Wood Business

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Final Cut – November-December 2013

Dec. 12, 2013 - As the new president and CEO of the Council of Forest Industries, I am at once struck by the tenacity and innovation shown by B.C.’s interior forest industry and the strength of the partnership that exists between industry and government in this important sector.

Having absorbed the hard hits of the mountain pine beetle (MPB) epidemic and the U.S. downturn, B.C.’s interior forest companies have repositioned themselves to compete for years to come. They did it through innovation, investment, good management and a highly capable workforce. Our companies have focused on efficiencies and the workforce responded by improving productivity. Significant capital investments have been made to ensure production facilities maximize the value taken from every tree harvested. Markets have been expanded, China has taken off, and new and innovative products continue to be developed.

But industry could not have done it alone. At its roots, the forest sector is a partnership between the provincial government that owns the fibre and an industry that invests capital to develop and market a product from that fibre. That partnership produces value for shareholders, significant tax revenues for government and family-supporting jobs that maintain the economic stability of entire

The provincial government has played a vital role in helping the industry diversify markets for B.C. forest products. While the U.S. is and will remain a primary market for our products, historic strides forward were made in developing the Chinese market for Canadian wood products. B.C.’s premier and ministers responsible for forests and economic development led the charge with multiple trade missions to Asia. Canada’s federal government provided valued financial support to these efforts and federal ministers also visited China to extol the virtues of Canadian wood products. Relationships have been built that today allow China’s importation of our products to enjoy significant growth and a market diversity we could not have imagined 20 years ago.

So with our markets diversifying and lumber prices stabilizing, what does the future hold? Where does the industry-government partnership need to shift its focus?

The most significant risk facing B.C.’s interior forest industry is certainty of sawlog availability to support
operations. With the MPB epidemic, B.C. has long known that the Annual Allowable Cut in the interior must necessarily decline. The MPB has simply destroyed so much of our interior pine forest that we have too much production capacity for the amount of raw resource available.

B.C.’s interior forest industry needs greater certainty around saw-log availability. Greater certainty leads to capital investment in adapting and enhancing mills that have secure, long-term access to adequate quantities of timber. Certainty creates predictability, and in so doing, allows government, communities and industry to work in partnership to manage the necessary adjustment to capacity.

Two important steps the provincial government can take now to improve certainty of supply are to accelerate its reviews of timber supply and to refocus B.C. timber sales on its mandate to deliver a reliable supply of timber to the market through open and competitive auctions.

Government also must look for opportunities to streamline the regulatory environment to ensure unnecessary and duplicative regulation resulting in unnecessary costs for government and industry are addressed. By committing to a regular cycle of regulatory review, and industry inclusion in all policy matters impacting the working forest, government can better assure the continued competitiveness of the sector.

It is an exciting time for B.C.’s interior forest companies and for the sector as a whole. Rebounding share prices, improved market numbers, new tall wood building technology, cutting edge development of fuels, medicines and other new products from wood residue, all point to an innovative industry well positioned to thrive. In the partnership with government, forest industry success leads to a more prosperous province and stronger communities where we live and work.

James Gorman is the new president and chief executive officer of The Council of Forest Indistries (COFI) effective Sept. 23, 2013.Gorman was chosen to lead the association because of his extensive public policy and senior management experience. He most recently served the government of British Columbia as the Deputy Minister of Advanced Education and prior to that as Deputy of Education and the B.C. Public Service Agency.

December 9, 2013  By James Gorman

James Gorman is the new president and chief executive officer of The Council of Forest Indistries (COFI) effective Sept. 23 As the new president and CEO of the Council of Forest Industries

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