is premium in most of the sawmills, by the way, because sometimes you don't even have one engineer on site—it's so difficult. That's the danger. Innovation is helping those companies, the SMEs and even the large companies. You would be surprised to see, in a major pulp mill, that there are one-and-a-half process engineers on site, and you're tapped. Often, I knock on doors saying that I can do this to help them, but there's nobody.

Actually, you were talking about staff. Let me share mine as well. When I got the job, I had 500 scientists across Canada. Today, I have 280. In a few months I'll be down to 200 because there's no money, no receiving end. Where do we go? I think we're the canary in the coal mine.

[The Chair, Liberal, Terry Duguid]

Thank you both.

We'll go to Mr. McKinnon for five minutes.