Derek Nighbor, President and CEO, FPAC

Every year the Government of British Columbia leads a delegation to Japan and China in an effort to support and grow the market for BC wood products.  I appreciate the opportunity to join BC Minister of Forests Steve Thomson and representatives from Natural Resources Canada, BC forest products associations and industry leaders on this year’s trip – starting in Tokyo, Japan followed by stops in Shanghai and Beijing.  Let me say that our sector is lucky to have someone like Minister Thomson leading our file.  He is a tireless champion for BC and the Canadian forest products sector.  Great to see him in action.

When we left Canada, the US softwood lumber industry had just filed its petition to the US government to begin the process of seeking significant duties on the import of Canadian softwood lumber. That consumed most thought and conversation.  This filing was something we were expecting and is a stark reminder of how important market diversification is to the future growth of our sector.  As I was reviewing my briefings on the plane from Vancouver to Tokyo it was clear to me that this trip to Asia is an important one.

 

 

Some interesting facts on Japan:

  • Japan is the world’s 3rd largest economy and the #3 destination for Canadian wood, pulp and paper products
  • Japan’s population is shrinking; losing 250,000-300,000 people per year (the equivalent of a Saskatoon being wiped off the map in Canada every year) with no clear plan to address this which creates big issues for the labour pool.  The average age of the current Japanese logger is 63 and as the country works to promote greater domestic use of its forest products, availability of labour is likely to be an ongoing challenge.
  • While residential construction is relatively flat (1% increase) huge opportunities exist in non-residential construction (11% increase).
  • Japan is experiencing a tourism boom.  In 2011, 6.2 million people visited Japan.  This year, Japan tourism has increased almost 4 fold to an expected 24 million.  Why? A relatively low yen, increased promotion in neighbouring Asian countries, a growing middle class in nearby China and less restrictive visa requirements for Asian visitors.  As evidenced by the hotel we’re staying in – Hotel Okura – Japan’s hotel infrastructure was mainly built in the 1980s and is looking quite dated.  They have leveled the North Tower here and will be rebuilding – and it’s going to take a lot of wood!  Japan’s hotel sector will need to reinvest to accommodate increased tourism with the 2020 Olympics on the horizon.  That’s good news for the Canadian forest products industry – and a particularly huge opportunity for BC wood products.

The move to taller wood buildings is underway here.  At Japan’s Building Research Institute in Tsukuba, we toured two mid-rise timber demonstration buildings that the Japanese are using to test and clarify technical standards for timber structures and materials.  Similar to Canada, the Japanese are promoting the environmental benefits of building with wood and are looking to do more.  More work needs to be done to update Japan’s building codes but that is underway.  We clearly are a bit further ahead of this curve in Canada, but there is real promise for the future.

Our tour was slightly interrupted by word that the Grey Cup was going into overtime. While mainly a western delegation, there seemed to be a lot of people pulling for the underdog RedBlacks and the majority of the group was quite pleased to see their upset win over the Stampeders.  The two Ottawa-based delegates here (myself included) will plan our own version of a Grey Cup parade on Tuesday to honour our champs!

We ended the day with my favourite part—a briefing with officials from the Canadian Embassy in Tokyo, including an address from Ambassador Ian Burney, and a reception with dozens of Japanese customers of BC and Canadian wood.  In meeting the Japanese customers it was clear: they have high admiration for Canada and the quality of Canadian products.  And, loyalty matters.  Many of the Japanese customers who attended proudly talked about long-time, trusted business relationships with Canada—in one case, a relationship that has spanned over 40 years, proving that if you deliver a quality product and on the customer service promise, you can be nicely rewarded in Japan.

Great opportunities here and this speaks to the need to continue to invest in relationships and a presence in Japan for BC and Canadian interests.