There’s potential for our forest industry to recover

By MPP Toby Barrett

For generations, lumbering has been a primary driver of our economy. Although the forest industry is one of the major planks in Northern Ontario’s economy, that doesn’t mean it’s not important in Southern Ontario. Here in Haldimand-Norfolk, there are four major saw mills and many working in logging and value-added.

The forest industry will decide to re-invest in Ontario for one simple reason: the potential for a strong and sustained recovery of Ontario’s softwood lumber industry.

There is potential for Ontario firms compared to Western Canada for several reasons. These include: the rapid decline in volume and quality of BC interior pine due to the mountain pine beetle epidemic; the emergence of wood as an environmentally-friendly and structurally sound building material in North America, Europe and the Middle East; and the rapidly growing demand from China for lumber from BC that is diverting increasing amounts of western lumber away from traditional US markets.

Another positive development is the London Court of International Arbitration’s decision on US-alleged subsidization of the softwood lumber industry by Ontario. Rather than the 20 per cent additional export tax originally sought by the US, the LCIA panel will require only a 0.1 per cent additional export tax on lumber shipped to the US.

However, a forest industry recovery will take time . Decimated by the 2008 collapse of the US housing market, the export tax under the softwood lumber agreement, a high Canadian dollar and, in some cases, excessive debt, lumber shipped to the US is currently running at about 20 per cent of 2006 levels. US housing starts remain less than 30 per cent of the 2.4-million annual peak that was reached in 2006.

As well, The average selling price of a 2 x 4 – at $2.23 locally – is about half what it was in 1994. Fuel, electricity and insurance costs continue their upward spirals.

So, what can the Ontario government do to help out?

Industry insiders, during Finance Committee hearings, made three major recommendations:

1. Maintain and construct forest access roads.

2. Extend industrial electricity rates and programs enjoyed by larger consumers to the smaller mills.

3. Provide long-term access to predictable and affordable supplies of crown timber.

Another industry concern is the proposed forest tenure model that raises the spectre of handing over decision-making authority to well-intended individuals who are appointed by government, but may well have no experience or understanding of the forest sector and no vested interest.

Over the past several years, the forest sector has continued to witness the development and implementation of damaging provincial policy – policy that increases costs eg. wood turtle habitat regulation, reduces the forest land base, eg. Endangered Species Act and creates uncertainty eg. tenure reform.

The companies left standing are the survivors – the winners that will take Ontario to the next level. Ontario’s forest sector still supports 200,000 direct and indirect jobs in over 260 Ontario communities with recent wage and salaries calculated at $2.7 billion. As well, it accounts for approximately $14 billion in sales, billions more in related economic activity, more than $4 billion in exports, and about $2.3 billion in taxes to all three levels of government.

This is an industry worth looking after.