Setting the Stage

Heather Lynch

When I first began writing about Canada's forest sector in 2004, the industry was at a critical turning point. The glory days of positive ROIs and extensive capital upgrades were starting to fade and mills were beginning to make strategic exits from unprofitable paper grades – or closing facilities altogether.

Fast forward six years and the industry is a vastly constricted version of what it once was. Enormous corporate mergers, shuttered mills and falling paper prices have taken an economic and a social toll – ending countless jobs and changing the face of dozens of towns whose backs were built on the forestry sector. Today, not one of the top ten global forestry companies in terms of sales is located on Canadian soil – according to PricewaterhouseCoopers, Domtar holds 14th place, coming behind a host of U.S. and Nordic-based enterprises. To say that our industry is in critical need of an economic overhaul is to undermine the current environment – the sector needs not only to reinvent itself, but to break cleanly from its past in order to reposition not only as a smaller and more intensely-focused industry, but as a new one altogether.

Several driving factors can assist with this process. The first is the increased concern about environmental sustainability. Indisputably, Canada comes up against a razor-sharp competitive edge when it goes head to head with our pulp-producing South American counterparts. They produce cheap plantation wood and they do it quickly. Where Canada has a significant advantage, however, is in its ability to provide and willingness to commit to sustainable business practices. Environmentally supportive policies have long governed Canada's practices in wood sourcing, pulp and paper production. The key here is to convey this commitment to both local and international customers; to highlight, and to celebrate our environmentally responsible path.

The reasons for slumping demand for paper products in Canada are multiple, but a corporate push towards the paperless office, a robust Canadian dollar, digitized materials and a declining newsprint market are at the forefront. The U.S. housing crisis has also had a dramatic effect by squeezing demand for Canadian wood building materials. However, on a global scale, the pulp industry is still growing, in large part due to huge demand from emerging and growing markets in China and India. While competition for access to these markets from countries in South America, Asia and Russia is fierce, Canada needs to investigate opportunities to explore and expand its market share in these parts of the world.

Canada's ability to innovate is another advantage. Renewable energy that uses woody biomass as feedstock represents a significant opportunity for our forestry sector – both as a revenue source and to offset production costs. Canada's public and private sector continues to demonstrate a deeply-rooted commitment to developing and harnessing innovation through research and people development. We have an abundance of talent, natural resources and a solid regulatory framework within which to operate and conduct business abroad. These advantages need to be exploited.

In order to reposition the forestry sector and to push ahead, we need to make a break with the past. Not to forget the glory days, but to reinvent what that model may look like in the future. We have both opportunities and advantages to help us do this. It is time for a proverbial joining of the hands; it is time for a collective declaration of 'Onward!'