Annual Report 2007Annual Report 2007 | 3 Society • Most of Canada’s forest land (93 percent) is...

The State of Canada’s Forests

Annual Report

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© Her Majesty the Queen in Right of Canada 2007 Catalogue number: Fo1-6/2007EISBN: 978-0-662-46538-6

The National Library of Canada has catalogued this publication as follows: Main entry under title: State of Canada's Forests... Annual. Description based on 1991- Issued also in French under title: L'État des forêts au Canada. Bibliographic address varies: 1993- , Canadian Forest Service. Issued also on the Internet. Subtitle varies. ISSN 1196-1589

1. Forests and forestry--Canada--Periodicals. 2. Forest policy--Canada--Periodicals. I. Canada. Forestry Canada. II. Canadian Forest Service.

SD13.S72 634.9'0871'05

Copies of this publication may be obtained free of charge from:

Natural Resources CanadaCanadian Forest Service580 Booth StreetOttawa, OntarioK1A 0E4Telephone: 613-947-7341Fax: 613-947-7396Email: [email protected]

Web site: canadaforests.nrcan.gc.ca

Minister’s MessageI am pleased to present The State of Canada’s Forests for 2006–2007. The theme for this year’s report is “ConfrontingChallenges, Maximizing Opportunities.” From the mountain pinebeetle infestation in my home province of British Columbia to theever more demanding international marketplace, our forest industryfaces its share of challenges. At the same time, we know that withinevery challenge there is opportunity.

The Government of Canada continues to work closely withprovincial and territorial governments, with communities and withthe industry to meet these challenges and make the most of theopportunities they present.

Over the past year, we have launched the Forest Industry Long-TermCompetitiveness Initiative and expanded our collaboration with theprovince of British Columbia to address the impacts of the mountainpine beetle.

Other important initiatives have come from our partners in the provinces and territories and from theindustry itself. Canada’s three major forest research organizations have consolidated to formFPInnovations, giving our country the biggest public–private forest research institute in the world.Despite the challenges of the past year, all around us are signs of a strong industry determined to growstronger—upgrading mills, modernizing business operations, taking steps to attract more skilledworkers and building new business partnerships with Canada’s Aboriginal communities.

This latest edition of The State of Canada’s Forests marks another innovation. This publication,highlighting selected economic, social and environmental priorities for Canada’s forests and the forestsector, is now complemented by a new Web site offering a more detailed statistical and analytical viewof the sector. Look to canadaforests.nrcan.gc.ca for access to the most up-to-date statistics andinformation available on topics of interest.

Of course, Canada’s forests are about more than statistics. They are part of who we are as Canadians.We can all be proud that Canada continues to be a world leader in sustainable forest management.

I hope you will find this report interesting and informative and that it will provide a greaterunderstanding of the challenges confronting our forest sector and how we are working together tomaximize the opportunities.

The Honourable Gary Lunn, P.C., M.P.Minister of Natural Resources

Annual Report 2007 i|

Contents

Minister’s Message i

Quick Facts 2

Year in Review 4

Sustainable Forest Management in Canada 6

Focus on Climate Change 9

Integrated Landscape Management 12

Staying Competitive 14

Forest Workers: The New Generation 18

Aboriginal Partnerships in the Forest 21

Tables: Selected Forestry Statistics 23Forests 24Industry 25Products 26Exports 27Glossary of Economic Terms 28

Annual Report 2007 1|

2 The State of Canada’s Forests|

Quick FactsEnvironment• Canada has 402.1 million hectares of

forest and other wooded land,representing 10 percent of theworld’s forest cover and 30 percentof the world’s boreal forest.

• About eight percent of Canada’sforest area is protected bylegislation.

• Annually, less than one percent offorests are harvested across Canada.

• By law, all forests harvested onCanada’s public land must besuccessfully regenerated.

• About 85 percent of harvested areason Crown land are regeneratednaturally, while the remainder isregenerated through tree planting.

• By June 2007, more than 134 millionhectares of Canada’s forests werecertified as being sustainablymanaged by one or more of threeglobally recognized certificationstandards.

• A National Invasive Alien SpeciesStrategy is being implemented toaddress the increased number ofnon-native (alien) insect species.

• Bioenergy now constitutes morethan 55 percent of the total energyused by the forest industry.

Economy• Canada is the world’s largest

exporter of forest products.

• The forest industry’s contribution toCanada’s gross domestic productremains stable at about threepercent.

• Eastern Canada’s forest industry isdominated by pulp and paper, whileindustry in western Canada is morefocused on wood products.

• Secondary manufacturing of woodproducts has expanded in recentyears, increasing economic benefitswithout increasing harvests.

• The United States is by far thelargest buyer of Canadian forestproducts.

• Forest-based foods (such as berriesand wild mushrooms) contribute anestimated $725 million to theCanadian economy.


Society• Most of Canada’s forest land

(93 percent) is publicly owned—77 percent under provincial orterritorial jurisdiction and 16percent under federal purview.

• The rest is on private propertybelonging to more than 450 000private landowners.

• The provinces and territories havelegislative authority over theconservation and management ofthe forest resources onprovincial/territorial Crown lands.

• The federal government isresponsible for forestry mattersrelated to the national economy,trade and international relations,and federal lands and parks, and hasconstitutional, treaty, political and legalresponsibilities for Aboriginal peoples.

• Canada’s forest sector supportsabout 800 000 direct and indirectjobs—almost five percent of all jobsin Canada.

• Between January 2003 and March2007, more than 22 000 forest jobswere lost in Canadian mills.

• For 324 communities, the forestsector makes up at least 50 percentof the economic base.

• About 80 percent of Aboriginalcommunities are in forested areas.

• Public participation is an importantaspect of forest managementplanning in Canada.

• There were 12.2 million person-visitsto Canada’s national parks in 2006.

The Government of Canadaannounced in its 2006 budgetthat it would invest $400 millionto address three forest-sectorpriorities: combatting themountain pine beetle infestation,strengthening the sector’s long-term competitiveness andsupporting worker adjustment.

As part of this investment, thegovernment announced inJanuary 2007 that it wouldallocate $200 million to theFederal Mountain Pine BeetleProgram. The funds will assistefforts to control the spread of thebeetle infestation and mitigate itsimpact. The first announcementunder the program, in March, was$24.8 million, primarily to controlthe spread of the beetle. Thesecond, in June, was $39.6 millionto help control the spread of theinfestation, recover economicvalue from beetle-killed trees andprotect communities and forestresources in affected areas. Thethird, in July, was $80 million tohelp affected communities inBritish Columbia manage thelong-term economic impacts ofthe infestation.

Year in Review


B.C./Alberta—Managing, Mitigating theBeetle InvasionBritish Columbia has been hit hard by the mountain pinebeetle. By fall 2006, 9.2 million hectares of the province’sforest were infested. The volume of infested trees rose from411 million cubic metres in 2005 to 582 million in 2006.

The epidemic also moved into parts of Alberta in 2006. Anunusual weather event coincided with the peak of beetleflight, which caused a mass migration of the beetle fromBritish Columbia’s Peace Forest District into Alberta,reaching as far east as Slave Lake. An estimated minimumof 3 million trees in Alberta had been infested by early2007, largely in the Grande Prairie area, up from about20 000 in 2005.

Both provinces have action plans in place. BritishColumbia’s plan focuses on economic stability for affectedcommunities, public and worker health and safety, valuefrom dead timber, conserving long-term forest values,restoring forest resources in affected areas and protectingsusceptible areas.

Alberta’s action plan centres on removing as many infestedtrees as possible before the next beetle flight inJuly/August. Governments and the forest industry aretaking steps to survey and aggressively control the beetle.Single-tree treatments, such as felling and burning ormulching, and harvesting of infested stands, beganimmediately. Fourteen helicopters have been dedicated toidentifying infested trees in densely forested areas from theair and transporting crews to destroy the infested trees andset pheromone baits. Prescribed fire is also being used.

Another $127.5 million was announced inFebruary 2007 to contribute to the forestindustry’s long-term competitiveness. The fundswill be used to promote innovation andinvestment, expand market opportunities,develop a national forest pest strategy, andidentify and address sectoral job skills andadjustment issues. As well, $72.5 million will beinvested in measures to address the issues facingolder workers. This includes the $70-millionTargeted Initiative for Older Workers, whichhelps unemployed workers, aged 55–64, incommunities with high unemployment and/orwhich rely heavily on a single industry affected bydownsizing, to get the training and experiencethey need to find work.

Two major research events occurred in 2006 andearly 2007. In March 2006, Natural ResourcesCanada launched the Canadian Wood FibreCentre to gain better insight into several areas:wood fibre quality; best ways to inventory,produce and use Canadian fibre; and ways tocapitalize on fibre quality in the long term.

On April 1, 2007, FPInnovations went intooperation. The new research institute was formedwhen the expertise in Canada’s three forestresearch institutes, Forest Engineering ResearchInstitute of Canada (FERIC), the Pulp and PaperResearch Institute of Canada (Paprican) andForintek Canada Corp., was merged.FPInnovations was created to strengthen forestresearch, integrate innovation along the valuechain and support industry renewal in the shortterm and diversification in the long term. TheCanadian Wood Fibre Centre makes up the fourthdivision of FPInnovations, now the largestpublic/private forest research institute in theworld.

A new federal program was announced in July2007 to help forest communities developstrategies to respond to the new challengesfacing Canada’s forest sector. The $25-million,five-year Forest Communities Program will fund11 sites across Canada and encouragecommunity-level partnerships to take advantageof emerging resource-based economicopportunities. It will encourage innovativeapproaches to accommodating competing landuses, set up projects to demonstrate innovativeforest management, and create communityventures based on new types of forest products.

The Forest Communities Program is patterned onthe successes of the Model Forest Program whichbegan in 1992 and ends in 2007.

The Softwood Lumber Agreement betweenCanada and the United States took effect onOctober 12, 2006. Under the agreement, Canadianexports of softwood lumber are no longer subjectto U.S. countervailing and anti-dumping duties,and more than (CAN)$5 billion in duties collectedby the United States since 2002 has beenreturned to Canadian exporters. The agreement,which has a seven-year term with an option torenew for two additional years, imposes exporttaxes and quota limits on shipments of softwoodlumber to the United States that become morerestrictive as the market price of lumber falls. TheAtlantic provinces and the territories, as well as32 companies in Quebec and Ontario, are exemptfrom the border measures.

By late 2006, the Forest Products Association ofCanada had honoured its pledge, made four yearsearlier, that all of its members would be certifiedunder one of the country’s three leadingcertification systems by the end of 2006. Theachievement of this commitment means thatCanada has the largest area of independentlycertified forest in the world. The association hasnow made another pledge—that all of itsmembers would be able to trace their fibresupplies back to the forest of origin by the end of2008, thus allowing customers to know that thewood they purchase comes from legal,sustainable sources.



Sustainable ForestManagement in Canada

It has been 15 years since forests emerged as asignificant item on the internationalagenda at the United Nations Conference onEnvironment and Development (UNCED) in1992. Since then, major progress has beenmade toward sustainable forest management.Developments have stimulated changes inCanadian forest policy, legislation andmanagement practices that will continue toevolve in response to challenges and changingvalues.

Canada has adopted a vision for the sustainablemanagement of its forests: “The long-termhealth of Canada’s forest will be maintained andenhanced, for the benefit of all living things,and for the social, cultural, environmental andeconomic well-being of all Canadians now andin the future.” National Forest Strategy(2003–2008)

In other words, sustainable forest managementrespects society’s increasing demands for forestproducts and benefits, as well as the need topreserve forest health and diversity. The futureof our forests and of forest-dependentcommunities centres on innovativetechnologies, approaches and tools.

SFM is public-driven

Most of Canada’s forest land (93 percent) ispublicly owned. As a result, governments, onbehalf of the Canadian people, have setlegislation and regulations based on the latestknowledge in sustainable forest managementon nearly all of the country’s forest, and aremonitoring progress toward achieving it.

Since the 1990s, forest managers and federal,provincial and territorial governments haveincreasingly consulted with stakeholders andother interested parties (forest owners,industries, Aboriginal peoples, localcommunities, etc.) to identify appropriate foreststrategies, legislation and management plans.This has enlivened the debate within the forestcommunity about sustainability and hasincreased stakeholders’ participation in decisionmaking.

Approaches to forest management thatincorporate a broader array of values, such asecosystem management and landscapemanagement, are now widely accepted andimplemented.

Measuring SFM An ongoing challenge forforest planners and legislatorshas been how to translate theconcept of sustainable forestryinto real and measurable goals.We may know what sustainableforest management is, but howdo we evaluate our progresstoward it?

Grappling with this questionled the Canadian Council ofForest Ministers to develop, in1995, a set of science-basedcriteria and indicators forsustainable forestmanagement. The criteria andindicators provide a frameworkto describe and measure thestate of Canada’s forests,management practices, valuesand progress towardsustainability.

Independent third-party forest certification canalso serve as a measure of sustainable forestmanagement, and is an important tool for thoseseeking to ensure that the paper and woodproducts they purchase and use come fromforests that are well-managed and legallyharvested. Three globally recognized standards(those of the Canadian Standards Association,Forest Stewardship Council and SustainableForestry Initiative) are used in Canada, all of whichsupport sustainable forest management. In fact,Canada now has more independently certifiedforest land than any other country.

A leader in SFM When we look at the international milestones insustainable forest management, Canada’sleadership stands out.

• 1992: Canada was the first country to adopt anational forest strategy.

• 1992: Canada unveiled one of the largest, mostinnovative SFM experiments ever—theCanadian Model Forest Network. Aninternational network followed in 1995.


“Canada’s forest regulations and laws are among the strictest in the world,and Canada is a world leader in improving sustainable forest practices.”

Global Environmental Forest Policies: Canada as a Constant Case Comparisonof Select Forest Practice Regulations (2004)

• 1994: Canada was a founding member ofthe Montréal Process, established toformulate international criteria andindicators for SFM.

• 2002: The Forest Products Association ofCanada was the first national tradeassociation to commit its members toachieving forest certification.

• 2006: Canada now has the largest area ofindependently certified forests in the world.

• 2007: Canada announced the ForestCommunities Program, patterned on thesuccesses of Canada’s Model ForestProgram. The new program will helpcommunities make the most of newresource-based economic opportunities.

• 2007: FPInnovations was formed, the largestpublic/private forest research institute inthe world.

The road to sustainable forest management iscontinually changing, as foresters grapple withthe shifting values, demands and environmentthat influence the forest landscape. In recentyears, the reality of a changing climate hasemerged as one of the most difficult challengesfor balancing the economic, environmental andsocial aspects of forest management.

Forest management itself will need to change,and strategies to help forests and society adapt toa changing climate are needed. But climatechange awareness has also brought an additionalset of forest values, as the potential for forests tosequester and store carbon introduces yetanother demand on the forest that needs to bepart of the balance.

As a forest nation committed to continualimprovement, Canada recognizes that these andother challenges require that sustainable forestmanagement in Canada continue to evolve andadapt. Innovation, through the development andimplementation of new technologies, tools andapproaches, will continue to be central to thisevolution.



Focus on Climate ChangeThis past year, climate change became animmediate concern for many Canadians.Mainstream media coverage and high-profileactivists and speakers helped publicize theissue, and reports from the IntergovernmentalPanel on Climate Change helped validate it.

Even more pressing is the fact that Canada mayalready be feeling the effects of climate change.Higher temperatures, drought, floods,windstorms and other severe weather events, ifthey persist, are sure signs that climate changeis real and underway. So are phenomena likethe unprecedented mountain pine beetleepidemic sweeping through British Columbia,and now making inroads in Alberta—aninfestation influenced by warmer winters.

It is hardly surprising that the public hasdemanded action on climate change and hasranked the issue a top priority for the country.All levels of government, as well as the privatesector, are responding by setting goals andplans to cut greenhouse gases and air pollution.

How do forests fit in?Forests are a carbon sink—they take in carbondioxide and convert it to wood, leaves androots. They are also a carbon source—theyrelease stored carbon into the atmospherewhen they decompose or burn. Because of thisability to both absorb and release hugeamounts of carbon dioxide (a majorgreenhouse gas), forests play a major role in theglobal carbon cycle—the exchange of carbonbetween the atmosphere and the biosphere.Large changes in forest carbon sinks andsources, whether due to human or naturalcauses, can affect the climate by altering theamount of carbon dioxide in the atmosphere.

As the climate changes, forest carbon storagewill be affected. A warmer climate can speed upvegetation growth, which means more carbonstorage. However, it can also acceleratedecomposition, resulting in more carbonemissions, and boost the risk of drought, pestoutbreaks and fire, all of which can significantlyreduce carbon storage. The extent of theseeffects will also be influenced by the amountand/or timing of precipitation changes.

A rapidly changing climate has importantimplications for the forest sector and the morethan 300 communities whose livelihood isclosely associated with forests. Effects on timbersupply are one example. Growth and yielddatabases used in timber supply forecasting willneed to be re-evaluated because of changingtree growth and productivity. Long-term timbersupply planning may also need to considerchanges in species composition over time. Morefrequent large-scale disturbances will causetimber supply fluctuations, and result in moresalvage harvesting of trees killed bydisturbances, which affects fibre quality.

The complex relationship between forests andclimate makes it difficult to know how all of thiswill play out. But here are some things we doknow.

Some facts . . .

• Globally, there is more carbon stored in forestbiomass (trees and other living plants), deadorganic matter and soil than is contained inthe atmosphere. This is why forests are a keypart of the global carbon cycle.


• Deforestation, the permanent clearing of forestfor other uses like agriculture and urbandevelopment, is a serious global issue. World-wide, deforestation creates about 20 percent ofhuman-generated greenhouse gas emissions—more than is produced by the globaltransportation sector. Curbing deforestation isthe subject of intense international concernand negotiations. (While deforestation is thepermanent removal of the forest, harvesting,when it is part of sustainable forestmanagement, is followed by regeneration ofthe forest.)

• In Canada, deforestation accounts for less thanthree percent of national emissions, a figurethat is declining.

• Because wood continues to store carbon evenafter it is made into products (such as lumberand paper), only a fraction of the carbonremoved from the forest is actually emittedinto the atmosphere. As well, some of thewood-waste from manufacturing products isburned to produce energy, offsetting fossil fueluse. After harvest, 40 to 60 percent of thecarbon remains in the forest in the roots,branches and soil, and decomposes slowly toprovide nutrients for the newly regeneratingforest.

• Environmentally speaking, wood is an excellentconstruction material (as shown in studies byagencies like the Athena Institute). Woodproducts take far less energy to produce thanconcrete, plastics, metals and other materials,and their production has fewer impacts on airand water quality.

• Natural disturbances like forest fires and insectinfestations release large amounts of carbondioxide into the atmosphere, although the areaaffected and emissions can vary considerablyfrom year to year. The area of forest burnedeach year is on average 2.5 times the areaharvested, and is projected to increase underwarmer, drier climate scenarios. A significantdifference between fires and harvesting is thatwith harvesting much of the carbon ends upbeing stored in long-lived products while withfires the carbon goes into the atmosphere.

According to an analysis using the CanadianForest Service’s Carbon Budget Model of theCanadian Forest Sector (see inset), Canada’smanaged forests were a net carbon sink in mostyears between 1990 and 2005. But in some yearsthey were a source—mostly because of wildfires.

Carbon Budget Model of theCanadian Forest Sector(CBM-CFS3)With emission reductions high on Canada’sagenda, carbon management is becomingan important part of sustainable forestmanagement. Thanks to scientists at theCanadian Forest Service of Natural ResourcesCanada, governments and forest managershave a valuable tool to help them. TheCBM-CFS3, which the Canadian Forest Servicebegan developing more than 15 years ago,integrates scientific knowledge with forestinformation to analyze the forest’s carbonbalance. The model also projects how thatbalance might change in response to naturaldisturbances and different managementpractices.

As the world pieces together the puzzle ofclimate change, Canada’s forest researchers,managers and policy makers must work on twofronts. The first is mitigating climate change—reducing carbon emissions or increasing sinksthrough actions such as managing forest fire,protecting against insects, reducing deforestationand managing forests and forest products tolower the human impact on the carbon. Thesecond is adapting to climate change—that is,understanding and preparing for the impacts thata changing climate will have on our forests at theoperational, planning and strategic levels. Thenew Forest Communities Program is one way toempower forest-dependent communities tointegrate a changing forest base into their localeconomy. Sound science, and sound policiesbased on science, will be critical at every step forboth mitigation and adaptation activities.


What is it? Integrated landscape management, or ILM, is away of planning how land will be used andresources will be managed. It goes beyond theforest sector to include other industries andother uses of the forested landscape. It looksat planning from the “whole landscape”perspective, taking into account all activities, inorder to reduce cumulative impacts. Planningand managing at the landscape scale allowspeople with diverse interests to develop ashared vision for their public lands andresources, a vision that includes environmental,economic, social, cultural, aesthetic andrecreational objectives.

Why is it important?Canadians look to the forest to provide manythings such as habitat for wildlife, economicstability for communities, culture and history forFirst Nations, beauty and recreation for all. Theforest also provides ecological benefits that areoften taken for granted: climate stabilization,disease and pest control, water supply andregulation, air purification and carbonsequestration. In the past, decisions about landuse and allocation were too often made inisolation, focusing on one sector or use withoutregard for other interests. This approach bredconflict between industry, First Nations,communities and environmental groups, andcontributed to ecological degradation andhabitat fragmentation. ILM is a mechanism for

making comprehensive decisions based onmultiple objectives—decisions that result inhealthy forests and communities.

How does it work? Collaboration is the key ingredient of ILM. Theprocess brings together many voices, whichmay include forest owners, forest managers andforest users, including the various industriesthat work in the forest such as forestry, mining,and oil and gas energy. Together, the partiesgather information, set objectives, explore landmanagement strategies and decide on aprocess for monitoring and reviewing progress.This approach enables all users to take intoaccount the potential activities of others and toincorporate these aspects into their planning.For example, forest companies might use oilcompany roads instead of building their own, orthey might use the wood cleared from seismiclines to meet their fibre needs.

Where is it happening?ILM is still evolving, but it has taken root inmany parts of Canada. The approach is meetingwith success in Alberta and British Columbia(see insets). In Saskatchewan, the North CentralLand Use Plan proposes to divide an area ofboreal forest into zones with different degreesof protection and development. ILM may proveespecially valuable in Canada’s forests with theircomplex social, economic and ecologicalinteractions.

Integrated LandscapeManagement


ILM and Woodland CaribouConsidering all values in landscape planningand management is especially important inareas that shelter species at risk, such as thewoodland caribou. The Caribou LandscapeManagement Association, based in theFoothills Model Forest in west-central Alberta,has brought together local forest operators, oiland gas companies, and First Nations todevelop a coordinated plan to conserve thehabitat of the area’s Little Smoky andA La Peche caribou herds.

The Spirit Bear Rainforest: ILM at Work The Spirit Bear Rainforest is the largest stretch of coastal temperate rainforest left in the world. Itspans 6.4 million hectares along the central and north Pacific coast of British Columbia andincludes the Queen Charlotte Islands. The rainforest is home to forests of Sitka spruce andcedars, as well as thousands of plant and animal species.

Forestry and other resource industries have long been the mainstay of communities in theregion, many of them First Nations. But through the mid-1990s, protests against industrialactivity, especially logging, escalated, highlighting the need to focus on the impact of industrialactivity on the environment.

The outcome has been called a “conflict to consensus” story. Various parties, many withcompeting interests, worked together to create an integrated vision for the rainforest, one thattakes into account environmental health and the needs of those who live and work there. Theconsensus agreements that emerged created 1.2 million hectares of new protected areas, andadditional “biodiversity areas” where logging is prohibited and industrial activity severelylimited. The remaining two-thirds of the land will be managed for a full range of economicactivities using an ILM approach that ensures both healthy ecosystems and healthycommunities.


Canada’s social and economic well-being isclosely tied to the forest industry. The sectorsupports about 800 000 jobs directly andindirectly, not to mention more than 300communities, many in rural and remote areas.Forest products make up close to 10 percent ofCanada’s merchandise exports and contributethree percent to the country’s gross domesticproduct.

Competitive pressures

This key economic sector has been hard hit inrecent years. Although global demand for forestproducts is on the rise, the Canadian industry,despite increasing productivity, is not reapingthe full benefits. The reasons, which are manyand complex, include the appreciation of theCanadian dollar, high fibre costs, stiffercompetition from international producers(some of which benefit from governmentincentives unmatched in Canada), tradebarriers, aging and uncompetitive mills, andenvironmental, regulatory and policychallenges (for example, the interprovincialmovement of logs).

Some subsectors of the industry have faredbetter than others. The volume of lumber andengineered wood exports and production havestayed generally healthy by historical standards,despite the softwood lumber dispute and, morerecently, falling housing starts in the UnitedStates. That said, the decline in the U.S. housingmarket translated into lower prices forsoftwood lumber producers in 2006. Pulpexports have been stagnant for a decade, andnewsprint production has dropped offsignificantly in reaction to weak NorthAmerican demand. The result—mill closuresand job losses that have sorely tested theindustry and Canada’s forest-dependentcommunities.

The way ahead

The question for industry and governmentsalike is how to respond to this mountingpressure. Three major reports in 2006 and early2007 offer suggestions:

• Facing the Challenge of Forest IndustryRestructuring, Canadian Council of ForestMinisters (October 2006)

• Mission Possible (Volume II), Conference Boardof Canada (January 2007)

• Industry at a Crossroads: Choosing the Path toRenewal, Forest Products IndustryCompetitiveness Task Force (May 2007)

Staying Competitive

Between January 2003 and March 2007, morethan 22 000 forest jobs were lost in Canadianmills.

Canada’s forest sector supports about800 000 direct and indirect jobs—almostfive percent of all jobs in Canada.


All three reports present similar recommendations:embrace R&D and innovation, the keys to bothlong-term competitiveness and sustainabledevelopment; develop new products and marketopportunities; reform tax and trade regulations toencourage investment; reduce input costs (fibre,energy, labour, transportation); develop theindustry’s human resources. Underlying theserecommendations is a single resounding message:the status quo is not an option.

Meeting the challenges

Given the myriad of challenges facing the forestindustry, jurisdictions across Canada arere-examining their strategic approach to thesector. Questions have been raised regardingissues such as stumpage and tenure policies,workers and skills, economic framework policy(for example, taxation) and approaches to marketdevelopment. Industry is also working to addresscompetitiveness challenges. Over the past year,governments and industry have taken importantactions to set the stage for a more prosperousfuture for the Canadian forest sector.

Federal action: To pave the way for a morerobust forest industry, in February 2007 thefederal government unveiled its Forest IndustryLong-Term Competitiveness Initiative. A total of$127.5 million will go to address sectoral prioritiessuch as product and market diversification,innovation and human resource challenges.

Provincial action: Here is a sample of recentactions by Canada’s major forest provinces.

• In 2005 and 2006, Quebec announced a seriesof measures totalling $1.4 billion over five yearsto help the forest sector address challengesand to contribute to its revitalization.

• British Columbia is taking a market-orientedapproach to the sector and has introduced

policies to remove unnecessary barriers tocompetitiveness and to enable firms tobecome more efficient and thereby morecompetitive. As well, the provincialgovernment’s Forest Innovation InvestmentLtd. is spending $11.5 million on marketinginitiatives to expand access to new markets.

• Since June 2005, Ontario has announced aseries of measures to help restore the forestsector’s competitiveness and to assist rural andnorthern communities. The programs, totallingmore than $1 billion over five years, will help tostimulate new forest-sector investments invalue-added manufacturing and inco-generation.

Industry action: For several years, the forestindustry has been consolidating, restructuringand closing mills in an attempt to remaincompetitive. It has also been looking at newtechnologies that may expand the sector’sproducts and markets. Biorefineries, bioenergyand biochemicals hold promise, as dodevelopments in engineered wood and othervalue-added products (see insets).

A competitive futureCanada’s forest products sector has many naturaladvantages, including diverse, high-quality fibre,and environmentally responsible operations. Ifmanaged wisely, these advantages will placeCanadian industry in a leading position in theglobal market.

By embracing the opportunities that achanging global environment offers andmaking the difficult changes needed to realizethem, the Task Force strongly believes thatCanada can be at the forefront in re-definingsocial, environmental and competitiveexcellence in the forest products industry ofthe 21st century.

Industry at a Crossroads, Forest Products IndustryCompetitiveness Task Force

To compete effectively, Canada’s forestproducts sector must invest in both renewaland transformation.

Mission Possible (Volume II),The Conference Board of Canada


Diversifying Products and MarketsIndustry analysts agree—to secure its future,Canada’s forest industry must both defend itstraditional and current markets and lookbeyond them. That means developing newhigh-value products like engineered hybridbuilding systems. It also means seeking out newgeographic markets and matching products tothose markets.

The federal Forest Industry Long-TermCompetitiveness Initiative includes threeprograms aimed at diversifying marketopportunities.

• Value to Wood Program(launched 2002, renewed in 2007)

What: Development of products,manufacturing processes, market knowledgeand technical assistance for the value-addedsector.

Why: To improve the competitiveness of theCanadian value-added wood products sector.

• Canada Wood Program(launched 2002, renewed in 2007)

What: Development of offshore markets.

Why: To expand export opportunities forCanadian wood products.

• North American Wood First Initiative(new in 2007)

What: Education, awareness, R&D andtechnology transfer concerning the benefitsof using wood in non-residentialapplications.

Why: To increase the use of wood incommercial construction in North America.

Innovation and R&D—JoiningForces Innovation is key to the future viability andprofitability of Canada’s forest industry.Investment in forest R&D has been low inrecent years, while the industry has struggledwith competitiveness challenges, and hastended to focus on shorter-term cost-cuttingobjectives. There is now, however, recognitionthat longer-term R&D—aimed at developingand adapting emerging and transformativetechnologies—is key to transforming theindustry and better positioning it to offer agreater diversity of products. To maximize theeconomic value from Canada’s forests in thefuture, research will need to look atopportunities for new products, processes andtechnologies along the whole value chainfrom the tree to the marketplace.

The first step toward a renewed climate ofinnovation is to harness forest research effortsso they can support common goals. Here aresome recent initiatives designed to help.

• Canadian Wood Fibre Centre: Launched inMarch 2006 by Natural Resources Canada.Focuses on improving forest productivityand fibre quality as well as increasing thevalue of the forest resource. Staffed byCanadian Forest Service researchers.

• FPInnovations: Formed in April 2007 whenCanada’s three forest research institutesmerged. Created to harmonize forestresearch, integrate innovation along thevalue chain and support industry renewal inthe short term and diversification in thelong term. Combined with the CanadianWood Fibre Centre (the fourth division),FPInnovations is the largest public/privateforest research institute in the world.

• Canadian Biomass Innovation Network:Coordinates the federal government’s R&Din the area of bioenergy, biofuels, industrialbioproducts and bioprocesses. Involvesseveral science-based federal departments.Reports to Natural Resources Canada’sOffice of Energy R&D.


Bioproducts and Other EmergingTechnologiesUnder the federal Forest Industry Long-TermCompetitiveness Initiative, $70 million isearmarked for forest innovation through thenew FPInnovations (including $10 million tocreate the Canadian Wood Fibre Centre). Themoney will fund R&D in breakthroughtechnologies such as forest biotechnology.Some emerging technologies being studied:

• Bioenergy from wood waste (synthesis gas,bio-oil, liquid alcohols)

• Forest biorefinery processes(thermochemical conversion, fermentation)

• Biochemicals and materials from fibre(bioplastics, fibre-reinforced composites,nanocrystalline cellulose)

• Application of nanomaterials to themanufacturing process

• Next-generation building solutions forsustainable construction

• New ultra-lightweight paper grades forcommunication and packaging

Investment and Taxation Too many Canadian mills are small andinefficient compared to the super-mills setup in parts of South America and Asia.Modernizing Canada’s mills, building newones and converting to new product linesall require huge capital expenditures—billions of dollars, according to a recentreport from the Forest Products IndustryCompetitiveness Task Force. Attractinginvestment is therefore critical if the sectoris to turn itself around.

With depreciation currently outstrippingcapital expenditures—a situation that haseroded the sector’s capital stock for adecade now—industry is calling ongovernments to restructure tax measures inorder to encourage capital investment.According to the Forest ProductsAssociation of Canada, the Canadian forestindustry bears a higher tax burden than anyof its major competitors, and it does notbenefit from the kinds of tax credits thatbolster other industries, including oil andgas and mining.

The Forest Products IndustryCompetitiveness Task Force, in the reportIndustry at a Crossroads, has called ongovernment to introduce specific taxreforms that will make the sector moreappealing to investors. Says the Task Force,“The single most important role forgovernments in the industry renewalprocess is to avoid impeding newinvestment into the sector.”


Databases, computer modelling, satelliteimagery, digital processing. Lumber, logging,planting, paper mills. Different worlds? Not atall. Today’s forest sector is more high-tech all thetime—in fact, it is now the largest consumer ofnew technology in Canada. And it offers workershigher-than-average pay.

Yet despite these attractions, the industry facesa looming skills shortage, particularly fortechnical and professional forestry staff. Otheroccupations in forest product manufacturingmay also be at risk. The scramble for workers ismore than a managerial inconvenience. It couldjeopardize the sector’s productivity and long-range planning.

Forest Workers:The New Generation

Forestry is High Tech!Gone are the days of horse logging and bush whacking through the forest. Forest professionalsuse mapping tools like GIS and GPS to create a picture of the forest ecosystem that can be usedto develop integrated forest management plans. They also use satellite imagery to monitorforest fires and pests like the mountain pine beetle.

Web site recruitment page, Association of BC Forest Professionals


The trends• As in other sectors, the forest sector’s

workforce is aging. More than 41 percent ofits employees are over 45.

• The sector will lose many experiencedworkers to retirement in the next 10 to 15years. The British Columbia Ministry of Forestsand Range, for one, predicts having toreplace 80 percent of its technical andprofessional workforce within 10 years.

• The forest sector is facing stiff competitionfor workers (for example, skilled tradespeople) from other sectors.

• Forestry graduates are in high demand inCanada. According to some sources, theemployment rate upon graduation is secondonly to medicine.

• Despite this strong demand, the number ofgraduates from university forestry programsin Canada fell by almost 30 percent in thefirst half of this decade.

The image Attracting young, skilled workers to the industryhas been difficult largely because people’s imageof the sector has not kept pace with reality.

• People still view the forest industry as low-tech,when in fact it is becoming more technology-intensive all the time.

• People think of the forest industry as a “sunset”or dying industry, limited in scope andopportunities for advancement, when in fact itis a dynamic, cutting-edge sector that coversaspects of science, policy making, economics,sociology, conservation, business andtechnology.

• Messages about forest careers are weak anduncoordinated and are often perceived as anti-environmental, when in fact environmentalconcerns are front and centre.

• Efforts to recruit workers make poor use of newtechnologies (like the Internet), keeping theindustry disconnected from potential studentsand young workers.

When we talk to high school students, teachers,and the public, we find that most people havelittle or no knowledge about forestry or what acareer in forestry entails. Those who have someknowledge about forestry stereotypicallyequate it with low technology and low-browwork; they think of it as a “sunset” careerdealing only with the cutting and planting oftrees. Another misconception is that forestry isfor males, when actually over 30% of ourstudents are female, and the share is continuallyincreasing.

Reino Pulkki, Dean, Faculty of Forestry and the ForestEnvironment, Lakehead University, LakeheadUniversity Magazine, Spring/Summer 2005

The new generationTo combat falling recruitment, many universityand college forestry programs are revampingtheir public image. Schools like LakeheadUniversity, Malaspina College and the MaritimeCollege of Forest Technology actively targetstudents who care about the environment, lovethe outdoors and want the challenges of a fast-changing, high-tech field. Joining the effort, theCanadian Institute of Forestry has called for anational marketing program for post-secondaryforestry programs, one that correctsmisperceptions and focuses on the many pathsopen to graduates.

The transition currently underway on themanufacturing side of the industry will have asignificant impact on the skill sets required bythe forest industry of tomorrow. As the focus onemerging technologies in areas such asbioenergy, bioproducts and building systemsincreases, the industry will require highly trainedindividuals with the appropriate skills to processthis next generation of forest products.


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In February 2007, the federal government rolledout the Forest Industry Long-TermCompetitiveness Initiative, a funding packageto help the industry compete on a global scale.Of that funding, $5 million will go towardestablishing a Human Resource Forest SectorCouncil, a body that will assess the skills andhuman resource issues in today’s forestindustry. Government and industry are workingtogether to set up the council.

An especially promising source of new workers isCanada’s Aboriginal communities. Many arealready located in productive forest areas andhave close ties to the sector. Another plus—theAboriginal population, hence the pool of nearbyworkers, is growing.

To prepare that pool for today’s skills-rich forestindustry, organizations like the Forest ProductsAssociation of Canada are encouraging Aboriginalstudents to stay in school. The University of BritishColumbia’s forestry faculty, through its FirstNations Initiative, is encouraging Aboriginalpeople to enter forestry professions and isbuilding Aboriginal issues and approaches intothe faculty’s curriculum and research. As well,forest companies and policy makers are forgingmore partnerships with First Nations (see“Aboriginal Partnerships in the Forest” article).


Aboriginal Partnershipsin the ForestCanada’s Aboriginal people have an age-oldcultural and spiritual relationship with theforest. And, with more than three-quarters oftheir communities in forested areas, they have along history of contact with the forest industry.In the past, not all of this contact has beenpositive. But in recent times, growingrecognition of indigenous rights to land andnatural resources has resulted in moreAboriginal involvement in forest managementand more company/Aboriginal partnerships inforest business.

The forest industry has in fact become one ofthe most important commercial sectors forAboriginal people, who are more likely thanother Canadians to work in the sector. The forestproducts industry directly or indirectly employsmore than 17 000 Aboriginal people, mostly insilviculture and woodland operations, and doesbusiness with more than 1400 Aboriginal firms.These firms (some directly related to forestry

and some not) typically employ 10 to 30 peopleand often earn revenues exceeding $1 milliona year.

Partnership makes sense

In forest commerce and forest planning,partnerships between industry and Aboriginalpeople yield benefits for both.

For Aboriginal people:

• Economic opportunities: jobs, businesses,revenue for communities

• Local jobs, so people can stay in theircommunities

• More meaningful economic involvement(joint ventures, company ownership)

• More control over forest management;greater say in activities on or near Aboriginallands

For the forest sector:

• More secure access to timber in areas subjectto land claims and negotiations

• Better forest relations: less conflict, moreconsensus

• An expanding supply of local workers (theAboriginal population is growing faster thanthe national average)

• A key criterion for sustainable forestmanagement, social responsibility, forestcertification and international confidence

Aboriginal People and Canada’sForests: A Snapshot• About 80 percent of Aboriginal

communities are in forested areas.

• Some 1000 forestry operations are ownedby Aboriginal people.

• Proportionally, Aboriginal people are morelikely to work in the forest sector thannon-Aboriginal Canadians.

• Aboriginal forest workers are stillconcentrated in lower-skilled, part-time andseasonal positions.


Overcoming challenges Aboriginal people and the forest sector are morestrongly allied today than ever before. Still,Aboriginal participation in the sector is variableacross the country.

One challenge to full participation is continueduncertainty over jurisdictional responsibilities.In a survey on First Nations forest partnerships,released in 2005 by the Sustainable ForestManagement Network, respondents—both FirstNations and industry—made it clear that to moveahead with forest partnerships, the governmentmust first “clarify the responsibilities of federaland provincial governments regarding FirstNations and natural resources.”

Complicating matters further are the manyunresolved land claims and treaty negotiationsthat apply to forest areas. Again, those surveyedby the Sustainable Forest Management Networkstated overwhelmingly that land claims andtreaty entitlement processes must be resolved.

These difficulties are real. And there are others.One is the need to build skills and capacity(financial, technical, educational, organizational)within Aboriginal communities and, conversely, tobuild skills and capacity (for working withAboriginal people) within forest companies.

But partnership is increasingYet the fact remains that partnership is bothdesirable and on the rise. British Columbia is acase in point. Since 2002, the provincialgovernment has reached forest agreements with127 First Nations, giving them rights to24.4 million cubic metres of timber and sharingeight percent of the annual allowable cut andalmost $166.5 million in revenue. Although BritishColumbia’s approach has drawn some criticism forits revenue-sharing formula, it nonethelessillustrates how First Nations can have access toresources, develop economic opportunities andbuild capacity in their communities withoutwaiting for land claims to be resolved.

Encouraging PartnershipSome government initiatives that promote Aboriginal involvement in Canada’s forests:

First Nations Forestry Program. Federal program to help First Nations develop capacity tosustainably manage their forests and participate in forest opportunities. Since 1996, some1900 projects funded in more than 460 communities; roughly 9000 First Nation workers givenforest-related job experience.

Forest Communities Program. A new federal program from Natural Resources Canada. Will workwith local groups in forest communities, including Aboriginal communities, to share forest-relatedknowledge, tools and practices.

New Brunswick Aboriginal Forestry Initiative. Jointly sponsored by federal and provincialgovernments, industry and Aboriginal partners. Goals include skills development and long-termforestry jobs for local Aboriginal people.


Tables: Selected Forestry Statistics


4

1

2

3

2

1

3

4

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ForestsSeveral factors, both natural and human, affect forest ecosystems. Natural factors include, for example,fire and insects. Human factors include, for instance, tree harvesting, other economic pursuits andatmospheric changes such as climate change. Both natural and human factors affect the forest inpositive and negative ways.


�

�

�

�

�

�

Annual changeincreased � OR

decreased �

�Area defoliated by insects and beetle-killed trees (2005) 16.0 million hectares 2004 2005

Fire – area burned (2006) 2.1 million hectares 2005 2006

Fires – number (2006) 9713 2005 2006

Area planted and seeded (2005) 429 072 hectares 2004 2005

Harvest (area) – (2005) 903 009 hectares 2004 2005

Harvest (volume) – industrial roundwood (2005) 188.1 million m32004 2005

Wood supply (2005) 245.8 million m32004 2005

Forest area certified (June 2007) 134 million hectares 2006 2007

Net carbon sequestered (2005) 26 million tonnes CO2e/yr

Deforestation – forest area (2005) 56 000 hectares

Afforestation – forest area (2005) 9000 hectares

CO2 emissions due to deforestation (2005) 21 million tonnes

CO2 removals from the atmosphere due to afforestation (2005) 1 million tonnes

All of Canada’s forestsInformation on annual allowable cut (AAC) is reported as a proxy for wood supplyManaged forest only (236 million hectares)Equivalents per year

Sources: Canadian Council of Forest Ministers (National Forestry Database); Canadian Interagency Forest Fire Centre; National Forest Carbon Monitoring,Accounting, and Reporting System and National Inventory Report, 1990–2005

��


IndustryThe forest industry provides many benefits to workers, communities and businesses, and to Canadiansas a whole.

Forestry and logging $8.2 billion $13.1 billion $0.8 billion $0.3 billion 41 500 $2.3 billion

Paper productmanufacturing $12.8 billion $32.2 billion $3.4 billion $1.3 billion 94 100 $5.0 billion

Wood productmanufacturing $15.3 billion $33.0 billion $3.0 billion $1.5 billion 166 500 $5.2 billion

Support activitiesfor forestry 21 500

TOTAL $36.3 billion $78.3 billion $7.2 billion $3.1 billion 323 600 $12.5 billion

Annual change

increased�OR

decreased� 2005 2006 2004 2005 2004 2005 2005 2006 2005 2006 2004 2005

Source: Statistics Canada

Contributionto gross Revenue

domestic from goodsIndustry product (GDP) manufactured

(2006) (2005)

Capitaland repair

expenditures(2005)

Newinvestments

(2006)

Directemployment

(2006)

Wages andsalaries(2005)

Sources: Canadian Council of Forest Ministers (National Forestry Database); Statistics Canada; Pulp and Paper Products Council;APA-The Engineered Wood Association


ProductsThe forest industry produces a range of products such as dimensional lumber, wood pulp, paper andvalue-added products, and helps support a variety of service-based industries. The key wood productsare softwood lumber, structural panels and engineered wood products. Value-added wood productssuch as millwork (for example, doors and windows) also make up a significant portion of Canada’swood manufacturing (approximately 20 percent of total shipments). The chief pulp and paperproducts are newsprint, printing and writing papers, and market pulp. Pulp and paper products alsoinclude other papers (for instance, tissue) and packaging, although these represent a relatively smallportion of Canada’s pulp and paper production.

1.0 million m3

0.7 million m3

0.28 million m3

51 000 tonnes

1.2 million tonnes

312 000 tonnes

7.0 million doorsand windows

not available

19 000 prefabri-cated buildings

254 000 trees

894 000 litres

1.6 million m3

79.2 million m3

12.4 million m3

7.1 million tonnes

6.1 million tonnes

23.5 million tonnes

not available

not available

not available

3.2 million trees

28.1 million litres

Lumber – hardwood

Lumber – softwood

Structural panels

Paper products

Newsprint

Printing and writing paper

Wood pulp

Value-added wood products

Doors and windows

Framing products

Prefabricated buildings

Non-timber forest products

Christmas trees (2005)

Maple products (2005)

Based on valueBased on estimates

Selected forest products(2006)

Wood products

Production

Quantity

Imports

Quantity

2

1

Exports

Quantity Value Major exportmarkets

1.1 million m3

52.6 million m3

9.3 million m3

6.7 million tonnes

5.2 million tonnes

10.9 million tonnes

not available

not available

not available

2.4 million trees

24.7 million litres

$0.5 billion

$9.0 billion

$2.8 billion

$4.9 billion

$4.5 billion

$6.5 billion

$0.6 billion

$1.1 billion

$0.5 billion

$0.04 billion

$0.2 billion

U.S. (56%)

U.S. (82%)

U.S. (97.5%)

U.S. (72%)

U.S. (92%)

U.S. (42%)

U.S. (97.5%)

U.S. (98%)

U.S. (60%)

U.S. (92%)

U.S. (72%)

1

2


�

�

�

�

ExportsCanada is the world’s largest exporter of forest products, accounting for 15.9 percent of the worldtrade. The major contributors are softwood lumber, newsprint and wood pulp.

$979.9 million

$20.9 billion

$16.4 billion

$38.2 billion

U.S. (58.6%)

U.S. (71.8%)

U.S. (87.4%)

U.S. (78.1%)

Logs, pulpwood, chips, etc.

Wood pulp, newsprint, paper, etc.

Lumber, plywood, oriented strandboard, etc.

Source: Statistics Canada

2005 2006

2005 2006

2005 2006

2005 2006$28.1 billion

Commodity(2006)

Export marketvalue

Major exportmarkets

Balanceof trade

Annual changeincreased �OR

decreased �

1

2

3

1

2

3

Primary wood products

Pulp and paper products

Wood-fabricated materials

TOTAL

Glossary of Economic TermsBalance of tradeThe difference between the value of the goods and services that a country exports and the value ofthe goods and services that it imports. If a country’s exports exceed its imports, it has a trade surplus;if imports exceed exports, the country has a trade deficit.

Capital and repair expendituresCapital expenditures include the cost of procuring, constructing and installing new durable plants,machinery or equipment, whether for replacement of worn or obsolete assets, as additions to existingassets or for lease or rent to others. Also included are all capitalized costs such as feasibility studies andarchitectural, legal, installation and engineering fees; the value of capital assets put in place by firmseither by contract or with the firm’s own labour force; and, capitalized interest charges on loans forcapital projects. Repair expenditures include costs to repair and maintain structures, machinery andequipment.

Direct employmentPersons employed directly in the following industries: forestry and logging (includes timber tractoperations, nurseries and logging), industries involved in support activities for forestry (for example,fire prevention/fighting, reforestation, pest control), and paper manufacturing and wood productmanufacturing (includes production of lumber and other wood products).

Gross domestic product (GDP) The total unduplicated value of the goods and services produced in an economic area such as acountry or region during a given period. (“Unduplicated value”means that the intermediate costs ofproducing an item or service have been deducted.)

New investmentsAll expenditures made on buildings, engineering, construction, machinery and equipment (includingimports of used machinery and equipment) for the current time period. Investment in buildingsincludes transfer costs on the sale of existing assets (for example, real estate commissions).

Revenue from goods manufacturedRevenue from the sale of goods manufactured using materials owned by the establishment as well asfrom repair work, manufacturing service charges and work contracted to others.

Wages and salaries The earnings, in cash or in kind, of Canadian residents for work performed before deduction of incometaxes and contributions to pension funds, unemployment insurance and other social insuranceschemes.


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