Editorial – July/August 2013 – Diversify, but Why?
By Scott Jamieson
Put simply, our industry’s biggest challenges will soon be finding logs to saw and people to saw them. In this issue of Canadian Forest Industries we address both.
Regular contributor Treena Hein reports on industry-wide efforts to draw the 40,000 to 120,000 fresh faces we’ll need between now and 2020 (page 12). It is heartening to see the sophisticated efforts of the Forest Products Association of Canada (FPAC), Alberta Forest Products Association (AFPA) and others around such campaigns as the Greenest Workforce or Work Wild.
Yet for a dose of reality, consider that Annex Business Media, the publisher of this magazine, also has trade magazines in over 35 other markets. In most of these, aggressive recruiting campaigns are also underway or in the works. In that light, green may describe our collective recruiting envy as much as it does our future workforce. Given the remote locations of our operations, as well as the capital required to enter either the logging or log hauling sectors today, our challenges will be significantly higher than those of the aviation, manufacturing, or even highway trucking sectors, for example.
On the fibre supply side, Russell Taylor and Alice Palmer of International Wood Markets Group address the anticipated significant reductions in log supplies in the key lumber-producing provinces of B.C., Quebec and Ontario (page 25). The available log supply will soon plateau across Canada, with no reasonable expectation of increases for decades thereafter.
There are solutions, or at least ways to mitigate these issues. Investments in automation and optimization can reduce head counts and increase recovery, often at the same time. They can also make the remaining jobs more attractive. Companies may yet again become involved in the financing, if not the operation, of logging and log hauling operations. Aboriginal, migrant, and non-traditional workforces may expand in forestry as they have in such other sectors as agriculture and construction. Regardless, supply constraints and price volatility will be the order of the day for years to come.
Need for markets?
Given these expected constraints on people and wood, looking for new markets may well be the last thing on the industry’s mind come this time next year. Yet starting in our next issue, that’s just what we’ll be doing. That’s when we kick off a series on export market development, beginning with the expanding lumber markets in India. Yet if we’ll struggle just to meet the needs of out current client base in the U.S. and China by 2014, why expend considerable effort developing new markets in faraway lands?
If you’re like me, you recall the urgent talk about diversifying lumber markets as we emerged from the last large recession in 1993. At meetings east and west the talk was on the need to commit to markets like Japan and the U.K. to prevent being skewered on the boom-and-bust cycle of U.S. home building. Never again would we be so dependent on one market. Then the massive lumber vacuum south of the border distracted us all for the next 15 years.
Looking out to 2016, it may be hard to see the need to broaden our market reach. Yet, looking back at where we’ve been and ahead to where we may yet be again, some sustained effort in developing possible significant markets like India makes sense. We know that like China, the process will take some time. Also like China, when this alternative market is needed, that nascent pipeline can be the difference between running your mill and shutting down.
As we emerged from the market doldrums in 1993, I suggested in this space that the industry collectively understood the need to invest in and commit to long-term export market development. The problem was that at the individual mill or company level, we could not resist chasing the maximum short-term return south of the border. The end result would be a collapse in export market development and the abandonment of the few export customers we had.
As the U.S. enjoyed one of its longest building booms ever, that is exactly what happened. Realistically, that will again happen if we hit a sustained lumber super cycle. Once again, I hope a few farsighted companies prove me wrong. Once again, I doubt they will.
Scott Jamieson, Editorial Director