FORESTRY INNOVATION INVESTMENT NOVEMBER 2013 · 2015-10-09 · British Columbia - Supplying...

REPORT TO STAKEHOLDERS

FORESTRY INNOVATION INVESTMENT NOVEMBER 2013

2013

Front and inside cover images: construction of the Yuriagi Public Market in Natori Japan, the second development under the Canada Tohoku Reconstruction Project.

British Columbia - Supplying Products to the World

Working Together

Message from the Minister

Message from the CEO

An Overview of FII

Financial Information and Performance Measures

Market Trends

Market Reports

20 China Market Report

24 United States Market Report

27 Japan Market Report

31 South Korea Market Report

34 India Market Report

37 Europe Market Report

Wood First in B.C.

Market Outreach Program

Industry Resources

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Contents

BRITISH COLUMBIA - SUPPLYING WOODPRODUCTS TO THE WORLD

USA CHINA JAPAN EU

OTHER

SOUTHKOREA

2012 B.C. EXPORTS BY VALUE (MILLIONS)

B.C.

Sha

re o

f Sof

twoo

d Im

port

s (v

olum

e) b

y D

estin

atio

n

A DIVERSIFIED PORTFOLIO AN EXPORT LEADER

83%

54%

29%

10%12%

5%3%

1%1.5%1.5%0.5%

2003 2012

1%

Forest Products$10,160

$1,762All Other

$6,175Wood Products

$869Chemicals

$1,005Fabricated

Metals

$2,720Agriculture,Fish + Food

$5,679Coal

$3,426Machinery

+ Equipment

THE WORLD’S LARGEST EXPORTER OF SOFTWOOD LUMBER B.C. LEADS IN SUSTAINABLE FOREST MANAGEMENTB.C. has the largest share of third-party forest certification in the world.

A GLOBAL LEADER IN THE FOREST SECTOR

BRAZIL8 million ha

GERMANY8 million ha

NORWAY9 million ha

BELARUS13 million ha

AUSTRALIA11 million ha

POLAND21 million ha

FINLAND21 million ha

RUSSIA31 million ha

SWEDEN23 million ha

USA49 million ha

CANADA(Including B.C.)148 million ha

B.C. 52 million ha

ASIA’S SHARE OF B.C.’S WOOD EXPORTS

13.5% 41%2003 2012

CANADA(Including B.C.)24.8 million m3

RUSSIA19.4 million m3

SWEDEN11.8 million m3

FINLAND6.4 million m3

GERMANY6.41 million m3

B.C.17.4 million m3

$3,985Pulp and Paper

$3,456MetallicMinerals

$2,229Natural Gas& Energy

Source: B.C. Stats

Source: World Agriculture and Food Organization, 2012 Source: certificationcanada.org 2012

Source: B.C. Stats

Volu

me

= ne

t cub

ic m

etre

s

WHERE B.C. SELLS ITS WOOD

$1 = $2.80

FII, industry, the federal government and research institutions are pooling financial and technical resources to grow the demand for B.C.’s wood products and building systems around the world.

For every dollar FII invests, $2.80 in marketing activity is generated through funding by industry, the federal government and other partners.

WORKING TOGETHER – BUILDING GLOBAL MARKETS FOR B.C. WOOD PRODUCTS

WORKING TOGETHER MAKES SENSE

PARTNERS IN MARKET DEVELOPMENT

Source: B.C. Stats, 2012 Data* Other markets account for $280 million** Wood products include softwood lumber, plywood, OSB, MDF and particle board

*For a full list of partners, see pg 7.

$4.7 BILLION IN B.C. WOOD PRODUCT EXPORTS

For more details, see pg 37

EUROPE

$132 MILLION


UNITED STATES

$2.4 BILLION


INDIA

$8.7 MILLION


SOUTH KOREA

$66.9 MILLION


JAPAN

$711 MILLION


CHINA

$1.1 BILLION

Une initiative duConseil canadien du bois

Forestry Innovation Investment4

BRITISH COLUMBIA - SUPPLYING WOODPRODUCTS TO THE WORLD

USA CHINA JAPAN EU

OTHER

SOUTHKOREA

2012 B.C. EXPORTS BY VALUE (MILLIONS)

B.C.

Sha

re o

f Sof

twoo

d Im

port

s (v

olum

e) b

y D

estin

atio

n

A DIVERSIFIED PORTFOLIO AN EXPORT LEADER

83%

54%

29%

10%12%

5%3%

1%1.5%1.5%0.5%

2003 2012

1%

Forest Products$10,160

$1,762All Other

$6,175Wood Products

$869Chemicals

$1,005Fabricated

Metals

$2,720Agriculture,Fish + Food

$5,679Coal

$3,426Machinery

+ Equipment

THE WORLD’S LARGEST EXPORTER OF SOFTWOOD LUMBER B.C. LEADS IN SUSTAINABLE FOREST MANAGEMENTB.C. has the largest share of third-party forest certification in the world.

A GLOBAL LEADER IN THE FOREST SECTOR

BRAZIL8 million ha

GERMANY8 million ha

NORWAY9 million ha

BELARUS13 million ha

AUSTRALIA11 million ha

POLAND21 million ha

FINLAND21 million ha

RUSSIA31 million ha

SWEDEN23 million ha

USA49 million ha

CANADA(Including B.C.)148 million ha

B.C. 52 million ha

ASIA’S SHARE OF B.C.’S WOOD EXPORTS

13.5% 41%2003 2012

CANADA(Including B.C.)24.8 million m3

RUSSIA19.4 million m3

SWEDEN11.8 million m3

FINLAND6.4 million m3

GERMANY6.41 million m3

B.C.17.4 million m3

$3,985Pulp and Paper

$3,456MetallicMinerals

$2,229Natural Gas& Energy

Source: B.C. Stats

Source: World Agriculture and Food Organization, 2012 Source: certificationcanada.org 2012

Source: B.C. Stats

Volu

me

= ne

t cub

ic m

etre

s

WHERE B.C. SELLS ITS WOOD

$1 = $2.80

FII, industry, the federal government and research institutions are pooling financial and technical resources to grow the demand for B.C.’s wood products and building systems around the world.

For every dollar FII invests, $2.80 in marketing activity is generated through funding by industry, the federal government and other partners.

WORKING TOGETHER – BUILDING GLOBAL MARKETS FOR B.C. WOOD PRODUCTS

WORKING TOGETHER MAKES SENSE

PARTNERS IN MARKET DEVELOPMENT

Source: B.C. Stats, 2012 Data* Other markets account for $280 million** Wood products include softwood lumber, plywood, OSB, MDF and particle board

*For a full list of partners, see pg 7.

$4.7 BILLION IN B.C. WOOD PRODUCT EXPORTS


EUROPE

$132 MILLION


UNITED STATES

$2.4 BILLION


INDIA

$8.7 MILLION


SOUTH KOREA

$66.9 MILLION


JAPAN

$711 MILLION


CHINA

$1.1 BILLION

Une initiative duConseil canadien du bois

Report to Stakeholders November 2013 5



A major strength of the B.C. forest sector is its ability to work together for the best interests of British Columbia and Canada. Through this collective effort, stakeholders are able to leverage their strengths to develop and diversify markets at home and abroad, and to maintain B.C.’s position as a global leader in wood product innovation and export.

FII is proud to work with the following principal partners, stakeholders and clients.

Forest Industry Associations and Organizations

• APA- The Engineered Wood Association• B.C. Shake & Shingle Association• B.C. Wood Specialties Group• Binational Softwood Lumber Council• Canada Wood Group• Canadian Wood Council• Canadian Wood Council – WoodWORKS! BC• Cedar Shake and Shingle Bureau• CertiWood• Coast Forest Products Association• Council of Forest Industries• Forest Products Association of Canada• Softwood Lumber Board• Western Red Cedar Export Association• Western Red Cedar Lumber Association• Wood Pellet Association of Canada• Wood Products Council• Independent Wood Processors Association of B.C.

Post-Secondary and Research Institutions

• Athena Sustainable Materials Institute • Consortium for Research on Renewable Industrial Materials• Dovetail Partners • FPInnovations• University of British Columbia • NEWBuildS

Government Organizations

• Government of British Columbia- Ministry of International Trade - Ministry of Jobs, Tourism and Skills Training- Ministry of Forests, Lands and Natural Resource Operations

• Government of Canada- Natural Resources Canada- Foreign Affairs, Trade and Development Canada

• Government of Alberta

Working Together


Message from the Minister of International Trade

British Columbians agree that a healthy forest sector is important to the province and all signs indicate that our forest sector is gaining strength. The output of the forest sector, whether measured in volume or value, is set to grow in 2013 for the fourth consecutive year.

International trade is a major reason for this success. British Columbia has the enviable position of being the world’s largest exporter of softwood lumber products and the Province is committed to supporting the industry in maintaining this leadership position. Reflecting this priority, developing and diversifying international markets has been a mainstay of provincial policy since Forestry Innovation Investment was created in 2003 as the Government’s market development agency for forest products.

In the 10 years since then, FII, Natural Resources Canada and industry have worked together with impressive results. The Chinese market has grown from a very small consumer of B.C. wood products to become the Province’s second largest market, after the United States. In total, Asia now accounts for more than 40 per cent of all foreign sales. In the upcoming year, stakeholders will see continued efforts by FII and the Province, in partnership with the federal government and industry, to further develop Asian markets, including a targeted program to open new markets in India.

Growing markets, however, does not just occur overseas. Here in B.C., the Province is strengthening interest in building and designing with wood, investing in the development of innovative, new approaches to wood construction, increasing the capacity of our value-added manufacturers, and positioning B.C. as a global leader in wood manufacturing, design and use. Across North America, the reTHINK Wood program is delivering effective messaging that is resonating with consumers. These efforts to make wood the “green” product-of-choice for builders and consumers will continue to gain momentum into 2014.

Through the BC Jobs Plan and the Forest Sector Strategy for British Columbia, the Province remains committed to working with industry, community and government stakeholders to ensure a healthy, sustainable forest sector and to support a globally competitive industry that creates jobs and opportunities for British Columbians.

Teresa WatMINISTER OF INTERNATIONAL TRADE, AND MINISTER RESPONSIBLE FOR THE ASIA PACIFIC STRATEGY AND MULTICULTURALISM


Message from the CEO

In the 10 years since FII was created as a Crown corporation, its mandate has been heavily oriented to working with the B.C. forest industry and with other government agencies to enhance the marketing of forest products around the world. My colleagues and I have a particular interest in creating new long-term demand and to this end our efforts have focused on opening new markets in Asia, as well as on expanding the use of wood in the vast non-residential construction sector here in North America.

FII also works to ensure that customers for the province’s forest products have access to factual, consistent and credible information about the environmental benefits of using wood products, the range of wood products and construction technologies available from B.C., and the facts on B.C.’s forest management practices. In recent years, FII’s mandate has expanded to include the Wood First Initiative aimed at making B.C. a world-class centre of excellence in manufacturing and using B.C. wood products.

In discharging our mandate, we have assumed two basic functions. First, FII is a major funding agency, using about half of its budget to share the cost of activities that other organizations design, propose for funding, and ultimately deliver. This partnering approach to market development continued to yield good value for the Province in 2012/13, with each dollar from FII generating marketing activity of $2.80 through funding by industry, the federal government and other partners.. Second, our staff directly initiate pioneering work on behalf of industry to stimulate new products and new market demand in places like India where the entry requirements and initial risk make it prohibitively expensive for individual companies to engage. This work is led by our employees in Vancouver and those of our subsidiary companies in China and India.

This Report to Stakeholders explains the priorities and strategies currently driving FII and its funding recipients, highlights accomplishments in 2012/13, and describes activities underway in 2013/14.

My colleagues and I welcome comments on this report, or on any aspect of FII’s programs.

Ken BakerCEO


An Overview of FII

The B.C. forest sector is recognized globally for its production of high quality wood products, leadership in sustainable forest management, innovation in harvesting and processing, and the development of advanced wood technologies and building systems. More than 50,000 British Columbians are directly employed in the sector, and more than 40 per cent of regional economies across the province are dependent on forestry.

Maintaining B.C.’s global leadership in forestry requires constant innovation and continuing efforts to develop and diversify markets. Forestry Innovation Investment was established in 2003 as the provincial agency responsible for maintaining and expanding markets for B.C. forest products. FII works in partnership with the forest industry, the Government of Canada, research institutions and other stakeholders to deliver innovative, forward-looking programming that responds to today’s domestic and international market dynamics and challenges, as well as tomorrow’s opportunities.

Because more than 80 per cent of B.C.’s forest industry output is sold in foreign markets, FII’s market development efforts link directly to forest sector activity and the resulting job creation. A strong, healthy forest sector encourages investment and innovation and directly supports regional economies across the province.

As directed by the province, the mandate of FII is to:

• Position British Columbia as a global supplier of world-class environmentally friendly forest products;

• Actively maintain, create and diversify demand for B.C. forest products in Canada and in key world markets, helping break down non-tariff trade and market barriers to ensure opportunities for B.C. forest products;

• Help break down non-tariff trade and market barriers to ensure opportunities for B.C. forest products;

• Work with the forest industry to promote B.C.’s forest products and forest management to the global marketplace; and

• Help ensure that the forest sector, through product development and strong international sales, continues to be a leading contributor to the B.C. economy.

Value Added Industry Development Bears Fruit

Following several very tough years in the trading environment for value-added products from B.C., trade development efforts bore fruit in 2012/13 with solid sales reported by value-added producers. Japan and the U.S. continue to be strong markets for the sector with over $18 million in sales in 2012/13 linked to specific market development efforts.

The Global Buyers Mission is the value-added industry’s key promotional and networking event. Held annually in Whistler B.C., the GBM draws buyers from 21 countries and, in 2012, generated sales opportunities representing over $48 million in new business. The GBM celebrated its 10th anniversary in 2013.

Minister of Forests, Lands and Natural Resource Operations Steve Thomson addresses participants at the 2013 Global Buyer’s Mission, Whistler, B.C.


Vision, Mission and Values

VISION The British Columbia forest sector is innovative, diverse and prosperous, based on sustainable forest practices and a commitment to continuous product and market development.

MISSION To develop and diversify domestic and international markets for B.C. forest products by working collaboratively with industry, government, and institutional partners, and by making well balanced investments that respond to government and industry priorities while maximizing value to the Province.

VALUES INNOVATION – FII anticipates changing market, economic and geo-political forces that impact the forest economy and invests in new programs, research and product development that offer competitive advantages to the forest sector.

CREDIBILITY AND INTEGRITY – FII activities and funded projects are based on government and industry priorities and strategies developed in partnership with stakeholders. FII services are transparent, timely and openly communicated.

COLLABORATION – FII works in partnership with key stakeholders in industry, the research sector and government to develop initiatives and ensure programs are delivered effectively.

ENGAGEMENT – FII is actively involved in the market and product development programs it funds and delivers. FII not only responds to government and industry priorities, but also takes the initiative to identify new market opportunities and counsel industry and government on emerging issues.

RISK MANAGEMENT – FII is oriented towards growing markets, but recognizes that there are risks in pursuing opportunities. As much as possible, investment decisions are firmly rooted in current, relevant, and comprehensive market information that provides a sufficiently compelling business case for each market initiative.

ACCOUNTABILITY – FII strives for transparent decision-making and investment processes. FII staff have a duty to ensure the appropriate use of the public funds entrusted to them. Activities are expected to be founded on clear objectives, generate a positive return and have well‐developed performance measures.

FII uses a number of performance measures to track progress against its mandate and the direction set by the Province each year through the Government’s Letter of Expectations (GLE). For each performance measure, targets are set for three years and are updated annually to align with the GLE, changing market conditions, or any other change in FII priorities or business activities. More details are available in the FII Service Plan 2013/14 – 15/16 (www.bcfii.ca/service-plan).

FII also tracks the results of every program that it funds, including those jointly funded with the Government of Canada and other organizations. Details on the FII Performance Management Framework are available at (www.bcfii.ca/framework).


Program Areas and Organizational Structure

FII’s two business units, Operations and Corporate Services, are responsible for the following program areas and activities.

OPERATIONS

MARKET INITIATIVES

• Research opportunities in new and emerging markets, and initiate early market exploration activities

• Support industry trade associations in developing and/or expanding markets and market segments for B.C. forest products

• Support industry efforts to mitigate market access and plant health issues

• On behalf of the forest sector, manage outreach and relationship building with Chinese authorities and central government agencies

• Undertake early-stage market development in India

WOOD FIRST • Champion the Province’s Wood First priorities and encourage expanded wood use in B.C.

• Encourage the development of a pro-wood culture in B.C., and position B.C. as a leader in wood innovation

• Encourage product innovation and the introduction of new wood building systems

• Encourage a robust valued added sector in B.C., through enhanced capacity and competitiveness

MARKET OuTREACH

• Promote the benefits of wood as a green building material

• Develop factual and science based materials to position wood’s environmental benefits and climate change mitigation potential

• Promote B.C. as a world leading supplier of forest products

• Ensure markets are aware of B.C.’s sustainable forest practices and high environmental standards

CORPORATE SERVICES

FINANCE & ADMINISTRATION

• Ensure financial reporting to government standards

• Provide Human Resources, IT and office services to meet organizational needs

• Oversee budget and planning controls

CORPORATE RELATIONS

• Compile and share export data and analysis on market trends

• Support Government and industry trade initiatives

• Provide corporate communication and analytical services to meet internal and external needs


2003

FII incorporated

B.C. Market Outreach Network established to promote B.C.’s sustainable forest practices and respond to advocacy campaigns targeting B.C. forestry

Market Development Program established to identify and develop new markets for B.C. forest products, with an emphasis on Asia-Pacific

2004

Major focus on hiring permanent staff, establishing subsidiary company in China, and building office in Shanghai

2005

Demonstration wood-frame housing built in Sumatra (Indonesia) following December 2004 earthquake and tsunami to test logistics and social parameters of disaster reconstruction

2006Completion of Dream Home Canada office building in Shanghai, China, reflects priority being placed on China market development

2006

Mountain Pine Beetle Program introduced to support industry response to outbreak, including market development, product research and manufacturing innovation

2007

Business Innovation Program introduced to support marketing and product innovation in value-added sector

2008

$8 million Canada-B.C. Wenchuan Earthquake Reconstruction Project offers humanitarian support to China and raises profile of wood-frame construction

2009

FII responds to growing consumer interest by promoting “green” benefits of B.C. wood products

2010

FII uses Olympic venues to showcase wood use and launch marketing program targeting non-residential sector across North America

2011

FII assumes management of Wood First Initiative to create a “culture of wood” in B.C.

2012

FII scales back its subsidiary in China, and establishes a presence in India to initiate a market development program

2013

First two tsunami reconstruction projects in Japan (a library in Natori and a public market in Yuriage) are officially opened.


Financial Information and Performance Measures

2012/13 Expenditures and 2013/14 Budget

FII operates on the basis of an annual funding allocation from the Province, often augmented by funding from the Province and others for particular applications. The actual expenditures in fiscal 2012/13 and the 2013/14 projections are provided below:

Statement of funding and expenditures by programComparison to budget and prior year

(in thousands of dollars) 2012/13 2013/14 Actuals Budget

Revenue: Government contributions - Provincial $ 17,758 $ 17,140Government contributions - Federal 624 740Other revenue 1,004 545Transferred from (to) deferred revenue (550) -Investment income 38 -

$ 18,874 $ 18,425

Program expenses: Funding recipient initiatives $ 9,021 $ 8,800Market initiatives and outreach

FII Vancouver 4,442 3,985FII China 2,536 2,600FII India 873 1,740

Corporate Services 1,348 1,300Total expenses $ 18,220 $ 18,425

Annual surplus $ 654 $ -

Minister of International Trade Teresa Wat (front row) and Isoo Sasaki Mayor of Natori City Japan pictured with representatives of B.C. forest product companies that contributed to the Canada Tohoku Reconstruction Project.


In 2012/13, FII received funding of $17.8 million from the Government of B.C. consisting of base funding of $17.05 million in operating revenue, $0.55 million in capital funding and an additional $0.2 million from the Ministry of Jobs, Tourism, and Skills Training towards the start-up costs of the new joint office in India1,2. FII received an additional $0.62 million from Natural Resources Canada of which $0.56 million was for the joint India initiative. In 2012/13 the private sector provided FII with $1.0 million to share the cost of delivering certain activities undertaken in collaboration with industry trade associations.

During the year, FII spent a total of $16.4 million to deliver market outreach and market development initiatives in Asia, the U.S., Canada and Europe. This amount included $8.5 million committed to partly or fully pay for product and market development activities proposed and ultimately delivered by trade associations. Included in the funding to trade associations and related institutions was $2 million directed at supporting the Province’s emerging Wood First priorities, such as development of cross-laminated timber technology and manufacturing capacity.

Together, these combined expenditures leveraged over $17.8 million in contributions from industry and the federal government. For the programs that FII funded with trade associations and others in 2012/13, the cost-sharing was as follows:

FII share: 36 % Natural Resources Canada and other government agencies share: 40 % Forest industry share: 24 % An additional $1.7 million was leveraged through activities directly delivered by FII staff.

1 In June 2013, the Minister of International Trade assumed responsibility for FII and associated funding allocations.2 The new office has been designed to showcase a variety of B.C. wood products.

Market Priorities

FII’s revenues and expenditures are expected to decrease by roughly $0.5 million from $18.9 million in 2012/13 to a budgeted $18.4 million for fiscal 2013/14.

FII will continue to rely on trade associations to develop and deliver the bulk of market development programs in key markets with internally directed initiatives augmenting these efforts in select areas. In China, FII’s focus has shifted to building deeper and broader relationships with Chinese government officials at all levels, as well as with state-owned development companies, particularly in providing architectural and engineering design advice.

In 2012, FII established a new subsidiary company in Mumbai, India, which is now sharing brand new office space in concert with trade and investment representatives of the Ministry of International Trade. Current budget projections for FII’s India market initiatives are $1.0 million with an additional $0.6 million of leveraged funding through a cost-share agreement with Natural Resources Canada.

A summary of projected funding allocations by region for 2013/14 is presented below:

3 ‘Funding Recipient Initiatives’ refers to funding provided to industry associations and other groups to carry out market development activities they propose. ‘Funding

Recipient Initiatives’ also includes $2.3 million under B.C./Canada directed to Wood First Initiatives. Amounts include associated program administration.

‘FII Vancouver Market Initiatives’ refers to funding for product and market development activities managed directly by FII, including market research, market outreach

and demonstration projects.

‘FII China Market Initiatives’ refers to activities directly managed by FII Consulting (Shanghai) Co. Ltd.

‘FII India Market Initiatives’ refers to funding activities to establish a subsidiary company in Mumbai, India and conduct market research managed by FII.

‘FII Wood First Initiatives’ refers to funding for FII’s internally initiated projects related to Wood First, such as commissioning technical studies of cross-laminated timber.

‘Corporate Services’ refers to FII’s accounting and financial reporting and general office functions that support all program delivery, transparency and government

regulatory requirements.


Market Trends

Global Market Trends

2012 was a year when national and regional factors had a significant impact on softwood consumption. The continued economic recovery in the United States translated into growing demand, imports and rising prices for softwood lumber products, all to the benefit of B.C. producers. Growth was also reported in South Korea where construction of wood-frame homes reached an all-time high.

In China, a tightening of housing regulations led to a drop in softwood consumption. Despite this, B.C. increased its share of China’s imports during the year (see next section). Japanese demand also fell slightly and combined with a weaker valuation of the Yen against foreign currencies, translated into a drop in all softwood imports.

Europe continued to grapple with economic uncertainty in many member states of the E.U., with some national economies contracting. Housing starts and softwood production dropped as a result, with imports particularly hard hit, down by 27 per cent. In emerging economies, such as India and Vietnam, softwood consumption was similar to 2011 levels.

Trends and emerging issues of relevance in 2013 include the continued recovery of the U.S. housing market and the potential for a “super-cycle” of high prices for softwood products due to constrained supply and increasing demand; continued economic uncertainty in Europe; a recovery in the Chinese housing market; a push for greater wood use in Japan but with a bias towards domestic suppliers; and a continued strong market in South Korea.

4 Based on sales of five softwood products (lumber, plywood, OSB, particleboard and MDF).5 The size of the circles is proportional to the total size of each market for the five softwood product lines. Note: China consumption data includes hardwood plywood.



Markets for B.C. Wood Products

Improvements in the U.S. housing market in 2012 helped B.C. forest product exports post a third straight year of growth. B.C. exports of softwood lumber rose 5.6 per cent to 24.2 million m3, the highest volume since 2007. Sales to the U.S. recovered by more than 11 per cent to 12.5 million m3. The volume sold to China climbed 2.3 per cent to reach another all-time high at 7.5 million m3 (valued at $1.06 billion). Led by the resurgence of the U.S. and growth in China, volume shipped to these two customers represented nearly 83 per cent of all softwood lumber sold by B.C. Other notable B.C. customers included those in Japan (2.4 million m3), Taiwan (386,000 m3), South Korea (305,000 m3) and the EU27 (204,000 m3).

Housing starts in the U.S. totaled 781,000 units in 2012, up from 609,000 the previous year. Based on Census Bureau data, the number of new homes sold in January 2013 was 15 per cent higher than in December 2012 and nearly 30 per cent higher than a year earlier. Furthermore, the sales of new homes were at the highest level since July 2008, about two months before the bursting of the housing bubble. Due to this buying frenzy, in February 2013 there was only a 4.1 month supply of new homes available for sale on the market – the tightest supply since 2005. All these positive housing numbers, along with supporting economic data, are encouraging signs for the wood products industry.

China’s demand for softwood products dropped in 2012 as economic growth slowed, but imports from B.C. increased. GDP growth in 2012 was recorded at 7.8 per cent, compared to the 9.3 per cent in 2011. For the second year in a row, B.C. sold more than $1 billion worth of softwood lumber to China. Led by B.C. exports, Canada was again China’s largest softwood lumber supplier in 2012, followed by Russia and the U.S.

Japan continued to recover from the destructive earthquake and subsequent tsunami which devastated entire regions in the northern part of the country. Housing starts climbed 5.8 per cent in 2012 to 882,797 units, but total consumption of softwood lumber was down slightly (-0.8 per cent). With increased domestic production, imports of softwood lumber fell (-4.3 per cent to 6.3 million m3) as did imports of plywood (-3.8 per cent to 3.5 million m3).

Exports of structural lumber to South Korea, B.C.’s fourth largest market for lumber, were up 3.1 per cent by volume and 9.3 per cent by value over 2011 driven by continued strength in the housing and real estate sector, including a growing use of lumber in structural applications. B.C. lumber sales to the European Union were down in 2012 in the face of both excess supply within Europe, and rising demand for B.C. product from the U.S.

A more detailed analysis of global and B.C. trends in export markets is available in two reports updated annually by FII:

• British Columbia Forest Products Trend Analysis in Export Markets 2012 Volume 1 (Global Market Overview and B.C. Exports); and

• Volume 2 (Export Markets Summaries).

Both are available online at (www.bcfii.ca/stats).



Market Type

• B.C.’s second largest export market for softwood lumber, on a volume basis, after the United States

• Significant market for softwood lumber in industrial applications with large potential for higher grade lumber in wood frame construction

B.C. Position

• Largest supplier of softwood lumber products with a 53 per cent share of softwood lumber imports and a 50 per cent share of commodity softwood imports (lumber, plywood, OSB, particleboard and MDF)

B.C. Export Sales

• 2012: 7.5 million m3 of commodity wood products valued at $1.1 billion

• 2013 (through July): 4.3 million m3 valued at $761 million

Market Overview

China’s economy continued to grow in 2012, but at the lowest rate since 1999. During the year, new housing construction was dampened as government moved to keep housing affordable. This included restricting speculative investors by placing restrictions on home purchases for new migrants to key cities and by increasing requirements on down payments for first mortgages from 20 to 30 per cent. Even with these restrictions, residential construction, about 56 per cent of all construction, was estimated at 6.2 million m2, up 8.4 per cent over 2011. Floor space under construction in 2012 grew 8.7 per cent to 11.2 million m2.

As prices for softwood lumber spiked upwards in 2012, there was only moderate softening in the China market with softwood lumber imports dropping by 4.7 per cent to 14.2 million m3. B.C. bucked that trend by increasing lumber shipments 1.5 per cent to 7.5 million m3 and maintaining market share of almost 53 per cent. While B.C. lumber exports grew, softwood lumber shipments to China from non-Canadian sources fell by 10.5 per cent to 6.6 million m3 during the year.

Limited availability of logs led to decreases in lumber production to 19.3 million m3, down 4 per cent from 2011.

Market Reports

CHINA


Market Strategy

Over the past ten years B.C. established itself as China’s largest source of softwood lumber by supplying the fast-growing commercial, industrial and remanufacturing markets. Concurrently, extensive outreach was used to open new avenues in residential construction by informing and educating regulators, architects, engineers and developers on the advantages of building with wood, particularly for mid-rise residential buildings.

This strategic focus continues, with an emphasis on increasing the use of wood in mid-rise and multi-family construction. Specific priorities include profiling the use of wood “in-fill” walls in mid-rise and high-rise construction, wood-truss roofing, and hybrid construction that pairs wood with concrete, steel and other materials. Efforts are also underway to develop niche opportunities in the villa and townhome markets, both in new resort communities emerging across China, and in districts such as Pudong (Shanghai) where lower density housing is feasible.

The market development program in China is delivered by the Canada Wood Group (CWG) in cooperation with FII China, and with funding support from Natural Resources Canada. CWG leads training, research and market promotion campaigns to encourage the adoption of wood building systems and structural and appearance grade products. FII China is responsible for government relations and liaison with state-owned development companies. In large measure, it is FII China’s role to provide “front-end” support for government policy makers, and architectural and engineering advice for developers and builders. CWG provides technical expertise on building and fire codes, wood frame construction training, and quality support on job sites.

Select Accomplishments 2012/13

• B.C. maintained its share of the Chinese market despite a slowdown in China’s economy. As a result, sales of B.C. softwood lumber to China topped $1 billion in 2012 for the second consecutive year.

• CWG provided technical advice and quality support to 28 large builders and designers to accelerate their adoption of wood.

• The Council of Forest Industries hosted a mission of Chinese senior media officials to B.C. in 2012. The tour resulted in high profile coverage of wood products in China, including a nationally broadcast, 10-minute television feature on the use of wood in construction.

• The Canada Wood College trained more than 1,200 builders and designers, with 80 per cent of participants reporting that they would be making greater use of wood in future projects.

• CWG’s quality support advisors conducted more than 500 job site visits to support the proper use of Canadian wood-frame construction practices and materials.

• More than 43 per cent of architects, builders and specifiers said they considered Canada/B.C. as their preferred supplier of forest products.

• 2012 saw the launch of new vocational schools to increase training opportunities for local construction trades. Under a partnership with the new China Modern Wood Frame Construction Industry Association, CWG will deliver technical training and support the development of local wood frame construction programs.

Canada Wood China seminar on wood frame construction

Developers’ mission from Jiangsu Province, China visits FPInnovations, September 2012.


Opportunities and Threats for B.C.

• China’s continued shift from log to lumber imports suggests new opportunities for B.C. lumber suppliers.

• Rebounding markets in the U.S. are welcome news for the industry, but as demand and prices increase in North America, there is some concern that Chinese buyers may look to alternative sources, especially Russia.

• Declining volumes of economically viable Mountain Pine Beetle-killed fibre in the B.C. interior may constrain future growth of B.C. lumber shipments to China. In fact, the volume of B.C. lumber sold to China may have plateaued at about 7.5 million cubic metres per year. The challenge is to invoke higher-value uses for that lumber, which in turn would support higher unit prices.

• The medium and longer-term impacts from reductions in Russia’s log export tariff are yet to be determined. China’s largest customers (U.S. and Europe) now require third-party certification of wood-product environmental attributes. Consequently, while the lower-than-expected tariffs on logs flowing from Russia to China may reduce the cost of logs, certification requirements are likely to dampen Chinese demand for Russian logs, which are typically uncertified.

Focus in 2013/14

FII China is currently working with industry partners to update the China marketing strategy which will guide efforts over the next three years. In the interim, the current focus on training, research, market promotion and quality support will continue. The current strategy also includes a value-added component to encourage growth as demand for more sophisticated western style interior finishing, including western red cedar products, continues to increase. In 2013/14, the Coast Forest Products Association is working to promote coastal species to Chinese customers to increase their understanding of appropriate grades and properties for use in manufacturing, finishing or landscape applications.

For FII China, the completion of the last two demonstration projects in 2012/13 (Tianjin Apartment Project and Sanlin Affordable Housing Project) marked a shift in focus away from new demonstration work and towards increasing the profile of existing projects. Now the strategic focus is to capitalize on the results of the more than 20 demonstration projects completed in China by promoting the features and benefits of these structures to the Chinese construction and design community.

Providing Wood Frame Construction Technical Expertise to China’s Largest Developers

With technical support from FII China and CWG, Vanke, China’s largest developer, completed another significant wood frame project in the city of Qingdao. The one-storey 1,800-square-meter heavy timber structure will serve as a visitor center and sales office for Vanke’s latest development in the city. The building consists of a heavy timber glulam structure with curved 2x6 roof panels. Both the project’s wood frame builder and its structural engineering firm are based in Canada. All of the wood materials including glulam, J-grade SPF lumber and plywood were sourced from Canada.

Improving the Quality of Wood Frame Buildings

FII China and CWG signed an agreement to assist Shanghai-based and state-owned Shanghai Industrial Investment Company (SIIC) with design, technical and wood frame construction quality support. The efforts have paid off as an 82-unit villa and clubhouse project recently passed the official audit under 3A—National Standard for Residential Building Performance Evaluation Technology Certification. Issued by China’s Ministry of Housing and Urban-Rural Development and AQSIQ11, the standard is one of the most recognized awards for building performance in China.

Building Momentum – China’s First Wood Frame Construction Association

Under the auspices of the Joint Working Committee of the Ministry of Housing and Urban-Rural Development (MOHURD), CWG and FII China helped establish the China Modern Wood Frame Construction Technology Industry Association in 2012. The WFCA is China’s first industry association dedicated to promoting wood frame construction. Members include builders, developers, designers and timber suppliers. The association will cooperate with MOHURD to advance regulations favorable to wood frame construction and to increase knowledge and quality standards throughout the industry.

Vanke Tsin Tao Pearl Visitor Centre

Officials from FII, Natural Resources Canada and Canada Wood Group visit the SIIC wood frame project in Shanghai


Market Type

• B.C.’s largest market for wood products

• Mature single-family housing sector dominated by wood-frame construction

• Large non-residential construction sector dominated by non-wood construction materials

• Significant multi-storey, multi-family housing construction, with increasing use of wood

B.C. Position

• Market leader with a 54 per cent share of softwood lumber imports representing almost 15 per cent of U.S. wood consumption (B.C. has a 48.8 per cent share of total softwood commodity product imports)

B.C. Export Sales

• 2012: 13.8 million m3 of commodity softwood products valued at $2.4 billion

• 2013 (through July): 9.1 million m3 valued at $1.9 billion

Market Overview

The U.S. presently accounts for just over half of all B.C. softwood commodity lumber exports, or 12.5 million m3 in 2012. GDP growth of 2.2 per cent in 2012 reflected the U.S. economy’s continued, albeit slow, path to recovery. Supported by a stronger jobs market and lower inflation, the housing market began to show signs of a significant rebound during the year.

Total housing starts were up by 28 per cent. Multi-family starts were a big part of that growth, increasing by almost 38 per cent in 2012. Aside from the increase in numbers of starts, the composite index of U.S. house prices showed gains of between 6 and 7 per cent in 2012. Similarly, composite lumber prices saw steady rises in 2012 on the back of strengthening demand, with a surge in December to US$400 per thousand board feet (Western SPF No. 2 & Btr), the highest level since October 2005.

On the market access front, the 2006 Softwood Lumber Agreement (SLA) was extended to October 2015, and an SLA-related complaint against B.C. was dismissed by the London Court of International Arbitration, helping to ensure market stability in the near term.

uNITED STATES

Enso Apartment Project, Atlanta Georgia



6 The SLB, now the primary funder of the WoodWorks program, is a private sector organization created when a majority of the companies comprising the softwood

lumber industry in the US and Canada (67 per cent of softwood lumber companies representing 80 per cent of U.S. softwood lumber shipments and imports) voted in a

referendum to approve creation of a check-off system to fund a unified softwood lumber promotion program.

Market Strategy

As wood is already the preferred building material for single-family homes in the U.S., the FII market development strategy focuses on two components. The first is expanding wood use in non-residential construction and in the multi-storey, multi-family residential segment. Much of this effort is delivered by the Wood Products Council in partnership with Natural Resources Canada and, as of 2012, the Softwood Lumber Board (SLB)6 through the US WoodWorks program. The program was the first market development initiative to receive funding support from the SLB, confirming that the industry places a high priority on developing the non-residential and multi-family housing markets. Although a relatively new program, US WoodWorks has established a solid track record in increasing wood use in the non-residential sector and convincing designers and developers to convert projects to wood from other materials.

The second component of the U.S. market development strategy involves high-value niche markets. Emphasis is placed on promoting value-added products and packages, including resort homes, log and timber frame homes, pre-fabricated housing, cabinetry, millwork and finishings, and other end-uses supported by B.C. manufacturers. The strategy also seeks to grow the market share of western red cedar in the repair and remodeling and outdoor landscaping market.

A new area of opportunity involves expansion into specialty products for the oil and gas sector (timbers for rig mats, wood fibre products for spill control, and high-end pre-fabricated housing for new developments in oil exploration areas).


• $58 million in increased wood sales were directly attributed to FII-funded programs in the U.S. in 2012.

• 10,994 building and design professionals received training in using wood products in their building projects via Wood Solutions Fairs, lunch-and-learn workshops and educational seminars run by US WoodWorks in partnership with various associations of architects and engineers.

• US WoodWorks staff provided support to designers, engineers and architects for over 104 separate building projects.

• A first-ever cross-laminated timber symposium attracted more than 100 attendees and a range of international speakers. Following the CLT Symposium, a U.S. version of the CLT handbook was distributed in the U.S.

• 97 per cent of architects/builders/engineers who received training through the US WoodWorks program reported an increased ability to incorporate more wood into their projects.

• Opportunities in the resort and high-end pre-fabricated housing markets led to more than $3 million in new business for B.C. value-added producers. For example, Norelco Cabinets, with support from BC Wood Specialties Group, completed two new projects in Hawaii valued at more than $1.6 million.

Central Carolina Community College, Sanford, North Carolina

Non-residential Market

With increasing interest among engineers and architects in the U.S. regarding cross-laminated timber (CLT), the US WoodWorks program is helping to broaden use of CLT. Working closely in partnership with FPInnovations, the program launched a U.S. version of the CLT Handbook (already available in Canada) with updated information and specific data relative to U.S. building codes and potential uses of CLT. The Handbook was introduced at the first ever CLT Symposium in Seattle, Washington in February 2013, which presented a variety of technical and project related presentations to an audience of building professionals.


Focus in 2013/14

Market development efforts in 2013/14 continue to focus on converting projects to use lumber instead of alternative materials as well as increasing the total volume of wood used in projects, particularly in multi-storey/multi-family residential construction.

Although the manufacturing capacity for CLT in North America remains limited, there is great potential for this technology to expand the use of wood in the non-residential sector. In 2013/14, US WoodWorks is working on the adoption and commercialization of CLT in the U.S. through tools, education and one-on-one support.

B.C.’s value-added firms and cedar producers remain focused on key markets for resort housing and for repair and remodelling. The activities, which started to target the oil and gas sector in 2012/13, are continuing.


• The use of engineered wood products continues to grow in the non-residential sector, implying greater market awareness and acceptance by developers and builders.

• As the U.S. market continues to rebound, timber supply problems can be anticipated. Maintaining supply to key customers in the U.S. will be a priority, especially for lumber producers in the Interior.

• Entering into a new round of softwood lumber negotiations in 2015 may re-open old debates on the relative share of the U.S. market held by Canadian/B.C. producers.

• Rapid price and demand increase across 2012 has renewed talk of a possible “super cycle” of constrained supply and high demand in the U.S.; however, markets retracted somewhat over the first half of 2013, easing near-term pressure on prices.

Long Hall, in Whitefish Montana, is one of the first commercial buildings in the U.S. to be built using cross-laminated timber.


Construction featuring Canada Tsuga, Fujisawa City, Japan

Market Type

• Third largest market for B.C. wood products in volume and value; preference for higher quality wood products generates higher prices for B.C. exports

• Mature housing sector with an aging society; the share of platform frame construction continues to show growth, but within a shrinking housing sector

• Opportunities in hybrid construction, specialty residential (e.g., elderly care housing) and “green building”

B.C. Position

• Market leader with 39 per cent share of softwood lumber imports and a 23.8 per cent share of total commodity softwood imports

B.C. Export Sales

• 2012: 2.6 million m3 of commodity softwood products valued at $711 million

• 2013 (through July): 1.7 million m3 valued at $504 million – an increase in both volume and value from the same period in 2012

Market Overview

Japan’s economy strengthened in 2012 with GDP growing at 2 per cent, unemployment level at 4.4 per cent and zero inflation. The Yen began to sharply depreciate in late 2012, increasing the price of all imports. This had a dampening effect on imports from B.C., with lumber shipments down 1.9 per cent in 2012.

Rebuilding efforts are still underway following the East Japan Earthquake in 2011. Progress has been somewhat slower than expected; however, housing starts did experience growth of almost 6 per cent in 2012. Domestic lumber production was severely impacted by the disaster, but began to rebound in 2012, increasing by 1.7 per cent over the previous year.

There was growth in platform frame (2x4) construction in 2012 (up 9.4 per cent to 107,487 housing units). This type of construction, which favours the use of dimension lumber, now has a 22 per cent share of all wood housing starts in Japan.

Japan’s new Wood Use Points program that took effect on April 1, 2013 is of significant concern to B.C. and other exporters of wood products. Under this program, points are awarded for the use of domestic wood species in home construction. Consumers are eligible to exchange these points for goods and gift certificates. The potential of this program to negatively impact the demand for imported wood products in Japan is very high and the issue is being pursued aggressively by government and industry in Canada, and by a number of other exporting countries.

JAPAN


Market Strategy

Canada Wood Group (CWG) is responsible for the delivery of the Japan market development program, with financial support from FII and Natural Resources Canada. As Japan is a mature market for many wood products, the market development program is focused on developing niche opportunities in elderly care facilities, post-and-beam and 2x4 wood-frame construction, and value-added products. While SPF volumes held steady in 2012 as compared to the previous year, Douglas-fir, hemlock, and western red cedar saw some declines in volumes.

Responding to these trends, market development efforts focused on increasing acceptance of coastal species in existing and new applications. Work also continued on building and fire codes to enable expansion and adoption of coastal species. Maintaining an open market for B.C. coastal products has been an increasing challenge in light of moves by the Japanese government to protect markets for its domestic species (e.g., Sugi) which competes directly in applications with hemlock from B.C.

Construction guides have been completed for several products including OSB and, despite some slippage in the total volume of OSB, programs are working to ensure B.C. maintains its position as the preferred supplier for OSB.

In addition to sector and product-specific approaches, the market strategy for Japan includes delivering the Canada Tohoku Reconstruction Project. This initiative to build wood-frame legacy projects in the tsunami disaster zone is being led by Canada Wood Group with funding from the Governments of B.C. and Canada, industry, and a contribution from the Province of Alberta.


• In the medical and welfare sectors, construction of wooden buildings has doubled in three years. This is in part due to the significant promotional efforts around wooden elderly care housing and other specialty building systems. Construction of 17 new wooden elderly care home projects began in 2012.

• Canada Wood Group has been expanding the acceptance of 2x4 building systems as “fireproof” buildings in non-residential segments (“fireproof” being an important distinction in the Japanese code). 270 new approvals were granted in 2012 for 2x4 non-residential buildings designated under the “fireproof” category.

• Value-added promotions generated $9.2 million in sales in 2012, with the Living and Building with Wood brand promotion reaching over 300,000 industry representatives.

• Canada Wood held 65 separate training sessions for over 2,500 industry professionals in Japan. The sessions encouraged the adoption of B.C. species in construction projects.

• Approximately 60 per cent of specifiers who attended these training sessions report that B.C. is a preferred supplier of forest products.

• Coast Forest Products Association distributed over 19,000 copies of a new Construction Manual for Canada Tsuga (hemlock) usage in non-residential construction to the Japanese specifier community.

Canada Wood Japan tradeshow display



• Between 300,000 – 400,000 m2 of wholesale and retail buildings are constructed annually in Japan and, at present, wood has a very small share of this market. Working with local builders, Canada Wood Group has been able to stimulate an increase in the use of wood in several new projects.

• Reconstruction of homes and commercial buildings resulting from the earthquake and tsunami is expected to dominate construction activity for the next several years. Demand for J-grade lumber should remain solid despite the recent appreciation in the Yen.

• Trade negotiations may have a favourable impact on B.C. softwood exports to Japan. In particular, on October 8, 2012 Canada joined the Trans-Pacific Partnership (TPP). The TPP currently comprises Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

• Japan’s Wood Use Points stimulus program poses a serious threat to B.C. softwood exports to Japan. Canada is raising the issue in both bilateral and multilateral negotiations. Concerns have also been raised with WTO by the European Union, Canada, New Zealand, the United States and Malaysia.

Focus in 2013/14

FII is currently working with industry to update the market strategy for Japan, with the new plan intended to guide efforts over the next three years. While this review is underway, the market development strategy for 2013/14 continues to pursue opportunities in non-residential applications of wood-frame construction. At the same time, Coast Forest Products Association is working to raise the visibility of coastal species and to provide technical information to Japanese customers on the suitability of coastal products in commercial and non-residential applications.

APA – The Engineered Wood Association is seeking to complete work to obtain ministerial approval for Oriented Strand Board in specific wall assemblies and to promote OSB for use in platform frame and post and beam building systems, and in industrial and commercial building types.

With the remaining funding for the Canada Tohoku Reconstruction Project, Canada Wood Group is undertaking a third reconstruction project and evaluating options for additional demonstration work.

Inbound missions to Canada are focusing on elderly care facilities and multi-unit residential housing, to continue building momentum in these sectors. Cedar promotions in Japan are on hold for 2013/14 while the B.C. industry completes a new strategy for priorities across all markets.

Japanese government officials join with B.C. and Canadian government and industry representatives to officially open the Yuriagi Public Market, Natori, Japan. May 2013.

The Donguri Anne Public Library, Natori City, Miyagi Prefecture, Japan

“It is our hope that the citizens of Natori City will enjoy the use of these beautiful, warm and safe wood frame structures for many years to come and that they positively contribute to the long term economic and social revitalization of the community.”

Minister of International Trade Teresa Wat

Canada Tohoku Reconstruction Project

On March 11, 2011 a 9.0-magnitude earthquake occurred off Japan’s northeast coast in the area of Sendai. The earthquake and resulting tsunami caused mass fatalities, casualties and catastrophic loss of infrastructure. In response to the tragedy, the forest sector and government joined together to donate substantial aid to finance wood frame reconstruction. The Province of B.C. contributed $2 million through FII, the Government of Canada provided $2 million through Natural Resources Canada, the B.C. forest industry donated $460,000, and the Government of Alberta donated $150,000.

Canada Wood Group, acting on behalf of the funding partners, has managed two projects to date, a library and a public market in Natori. The first of these projects, the Donguri Anne Public Library, opened in January 2013. The $725,000 wood-frame building features a wide variety of Canadian wood products, including coastal B.C. hem-fir structural timbers (150x150mm), OSB sheathing, SPF 2x4 structural lumber, coastal B.C. western red cedar decking and exterior siding, value-added hem-fir interior millwork and furniture, and Eastern Canadian solid maple flooring.

A second project, the nearby Yuriage public market was officially opened in May 2013. The $1.67 million project features a 493m2 Canadian Pavilion as well as 14 commercial booths that showcase engineered Douglas-fir beams, decorative cross laminated timber finishing materials, western red cedar decking and siding, and SPF lumber and OSB in structural applications.

Both the Donguri Anne Library and the Yuriage public market projects will serve as permanent showcases for Canadian wood products and applications in Japan, as well as provide the City of Natori with essential social and economic infrastructure as the community struggles to re-build after the disaster.

Construction of the Yuriagi Public Market in Natori Japan, the second development under the Canada Tohoku Reconstruction Project.


Market Type

• Fifth largest overseas market for B.C. softwood commodity products after the U.S., China, Japan and Taiwan

• Growing market for B.C. softwood lumber, with B.C. lumber exports to Korea increasing 8.5 per cent in value and 3 per cent in volume in 2012

• Strong potential for expanded wood use in the residential housing sector

B.C. Position

• 15 per cent share of total softwood lumber imports

B.C. Export Sales

• 2012: 334,121 m3 of commodity softwood products valued at $66.9 million

• 2013 (through July): 176,123 m3 valued at $45.2 million

Market Overview

South Korea’s economy grew in 2012 (+2 per cent GDP), but at a slower pace than in 2011. Housing starts were up 7 per cent with a 4 per cent increase in starts for wood buildings. Wood consumption per capita was up over 2011 with wood use in apartments and multi-family construction leading this trend.

In August, the Korea Environmental Industry and Technology Institute reached an agreement with Canada to allow existing Canadian eco-labels in Korea without additional certification in Korea. This will assist the expansion of Canada’s certified wood products into the green building market in Korea.

During the year, B.C. maintained its ranking as the third largest exporter of softwood lumber to Korea behind Chile and Russia. Canada is the largest supplier of OSB to Korea and B.C. has 36 per cent share in the OSB market. Korea is entirely reliant on imports of OSB as it has no domestic manufacturing capacity.

SOuTH KOREA

Korean architecture students complete training in wood frame construction through the Canada Wood university program.


Market Strategy

With support from FII and Natural Resources Canada, Canada Wood Group (CWG) is responsible for the delivery of the Korea market development program. The strategy for Korea is focused on encouraging more mid-rise (three- to four-storey) residential and commercial construction and hybrid building systems. The success of new housing designs such as the “peanut house” two-storey duplex model has lead to growing interest in innovative residential wood design.

Canada Wood Group and BC Wood Specialties Group are working closely with local authorities to increase the use of both prefabricated housing solutions and platform frame construction to service the demand for new town developments outside Seoul. Work is also continuing on market barriers related to sound insulation and good progress has been made through new scientific testing of acoustic properties. Examples of wood use for in-fill walls and floors in concrete and post-and-beam buildings are starting to enter the Korean market, presenting a potential growth opportunity.


• CWG training in wood construction techniques was delivered to almost 3,000 builders, architects and specifiers through 40 separate training seminars and workshops. More than 700 specifiers received one-on-one project support to assist them with using wood in their projects.

• Sound insulation regulations for party wall assemblies were successfully extended to 2017, which opens up more opportunities for multi-family, multi-storey construction. Efforts to gain permanent acceptance for wood frame assemblies are ongoing.

• Tools and resources for builders, such as the 450-page Wood Frame Construction Design Drawing Booklet, were disseminated to 53,000 industry professionals through the CWG Korea office.

• CWG expanded its training program and now delivers wood construction content via local construction associations, university programs (19 nationwide), workshops and specialist training in partnership with the British Columbia Institute of Technology.

• Targeted sales promotions for high-end designer furniture and other value-added wood products from B.C. were undertaken by BC Wood Specialties Group. These promotions reached some 275,000 industry representatives and consumers.

Korea Wood Construction Association meeting, Seoul, Korea


Canada Wood developer mission tours net zero home in B.C.

Focus in 2013/14

FII and industry representatives are updating the market strategy for Korea in 2013/14 to guide efforts over the next three years. In the interim, pursuing opportunities in residential 2x4 wood frame construction and non-residential (multi-storey/multi-family) construction remains the focus of the market development strategy.

With the local industry becoming more familiar in working with wood, a greater share of training content is being delivered by local organizations, allowing CWG staff to put more effort into market access initiatives and promotional programs. Market positioning is focusing on the health and environmental benefits of wood construction, as well as niche opportunities for value-added products and prefabricated building systems from B.C. Work also continues on removing the remaining trade barriers, particularly sound and fire regulations.


• Energy efficiency and healthy building design are significant trends in Korea, with the government introducing the Passive House Standard (2017) and Zero-Energy House Standard (2025) to promote green building. Positioning B.C. as an environmentally friendly source of forest products should create opportunities for both B.C. commodity lumber and value-added firms.

• Korea will be launching a carbon emission cap-and-trade system in 2015 which will also contribute to public awareness of environmental issues. This should raise the profile of all green building materials, including wood products.

• New manufacturing standards for pressure-treated wood produced in Korea could potentially shift production away from using Canadian species to using other softwood species. Research is currently underway to better understand the impact of the new standards.

• Korea’s national energy plan aims to increase the market share of bioenergy more than four-fold by 2030, offering long-term growth for fuels such as wood pellets from B.C. However, with the B.C. industry fully committed to exploring the European market for pellets, opportunities in Korea may take some time to be developed.

Peanut House

A success arising out of Canada Wood Group’s program to encourage wood frame construction in Korea has been the “Peanut” house concept. Introduced in 2011/12, the “peanut house” is essentially a duplex (two family units on one lot) that evokes connotations of a peanut (two nuts in one shell). The innovative design, which has rapidly gained popularity among first time homebuyers, was created by the Kwangjang Architect Group with technical support from Canada Wood Group. The objective was to translate Canadian style building systems (townhouses) into the Korean context while achieving three goals: faster construction time; cost savings over similar concrete structures; and low maintenance costs. Using Canadian wood frame construction technology and translating it to the Korean sensibilities, Kwangjang and Canada Wood Group have successfully created a new brand in the Korean housing industry. Over 100 new peanut houses have now been built, or are in the planning stage.



Market Type

• Emerging market for softwood products generally

• Strong opportunity for coastal lumber products, especially hemlock, western red cedar, and Douglas-fir

• Value-added applications in doors, windows, architectural millwork, and furniture

B.C. Position

• 21 per cent share of India’s total imports of softwood lumber

B.C. Export Sales

• 2012: 52,820 m3 of commodity softwood lumber products valued at $8.7 million

• 2013 (through July): 39,948 m3 in softwood lumber valued at $9.4 million

Market Overview

After several years of unprecedented expansion in GDP, India’s economy slowed in 2012 to 4 per cent growth from more than 7 per cent the previous year. Government spending increased and inflation was persistently high at more than 9 per cent. Basic infrastructure continues to be an issue in India and requires significant investment.

Although structural applications in the housing market are not a primary target for B.C. producers, housing starts are increasing by approximately 5 per cent per year. Housing activity does, however, impact B.C. producers as interior wood finishing and appearance-grade applications make up 70 per cent of total demand for solid wood products in building and construction, with doors and windows representing up to 11 million m3 per year in consumption.

The Indian furniture market is estimated to be worth $8 billion annually and is forecast to grow at a rate of 30 per cent annually. Wooden furniture makes up 65 per cent of the total furniture market in India. Over 140 million households in India account for 65 per cent of the furniture market and are anticipated to continue to drive growth in furniture output.

Total wood consumption in remanufacturing was estimated at 75 million m3 in 2011 (the most recent data available) with millwork applications representing approximately half that total. Re-manufacturing (e.g., for furniture and doors) and interior millwork applications are the central focus of FII’s market development focus for India, as these sectors are seen to hold the best prospects for B.C. species.

Following relaxation of phytosanitary restrictions and tariffs on imported softwood lumber, the India market saw a sharp upswing in demand for softwood products in the second half of 2012. Strong growth in consumption, an expanding middle class and constricting supply of traditional hardwood supply are expected to create excellent mid- to long-term prospects for softwoods to gain a foothold in remanufacturing applications.

INDIA


Market Strategy

In partnership with Natural Resources Canada, FII established an office in Mumbai in 2012 and a market development strategy was completed in consultation with industry. The strategy is targeting those market segments identified as having the greatest immediate potential, including the manufacturing of doors (solid wood and flush/skin doors), wooden furniture and architectural millwork. Market research is a central feature of the strategy, as India is a new market for the B.C. industry and further investigation is required to fully understand the opportunities available to B.C. exporters.

Creating and distributing appropriate promotional materials and educational content to raise awareness of Canadian softwoods is another cornerstone of the market development strategy, and will remain a core focus as specific concerns of Indian consumers are identified and addressed. Trade events such as the Delhiwood Trade Show, and associated company missions, are also planned, as is supporting local manufacturers in pre-commercial trials using B.C. species. Maintaining a focus on phytosanitary rules and import regulations is an important element of the strategy as a number of market access barriers remain and there are indications that the Indian Government may revisit tariffs on wood products.


• Seven separate research projects were completed in 2012, including a project led by Canada Wood Group to identify market barriers to the increased adoption of softwood species in India.

• Three product trials were initiated in 2012, with doors and furniture applications being the focus.

• Canada Wood Group and FII collaborated to create new marketing collateral specific to the India market and showcased these materials at local trade events, where over 6,000 copies were distributed.

• FII completed the legal work required to operate in India, opened a temporary office in Mumbai, and began operations with a staff of 5 employees and one contractor. In early 2013, the operation moved to a permanent facility, co-located with the B.C. Ministry of International Trade, that showcases B.C. wood species and products.

• FII’s Technical Advisor for India delivered seminars at trade events and created educational content that will contribute to greater awareness of the suitability of B.C. species in a variety of applications.

B.C. products on display at the 2013 Delhi Wood Show.


Focus in 2013/14

Encouraging Indian manufacturers to try B.C. species is priority for the market development strategy in 2013/14, with two projects already completed and three more identified, including a hotel project in northern India. Twenty company representatives attended the Delhiwood Trade Fair in 2013 and expressed strong support for the promotional program being developed for India. Expanding the company mission to the India Wood trade show in February 2014 is a priority for FII India and the B.C. trade associations.

B.C. Wood Specialties Group is undertaking targeted trade promotions in the market and will be facilitating efforts to promote value-added applications and products. Continuing to build the brand for B.C. species, and raising awareness of the options for augmenting hardwood consumption with use of B.C. lumber, will help expand the market as hardwood supplies from traditional sources contract. Research to better understand the buying patterns and needs of top importers, as well as segment-specific analyses for doors, furniture and millwork applications, will also be completed in 2013/14.


• Relaxation in foreign investment rules related to retail operations is expected to open new markets for wood products, including ready-made and ready-to-assemble products. Major players such as IKEA and Walmart plan to expand their presence in India.

• Though hardwood species such as teak from plantations are available to manufacturers in India, these materials are not equivalent in standard to those originating in natural forests. This, together with tightening supplies of tropical hardwoods, will likely drive the adoption of softwood species.

• Pressure on illegal logging of tropical hardwoods supply regions (Myanmar/Burma and Malaysia) has constricted the supply of tropical hardwoods for the Indian remanufacturing sector, precipitating the beginnings of a shift from import of logs, which are processed locally, to the import of lumber products. This transition is likely to be a slow process as India imposes lower import tariffs on logs as a means to maintain its small-scale and highly fragmented domestic sawmilling sector.

• While SPF (primarily for industrial applications) remains the dominant species in shipments from B.C. to India, new opportunities are opening for coastal species such as hemlock, Douglas-fir, and western red cedar in the remanufacturing sector.

• In June 2013 Canada finished the eighth round of free trade negotiations with India. Concluding an agreement would greatly reduce the potential for a return to high tariff schedules previously applied to Canadian wood products.

• The trend towards forest certification in India continues to gain strength, with FSC India setting a goal of certifying one million hectares of forests by 2017. As global leaders in the supply of certified forest products, B.C. forest products companies would enjoy a competitive advantage in India should there be an increase in consumer awareness of, and demand for, wood products sourced from sustainably managed forests.

Growing the Indian Market for B.C. Wood

In 2012/13, FII established a subsidiary company in Mumbai to lead a new market development program aimed at introducing B.C. and Canadian wood products to the potentially large Indian market. With a full team now on the ground, FII has seen a rapid increase in enquiries for B.C. species and products, and strong interest in educational events and outreach.

A successful industry mission to the DelhiWood Trade Fair in January/February 2013 included 20 industry representatives. Participants expressed strong support for the program to build demand through a combination of educational activities and promotions with buyers and specifiers.

With funding support from the Government of Canada, the FII India team has initiated a series of activities and promotions in line with the market development strategy formed in partnership with the B.C. industry.

Michael de Jong, Minister of Finance speaks at the official launch of FII’s operation in Mumbai, India

“While India is currently one of B.C.’s smaller markets for wood products, we’re confident that with the establishment of an office there we can experience the type of success we had in China.”

Steve Thomson, Minister of Forests, Lands and Natural Resource Operation


Market Type

• Sixth largest overseas market by volume, and fourth largest market by value, for B.C. softwood commodity products

• Mature housing sector with niche opportunities, particularly for high quality products that meet environmental regulations

• Traditionally a strong market for coastal products, especially western red cedar and Douglas-fir

B.C. Position

• Small overall supplier at less than 4 per cent of total imports of softwood lumber and 1.6 per cent of commodity wood product imports

B.C. Export Sales

• 2012: 211,683 m3 of commodity wood products valued at $131.8 million

• 2013 (through July): 114,244 m3 valued at $85.7 million

Market Overview

Markets in the European Union (E.U.) continue to struggle as several E.U. member states face ongoing debt, high unemployment and economic stagnation. Overall GDP growth for the E.U. was down almost 2 per cent in 2012, taking the region into recession. The UK, a key market for B.C. wood products, showed modest growth of 0.2 per cent in 2012, bucking the trend somewhat. However, wood consumption per capita fell between 5 and 10 per cent within the E.U. overall.

In 2012, B.C. maintained a 3.6 per cent share of total E.U. softwood lumber imports. During the year, Russia completed its transition from steep log export taxes to a graduated quota system which re-opened the log export business for Russia. During the market peak from 2000 to 2006, over 8 million m3 of Russian softwood logs were sold to the EU annually. European Union Timber Regulations (EUTR) and CE Marking requirements may however may hinder Russia’s sales to Europe.

A bright spot on the horizon for B.C. is the ever strengthening demand in Europe for wood pellets. Recent estimates anticipate growth of 90 million metric tons in demand for pellets over the next decade.

European companies are reinvesting in glue laminated manufacturing capacity with announcements of new plant and secondary processing in Finland and Austria and expansion of sales by French glulam producers. These investments reinforce the expectation for growth in the global market for engineered wood products.

EuROPE

Western Red Cedar wood wave ceiling application, Europe


Market Strategy

The priority for the B.C. forest sector in the European market is to maintain existing markets for high value softwood products, including value-added products. FII’s investment strategy focuses on the highest performing E.U. member states (e.g., Germany, U.K. and Netherlands) as well as niche opportunities in Eastern Europe for log and timber frame home packages and other pre-fabricated solutions. Promotional efforts focus primarily on development of literature profiling the use of B.C. species in target applications, including showcasing the use of wood in venues built for the London Olympics.

Market development funding will also be directed at efforts to maintain market access and to expand markets for B.C. wood pellets through research and active engagement with E.U. regulatory bodies.

FII continues to monitor and participate in debates around green building and environmental product declarations in the EU as these have significant impacts beyond European markets. FII’s Market Outreach activity in the E.U. will continue to focus on protecting and enhancing B.C.’s international reputation as a supplier of sustainable forest products.


• Promotion of the “Real Cedar” brand helped to maintain profile for solid wood cedar applications in the face of increasing competition from composite products and other materials. B.C. Shake and Shingle Association and the Western Red Cedar Export Association were both active in Europe in 2012/13.

• B.C. pellet exports to Europe continued expanding in 2012/13, growing by 15 per cent over the previous year.

• Promotions in central and eastern Europe generated value-added product sales of more than $5.5 million.

• 146 designers and architects received training through 15 seminars and workshops held across Europe. Training programs focused on the benefits of cedar and other value-added wood products in a variety of applications.

Pier K Theatre and Arts Centre, Ector Hoogstad Architechs, Haarlemmermeer Netherlands

Western Red Cedar featured in the Irdeto Head Office, Netherlands


Focus in 2013/14

The focus of FII’s funding mix in Europe has shifted for 2013/14, with western red cedar promotions placed on hold while the industry undertakes a review of its priorities. Value-added products, such as prefabricated homes are finding receptive markets in some emerging Eastern European markets (e.g., Turkey, Czech Republic and Russia) and, with support from FII, investigations into the future opportunities in Eastern Europe are underway.

In 2013/14, FII is directing funding to market access and promotions for wood pellet exports to Europe. Significant gains were made in 2012/13 which will be further leveraged to build market share for the B.C. pellet industry. The industry is also supporting work to ensure that international standards for biomass products set by industry bodies are favourable to exports from B.C. and the rest of Canada.


• E.U. production of CLT and other higher-value structural lumber experienced continued growth, including for export to North America. With demand for engineered products expanding in North America, and few B.C. companies positioned to supply the market, European producers are gearing up to grow market share.

• The decision by E.U. member states to acknowledge the carbon storage properties of wood products is a positive sign for acceptance in key markets. New rules recognize that wood will continue to store CO2, absorbed during a tree’s growth, until the end of its useful life.

• The UK Timber Frame Association plans to increase the use of wood products in the housing market by working with major homebuilders. Their first step is to lobby the UK government to link mortgage rates to the energy performance of a home.

• The E.U. Timber Regulation, which counters the trade of illegally harvested timber and timber products, has resulted in a decrease in European imports of Chinese plywood. This provides an opportunity to expand sales of certified Canadian plywood. B.C. did see gains of 25 per cent in panel exports to Europe in 2012, though off a very small base in volume terms.

• With some E.U. economies contracting, the overall economic outlook for the region has been dampened. While Northern European economies have generally performed better, it is unclear what impact the ongoing economic issues in the region will have on the wood products.

Pellet Demand Remains Strong in Europe

FII expanded its support for development of markets for wood pellets in Europe in 2012/13 and the industry has made good progress. Estimates show the market for wood pellets growing at 15 per cent per year in Europe demonstrating solid long-term potential for the industry. By addressing concerns regarding “wood miles” (a reference to the energy required to transport pellets for fuel to distant markets), and engaging at senior levels in the EU regarding potential threats to B.C. market access, the industry has been able to capitalize on Europe’s growing demand for green energy.


Wood First

Program Overview

Introduced in 2009, the Wood First Initiative aims to promote a “culture of wood” throughout the province, support the advancement of wood building systems and technologies, and raise awareness of B.C. as a world leader in advanced wood technologies and design.

Increased structural and architectural use of wood offers a number of economic, environmental and social benefits to B.C. Greater use of wood supports the provincial forest sector through increased employment and revenues, while greater use of engineered products, like cross-laminated timber, fosters innovation and the growth of value-added manufacturers. Wood products are climate friendly because of their high levels of embedded carbon and lower life cycle footprints in terms of energy consumption in their manufacturing, transport and application. Socially, the use of B.C. wood products provides direct support to forestry communities across the province, while designing with wood creates public buildings and facilities that are welcoming, attractive and provide a tangible connection to nature and the outdoors.

FII has been responsible for the Wood First Initiative since 2011.

Program Strategy

FII’s strategic priorities for Wood First focus on:

• growing a cultural preference for living and building with wood in B.C.;

• maximizing the appropriate use of wood in public and private projects;

• strengthening B.C.’s capacity to produce high quality wood-based products and building systems;

• accelerating adoption of existing and emerging wood-based products and building systems; and

• positioning B.C. as a world leader in sustainable and innovative wood-based products and building systems in design, production and application.

These priorities were developed by FII with input from Wood First Advisory Committee. The committee includes a broad cross-section of wood processing and design experts, specifiers and end users.

Program delivery for Wood First is accomplished in three ways. First, through an annual competitive call for proposals, FII engages service delivery organizations to provide specific promotional, research and educational programs aligned to the strategic objectives of Wood First. Second, FII directly delivers activities that promote non-residential construction across North America. Third, a Procurement Working Group, supported by FII, leads efforts to align ministry capital planning with the priorities of Wood First.


Select Accomplishments 2012-2013

• By the end of the fiscal year, 52 local governments or communities across B.C. had passed or endorsed Wood First resolutions or bylaws. These are leading to greater wood use in public sector projects, as fostered by the Wood First Act. The total population of these communities is over 1.1 million, or 24 per cent of the population of B.C.

• More than 200 five- and six-storey wood-frame buildings were at various stages of development, from planning to completion of construction, in B.C.

• Two studies were completed by the B.C. Building and Safety Standards Branch, with support from FII, that will help advance the fire safety design related to new wood products and building systems.

• The Large Wood Structures Symposium in Vancouver showcased mass wood products to more than 200 local builders and designers, including presentations on architectural and structural design, seismic resistance, connections, fire safety, durability and environmental performance.

• With financial support from FII, the Canadian Wood Council’s WoodWORKS! BC program hosted a professors conference to enhance wood content in post-secondary education programs, as well as a Wood Solution Fair which drew in more than 1,100 attendees, the most ever for the event.

• 1,176 architects, builders and specifiers received one-on-one project support and technical assistance through the WoodWORKS! BC program.

• BC Wood Specialties Group, FPInnovations and the UBC Centre for Advanced Wood Processing combined to help more than 200 individual B.C. companies develop new product prototypes, optimize manufacturing processes and reduce costs. B.C. manufacturers invested over $100,000 in in these initiatives.

• A case study video focused on mid-rise construction was completed by the Canadian Wood Council to ensure wide exposure to mid-rise non-residential applications for B.C. wood products.

52 Wood FirstCommunitiesin BC


7 A federally funded network of 13 university research centres across Canada

Focus in 2013/14

For 2013/14, Wood First efforts are focusing on marketing, promotion and outreach activities, reflecting the input of the Wood First Advisory Committee. The goals of these activities are to develop among architects, engineers, designers, developers and builders the ability and confidence to choose wood-based products and building systems over alternatives, and to encourage policy makers and building code officials to support the adoption of emerging products and systems. Specific activities include:

BC Wood Specialties Group

• Communicating the benefits of using wood in non-residential building to designers, contractors and developers.

• Coordinating participation of value-added manufacturers in tradeshows to promote new building products and systems.

Canadian Wood Council – WoodWORKS! BC Program

• Showcasing award-winning and innovative projects completed in B.C.

• Increasing education opportunities for existing practitioners and building officials through seminars, workshops, luncheons, Wood Solutions Fair, and a follow-up event to last year’s successful Large Wood Structures Symposium.

University of British Columbia Centre for Advanced Wood Processing

• Exploring complex industrial applications for wood fabrication technologies.

• Continuing work on development of reliability-based design methods for heavy timber connections that could provide new design solutions in non-residential building applications.

• Conducting research to enhance fire performance and weathering performance of wood.

FPInnovations

• Establishing guidelines for podium structures (wood structure sitting on concrete or steel structure) to achieve consistency in approaches among fire engineers, structural engineers and building officials.

• Facilitating fire-safety designs by developing computer models of, and conducting fire tests on, wall systems incorporating wood components.

• Working through an Advisory Group on Advanced Wood Design of leading B.C. practitioners to prepare guidelines for developing and implementing alternative solutions for wood-based building systems.

NEWBuildS7

• Demonstrating feasibility of designing a tall wood building in B.C. using latest research results generated by experts in Canada.

In addition to efforts by the organizations listed above, FII will continue to lead British Columbia’s participation in a “North American Tall Wood Initiative”. The Canadian government, the Canadian Wood Council, FPInnovations, the Bi-National Softwood Lumber Council, the American Wood Council, the U.S. Forest Products Laboratory, senior industry advisors and FII are working together to plan, guide and resource this effort which will enable main-stream commercialization of tall wood construction in North America. A demonstration building of at least 10 storeys in height has been proposed with incentive funding from Natural Resources Canada.

Wood use in Public Infrastructure

The Wood First Act received Royal Assent in 2009. The Act requires wood to be considered as the primary building material in all new publicly-funded buildings in B.C., when supported by the British Columbia Building Code. Since 2009, many new projects across government have incorporated a large amount of wood into the building design. In 2012/13 FII supported these efforts by coordinating with the Procurement Working Group, a committee of ministry officials involved in capital planning, to share information on building with wood and to build a knowledge base related to design, tendering and procurement guidelines.

A particularly innovative application of wood in public construction was demonstrated in 2012/13 with the use of wood in sound abatement walls for highway construction, including the new Port Mann Bridge. Compared to concrete, the wood barriers are lighter, easier to build, cheaper and preferred by nearby residents who appreciate their natural appearance. Another creative application of wood was demonstrated by the new Surrey Pretrial Centre. While correctional centres require extensive use of reinforced concrete, wood was incorporated in the design to create a better working environment for staff and better living conditions for inmates.

Building up With Wood

Changes to the B.C. Building Code in 2009 increased the maximum height for wood-frame residential construction from four to six stories. Since the changes were implemented, the demand for wood-frame mid-rise buildings has been growing steadily. Currently, more than 200 mid-rise wood-frame projects across B.C. are completed, under construction and/or in the design stage. These projects are taking advantage of wood’s cost effectiveness, design flexibility, and consumer appeal. Based on average wood usage in this type of construction, these projects will consume roughly 100 million board feet equivalent of B.C. lumber, or 50 per cent of the annual production of an average B.C. sawmill.

Surrey Pretrial Centre, Surrey B.C.

Ministry of Transportation and Infrastructure sound abatement wall.

Quattro3 by Tien Sher Construction, Surrey, B.C.


Opportunities and Threats

• Changes to the next edition of the National Building Code of Canada are being considered to allow wood-frame residential construction and commercial construction of up to six storeys.

• Urban densification continues to be a key approach in urban planning in many municipalities around the province, leading to increased demand for taller and multi-unit buildings.

• New wood engineering programs will be offered by the University of Northern British Columbia in Prince George.

• B.C. is playing a leading role in fostering realization of taller wood structures.

• B.C. has available expertise and interest in design and research for wood buildings and particularly for tall wood buildings.

• Limited domestic manufacturing capacity for advanced wood products such as CLT could affect successful completion of projects and hold back future opportunities for adoption of innovative systems.

• There is growing interest from foreign manufacturers to enter into the B.C. market.

Potential Highlights


Program Overview

FII’s Market Outreach Program ensures that customers for B.C. forest products have access to factual, consistent and credible information about the environmental benefits of using wood products, the range of wood products and wood construction technologies available from B.C., and the facts on B.C.’s forest management practices. In providing this information, Market Outreach addresses two key questions in the globally competitive market place: “Why use wood?” and “Why purchase wood products from British Columbia?”

This approach reflects two significant trends in the marketplace for building products. The first is that both consumers and professionals are factoring in environmental considerations when making purchasing decisions. The second is that forest products from sustainably managed forests have a distinct competitive advantage over other products.

In responding to these trends, forest companies and trade associations communicate the performance and benefits of specific product lines while FII develops material that applies to the industry as a whole, including information on the province’s leading forest management practices.

Through these efforts, B.C. has developed a reputation as a global leader in sustainable forest management. Maintaining this position requires ongoing efforts to ensure recognition in existing and new markets and to respond to environmental and social policy developments.

Program Strategy

Central to the Market Outreach strategy is the promotion and differentiation of B.C. and its forest sector as a leading global supplier of products from sustainably-managed forests. The long-term goal is to have wood viewed as a preferred building material and B.C. recognized globally as a leader in wood innovation and sustainable forest management. Specifically, the program:

• Provides timely and factual information regarding B.C. forest products and forest practices;

• Champions science- and fact-based approaches to communicate the merits of wood and wood-based construction technologies in a green building and climate change context;

• Collaborates with forest sector stakeholders to encourage consistent and compelling messages in the context of product and building innovations and reducing environmental impacts; and

• Monitors and advocates for codes, standards and policies that recognize the merits of wood and B.C. forest products.

Opportunities and Threats

• Advances in wood building products and techniques present new opportunities to expand wood use in the North American non-residential sector.

• A growing interest among consumers and builders in green construction is creating opportunities to position wood as a “new” green building product.

• Public awareness of climate change is stimulating increased interest in use of wood as an environmentally friendly building material.

• The growing trend in B.C.’s export markets to restrict the import of illegally harvested timber presents an opportunity for B.C.’s sustainably managed and legal forest products, though an increasing administrative burden remains a concern.

• Some green building rating systems continue to discriminate against the use of B.C.’s certified wood products.

• Upcoming EU biomass sustainability criteria may present market access issues for Canadian pellet producers.

Market Outreach Program



Growing Demand for Wood - reThink Wood & the North American Wood Products Industry

Architects and engineers are the primary audience for the reThink Wood program, a comprehensive, fact-based, and peer-driven pro-wood outreach effort across North America. FII cost-shared the reThink Wood program in 2012/2013 with the Binational Softwood Lumber Council and the Softwood Lumber Board. In 2012, more than 6,600 architects completed over 8,000 tests on at least one of the reThink Wood Continuing Education Units.

reThink Wood also generated over 8,300 qualified leads, 4 million print and online impressions and 9,000+ followers on social media.

Championing B.C. Forest Products & Building Systems

Through a mix of traditional, online, and social media, FII is generating greater awareness than ever of B.C. wood products. This “transmedia” storytelling increased traffic to FII’s naturallywood.com web site by 30 per cent, leading to more than 1,400 requests for technical advice from buyers and 5,600 searches for B.C. value-added manufacturers of wood products.

Online videos available through the naturallywood.com YouTube channel were very popular, with views up 40 per cent in 2012/13. In addition to 7,358 downloads, more than 24,000 publications were distributed in 2012/13 (including both naturallywood.com and reThink Wood materials) to over 35 organizations and events (architect, industry, government, academic).

ReTHINKwood_AR_FULLPGAd_FORPRINT.indd 1 12-10-26 4:10 PM

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T here is a quiet revolution taking place within the design community. After a prolonged

emphasis on concrete and steel for buildings other than homes, design professionals are using wood to great effect in a growing number of non-residential and multi-family building types—in applications that range from traditional to innovative, even iconic. Some are driven by wood’s cost effectiveness1 while others cite its versatility or low carbon footprint,2 but their collective path has been made possible by building codes that increasingly recognize wood’s structural and performance capabilities, and the continued evolution of wood building systems and techniques.

When the International Building Code (IBC) was introduced in 2000, it consolidated three regional model building codes into one uniform code that has since been adopted by most jurisdictions. It increased the possibilities

for wood construction by (among other things) recognizing additional fire protection techniques, consolidating the maximum allowable areas and heights from the three legacy codes into one (thus increasing what’s allowable in some jurisdictions), and allowing the use of wood in a wider range of building types. In subsequent versions of the IBC, even more opportunities have been created where additional fire protection features are used.

Even so, the pioneering nature of building design is such that there are always architects and engineers seeking to push beyond the conventional, and it is common for project teams to require—and be granted—variances for designs not covered in the code that can nonetheless be justified on a case-by-case basis.

This CEU will examine the use of wood both within the current IBC and through building projects that have further pushed the boundaries of wood design and construction.

Evolving Building Codes And the Wood RevolutionPushing the boundaries of innovative wood design and construction Sponsored by reThink Wood

CONTINUING EDUCATION

EARN ONE AIA/CES HSW CONtINuINg EduCAtION HOuR (CEH)

Learning ObjectivesAfter reading this article, you should be able to:

1. Discuss how the introduction of the International Building Code (IBC) in 2000expanded the options for wood construction beyond previous model codes.

2. Evaluate techniques that allow designers to increase the allowable heights and areas of building projects beyond the tabular limits stated in the IBC.

3. Identify the advantages of wood-frame structures in seismic and high-wind events.

4. Explain how advances in wood products and building systems are influencing the evolution of building codes.

To receive AIA/CES credit, you are required to read the entire article and pass the test. Go to ce.enr.com for complete text and to take the test for free.

AIA/CES COURSE #K1212E

ce.enr.com 1

International Relations and Trade

With partners including Canada Wood Group, the Canadian Wood Council, B.C. Housing and a number of B.C. industry associations and companies, FII helped arrange and host 8 incoming missions in 2012/13 with almost 100 participants from China, Korea, Mongolia and Europe.

The Architect’s Toolkit now at your fingertips,

visit naturallywood.com/architectstoolkit.

With information on B.C. wood species,

case studies, technical details about

materials and building ideas, the Toolkit

is your one-stop resource for British

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Find everything you need online.

British Columbia wood. Sustainable by nature. Innovative by design.

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Advertising, both in print and online, reached 1.3 million readers and viewers. This generated over 2,100 unique page views to the FII website and 239 requests for more information about B.C.’s forest practices and products, including requests for FII’s Architect Toolkit.


Focus in 2013/14

FII Market Outreach activities in 2013/14 include separate programs targeted to architects, engineers and builders; to regulators and policy makers; and to consumers and buyers of wood products.

Architects, engineers and builders: The goal of this program is to ensure that professionals involved in designing and building with wood recognize it as a preferred building material, use it appropriately, and understand its benefits to mitigate climate change and achieve green building objectives.

Key initiatives include:

• supporting research to provide science-based, objective evidence of the attributes of wood and B.C.’s superior forest management regime;

• maintaining B.C.’s position as a North American leader in building with wood by increasing awareness of lessons learned in British Columbia from mid-rise and non-residential development initiatives;

• collaborating with government and industry stakeholders who are promoting wood to architects, engineers and other key specifiers to ensure alignment with the North America reThink Wood platform;

• developing comprehensive and targeted tools that promote the benefits of wood as a product that regenerates naturally and, when forests are managed sustainably, supports climate change reduction strategies; and

• championing B.C.’s forest sector by using web-based and traditional marketing tools and channels to reach target audiences, providing informative and compelling resources to support pro-wood procurement and decision-making.

Domestic and international regulators and policy makers: The goal of this program is to ensure that B.C./Canadian forest management practices, products and building systems are recognized and not discriminated against in codes, standards and policies.

Key initiatives include:

• working with government and industry partners to monitor domestic and international developments, and engaging with government agencies to address forest management and environmental and social responsibility policy;

• encouraging inclusive recognition of all credible third-party wood product certifications in Canada and elsewhere and encouraging adoption of chain-of-custody certification and labelling;

• supporting the evolution of green building codes and rating systems, and advocating for appropriate recognition of the merits of using wood;

• supporting carbon labeling and environmental product declaration standards, such as those being considered in Japan and the United Kingdom, that do not discriminate against wood products; and,

• working with the industry and federal government to ensure access for B.C. forest products to priority markets, while overcoming trade barriers or issues that may arise.

Consumers and buyers of wood products: The goal of this program is to generate recognition of B.C. as a globally recognized leader in sustainable forest practices, and as a preferred supplier of forest products and wood building solutions.

Key Initiatives include:

• investing in messaging, materials and channels to position wood as a responsible material and to promote the variety and quality of wood products produced from B.C.’s sustainably-managed forests;

• providing timely, factual and scientific information regarding B.C. forest practices, products and building systems to domestic and international audiences, including government, customers and specifiers such as architects; and

• acting as a comprehensive information resource for government, trade associations, B.C. companies and other stakeholders to support marketing initiatives and to respond to wood performance and environmental reputation challenges.

Samuel Brighouse Elementary School, Richmond, B.C.


A competitive and evolving global forest sector requires that industry has access to timely market research to identify evolving market opportunities and maintain competitive product advantage. FII offers:

• An extensive library of research on major and emerging geographic and sector markets for British Columbia forest products;

• An annual trend analysis with export data and market reviews.

• To view report summaries, as well as to request a password to access entire reports, visit www.bcfii.ca/tools-resources/market-research/.

Market Research

Industry Resources

Forestry Innovation Investment works with the forest industry and government to develop materials and tools to help promote British Columbia’s forest products and sustainable forest practices internationally. The resources outlined here are designed for use by the British Columbia government, forestry companies and trade associations to:

• Research market opportunities;

• Support market development and communications activities; and

• Provide facts and science on British Columbia’s forest practices and the environmental benefits of wood as a green building product.

These resources are available at no charge. See FII website’s Tools & Resources section for more information: www.bcfii.ca/tools-resources/


Promoting Benefits of Wood and the B.C. Forestry Industry

Diverse and Innovative Wood Products – Showcases how B.C.’s wide variety of quality wood products are capable of meeting any structural or finishing need.

Mountain Pine Beetle – Summarizes the epidemic and how B.C. has responded.

Responsible Paper Production – Highlights how the pulp and paper industry is reducing its impact on the environment and increasing use of solid waste and post-consumer recycled products.

FII has developed an extensive YouTube channel with over 20 videos covering a wide range of topics.

naturally:wood Video Series – A suite of videos that showcase the use of wood in B.C. structures:

• Wood in Airports • Wood in Education • Wood and Human Health • Wood in Design• Wood in Transportation

Introducing Cross-laminated Timber (CLT) to North America North Vancouver City Hall, Elkford Community Conference Centre, NSCU Environmental Learning Centre, UBC Centre for Interactive Research on Sustainability, Richmond Olympic Oval, Vancouver Convention Centre, Hillside Aquatic Centre

“Sawdust” – Journey of wood from forest to mill to innovative building

Building Green – Demonstrates how wood products are an excellent choice to reduce the impact of buildings on the environment.

British Columbia is well positioned as a supplier of quality, innovative and environmentally-responsible products to markets around the world. FII has prepared a variety of print and electronic materials for use by B.C. forest companies and trade associations to assist with market development efforts at all levels.

The FII Image and Video Libraries contain a wide range of professional images of B.C.’s forests, forestry activities, manufacturing, building, trade and overseas market use of wood products.

Images – to view and request high resolution images suitable for printing or advertising please visit www.imagelibrary.bcfii.ca.

Video – for a list of available footage, or to arrange a time to view clips at FII’s office, please contact FII at [email protected].

Image Library & Video Library

This comprehensive online resource about B.C.’s forests, wood and pulp and paper industries draws attention to B.C., as a supplier of high quality, environmentally-responsible products to markets around the world through case studies, research and videos. The website also includes direct links to trade associations, a Supplier and Certified Product Directory and the Architect’s Toolkit.

Lists over 600 companies manufacturing and/or selling B.C. wood and pulp and paper products and includes product, species and certification/ chain of custody information. Please visit www.naturallywood.com/supplierdirectory to see if your company is included. Contact FII at [email protected] to request edits or additions.

www.naturallywood.com

B.C. Supplier and Certified Product Directory

Factsheets

Video

A comprehensive guide to British Columbia’s B.C.’s forest and wood products industries. Everything from the diversity of tree species and sustainable forest management to available wood products, quality assurance and association listings.

Buyers Guide to British Columbia Wood Products


Forest Certification

Factsheets

Research and Publications

Third-Party Forest Certification in British Columbia – Summarizes and compares CSA SFM, FSC, PEFC and SFI in B.C.

Comparison of selected forest certification standards (2009) – A study conducted by Indufor Oy examines the linkages between forest regulation and forest certification around the world.

Comparing B.C. with the World (2004) – An independent ground-breaking study conducted by Dr. Cashore, a professor at Yale University, comparing Canada’s environmental forest practice regulations with those in jurisdictions around the world.

A Guide to Chain of Custody – A guide to help companies develop a chain of custody that can be used for their entire wood supply, adding value to existing certification efforts through verified claims that promote their products.

For questions regarding third-party certification and forest management standards in B.C. and around the world:

Factsheets

Sustainable Forest Management

B.C. Parks and Protected Areas – Highlights how B.C. protects our diverse forests.

British Columbia’s Boreal Region – Describes the management of B.C.’s Boreal region.

British Columbia’s Forest Diversity – Demonstrates how we are conserving B.C. forests.

British Columbia’s Woodland Caribou – Learn about the different ecotypes/groups of Woodland Caribou in B.C.

Involving British Columbians – Describes how British Columbian’s are included in land-use planning.

British Columbia: Legal Source of Quality Forest Products – Demonstrates that B.C. is a legal source of wood products

British Columbia’s North and Central Coast Regions – Learn about the agreement between First Nations, the Province of B.C., industry and environmental groups.

Customers often ask “How can I be sure that if I purchase your product, it is coming from a responsible source?”. FII has a suite of publications available for industry use that provide factual, up-to-date information on British Columbia’s forest management practices, and fact-based evidence in support of all forest certification programs operating in B.C., to support inclusive purchasing policies.

For questions on British Columbia’s forest management, the following resources are available:

Sustainable Forest Management – Describes B.C.’s forest practices and policies.

Tla’Amin Community Health and Multi-Purpose Centre, Powell River B.C.


Forests play a key role in mitigating climate change by absorbing and storing carbon in trees, soil and biomass. Healthy growing forests recycle carbon naturally. When trees are used for forest products, the carbon often remains stored in the products for decades or longer.

The following publications have been developed to demonstrate how British Columbia’s and Canada’s forests and forest products can help mitigate climate change.

Wood, Forests and Environmental Impacts

A Synthesis of Research on Wood Products & Greenhouse Gas Impacts 2nd Edition (FPInnovations) – A review of 66 studies comparing wood to other materials in terms of net greenhouse gas (GHG) footprint (in collaboration with Natural Resources Canada and FPAC).

Toward a Common Cause: the Embrace of Carbon Along a Supply Chain – A study conducted by UBC’s Forest Resources Management Department and WWF’s Global Forest Program to measure carbon emissions of a magazine along its supply chain.

Demonstrating Wood’s Carbon Benefits: A Carbon Footprint of Four Canadian Wood Products Delivered to the UK – A study by the Athena Institute and FPInnovations that shows the carbon footprint of four wood products manufactured in Canada and delivered to the UK.

Research and Publications

The idea that wood products have a low carbon footprint is intuitive. Wood grows naturally, using energy from the sun, and doesn’t require large amounts of fossil fuels to manufacture. As they grow, trees absorb carbon dioxide (CO

2) from the

atmosphere and release oxygen (O2), and wood

products continue to store carbon (C) over their lifetimes—even longer if the wood is reclaimed and used elsewhere.

However, the UK’s ambitious shift to a low-carbon economy means that building designers and specifiers need a greater level of detail. They need reliable data on the carbon footprint of individual wood products.

With this in mind, two Canadian research organizations—the Athena Institute and FPInnovations—have completed a study on the carbon footprint of four wood products manufactured in Canada and delivered to the UK:

• Softwood lumber

• Softwood plywood

• Western red cedar lumber

• Western red cedar siding

In all cases, despite being transported more than approximately 16,000 kilometres (km), the study has confirmed that these products represent a net carbon sink upon delivery—that is, each product stores more carbon

This graphic shows the carbon balance for the four wood products as delivered from Canada to the UK, all of which store considerably more carbon dioxide equivalent (CO

2e) than is emitted

during their harvest, manufacture and transport.

than is emitted during its respective harvest, manufacture and transport.

Canadian wood products are valued for their quality, and because Canadian forests are sustainably managed under some of the toughest regulations in the world. As this study demonstrates, they can also help UK designers achieve their low-carbon objectives and obligations.

A Carbon Footprint of Four CanadianWood Products Delivered to the UKas per PAS 2050 Methodology

FEBRUARY 2011

SUPPORTING DESIGN DECISIONS WITH FACTS

VERIFYING WOOD’S NEGATIVE CARBON BALANCE

Dem

onst

rati

ng

Woo

d’s

Car

bon

Ben

efit

s

Results shown are per cubic metre (m3) of product*

Canadian wood

products are net

carbon sinks.


Green building practices have proliferated across the marketplace and the wood products sector is well-positioned to benefit from science-based approaches, such as life cycle assessment (LCA) and carbon sequestration research. The following publications help promote the environmental attributes of wood in relation to green building as well as provide examples to promote B.C. as a leader in recognizing wood in green building applications.

Green Building Rating Systems and How they Relate to Wood – A study by Light House Sustainable Building Centre that analyzes several green building rating systems and how they relate to wood.

Environmental Product Declarations (EPDs) – A study by FPInnovations on new environmental labeling designed to provide accurate, accessible and comparable information about the environmental impact from goods or services.

Highlights structures in British Columbia and around the world that utilize B.C. wood products:

• Centre for Interactive Research on Sustainability (CIRS)

• Wood in Higher Education

• Wood in Education

• Wood in Healthcare

• Wood in Transportation

• Cross-laminated Timber in B.C.-

• Gleneagles Community Centre

• John M.S. Lecky UBC Boathouse

• Nita Lake Lodge

• Squamish Adventure Centre

• Squamish Lil’Wat Cultural Centre

• Six-Storey Wood Construction in British Columbia

• Trout Lake Ice Rink and Percy Norman Aquatic Centre

• Vancouver Convention Centre

• Whistler Public Library

• West Vancouver Aquatic Centre

• UBC Buildings: Life Cycle Assessment

Building with Wood / Building Green

www.bcfii.ca/tools-resources/

Market Research www.bcfii.ca/tools-resources/market-research/

Marketing Tools www.bcfii.ca/tools-resources/marketing-tools-images/

naturally:wood YouTube Channel www.youtube.com/user/ naturallywood

Supplier and Certified Product Directory www.naturallywood.com/ supplierdirectory/

Image Gallery imagelibrary.bcfii.ca/

Publications www.naturallywood.com/resources

Report to Stakeholders www.bcfii.ca/wp-content/uploads/ aboutus/corporate/corporate-reports/FII-Stakeholder-Report.pdf

Architect’s Toolkit http://www.naturallywood.com/architectstoolkit

For questions, requests for print copies and market research passwords, contact us at [email protected].

www.bcfii.cawww.naturallywood.com

Resources

Presentations, Publications and Research

Case Studies

Building Green with Wood Toolkit and Manufacturer Product Factsheets - Topics include energy and resource conservation, transportation effects, durability, acoustics, recycled and salvaged materials and life cycle assessment. The toolkit includes links to other information sources.

For Specifiers and BC Suppliers: Factsheets and Presentations on how wood products can achieve credits under the most commonly used green building rating systems (LEED 2009, Green Globes, BuiltGreen for Multi-Storeys & Residential Towers). There is a presentation for architects, and one for suppliers.

For BC Suppliers: Template and 10 sample product factsheets outlining key environmental features organized for response to specifier queries as it relates to commonly used rating systems (including LEED 2009, Green Globes, BuiltGreen for Multi-Storeys & Residential Towers). To request the InDesign version of the template, contact FII at [email protected].

With demand for B.C. wood products in China and India rising rapidly there is a growing need to provide potential exporters with a comprehensive guide to help start, plan and conduct wood export activities to China and India from Canada. This guide addresses Chinese and Indian import restrictions and B.C. and Canadian export regulations and processes.

Wood Export Guides to China and India

Photo Credits: Covers - Canada Wood GroupPage 10 - BC Wood Specialties GroupPage 24 - US WoodWorksPage 25 - US WoodWorksPage 26 - US WoodWorksPage 27 - Coast Forest Products AssociationPage 29 - Canada Wood JapanPage 30 - Canada Wood JapanPage 31 - Canada Wood KoreaPage 32 - Canada Wood Korea (upper image), Canada Wood Group (lower image)Page 33 - Canada Wood Koreapage 37 - Western Red Cedar Lumber AssociationPage 38 - Western Red Cedar Lumber AssociationPage 39 - Wood Pellet Association of CanadaPage 43 - Ministry of Justice (upper image), Ministry of Transportation &

Infrastructure (middle image), Tien Sher Group of Companies (lower image)Page 47 - Perkins + Will ArchitectsPage 50 - McFarland Marceau Architects All images not otherwise credited are property of FII.

Corporate office1200 - 1130 West Pender StreetVancouver, BC Canada V6E 4A4

T 604 685 7507F 604 685 [email protected]

www.bcfii.ca

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