Speaking to the Canadian Council of Forest Ministers meeting on July 10, FPAC president and CEO David Lindsay discussed the journey of transformation that Canada’s forest products industry has undertaken. On behalf of the Forest Products Association of Canada, he congratulated the participants in the Kenora Declaration on Forest Innovation, which calls for continued collaboration and engagement with new partners in non-traditional industry sectors. Lindsay also commented that the concept of “environmental innovation” could be our next big national opportunity.
The full text of Lindsay’s speech, Innovation in Canada’s Forest Products Industry — Where we’ve come and where we’re going, follows: I am very pleased to be here on behalf of the Forest Products Association of Canada.
I’ve been asked to speak with you today about the transformation and innovation journey of the forest sector. It’s a story about creating opportunity out of necessity. It’s a story about foresight and leadership. And, I hope from my remarks this morning, you will agree – it is a story about Canada’s potential and future opportunity. An opportunity for partnership and collaboration between industry, governments – federal and provincial, researchers, the academic community and others. The raw wounds from the dramatic downturn of the forest industry in the last decade are no doubt fresh in the minds of many of the people in this room. It was a perfect storm – the worst recession of a generation, the housing collapse south of the border, a high dollar, growing global competition, the collapse of paper use in a digital world. As a result, the sector shed about 100,000 jobs and mills were closed and abandoned right across the country. Many people felt the forest products industry – one of the oldest and most important economic sectors in Canada – had become an historic relic – was doomed to be nothing more than a sunset industry. The industry realized that business as usual was no longer enough. Instead of waiting for better economic conditions, it was time to retool and reinvent itself. The sector embarked on a journey of transformation. Companies reduced costs, took out excess capacity, and enhanced productivity.
According to a May 2014 study by the Centre for the Study of Living Standards (CSLS), Canada’s forest sector labour productivity is improving at three times the rate of the overall Canadian economy. In fact, Canada’s labour productivity out-ranks the U.S. forest industry. When it came to markets, the industry did not sit back and wait for the return of the U.S. housing market but instead boldly and successfully cultivated new customers in new markets. Forest product sales to China grew by about 1000% over a decade. We diversified our markets. The United States was once 80 per cent of our customers by value. That is now closer to 60 per cent and forest products are now Canada’s largest export to China. Last year we exported $31 billion to 180 countries.
Canadian forest companies also developed world leading environmental credentials. For example, Canada now has 43 per cent of the world’s independently certified forests, four times more than any other country. We dramatically cut GHG emissions. All of this happened with innovation and technology… technology in our mills, innovation in our forest practices. But, the innovation doesn’t stop there. We are also innovating in the uses of the forest fibre – innovation in developing new products for the emerging bio-economy.
The industry dedicated itself to extracting more value from every tree in the form of innovative bio-fuels, bio-chemicals and bio-materials. So by becoming more productive, by expanding markets, by enhancing and leveraging environmental credentials and by looking to new products, the forest sector has been changing its brand from a sunset to a sunrise industry.
It’s a new dawn in the forest products industry, but we have not done it alone. Governments, both federal and provincial, have played an important role in this transformation. Governments have become strategic partners. So have research institutions and the college and university sector. Those partnerships were in evidence when the Future Bio-pathways Project was launched by FPAC in association with FPInnovations, Natural Resources Canada and scores of economic and scientific experts from many provinces. The ground-breaking project, started in 2010, investigated the opportunities to produce a wide range of bio-products from wood fibre with a second phase examining the global market potential of emerging bio-energy, bio-chemical and bio-products. In 2010, the federal government created the Investments in Forest Industry Transformation or IFIT program. The program was aimed at accelerating the deployment of highly innovative, first-in-kind technologies at Canadian forest industry facilities.
Providing this risk capital for new innovation has been an astounding success. For the $190 million on offer, applications worth more than $4 billion were received. At the same time, provinces were also active. Ontario had the Centre for Research and Innovation in the Bio-economy or CRIBE. Alberta had its Forest Products roadmap and British Columbia and other provinces have also been active in exploring the potential for the forest products industry in the bio-economy.
Another key to building innovation capacity has been FPInnovations, one of the largest scientific research centres in the world and a catalyst for transformation. It has been responsible for several world firsts and game-changers – for example those involving crystalline nano-cellulose, cellulose filaments and lignin – that are now being commercialized and have put Canada’s forest sector on the world innovation map.
There has also been a large contribution from the FIBRE network – that stands for Forest Innovation by Research and Education. Research by colleges and universities has been a vital part of Canada’s forest innovation sector. It involves colleges and universities throughout Canada with about 400 graduate students, more than 100 professors, and another 50 researchers.
With all this going on, industry has felt the confidence to shape Vision2020, setting the ambitious goal of generating an additional $20 billion in economic activity through new products and markets by the end of the decade. Vision2020 has two other goals: a further 35 per cent reduction in our environmental footprint and refreshing the workforce with 60,000 new recruits.
The Vision goals of products, performance and people all have one common theme of “going green.” Products made from renewable wood fibre can replace those made from materials with a larger carbon footprint; our environmental reputation can be leveraged in the global marketplace; young Canadians can proudly seek a career in what we are terming “the greenest workforce.” The theme of environmental innovation is not new. In 2009, the government brought in the billion-dollar Pulp and Paper Green Transformation Program that resulted in record investments in green technologies.
The sector is now recognizing the need to talk up the environmental record of the Canadian industry – a sector that has made great strides in reducing its environmental footprint and that is pledging to do even more to advance our environmental leadership. Both the federal government and provincial governments have been supporting this effort. The concept of “environmental innovation” as we pursue technical brilliance and environmental excellence in harvesting and processing natural resources could be our next great national opportunity.
As we move forward, FPAC congratulates the participants for the Kenora declaration on forest innovation that speaks to the need to collaborate on the need to commercialize innovations with a focus on environmental excellence; to engage new partners in non-traditional industries and academic fields; and to mobilize the best talent and technologies to address the future needs of the forest sector.
The rebirth of the Canadian forest products industry is now heavily reliant on our repositioning –we are transforming, we are innovating, we are environmentally progressive. On behalf of the Forest Products Industry of Canada, we encourage federal and provincial governments to continue to work together to go confidently down this path. If we do so, the sector will be a global leader in innovation, and a key contributor to jobs and prosperity throughout Canada.