Presentation by Dave Coles, CEP President,to the Standing Committee on Natural Resources
28 February 2008
Our forests are the foundation of an $80 billion industry that provides direct
employment to 300,000 people. More than 300 communities rely on our forests for their existence.
Unfortunately the industry is faring poorly, very poorly. In the past we have faced cyclical ups and downs but this time is different. Today the industry faces a perfect storm of difficult challenges:
* strong competition from Asia and Latin America;
* a currency that has appreciated beyond all expectations and now sits above the US dollar;
* permanent decreased demand for newsprint which was the cornerstone of the industry until recently;
* a cyclical reduction in demand for lumber resulting from the US housing crisis;
* wood shortages in some parts of the country, in particular Quebec.
Thousands of jobs have disappeared over the last 4 years, endangering dozens of single industry forest communities across the country. Since the middle of 2004, 17 paper mills represented by CEP have closed as have at least 40 sawmills and board plants. At least as many other locations have partially closed. In all, more than 20,000 good jobs have been lost.
If nothing is done and we just wait for the crisis to pass thousands more jobs will be lost and dozens more communities will turn into ghost towns.
A time of crisis is also a time of change. We should seize the opportunity to recast our industry to face the future. The industry's biggest asset is that forests are renewable. It should be the perfect "green industry". It is essential the industry be sustainable, both environmentally and economically. A healthy forest is the basis of a dynamic and prosperous forest industry, one that will provide stable employment for our communities.
The key to a healthy forest is to manage it in harmony with its ecosystems to ensure its long-term survival, bio-diversity and the multiple needs of its users. We need to honour international treaties for the protection of the environment, including those relating to global warming and the UN convention on biodiversity which requires the creation of protected areas totaling 12 per cent of our territory.
Indeed, environmental issues are more present than ever on the public's mind and demand for "green products" is increasing. We believe that environmental certification of forest products is a major asset for selling our forest products here and abroad.
To support a healthy forest the federal government must:
* Increase funding for research into forest ecosystems and into the natural and
man-made disturbances they face. Better control of insects, disease and especially the impacts of climate change should be priorities.
* Expand funding for research into management systems best suited to our many forest ecosystems, in consultation with all stakeholders.
* Support the most environmentally sound third party certification of forest products across Canada.
For a Dynamic and Prosperous Forest Industry
For the last century the forest industry has mostly been oriented to the export of commodity products: market pulp, newsprint, lumber. Competition for these products has become intense and many countries can now produce them more cheaply than Canada. To survive in the new commercial environment, the industry must:
* Develop better synergies between industrial sub-sectors in order to make the most efficient use of the entire resource. The waste from one part must be the
raw material of the next. * Redirect itself toward high value-added products for sawmills and the pulp and
paper industry: furniture, doors and windows, pre-fabricated houses, wood based insulation, sanitary products.
* Invest in new equipment for more efficient production, cogeneration facilities for electricity production and the most up to date equipment to reduce atmospheric and water pollution. To support a dynamic and prosperous forest industry the federal government must: * Offer financial incentives for research in biotechnology, nanotechnology, innovative products in construction and bio-energy to develop new wood based products.
* Improve financial incentives for the commercial development of new products
and the development of new production technologies and ensure that forest
products companies can effectively take advantage of existing incentives.
* Provide targeted incentives for more rapid capital renewal, including processes to reduce emissions of pollutants, by reducing the effective tax rate on new
capital investment, through accelerated capital cost allowance on machinery and equipment.
* Develop a renewable energy strategy that provides incentives for more rapid conversion from fossil fuels to green biomass energy.
* Provide assistance for exports and development of new markets for Canadian forest products.
Softwood Lumber Agreement Review
The softwood lumber agreement with the United States also needs to be reviewed. Under current economic circumstances, many sawmills have curtailed their operations or shut entirely until the situation improves. Under the use it or lose it quota system under the softwood lumber agreement, companies will lose their quota for the next year as a result. We understand that some lumber companies are buying wood from other producers and selling it in the United States just to maintain their quota allotment. This makes no sense and should be corrected.
Communities and workers
CEP is working to support forest workers and their communities. When a mill shuts we do whatever we can to find a new buyer that will either modernize the mill or produce a new value-added product.
Next week we are meeting with AbitibiBowater, Canada's largest paper producer, to look for ways to provide stability and security for our members and the industry. At the mill level we are already assisting the industry in finding ways to increase productivity.
Nonetheless the magnitude of the crisis has severely restricted what we, and the employers, are able to do. For a century this industry has been the mainstay of hundreds of our rural communities. Now it needs help.
In the event of plant closures, special programs must be established that provide financial assistance for workers, especially older workers, and their communities. A transition fund to assist communities to diversify their economies must be a priority. To support workers and their communities the federal government must: * Establish a national adjustment fund for forest communities to provide Just Transition for workers, their families and affected communities in the event of closures or restructuring. The fund would assist communities to create jobs and diversify their economies.
We recognize the federal government has set aside $1 billion for a fund to this effect for all of manufacturing and forestry.
Given the overwhelming size of the job loss experienced in the last few years in
these sectors and the losses that continue to be experienced with no end in sight, the amount set aside is inadequate to make any significant difference for workers or their communities.
Indeed, the money proposed so far represents only a fraction of what is required for the forest industry alone. A long-term commitment to recast the economies of forest dependent communities and support workers and their families is needed. Many more billions of dollars will be required over the next decade to accomplish this.
* A Fund is also needed to provide financial support to workers and arrange for training, skills upgrading and relocation if necessary. Special benefits are also
needed for those unable to re-enter the labour market in the form of financial
assistance to ease older workers into early retirement.
We recognize a federal program has been established to assist older workers who lose their jobs to re-enter the labour market. Again this program is only a small step in the right direction. It provides a little assistance to workers who require additional education but nothing for workers who are unable to find a new job.
Much more support is required for older workers in rural communities. The
province of Quebec has provided significant support for forest industry workers and their communities and other provinces have helped as well, but on the whole the support has been modest. It is the federal government that stands out as having done next to nothing while our communities are devastated. The time has come to support the forest industry in its time of need.
Bringing everyone together Forest management, worker training and environmental protection are areas of
provincial jurisdiction. All levels of government should be working together to find short and long-term solutions for the revitalization of the industry.
A national summit on the future of the forest industry
The Prime Minister of Canada needs to call a national summit on the future of the forest industry as soon as possible. Leaders from the various levels of government, unions, industry, environmental groups and First Nations peoples must combine their efforts to revitalize the forest industry, stabilize employment in our communities and, ensure our forests are regenerated and that degraded areas are restored.
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