ARCHIVED - Annual Council of Forest Industries: Speech delivered at COFI Annual Convention

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Transcript of Remarks by

Joe Oliver, P.C., M.P.
Minister of Natural Resources

at the Annual Council of Forest Industries (COFI)
Annual Convention

Prince George, B.C. April 4, 2013

Thank you very much, Nick [Nick Arkle, COFI Chair]. And good morning and welcome, everyone. Thank you for joining us today, and thank you for your kind introduction. I’d like to recognize my colleague Bob Zimmer, the Member of Parliament for Prince George–Peace River, and I believe Richard Harris may be here as well, Member of Parliament for Cariboo–Prince George, both of whom are doing such great work for their constituents and for Canada.  I’d also like to recognize the provincial Minister Steve Thomson, who has responsibility for forests, mines — forest land and natural resource operations. And I think possibly Minister Pat Bell will be here as well, Minister of Jobs, Tourism and Skills Training, and Parliamentary Secretary John Rustad [Parliamentary Secretary for Forestry to the B.C. Minister of Forests, Lands and Natural Resource Operations]. Distinguished guests, let me begin by congratulating the Council of Forest Industries for putting on this outstanding conference and trade show. It’s great to be here in Prince George, a city obviously proud of its roots in the forest industry. While Prince George prospered in the 20th century, selling lumber and pulp to the United States, it is well positioned to benefit in the 21st century from the tremendous opportunities emerging in the Asia-Pacific area. Our Government shares with you an appreciation for the forest sector’s contribution to British Columbia and to all of Canada. Few countries are as blessed with forest resources as Canada. Our natural endowment includes close to 400 million hectares of forests and other wooded lands, representing 10 percent of the world’s forest cover. Of this, nearly 150 million hectares are certified as being sustainably managed by one or more globally recognized certification systems, and that is far more than any other country in the world. Canada is internationally recognized as a responsible supplier of forest products from legal and sustainable sources, something that is of growing importance to buyers globally. And we’re also a leading producer of high-quality forest products, and that is what brings us all here today. Our government has been a proud supporter of the forest industry in times of struggle, success and transformation. So we are pleased to have proposed another $92 million in this year’s budget to further extend the forest — the Forestry Innovation and Market Development Program — for the next two years. This new funding, proposed under Economic Action Plan 2013, demonstrates our Government’s ongoing support for the industry’s transformation as it expands its expressive lineup of innovative forest products and broadens trade relationships with the rest of the globe. And that is why, building on earlier investments, in Economic Action Plan 2013 the Government will continue to work with the forest industry to advance the sector’s transformation with the creation of innovative productive products and by taking advantage of new markets for Canadian forest products. Canada’s forest industry experienced some very difficult years, as you all well know. And that was because of the collapse of residential housing construction in the U.S., the global recession and the mountain pine beetle epidemic here in British Columbia. But there are signs the industry is making a strong comeback. And the future looks bright, with over 3.2 billion board feet of lumber exported to China last year, and the value of the U.S. housing market has helped to drive up demand and prices. Markets for Canadian wood products are now more diversified. Thanks to the Softwood Lumber Agreement negotiated by our Government, access to the United States for Canadian softwood lumber is stable and predictable, and jobs are being created as lumber mills open and reopen. Lumber prices have risen to their highest levels in nearly eight years, and while the markets may still be volatile, industry analysts see the long-term outlook as stronger than it has been in years. And, as we heard this morning, industry analysts are even predicting a super cycle. But the industry is not sitting around waiting for better times to come. Canada’s forest industry is reinventing itself by becoming more innovative, more environmentally friendly and more global in reach. Working with the provinces and industry, we are proud to support the sector’s transformation into an innovative, more diversified and more competitive industry than ever before. Our Government is making strategic investments to assist in this transformation. We’re helping to expand opportunities for Canadian wood products here at home and in markets all over the world. Economic Action Plan 2012 included $50 million in this fiscal year to support innovation and market diversification in the forestry sector. And I’m pleased to announce today that we will be investing $10.9 million in 2013–14 to help forest companies tap into new and emerging markets and the non-residential North American market. COFI is a key partner in this effort and a recipient of this funding. Canada’s forest products industry has already had remarkable success in diversifying markets. We know that China is already the fastest growing market for Canadian wood products. Softwood lumber shipments to China have risen almost 1,000 percent since 2007. B.C. is now selling about a quarter of its softwood lumber to China. Success is not just stumbled upon. It is the result of hard work and outreach that is done together with the forestry industry, the province of British Columbia and others, and through initiatives like our Expanding Market Opportunities Program. In fact, Canada is now the world’s largest exporter of lumber to China. Last year, Canada had a 45 percent share of Chinese softwood lumber imports and a 31 percent share of overall Chinese lumber imports. And this trend shows no sign of stopping. The sharp rise in exports to China is helping to sustain jobs for thousands of workers in forest communities across Western Canada. Last year, I was on several trade missions to China and Japan, and I can tell you that there is enormous appetite in both countries for Canada’s forest products. In Japan, I had the honour of announcing the $4.5 million commitment in partnership with the industry and the Province of British Columbia to help reconstruct public facilities destroyed by the tragic tsunami of 2011. I cannot think of a better way to show solidarity with our long-term friends and trading partners than by supporting their reconstruction efforts in the Sendai region with wood frame buildings that hold up exceptionally well under the strains of an earthquake. In China, I took part in a ribbon-cutting ceremony in the Tianjin economic development area for two four-storey wood frame apartments, now recognized as the nation’s tallest residential wood frame structures. This is significant for a country where wood construction is not as common as it is in some other countries — the 600-year-old Forbidden City notwithstanding. On a subsequent trip, I had the honour of taking part in a ceremony with the Prime Minister and Canadian forest industry leaders at the Langfang Green Building Design Centre in Hebei province, the largest wood frame building in China, at 2,500 square metres.  As remarkable as our success in China has been, if the past few years have taught us anything, it is that the more diversified our markets are, the better. Right now, there is an opportunity for Canada to make major inroads in India’s growing market for wood products, as well as the growing market for newsprint and dissolving grey pulp. And that’s because India is poised to become the world’s fifth-largest consumer market by 2025. It also has an increased need for forest products driven by its rising standard of living and growing demand for housing.  And Canada is eager to share with India its knowledge and expertise in wood frame construction. That’s why last year, in partnership with the B.C. Government, our Government opened an office in Mumbai. My department is pleased and proud to have contributed $600,000 last year and will contribute an equal amount this year to this joint venture to expand trade with India. Canada has already successfully taken steps to grow future wood exports to India. Much of that success stems from NRCan’s Canadian Forest Service, which provided critical scientific analysis and research that led to phyto-sanitary standards between our two countries, enabling Canadian producers of spruce and cedar access to the Indian market.  Countries like China and India are increasingly looking to wood as a construction material of choice because of its low carbon footprint, energy efficiency and ability to withstand earthquakes. China and India are at the forefront of a global movement toward urbanization whose magnitude is unprecedented. The World Bank estimates that every day about 180,000 people — more than double the population of Prince George — move into cities worldwide. Most of those new city dwellers will not be dwelling in single-family homes. To fully benefit from this trend, it is essential for Canada to demonstrate that wood can be successfully used to build mid- and high-rise structures. So when we talk about diversification, we’re not just talking about geography. By showing how Canada’s forest industry can offer cost-effective, environmentally friendly and practical solutions in mid- and high-rise construction, we can position Canada to meet the demands of the global marketplace. Our Government is proud to be a partner with the forest industry in helping realizing this opportunity, starting here at home. Cross-laminated timber, or CLT, for example, is much lighter than concrete but strong enough to support a multi-storey structure. CLT panels are much easier and economical to transport and install, and they are more energy-efficient than conventional materials. Here in British Columbia, CLT was used to build multi-storey structures such as the Bio-Energy Research and Demonstration Facility and the five-storey Earth Sciences Building at UBC, both financed by Natural Resources Canada under the Large-Scale Wood Demonstration Initiative. When I meet with my counterparts abroad to promote better recognition of wood in their Building Codes, they often ask, “What do Canadian codes allow?” And that is why we’re conducting research with the Canadian Wood Council and the provinces to recognize wood buildings of up to six storeys in the 2015 National Building Code. And we’re not stopping there. In Europe, the United States, Australia and elsewhere, interest is growing in the concept of “tall wood” buildings. Last year, we invested over half a million dollars in research to advance tall wood building design. And to ensure that Canada remains at the global forefront in the development and demonstration of tall wood buildings, we will invest an additional $5 million in the years ahead. This will be funded under the $92 million for forest sector innovation and market development in our 2013 Budget. One of our goals is to generate more and more value from a given volume of harvested trees. With this in mind, we’re driving the transformation of this industry with new innovative products that are expanding the markets of Canada’s forest sector in ways we could hardly imagine just a few years ago. And that’s why I’m also pleased to announce that we’re investing $19.5 million to commercialize groundbreaking new technology in five projects here in Western Canada through the Investments in Forestry Industry Transformation Program. Many of these new technologies are expected to be widely adopted in mills across Canada. And this helps Canadian companies present more diversified product lines, making them now more resilient to fluctuations in demand or price for any one product or commodity. Bio-energy is an example that is now widely adopted and has made Canadian mills more competitive and more resilient. For example, in Drayton Valley, Alberta, Tekle Technical Services is receiving $4.5 million to create the first engineered fibre mat plant in Canada. Engineered fibre mats, or EFMs, are made from crop and forest biomass residuals and used to create dozens of products, including moulded interior panels for cars. Not only are these organic composites created from a renewable resource, but they can also make vehicles lighter, lowering energy costs. In Okanagan Falls, B.C., Structurlam Products is receiving $2 million to enhance the production of CLT. This will allow Structurlam to produce the new “Eco Structure Wall System,” an innovative CLT product with enhanced design features and increased ease of installation on site. A good example of CLT construction can be found here at the Prince George Airport, which I understand has become a local landmark.  These are only a few demonstrations of the diversified new products the IFIT program is helping to start up. They are truly the future of Canada’s forest industry.  Like the wood products sector, Canada’s pulp and paper industry has lived through difficult times due to the global recession, foreign subsidies and structural changes in key markets. And that’s why we’ve also made unprecedented investments to help Canada’s pulp and paper mills to become more diversified and competitive.  Our Government’s unprecedented $1-billion investment in the Pulp and Paper Green Transformation Program has helped mills across the country to adopt innovation as part of their new business model. It has helped mills to reduce their greenhouse gas emissions by more than 10 percent and reduce their energy costs by roughly $70 million a year. By better using their residuals, Canada’s renewable power production from forest fibre has increased by 14 percent, adding another $149 million in revenues. One of the major beneficiaries of this program is Canfor Pulp Limited Partnership, which received $122 million to reduce the environmental footprint of three mills here in Prince George. And that is the single biggest investment under our Pulp and Paper Green Transformation Program. These transformation projects allowed local mills to save more than 1.7 gigajoules of energy per year, and that is a huge figure — equal to the energy needed to heat all the homes in Prince George for a year. Those savings continue every year into the future. These projects also allowed the mills to reduce their greenhouse gas emissions by 25,000 tonnes per year and lower their odour-causing emissions by 60 percent. That means everyone here in Prince George can breathe a little easier. It’s great to see better times return to the forest industry. But to realize the opportunities in the global marketplace, we must redouble our efforts to transform and diversify the sector. Despite the improving U.S. market, we still face many challenges including an uncertain global economy and skill shortages, as well as fibre supply and quality challenges due to the mountain pine beetle epidemic.  The forest industry — including many companies represented by people here in this room — has made great efforts to reinvent itself and extract more value from wood fibre by developing and implementing new and innovative products. We’re proud to be your partners, and we look forward to working together even during a time of fiscal restraint.  My best wishes to everyone for a successful show and conference.  Thank you very much.