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FPAC urges innovation in the face of uncertainty

Q&A with Forest Products Association of Canada CEO Derek Nighbor

Jan. 17, 2017 - Almost a year into his tenure as CEO of the Forest Products Association of Canada, Derek Nighbor speaks about what’s on the association’s radar in 2017.

Q: Canada is celebrating 150 this year. Where does the forest industry fit into Canada’s 150-year story?

Derek Nighbor: I grew up in the Ottawa Valley, in Pembroke, Ont., and our junior hockey team there is called the Lumber Kings for a reason. Back over a century ago it was a very vibrant industry and a lot of communities like Pembroke were built on the forest sector. The Ottawa River was a main artery with the logs moving down the river, keeping the economy going.

History tells us that forestry has been here since the beginning. We look different from how we did back then for sure, but we are an industry that’s continued to transform and provide real economic opportunity to Canadian families. And also develop increasingly innovative products that Canadians rely on and trust.

Q: 2016 ended with a lot of uncertainty for the forest products industry. What’s your sense of what this year brings?

Nighbor: Every business faces its challenges and opportunities and we are no different in forestry. This industry is one that continues to evolve and transform and look different.

As we look forward into 2017, there’s no doubt talk will centre on the Trump administration and what that means for Canada-U.S. relations, and where the softwood lumber agreement goes. Those are issues from an industry perspective in some ways that are beyond our control, but they are issues that we continue to monitor and work with the federal government on to ensure that the Canadian industry’s interests are defended and protected.

We’ve been here before and we’ve always come out the other side of this. We might look a little different. We’re really working now with the federal government to make sure we have the best defense and the best support for the Canadian industry.

Q: Is there a sense of resignation since it’s all happened before?

Nighbor: I’d say there is a sense of resolve. We’ve been right the first three times, and I believe we are going to be proven to be right again the fourth time. We just want to ensure that we get the best outcome for Canada.

The U.S. relies on Canadian softwood lumber. If all the U.S. mills were operating at full capacity, they can only satisfy 75 per cent of their own demand. So they need at least 25 per cent of their supply to come from us. So at the end of the day, this is going to drive up costs for U.S. homebuyers and homeowners because they won’t be able to satisfy their domestic demand, and they’re going to need to turn to Canada and other countries. If they add tariffs to these imports, that’s going to drive up costs for their citizens.

Derek Nighbor CEO FPAC RESIZED Q: What is FPAC’s role in the discussions?

Nighbor: In Canada, we have different perspectives in different parts of the country. The challenge in Canada is that we don’t always, on every issue related to softwood lumber, have a unified industry position from Atlantic Canada to British Columbia, and that challenges us as a national association. We’ve developed a framework in Canada where the regions are working with the federal government on their regional positions and perspectives.

We at FPAC, as a national group, are monitoring the proceedings and we’re reminding the government that it is critical they defend the Canadian industry’s interests. When we sign trade deals with other countries we expect those trade deals to be followed and if they are not, if there are disputes, we expect our government to defend us.  Whether you’re in Saint John, New Brunswick, or Merritt, B.C., you’re going to agree with that.

No. 2, our message to the federal government as they work through this challenging time is to say, “We need you to continue to focus and support industry as it evolves and transforms.” We want to see continued support for innovation in forestry. We want to see the federal government partnering with us so we can become less reliant on the U.S. market. How can we expand in and to other markets like Asia and do more with those countries, for example?

A third area we are working on is to encourage building more with wood in Canada. We have the world’s No. 1 reputation for how responsibly we manage our forests in Canada and wood building structures are less carbon-intensive to build and the wood actually stores carbon.  We should be building more with wood through municipal, provincial and federal government procurement.

Our job as a national association in Ottawa is to continue to support the opportunities that exist at the same time as we’re working through this trade dispute.

Q: What other issues are on FPAC’s radar this year?

Nighbor: We’re looking forward to the federal budget, which will likely be tabled in March. This government is one that believes in innovation and they’re putting their money where their mouth is in supporting a number of sectors of the economy and encouraging innovation, and forestry is no different. There’s huge opportunity. We’re already seeing some of our companies getting into biomaterials.

Our members are always going to pump out 2x4s and other wood products, but there are opportunities to do more with every part of that tree. There’s continued innovation and focus on trying to use every part of the tree to drive more value and develop new products. This is where the future is going and if we don’t see a conscious and strategic commitment by the federal government to support us in that evolution, we’re going to be left behind the global competition.

As governments across the country are looking to fight climate change, their best climate change-fighting friend is the forest sector. Our forests, healthily managed, provide a carbon sink; our mills are more efficient than ever before in terms of GHG emissions – we’ve seen reductions in GHG emissions over the last 25 years by over 65 per cent, that’s significant – and the products we make store carbon. We’re moving towards carbon pricing schemes and forestry has a huge opportunity to be a leader there and to derive some economic benefit from that.

Q: What’s your message to those on the ground in the forest sector?

Nighbor: Let’s not fool ourselves: the softwood lumber issue is a real challenge for our sector. If we don’t see real improvements in the discussions, there’s going to be a real impact on the industry – there’s no doubt about that.

But my message to the industry is that we can’t allow ourselves to be sidetracked by that. As challenging as it is, we need to maintain focus on some of the opportunities that are before us on climate change and innovation. That’s going to be key to future growth and success of our sector in Canada – our ability to compete in the global economy.

We’ll get through the trade dispute, it’s going to be tough, but we need to keep our eyes on the prize of transformation and innovation in the industry. We need to ensure that provincial and federal governments are implementing the right policies and programs to support that.

This interview has been condensed and edited.