Write This Down - Government Should Go Bold Or Go Home

The use of forest products is such a big part of our daily lives we don’t realize how much we rely on them. Think about it as you walk across your hardwood floor in your wood-framed house in search of a piece of paper to jot something down at your wooden desk.

Even with more people communicating electronically and making products out of alternative materials, global economic growth will create a significant increase in demand for forest products.

In emerging economies like China and India, per capita income will triple over the next twenty years. The mission of the forest products industry is to translate this opportunity into jobs for Canadians.

And this will require two things: an ambitious, innovative industry and governments willing to create world-class hosting conditions. Canada’s forest industry is the most successful exporter of forest products in the world.  It needs governments to do its part.

As the federal government puts the final touches on its economic stimulus plan to be the major plank in this month’s budget, the forest products industry urges government to think long- term.

It should look beyond bailouts and focus spending in areas that will attract investment and forge competitive business conditions that will keep jobs in this province past the current crisis and well into the future.

Across Canada, forest products manufacturers employ 300,000 people in 300 communities. That’s more than the combined workforce of all three major automakers and all five big banks.

In communities throughout Ontario, close to 67,000 workers plant and harvest trees and make paper and wood products that are shipped around the world. The forest industry employs about one per cent of the province’s workforce and generates revenues of over $18 billion with exports that contribute $5.8 billion to the Ontario economy.  

This success is based not just on abundant natural resources but on ingenuity and hard work.

Even before the current economic downturn struck, the forestry industry battled challenging conditions - a slump in the US housing market, tightening credit markets and roller-coaster energy and currency costs.

But the industry has responded by retooling, spending more than $4 billion annually during the past decade on capital renewal and more than half a billion a year on research and development.

In fact forest product companies across Canada have come up with innovative ways to stay competitive by investing in everything from state-of-the-art boilers using biomass instead of fossil fuel, to packaging with embedded radio frequency chips so products can be easily tracked.

Now it’s time for government to do its part. Canada cannot win in tomorrow’s marketplace with yesterday’s policies.

Regulatory reform, tax modernization, infrastructure and transportation improvements have long been on the government agenda, but change has been painfully slow, costing tens of thousands of jobs and risking many more.

The federal government must ensure credit is available; use the tax system to encourage investment in new capital and research; and, invest in new technologies in the bio-economy. It must adjust the employment insurance work-sharing program to help families get through this difficult time and to help companies retain valued and skilled workers for when markets rebound.

All of this would cost about $600 million over five years. The cost of losing jobs in this key Canadian industry is much higher, not just for workers but for the communities and provinces that rely on the economic spin-offs those workers generate.

 
Provincial governments must also do their part. Changes to provincial forestry policies have not kept pace with the changing world in which companies do business making the current economic conditions even more daunting.

But with smart spending and bold economic policies Canada can emerge from this recession well positioned to prosper.
  
Many of our competitors are being slowed down by local land use conflicts, global reaction to rampant illegal logging and the sudden disappearance of credit needed to expand their operations.
      
Customers are increasingly looking to buy wood and paper from producers who harvest legally, regenerate promptly, invite outside scrutiny of their forest practices and reduce waste and emissions. Canada leads the world in sustainable forestry and has surpassed its Kyoto targets 10 times over in reducing greenhouse gas emissions – there is no question that demand for Canadian products will continue to grow.

Canada’s forest sector is a major source of jobs and national wealth. We cannot take it for granted. That is why governments must take aggressive action now to create winning economic conditions - not only for people of this province - but for the future prosperity of all Canadians.


Avrim Lazar is President & CEO of the Forest Products Association of Canada. He is also chair of the National Business Association Roundtable and President of the International Council of Forest and Paper Associations (ICFPA).