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B.C. forest industry vital to economy, but sector shift needed: COFI

A new economic impact study recently released by the BC Council of Forest Industries (COFI) confirms B.C.’s forest industry is a vital part of the province’s economy, generating billions in wages and government revenues, sustaining about 49,000 direct forestry jobs and contributing $17.4 billion in GDP in 2022.

“This study demonstrates that the B.C. forest industry is one of the main drivers of British Columbia’s economic base, providing outsized benefits to living standards and government revenue by generating employment, value-added activity, and exports,” said Kurt Niquidet, vice-president and chief economist at COFI.

“Coming out of the pandemic, 2022 was a highly volatile year for prices, not only for lumber but for many other commodities as well,” explained Niquidet “Forest product markets today are different and so are other economic dynamics in the sector. The industry has been challenged by rapidly changing market conditions, high costs, natural disturbances like fire and insects, and the impact of new public policies. Timber harvesting on provincial crown land has declined by about 30 per cent since 2021.”

To capture the impact of these changes the Study also provides some projections for 2023 that point to a loss of jobs and other benefits delivered by the sector. “We need to find ways to stabilize fibre supply and build a more predictable and sustainable path forward for the sector,” said Niquidet.

He said the forest industry in B.C. is in a period of transition, but the long-term outlook is strong for the full range of renewable forest products B.C. is capable of producing.

“Locally and globally the demand for wood products for more affordable and climate resilient housing is growing, and so is the demand for low-carbon and bio-based materials. But in the short term we are faced with a critical shortage of timber for B.C. mills. Left unchecked, reduced access to fibre supply will drive further losses in the investment, infrastructure and workforce needed to meet those new opportunities.”

The study measured the economic impact of the forest industry’s ongoing operations, employment and capital spending related to forestry and logging, wood product manufacturing, and pulp and paper manufacturing across the province using data primarily sourced from Statistics Canada. To ensure the accuracy and reliability of the study, independent external validation was provided by BDO Canada LLP. A copy of the full technical report can be found at cofi.org.

Among the study’s key findings were:

• Forest sector has significantly higher paying salaries, averaging over $106,000 per year in total compensation (compared to the BC average of $73,000);
• Contributes $17.4 billion annually to BC’s GDP;
• Sustains close to 100,000 good jobs for British Columbians, including 48,725 direct forestry jobs and an additional 51,143 indirect and induced jobs;
• Contributes $9.1 billion in wages, salaries and benefits;
• Generates $6.6 billion in government revenue;
• Sustains one out of every 28 jobs in B.C.;
• Sustains one out of every six manufacturing jobs in B.C.;
• 25 per cent of all forest industry jobs are based in the Lower Mainland;
• In 2022, forest products were B.C.’s number two export, representing 24 per cent of all merchandise exports by value;
• From 2013 to 2022, B.C.’s forest industry invested approximately $15.8 billion in construction, machinery, equipment, repairs and maintenance, through local B.C. companies and suppliers.

“It is important to recognize that the direct and indirect economic benefits from the forest sector are linked to annual timber harvest levels,” said Niquidet. “That’s why industry, government, First Nations, local communities and workers need to come together to address current uncertainty over fibre supply and attract the investment required to build on B.C.’s strategic advantage in the conservation and sustainable management of this renewable resource.”

Key findings from the report will be discussed at the 2024 COFI Convention, with a panel on the economic and investment outlook for the forest sector planned for Thursday, April 11. Kurt Niquidet will present the outcomes of the economic impact study and moderate a panel discussion that aims to provide insight into the economic trajectory of B.C. forest industry.