Natural Resources Committee on Nov. 27th, 2025

[The Chair, Liberal, Terry Duguid]

Thank you to our witnesses for your testimony today. I think you telegraphed the urgency of the situation and also the importance of innovation.

Briefs are always welcome if you want to add, subtract or multiply what you've said this morning.

We've really enjoyed your testimony, so thank you very much.

Colleagues we're going to suspend for five or six minutes. We'll be back with our second panel.

[The Chair, Liberal, Terry Duguid]

Colleagues, let me call this meeting back to order for the second panel.

We have, from GreenFirst Forest Products Inc., Michel Lessard, president.

Mr. Lessard, welcome to our committee, and thank you for being here.

You can use the earpiece and select the desired channel for interpretation.

You have five minutes or less to make your presentation. We look forward to hearing from you, Monsieur Lessard.

[Michel Lessard, President, GreenFirst Forest Products Inc.]

Mr. Chair, members of the committee, thank you for inviting me today.

My name is Michel Lessard, and I’m president of GreenFirst Forest Products Inc., a Canadian company with all operations located in Ontario.

GreenFirst operates four softwood sawmills in northeastern Ontario, with an annual capacity of approximately 500 million board feet. From the outset, we have practised responsible and sustainable forestry. All our operations are FSC certified, one of the most rigorous forest certification systems in the world. We also maintain close and respectful relationships with the indigenous communities affected by our activities.

Ontario’s forestry industry has several natural advantages: a sustainable and reliable wood supply, a world-class forestry regime and the ability to produce low‑carbon materials. Yet despite these strengths, our sector is currently facing an extremely difficult time.

A combination of factors is undermining the sector’s viability. We are facing two major obstacles. The first obstacle is the countervailing duties of 35.16% and the tariffs of 10% imposed by the United States, which directly erode profitability and limit our ability to invest. The second obstacle is historically weak American demand, combined with very low selling prices, forcing us to closely monitor our liquidity and postpone essential investments.

Added to these difficulties is a structural challenge in Ontario, namely the surplus of wood chips and biomass resulting from the closure of numerous pulp and paper mills. In 2002, Ontario had 21 pulp and paper mills. Today, only three remain, including one, Kap Paper, in the northeast. The contraction of this sector has drastically reduced the market for by-products, leading to their storage, landfill disposal or long-distance transport, with high and unsustainable costs.

Yet these by‑products represent real energy solutions: biochar for steelmaking, biofuels for transportation, forest biomass for electricity and torrefied pellets to replace coal, as New Brunswick intends to do in 2028. Developing these bioproducts, however, takes time—often three years from concept to implementation—and requires financial support, both to navigate current market conditions and to build the necessary facilities. Finally, it is essential to maintain support for pulp and paper mills, particularly the one in Kapuskasing, to reposition it toward a sustainable business model.

What the industry needs now is speed, diversification and competitiveness. To overcome this crisis, we first need rapid access to the programs announced by the Prime Minister on August 5, in addition to those announced yesterday, including those related to loans, diversification and accelerating residential construction. We must then diversify our markets, as we can no longer depend almost exclusively on the American market. Canada has a long history of supplying Asia, but no stable pathways have been established yet to southern Europe, the Middle East, or North Africa—regions facing wood deficits and where demand will increase with the future reconstruction of Ukraine and Gaza.

However, beyond diversification, it is important to clearly understand that the industry requires a coherent set of measures to get through the current crisis. The items I am about to outline are not limited to international markets, but rather represent examples of the conditions needed to ensure the survival and competitiveness of Canada’s softwood lumber sector.

Therefore, to support the industry—financially, operationally, commercially, and strategically—several federal measures are essential, including export support, particularly for emerging markets, to reduce dependence on the American market. A preferential investment fund is also needed to modernize assets, enhance competitiveness, and, where needed, support capacity reduction and workforce transition. Adjustments must be made to the Business Development Bank of Canada, or BDC, programs to provide conditions tailored to Canadian businesses in a crisis environment. Harmonization with existing Ontario programs, such as the forest sector investment and innovation program and those on biomass, forest roads and wood chips, must be carried out to ensure consistency in government actions. Finally, incentives are needed to increase the use of wood in housing, including medium and high‑rise construction, in order to stimulate domestic demand.

These measures form a coherent package of actions needed to maintain operations, protect jobs, encourage innovation and help the industry navigate an especially challenging period.

In conclusion, this is a complex file. It touches on competitiveness, energy, international trade and the transition to a lower‑carbon economy. But the solutions exist, and Canada’s forest sector is ready to do its part to ensure a strong, sustainable recovery aligned with the country’s objectives.

Thank you for your attention. I would be pleased to answer your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Lessard.

Colleagues, we only have one witness on this panel. To give you a little more time, we're going to have two rounds of six minutes each for each party. We'll see how far we get in the third round. We should be able to do a third round.

We're going to start with you, Mr. Malette.

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

Thank you.

I will be asking a few questions in French. Make sure you have the translation on.

Mr. Lessard, thank you for being here.

What have been the repercussions of tariffs on the operation of your business and on producers in northern Ontario and northern Quebec?

[Michel Lessard]

The repercussions are huge.

We must pay 45%, whether in taxes or new tariffs. Given the countervailing duties we had, it’s huge. Every 1,000 feet we send to the United States costs us extremely dearly. Furthermore, demand is very low.

In the past, countervailing duties were not as high as they are today. When there was strong demand in the United States, the rates were largely absorbed by the consumer. However, today, demand from the United States is low.

Interest rates remain quite high. For a person who wants to build a house and is applying for a loan from the bank, interest rates are still around 6% or 7%, so people aren’t doing it. There’s one more thing: with rates at 45%, will the consumer absorb an increase of up to 45%? We hope so, but for now, there’s no indication of that.

We’re closely monitoring our liquidities right now. We’re also monitoring our closing costs in terms of profitability. I should talk instead about losses incurred because I don’t think there’s an industry or company making money today in these markets. We need to closely monitor our liquidities.

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

As you say, for the industry, profits are very rare, they’re minimal—

[Michel Lessard]

They’re nonexistent.

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

That’s it.

I’m not necessarily talking about your company in particular, but how long will the industry be able to withstand what’s happening? There are closures every week.

[Michel Lessard]

Yes, and it’s not over.

Of course, if this continues, it will be extremely difficult for us to continue operating without government assistance, which, I repeat, was announced by the Prime Minister.

It’s difficult to make predictions. For example, some large companies have been around for a long time in western Canada, and they have a good nest egg compared to ours. GreenFirst Forest Products Inc. is still a relatively young company created in August 2021. We haven’t necessarily had that capability because the markets haven’t been very good since then.

Without government assistance, I think it will be difficult to maintain operations, both for us and for the entire forestry industry. It’s probably those who have the most liquidity who will be able to maintain their operations. For the others, it will be very difficult.

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

We often talk about the industry, but in the end, we need to talk about the workers.

In northern Ontario, if a business like yours closes, many jobs will be lost. I would add that if forestry companies close in areas where the forestry industry is the only industry, it will be difficult to reopen them once jobs have been lost.

[Michel Lessard]

Yes. That’s a very good question. It’s also an element to consider.

When analyzing whether it is better to continue operations or shut down, we certainly look at cash flow and losses incurred. However, there is always the issue of jobs as well. We have many good employees that we want to keep. They are all good employees.

As you know, in northern Ontario, there’s a very high demand for labour in the mining industry. It is known that gold mines today don’t have the problems the forestry industry has. So it’s difficult to compete with them in terms of labour. That’s another factor we take into account.

We have 750 direct employees, and the forestry contractors we work with have just as many. Towns and villages depend on the forestry industry.

There’s still another element. Earlier, I talked about the paper mills. In the northeast, there’s only one left. It’s a paper mill called Kap Paper. We know all the difficulties that this paper mill has faced. If operations cease and it lacks chips and bark to maintain its operations, that will lead to other problems.

In this environment in northern Ontario, near Highway 11, which you know well, about 2,500 jobs are linked to our sawmills and Kap Paper.

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

Thank you.

[The Chair, Liberal, Terry Duguid]

That's time, Monsieur Malette. Thank you.

Mr. Guay, you have six minutes.

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

Thank you very much, Mr. Lessard, for joining us today. We are grateful to you.

I’m going to start with some good news. I don’t know if you saw yesterday’s announcement regarding the Canada Development Bank, BDC, program. You asked for some flexibility. Unnecessary disclosure requirements will be removed. The age of the debt will be reviewed and eligibility criteria will be relaxed.

Obviously, only time will tell, but I think that's in line with what you asked for earlier.

Am I mistaken?

[Michel Lessard]

No. However, once again, we need to hurry. A first announcement in that respect was made on August 5 by the Prime Minister. I understand fully that a new program needed to be implemented. Furthermore, it had to go through the banks, and we know that each bank has its own organization, its own programs and its own way of operating. I understand that it wasn’t simple.

Today, we’re in close contact with the BDC and our bank to try to speed things up. Sometimes, the bank says yes, but it is missing some information from the BDC. The BDC, for its part, tells us it has already provided all the information to the bank. So, we’re trying to make sure they talk to each other.

Ultimately, we need to speed up the process so these funds are available as quickly as possible.

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

I must say that the minister himself made a call to the major Canadian banks to ask for their co-operation to speed things up.

There’s a second element I would like to hear about from you, namely the measure to lower transportation costs with Canadian National and Canadian Pacific, which I believe is now called Canadian Pacific Kansas City. Will this measure help you? Will it have positive effects for you?

[Michel Lessard]

Not really for us. From what I understand, the measure only applies to interprovincial rail transport. So it won’t really help us. On the other hand, if this measure were extended to transportation to the United States border, it would help us tremendously.

Moreover, what scares me a little in this respect is that the big companies in the west could take this opportunity to liquidate wood. If they have significant inventories, they could benefit from assistance for interprovincial transport to dump product on the market in Toronto or Montreal, for example. They could send their wood to the east, and that would take away some opportunities for us.

I have some concerns about this measure. Furthermore, in terms of our interprovincial transport, this measure won’t really help us.

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

There are others. We received a representative from Chantiers Chibougamau, who complained. He said that, in British Columbia, for some types of wood or products, his product could be used instead of purchasing products from Europeans.

This brings me to ask you the following question. How do you compare yourself, or how should we compare ourselves? We heard a witness before you talk about investments and what Sweden and Finland are capable of doing. We even talked about a threat from Brazil, in the short or medium term.

How does the Canadian market compare to these markets?

[Michel Lessard]

It’s difficult to compare ourselves with the European market. I would say that we mainly compare ourselves to the North American market. I would say that, in terms of North America, we’re still quite competitive. The forestry system in Ontario is still a very good forestry system. We’re able to ensure a sustained, sustainable and certified supply at a competitive cost. It’s often the cost of the fibre that impacts the final product cost.

When we compare ourselves to our North American competitors, we find that we’re still in a good position. On the other hand, there is certainly still a lot of investment to be made in our factories to be able to say that we’re in the top quartile. The company has defined a strategy, and it’s been presented to our shareholders. Our company is a public company.

The strategy consisted of two phases. In the first phase, we had to invest $50 million, and in the second phase, between $70 million and $80 million. We have started the first phase, we have invested in one of our factories, mainly for a new sawing line and boilers. We just invested about $28 million. We have also invested about $3 million in Cochrane.

However, given the tariffs that have been imposed, we are forced to suspend those investments. In fact, we’re not only suspending investments, we’re asking each of our CEOs to reduce all expenses. We’re currently doing the bare minimum. That said, we must certainly continue to invest to accomplish our mission and the vision we presented to our shareholders, which is to be part of the top quartile.

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

I only have a few seconds of speaking time left.

Have you considered the possibility of using the $500 million fund for transformation or tax credits for the superdeduction?

[The Chair, Liberal, Terry Duguid]

Respond very quickly, please.

[Michel Lessard]

Yes, these are certainly things we’re currently considering. This morning, I was speaking with our various government partners to move these files forward.

[The Chair, Liberal, Terry Duguid]

Thank you.

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

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Thank you for your presentation, Mr. Lessard. You painted a good picture of the situation in the forestry sector by discussing the obstacles.

I put the same question to everyone. Currently, in Quebec, a proposal has been made by people from the forestry industry and major labour unions. It would seek to buy back 50% of the countervailing duties at the end of each month, so we can still access the American market and reduce the countervailing duties and tariffs, which total 45%.

Does this solution seem like an interesting option for maintaining your operations and allowing you to accumulate some liquidity?