2005 Annual Review
TRANSFORMATION
FPAC VISION A leader in advancing the global competitiveness and sustainable stewardship of the Canadian forest products industry
Industry Environmental Highlights
Industry Economic Highlights(4)
Forest area 3rd-party certified CSA, FSC, SFI to December 31, 2005
Communities highly dependent on forestry(5) 119 million hectares
Percentage of Canada’s original forest area retained
91%(1)
Reduction in water use since 1989
34%(2)
Reduction in greenhouse-gas emissions from fossil fuel, 1990–2004
30%
Reduction in particulate emissions since 1992
62%
Recycled materials’ share (sawmill residues and waste paper) of fibre supply for new paper and paperboard(3)
80%
(3)
Recovered paper used in paper-making Recycled paper recovery rate(3)
Net sales
$81 billion
Export sales(6)
$45 billion
Export sales to United States
$35 billion
Contribution to Canada’s balance of trade
$35 billion
(2nd-largest contributor)
Annual R&D spending 5 million tonnes 46%
Employment (direct)(7) Employment (indirect)(7) Forest industry average wage per employee(8) Share of Canada’s GDP Transportation(9) Largest user of rail transport (2004) 2nd-largest user of truck transport (2004) Largest user of offshore marine transport in trade dollars
(1)
World Resources Institute Data Tables, 2000–2001 FPAC Environmental Data Survey Statistics Canada, FPAC, PPPC (4) General Economic Highlights, Statistics Canada, 2004/2005 (5) Census Data, Canadian Forest Service (6) Largest exporter to India and China; 3rd-largest overall and to USA and Europe (7) Labour Force Survey (8) Survey of Employment, Payroll and Hours (9) Transport Canada (2) (3)
324
$506 million 361,100 555,100 $45,400 3% 45 million tonnes 18 billion tonnes / km $7.3 billion
E M B R A C I N G A T R A N S F O R M AT I O N A G E N D A
This is Canada’s forest products industry in the news: an industry riding out the perfect storm—softwood duties, declining consumption of newsprint, intense competition from abroad, soaring energy and fibre costs, and a Canadian dollar that has appreciated by 35% in just three years. Often overlooked amid the headlines is another story: Canada is the largest, most successful forest products exporting nation in the world. The industry accounts for 3% of Canada’s GDP, is one of this country’s biggest employers, and directly supports more than 320 rural communities. While large segments of the industry are doing well, there is a broad, underlying challenge facing the industry. Under current financial conditions, many companies find it difficult to make the huge capital investments needed to renew their operations and remain competitive with state-of-the-art facilities being built abroad.
Our vision for the decade before us is for strong Canadian wood, pulp, and paper exports, healthy profits, elevated levels of capital spending, and increased hiring— including of many Aboriginal Canadians—to replace the retiring baby boomers who make up a large portion of our workforce. The culture of sustainability now taking hold in our forest management will permeate all aspects of our business. Instead of reading about mill closures, we will read about a healthy, stable industry expanding its dual role as the world’s largest exporter of forest products and the mainstay of a thriving rural economy. The reality, however, is that the industry will continue to be challenged in the short term as it focuses its attention on transformative change to improve its underlying fundamentals. In the end, we will achieve our vision with a spirit of innovation that will deliver world-class products and a sustainability record to be envied.
The good news is that we are up to the challenge; the industry has a vision. Our job will include tapping our capacity for innovation—introducing new technologies and products while striving for full energy self-sufficiency from renewable sources. Capital investment by our companies would be stimulated by pro-competitive, pro-investment, tax, monetary, and regulatory policies from government. This approach will enable us to reduce costs and to further realign our product mix to demand trends, build value-added customer relationships, develop new offshore markets, and make “Made-in-Canada” wood and paper synonymous with exceptional quality and first-rate environmental stewardship. In this report, we ratchet up our commitment to sustainability another notch by launching the FPAC Sustainability Initiative so you can monitor our progress on a range of environmental, economic, and social indicators. Avrim Lazar President & CEO Forest Products Association of Canada
James (Jim) A. Shepherd President & CEO Canfor Corporation Chairman, Forest Products Association of Canada
FUTURE-BUILDING
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
A V I S I O N F O R R E N E WA L
The forest products industry is worth growing, sustainably. The global outlook is bright: Demand is forecast to grow by 3% annually well into the future. Canada—the world’s largest exporter of forest products—enjoys extraordinary advantages: 10% of the world’s forest area, 20% of its fresh water, and a reservoir of great expertise in every aspect of forestry and the manufacturing of forest products.
THE PERFECT STORM Dollar has increased over 35% since January 2003 Cumulatively, over $5 billion in softwood duties paid Industry’s energy costs have risen 35%
May 2005
Jan 2005
Sept 2004
May 2004
Jan 2004
Sept 2003
May 2003
There are numerous success stories on which to build a broader revival of the industry’s economic fortunes. The structural wood panels sector (plywood and oriented strand board [OSB]) has enjoyed growth and high margins riding the long North American housing boom. Some of the most cost-efficient lumber manufacturing operations in the world are in the B.C. Interior. Our classic Canadian long-fibre softwood pulp is still the world’s best and enables mills to produce a growing range of lightweight and ultra-lightweight communication and printing papers. The growing appeal of Jan 2003
Over the past few years, Canada’s forest products industry has encountered a “perfect storm” of adverse circumstances that has placed a serious strain on many in the industry. While the nature of the challenges varies across facilities, industry sub-sectors, and regions, the national picture is one of an industry facing the most difficult situation it has seen in its long history in this country. Contributing factors include the softwood lumber dispute with the United States, the unprecedented appreciation of the Canadian dollar, rapid increases in fibre and energy costs in some regions, and the Mountain Pine Beetle infestation in Alberta and British Columbia. These problems have resulted in mill closures and distress for many parts of Canada’s forest products industry as well as for the workers and communities that depend on us.
Despite the current challenges, Canada’s forest products industry continues to enjoy many strengths in the global marketplace. With the right vision and a new spirit of partnership with governments and other stakeholders, the forest sector can secure its future as a dynamic and sustainable part of Canada’s land–based economy for generations to come.
Source: Bank of Canada, Statistics Canada, International Trade Canada.
Since January 2003, the Canadian dollar has appreciated by 35%, or 23 cents, against its U.S. counterpart, including a nearly 6-cent rise since May 31, 2005. PricewaterhouseCoopers estimates that each 1-cent rise in the value of the dollar reduces revenues in the Canadian forest products industry by over $500 million.
CANADA’S FOREST PRODUCTS INDUSTRY HAS BEEN HIT BY AN UNPRECEDENTED PERFECT STORM OF ECONOMIC CHALLENGES.
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F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
29 27 25 23 21 19 17 1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
15
Forest Products Sector Total Canadian Economy Source: Centre for the Study of Living Standards, 2003.
ABSOLUTE PRODUCTIVITY CONTINUES TO BE HIGHER IN THE FOREST PRODUCTS INDUSTRY THAN IN THE OVERALL ECONOMY.
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THE INDUSTRY VISION: A global leader in the forest products industry, through aggressive market and product development, deployment of new technologies, excellence in human resources, and strong sustainability performance. The industry’s agenda for transformation requires that we build a strong foundation by committing to the following:
31
1977
Some of the key elements of our vision are already in progress. The industry is responding aggressively to the challenges it currently faces by improving its productivity, focusing on innovation, and expanding its export markets. And governments, with recent announcements of incentives for research and transformative technologies and a focus on market diversification, are taking a role in the renewal of an industry responsible for 3% of GDP. Industry and governments need to invest to enable Canadian producers to improve their economies of scale and develop new revenue streams that will make them less vulnerable to the fluctuations of global wood, pulp, and paper markets.
FOREST PRODUCTS LABOUR PRODUCTIVITY Real Value Added per hour worked, 1992 $Cdn
1975
direct and online marketing is boosting demand for paper packaging, flyers, inserts, and catalogues. Canadian wood and paper producers have consistently recorded rates of labour productivity equivalent or superior to those of our U.S. counterparts and of other Canadian manufacturers. Our forests are being sustainably managed, and we’re building on that strength.
DEVELOPING NEW PRODUCTS, SERVICES, AND MARKETS: As more low-cost producers enter the global marketplace, it is becoming increasingly important for Canadian firms to differentiate themselves by adding value for their customers. This may involve customizing products through further processing, growing the market for traditional products, or enhancing service provision through such things as specialized delivery schedules and products tracking. ESTABLISHING A MARKET-DRIVEN INDUSTRY STRUCTURE: Canadian firms and the forest industry as a whole need to be able to adapt their structures to meet the evolving needs of the global marketplace. The industry will continue to have a dynamic mix of companies, including small, strategically focused players and larger companies with the ability to compete aggressively in global markets.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
HARNESSING THE POTENTIAL OF NEW TECHNOLOGIES: Forest products companies will compete increasingly on the basis of innovation in products, process, and services. The industry will work with government to support a strategic research system that fosters R&D and technology development.
ACHIEVING EXCELLENCE IN HUMAN RESOURCES: We will pass on our accumulated knowledge and skills to a new generation of employees to replace those retiring, creating tens of thousands of jobs for young Canadians and economic opportunity for Aboriginal communities.
RENEWING OUR COMPETITIVENESS IN CORE MARKETS: The strength of Canada’s forest products industry has been based on a critical mass of production capacity in markets like newsprint, pulp, softwood lumber, and some wood-based panels where Canada accounts for a large share of North American or global production. While our product mix is changing continually, our future success depends on finding ways to continuously improve our productivity and competitiveness in traditional product lines where maturing demand and the entry of low–cost overseas capacity into the marketplace pose pressing challenges.
BUILDING INNOVATIVE PARTNERSHIPS: By continuing to show leadership in partnering with stakeholders, including conservation and civil society groups, Aboriginal groups, and local communities, the industry will be a model of a progressive approach to stakeholder relations.
ESTABLISHING LEADERSHIP IN FOREST MANAGEMENT AND SUSTAINABILITY: Canada will establish itself as a recognized global leader in sustainability. We will make “Made in Canada” synonymous with high-quality, certified forest products from sustainably managed forests. The industry will continue to improve its environmental performance and increase its energy self-sufficiency.
WHY TRANSFORMATION? Canada’s forest products industry has many great strengths, but the competitive landscape is changing quickly. While Canada is still a big exporter to the United States, its share of this market is decreasing. Europe is emerging as a dominant force, and aggressive low-cost producers from China, Latin America, and Russia are coming on the scene, capturing greater shares of the global market. With global consumption of forest products growing steadily on an annual basis, the opportunity is there. Stimulating investment in transformative change will improve the industry’s economic fundamentals, which will, in turn, spur further
capital investment and investment in new product and market development. Employees and communities will benefit from added economic certainty, and the transformation will solidify the Canadian industry’s global competitiveness, sustainability leadership, and long-term viability. Can it work as well as that? It has in Finland, which pursued a strategy for renewing its forest industry that involved industry consolidation, investment in skills development and innovation, capital renewal, and effective public–private partnerships. Today, the Finnish industry is stronger in its absolute and relative performance on a range of social, economic, and environmental measures.
“Over the last few years, it has become increasingly clear that the North American industry has moved to a new phase in its lifecycle and will require more fundamental changes.” Mark Wilde Analyst, Deutsche Bank Paperloop
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FRESH PERSPECTIVE
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
R E - E N G I N E E R I N G O U R S E LV E S
PARTNERS IN PROGRESS Relaunching the industry will require collaborative approaches between the industry and policymakers to create a level playing field for all Canadian producers. Such a national strategy would install a disciplined, pro-competitive framework that stimulates private investment, promotes research and innovation, aggressively targets foreign trade barriers, and is sensitive to the impact of monetary and competition policies as well as the cost of energy, fibre, and transportation. While the industry has to play the leading role in defining and implementing the new path forward, there is much that governments can do to create the conditions for its success.
1500 1200
1219 949
900 506
600
469 121
116
Computers & Peripherals
Electrical
Mining, Oil, & Gas
Motor Vehicles
Forest Products
Aerospace
0
36
Transportation
180
Petroleum & Coal Products
184
Plastics
266
300
Source: Statistics Canada, January 2006.
RESEARCH & DEVELOPMENT EXPENDITURES 2005 Millions $Cdn
Pharmaceuticals
MODERNIZATION Anybody who tours a paper mill is impressed by its size. Yet most Canadian mills aren’t large compared with their global competitors. The global trend is towards capturing the lowest unit costs through massive economies of scale. Large-scale paper machines, three-shift lumber mills, and big single-line pulp mills are the new standard, offering the best fibre utilization, labour productivity, and energy efficiency. Niche producers will always have a place, but, in the long term, if fibre, energy, and other input costs are sufficiently competitive to justify the investment, Canada will have more large-scale production lines. Another option will be scaling up an existing facility’s revenue base by adding secondary revenue streams. An example could be a lumber, OSB, or pulp and paper mill that generates and sells surplus electricity from biomass cogeneration or produces bio-fuels or bio-chemical feedstocks from biomass.
ABOVE-AVERAGE SPENDING ON RESEARCH AND DEVELOPMENT
The most important step would be the first: recognizing the need to be our partners in the endeavour. From that would flow measures to re-examine how transportation, energy, fibre, competition, taxation, currency, and interest rate policies act as a brake on the Canadian industry’s ability to compete, and then taking corrective action. Federal competition policy and provincial tenure policies are preventing marketbased adjustments that could give some producers greatly increased economies of scale. Canadian producers need the freedom to achieve the same world-class scale as foreignbased competitors and major North American customers. From increased scale flow many benefits: a lower cost of capital, increased capacity for R&D spending and early
deployment of new technologies, and an enhanced ability to target capital investments and product mandates. All competition is tough, and, ultimately, remaining cost competitive in global markets is the industry’s responsibility; however, good public policy can make the difference between that competition being difficult and just plain impossible. The industry is encouraged that the Canadian government and key provinces are taking steps that could become the foundation of a more aggressive collaboration to encourage R&D investment, green power generation, and the development of transformative technologies and innovative forest management practices. Putting bioenergy on a level footing with other low-impact renewables will stimulate hundreds of millions of dollars in new investment in biomass cogeneration, which will result in a more competitive forest products industry, new green electrical generation capacity, reduced greenhouse-gas emissions, and air quality benefits across the country.
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FOREST PRODUCT?
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FIBRES USED IN THE MANUFACTURE OF SOME FABRICS ARE BEING MADE FROM WOOD RESIDUES—WHAT’S LEFT AFTER THE LOG IS SAWED FOR LUMBER.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
BEYOND LUMBER AND PAPER
THESE ARE FOREST PRODUCTS, TOO! The next time you see a log, think of it not only as lumber and paper but as a plastic milk jug, margarine tub, crayon, shaving cream, soft-drink container, or a fill-up for your car. Think of it as a bicycle helmet, an article of clothing (think hospital gown), or as electricity to run your computer. Think of it as eyeglass frames, toothpaste, or environmentally friendly fuels and fuel additives. Even more remarkable, these products come from wood residues—what’s left after that log is sawed for lumber—or pulp-mill effluent or paper-mill sludge. While some of these products are already in commercial production, they are just the forerunners of a new generation of biomass-based products, feedstocks, and fuels under development around the world. Extracting the fibres, sugars, fuels, and various other compounds in biomass will foster significant energy and biorefinery investments. In the next several years, the search for non-fossil substitutes for a range of products made from fossil fuels will intersect with the forest industry’s search for new revenue opportunities.
PROMISE OF NEW TECHNOLOGIES Some of that biomass fuel is in solid form—bark, shavings, and wood chips. New technologies being developed (some by Canadian companies) are demonstrating more efficient ways to obtain heat and electricity by converting the biomass into biogas or bio-oil that can be used as industrial fuel or further refined to make a range of products, feedstocks, or transportation fuels. Bio-oil can be converted into syndiesel that can run diesel motors without any modification. This year, a B.C. plywood mill will replace natural gas with gasified biomass to generate heat for log conditioning and drying veneer. A little further into the future, kraft pulp mills hope to unlock the potential in gasifying black liquor, the process waste liquid comprising biomass residue and process chemicals that is burned internally as fuel (with the chemicals being recycled). Gasifying black liquor would create more electricity and heat or syngas for further refining.
There are also technology and biotechnology solutions that will contribute to reducing costs in our core business. Lumber mills are using speech-recognition software to accelerate production by eliminating bottlenecks in lumber grading and log scaling. Canadian paper mills are pioneering new, lighter weight papers with only half the fibre content of traditional commodity grades. And another Canadian research breakthrough maximizes the filler content of paper to reduce fibre utilization. Designer enzymes show great potential in increasing the efficiency of the pulping process by up to 30% for the same volume of wood or reducing the volume of expensive chemicals required in pulp bleaching. Other enzymes have demonstrated the potential to improve the de-inking process for recycled fibre. As capital investment in the industry accelerates, Canadian mills will be well-positioned to be early adopters of these new technology and biotechnology opportunities.
Pulp-mill effluent and paper-mill sludge represent a net cost for treatment and disposal but could be turned into profit centres. Pulp effluent is ideally suited for producing the biodegradable polymers used to make bioplastics.
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RENEWABLE ENERGY
THE FOREST PRODUCTS INDUSTRY PRODUCES ENOUGH RENEWABLE ENERGY TO POWER THE CITY OF VANCOUVER, AND POTENTIAL EXISTS TO SIGNIFICANTLY INCREASE THAT CAPACITY.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
FOREST PRODUCTS: PART OF THE ENERGY SOLUTION
CANADA’S CLIMATE CHANGE SUCCESS STORY Phasing out fossil fuels in favour of renewable energy is a major part of the Canadian forest industry’s climate change success story, a story that keeps getting better and better. Since 1990, Canadian pulp and paper mills have reduced their greenhouse-gas emissions by 30% in the aggregate and 46% per tonne of output while cutting particulate emissions, an air quality concern, in half. The sector has committed to a 12% reduction in fossil-fuel intensity by 2010. Bioenergy currently provides 58% and 46% of the total energy consumed by the pulp and paper and wood sectors, respectively. While there will always be some residual use of fossil fuels in our production facilities, their share of the total fuel load in the pulp and paper sector, currently 19%, is destined to decline. More mills will switch out of fossil fuels and into biomass in primary production, and bio-oil and other synfuels are capable of displacing fossil fuels in secondary processes such as the drying and curing of lumber and engineered wood products.
BIOMASS SHARE 2004 Self-generated (biomass, small hydro)
59%
Fossil fuel
19%
Purchased electricity
20%
Other
2%
Source: FPAC Energy Monitoring Report 2004.
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THE MOVE TOWARDS GREEN POWER GENERATION HAS RESULTED IN A STEADY DECLINE IN THE INDUSTRY’S USE OF FOSSIL FUELS.
TOWARDS ENERGY SELF-SUFFICIENCY As Canada’s forest products industry derives more of its energy from renewable sources, it frees itself from the cost and uncertainty of soaring fossil-fuel prices. The cost of biomass energy is comparatively more stable and predictable than that of fossil fuels and, in some provinces, of electricity. Becoming more energy self-sufficient through the use of renewable energy is one of the most pro-competitive strategies this industry can pursue. Almost 60% of the pulp and paper sector’s energy is self-generated using biomass and small hydro.
Canada has over 50 mills producing 1,700 megawatts of renewable power, most of it fuelled by biomass residue. That’s enough electricity to supply all the power needs of Vancouver, or nearly double the needs of the Ottawa–Gatineau area. There is a wealth of green power production by this industry and the potential to generate even more. There are some large surpluses of biomass residue in western Canada, but cogeneration expansion is possible at virtually any installation with access to substantial biomass residue. Expanding biomass cogeneration will improve the industry’s underlying economics, achieve significant air quality improvements, reduce strain on landfills, and help Canada meet its climate change commitments.
“The environmental movement in Canada is indebted to the Forest Products Association of Canada for leadership on the climate change issue and leadership on the Kyoto file.” Elizabeth May Sierra Club of Canada The Western Star (Corner Brook) 30 September 2005
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MARKET FORCES
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CANADA IS THE WORLD’S LARGEST EXPORTER OF FOREST PRODUCTS.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
B U I L D I N G T H E F O U N D AT I O N F O R T R A N S F O R M AT I O N
DEVELOPING THE MARKET Building tomorrow’s Canadian forest products industry includes changing our product mix and expanding the markets for our products, both within North America and abroad.
CANADA’S MAJOR FOREST PRODUCTS MARKETS Major export markets 2004
Others 7%
The U.S. market will remain Canada’s principal export destination. Opportunity continues to exist in the strong U.S. housing market, and we will leverage new opportunities in nonresidential construction and re-establish our competitiveness in paper products to tap the potential of this very large market. Additionally, we will make aggressive, persistent efforts to innovate in products and services while continuing to lower costs and increase productivity to maintain our strong market position. Historically, Canada has been known for three primary products: dimension lumber, softwood pulp, and newsprint. Since 1990, lumber production has risen sharply, and Canada has become a major producer/exporter of OSB.
China 3% Japan 5% European Union 6%
The forest products industry is in the throes of transitioning from a predominantly commodity-driven business selling a handful of standard products to a market-driven business where manufacturers can offer customized products and value-added services. For a manufacturer of wood products, that can mean providing custom lumber sizes and grade overrides that produce a premium product, managing the inventory of a national retailer on an outlet-by-outlet basis, or providing a vending point at major construction sites. For a paper producer, it can mean providing environmentally certified or high recycled content paper to meet a customer’s procurement criteria or ultra-lightweight paper to qualify magazines and catalogues for lower mailing rates. Realignment is a long-term, multi-track strategy that includes trade liberalization, offshore market diversification, new product development, and changes to our product mix.
USA 79%
Source: Statistics Canada March 2005.
THE FOREST PRODUCTS INDUSTRY IS THE LARGEST CANADIAN EXPORTER TO INDIA, CHINA, JAPAN, AND KOREA AND THE THIRD-LARGEST CANADIAN EXPORTER BOTH OVERALL AND TO EUROPE AND THE UNITED STATES.
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F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
AVERAGE ANNUAL GROWTH IN PAPER AND PAPERBOARD CONSUMPTION 1984–2004 By volume 8%
7.0
6% 4.8
4%
3.2
2.8
2.6 1.4
2%
World
USA
Peru
Argentina
India
China
0
GLOBAL DEMAND FOR FOREST PRODUCTS IS INCREASING.
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Source: UN FAO, April 2005.
Canada can also promote wood use in developing markets. At the federal level, Canada Wood is the main program funding overseas export market development activity in the forest products industry in Europe and in Asia. And public–private partnerships to develop demand for Canadian wood products, combined with efforts to brand our products as high quality and environmentally preferable, are beginning to achieve progress in penetrating the fiercely competitive Asian markets.
CHANGING COMPETITIVE ALIGNMENTS World trade in forest products is undergoing seismic shifts. Countries like Brazil, Russia, and China are, or aspire to be, major exporters. The potential China paradox is intriguing. China is building a world-class pulp and paper industry using a great deal of imported fibre. As a result, China is Canada’s largest overseas customer for pulp and waste paper. And yet, China is also a major competitor—for example, production of containerboard is shifting to China as its consumer goods exports grow. If Russia realizes its potential in forest products, then Russia and China together could become a global forest products powerhouse. For Canada to remain the world’s largest exporter of forest products, there are many challenges to overcome, such as the rising tide of Latin American hardwood pulp exports or lumber from the Russian Far East competing against Canadian products in Asian markets. It’s going to take some muscular companies to compete in this new world order. That’s where
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
the makeover of the Canadian industry comes in, bringing down production costs and enabling consolidation. Everybody else in the global forest products trade has been growing. Among customers, so-called “big box” retailers like Home Depot, Staples, and Wal-Mart and publishing conglomerates like Gannett and Knight Ridder wield enormous leverage with their suppliers. Within this competitive environment, the forest products industry needs companies both big and small. Each has a role to play in keeping Canada’s forest products industry vibrant and dynamic.
ATTRACTIVE EMPLOYMENT OPPORTUNITIES The forest products industry directly employs over 360,000 Canadians. With a large portion of Canada’s entire industrial work force nearing retirement, we have our work cut out for us training—and retaining—skilled replacements, particularly since many jobs now require not only technical but also computer skills. Today’s mill operators spend much of their time managing production from behind a computer screen. Skilled labour will be a source of competitive strength, and future demand will be met by graduates of trade schools, apprenticeship programs, or targeted immigration or Aboriginal initiatives. Young people looking for a career will like our proposition: highly paid, stable employment in communities with a safe, pleasant, relaxed lifestyle.
RIGHT PLACE, RIGHT TIME Young Aboriginal Canadians live near our forestry or mill operations where their skills are needed, and many companies are funding Aboriginal education or job-training programs. The more than 1,400 Aboriginal businesses that are our joint-venture partners or suppliers constitute an Aboriginal forest economy employing over 17,000, mainly in silviculture and woodlands operations. Individually and collectively, our companies are stepping up endeavours with government and Aboriginal representatives to develop job candidates with the technical skills and IT knowledge for the modern manufacturing environment.
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F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
2005 MARKETS
No matter how a Canadian forest company began 2005— profitable or unprofitable—it did less well as the year went along, especially after energy prices began to soar heading into the summer. Higher energy prices pushed up manufacturing costs, made it more expensive to haul logs to the mill and to deliver finished products, and drove the Canadian dollar to its highest level in 14 years. In June, the dollar sat at the 80-cent U.S. level, and over the next eight months added almost 6 cents. The impact of higher energy and fibre prices, continuing softwood duties, structural demand changes for pulp and many paper grades, a home construction market coming back down to earth, and the strong dollar is forcing many Canadian companies to review the viability of their domestic manufacturing assets. While Canadian lumber and OSB shipments to the United States set records yet again (mainly because the residential construction market was still growing early on), pulp and paper shipments declined 3.5%. That decline is likely to continue as the full effect of capacity reductions announced last year is felt. Over 2.7 million tonnes of paper-making capacity are being removed, the largest drawdown since the 1990–92 recession. Several sawmills also face closure. The expectation is that 2006 will be difficult for most of the same reasons that 2005 was, which will keep the spotlight on the need for transformative change to improve the industry’s underlying fundamentals.
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LUMBER AND PANELS (% change over 2004) 2005 shipments — Total 97.2 million m3
-1.5%
Softwood lumber 34.2 billion board feet
-1.6%
Softwood plywood 2.6 million square feet (3/8")
-2.2%
OSB 11.7 billion square feet (3/8")
+0.2%
2005 shipments to the United States Softwood lumber 21.4 billion board feet
+2.3%
OSB 9.7 billion square feet (3/8")
+2.2%
Source: Wood Markets, 2006.
LUMBER AND PANELS It looked for a time as if nothing could stop the long-running North American housing boom, but each rate hike by the U.S. Federal Reserve slowed the housing market. Lumber, plywood, and OSB prices came off their peaks of 2003 and 2004. Nevertheless, the strong start to 2005 helped produce robust shipments of Canadian lumber—just over 35 billion board feet—and OSB. Shipments to the United States exceeded 21 billion board feet and 9.7 billion square feet, both records. With most forecasters expecting a weaker North American housing market and expanding capacity for lumber and OSB, 2006 is expected to be a more difficult year for both dimension lumber and panels. Large amounts of OSB capacity are being inaugurated or planned, although manufacturers aren’t likely to see a return for some time to the extraordinary margins they enjoyed during the boom. One important offset to all of the difficulties facing lumber producers is the virtual halving of softwood duties for 2006.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
PULP1 Canada’s long-fibre softwood pulp is a premium product that makes a strong lightweight paper; however, the high Canadian dollar and rising fibre and energy costs make Canadian firms high-cost producers. In addition, global market pulp prices have been suppressed by a rapid expansion of supply from several lower cost sources: notably, big Latin American hardwood mills flooding markets with eucalyptus pulp. Additional eucalyptus-based capacity will come on stream in 2007. Technological advances have made hardwood pulp almost as good as softwood pulp and certainly sufficient for some uses. As a result, our pulp doesn’t command a large price premium, which is a hardship for producers with high costs, especially with such a strong dollar. Fortunately, global markets are growing, and Canada’s pulp shipments rose by over 3% last year. Our exports to China—our principal overseas customer—rose a further 20%, to almost 1.65 million tonnes.
PAPER AND PAPERBOARD With more people getting their news online and less white paper and fewer forms being used in the business environment, core areas of Canada’s paper industry face difficult adjustments. Newsprint consumption has fallen by 20% since 2000 because of circulation declines and publishers’ attempts to economize by cutting page sizes and switching to lower basis weight paper. Canadian newsprint exports to the United States declined by more than 6% last year. By idling operations or converting them to make value-added mechanical papers, newsprint producers have been able to keep remaining operations going nearly flat out. A growing number of these value-added mechanical papers are aimed at the catalogue/direct mail market, with improved characteristics that make them a new competitive threat even to some fine paper grades. Shipments of uncoated mechanical paper grew by almost 4%, to over 4.1 million tonnes, while shipments of uncoated fine grades fell 5%. Packaging declined a further 4%, reflecting capacity drawdowns amid the ongoing shrinkage of the North American manufacturing sector as more consumer goods are imported already boxed from overseas.
TOTAL SHIPMENTS 1995: 19 MILLION TONNES (million tonnes)
Paperboard 3.83 Newsprint 9.24 Kraft, sanitary 1.16
Other printing & writing 2.16 Uncoated mechanical 2.62
TOTAL SHIPMENTS 2005*: 20.5 MILLION TONNES (million tonnes)
Paperboard 3.97 Newsprint 8.16 Kraft, sanitary 1.30
Other printing & writing 2.90 Uncoated mechanical 4.12 *Estimate
Source: PPPC.
1
Figures on this page are estimates for 2005.
17/28
NURTURE
CANADA HAS THE MOST HECTARES OF 3RD-PARTY CERTIFIED, ORIGINAL, AND PROTECTED FOREST OF ANY COUNTRY IN THE WORLD.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
W O R L D L E A D E R S I N S U S TA I N A B I L I T Y
By choosing Canadian forest products, customers are assured of high-quality products that embody these national values: • Our wood, pulp, and paper are derived from sustainably managed forests that are fully regenerated after harvesting. • Conserving biodiversity and wildlife habitat is a fundamental requirement of our forest management, determining how and where we harvest. • Canada’s regulatory regime is among the toughest in the world, and in many instances our forestry practices go beyond regulatory requirements. • As much as we keep improving our environmental performance, we always can do better; pursuing continual improvement is an explicit requirement of our forest management programs.
119.8
80
7.5
6.5
5.7
4.8
4.4
4
2.3
Australia
Malaysia
Brazil
France
Chile
17.1
Russia
31.9
Germany
37.8
40
Sweden
Finland
0
Source: Canadian Sustainable Forestry Certification Coalition, December 2005.
120
FOREST AREA CERTIFIED (millions of hectares at December 2005)
USA
THE COMPETITIVE ADVANTAGE OF “MADE IN CANADA” Canada is about to complete a crucial step in establishing its bona fides as a practitioner of sustainable forest management. By year-end, as a condition of continuing membership, all FPAC members must 3rd-party certify all of their forestry operations to a recognized sustainable forest management (SFM) standard: CSA (Canadian Standards Association), FSC (Forest Stewardship Council), or SFI (Sustainable Forestry Initiative). At the end of 2005, FPAC members were collectively 95% of the way there. Once they cross the finish line, they can promote their wood and paper exports as a sustainable choice sourced from certified forests.
Canada
<
CANADA HAS MORE 3RD-PARTY CERTIFIED FOREST LAND THAN ANY OTHER COUNTRY IN THE WORLD.
• Since 93% of our forest operations are on public lands, we involve the public and local communities in planning forest management programs, including the establishment of conservation goals. • We respect Aboriginal interests and are making a meaningful place in the industry for more Aboriginal employees, suppliers, and joint ventures.
DRIVING PROGRESS IN SUSTAINABLE FOREST MANAGEMENT Canada’s forests are abundant, thriving, and sustainable, and it’s our objective to keep them that way. We are committed to serving as global advocates for sustainability and addressing the problem of illegal logging and other practices that injure the image and reputation of the global forest products industry. Raising global standards—which we are constantly striving to do—will become another mechanism for levelling the competitive playing field between Canadian and foreign wood and paper producers. Canada’s preferred system of using the best available science to help achieve ecologically based forest management with emphasis on conserving biodiversity and protecting habitat has significantly reduced the footprint of our forestry operations. One driver of progress in Canada is SFM certification, which acts as a catalyst for conservation research and for the development of new, lower impact forest management practices. The vast majority of certifications are on public lands; the remaining 7% are on private lands, and private woodlot owners are seeking to develop a specialized certification standard in conjunction with CSA.
19/28
May we please have this paper when you’re finished with it?
We believe that no good paper should end up as landfill. And, with your help, we believe that’s an attainable goal. Canada’s forest products industry is already a world-leading recycler—currently we recycle more than two and a half times as much as we did ten years ago. But we’re committed to doing much more and we can’t do it without you. Pitch in by pitching this paper into a recycling bin.
ADVERTISEMENTS SUCH AS THIS WERE PART OF A 2005 PUBLIC AWARENESS CAMPAIGN BY FPAC.
Already, sawmill residue combined with recovered paper provides 80% of the fibre used to make paper in Canada.
CANADA’S PAPER RECOVERY RATE (%) 50
46
40 30
The Forum’s mandate is to coordinate improvements with the investment cycles of the industry, thereby enhancing its future viability. Forum members, including government, industry, environmental, and Aboriginal representatives, are seeking to cut red tape and minimize regulatory overlap between levels of governments. The industry will access government energyefficiency and green power incentives to help fund an initial wave of reductions, after which companies will have a choice
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0 1991
While the industry has already made tremendous strides, Canadians can expect another significant contribution from the pulp and paper sector towards improving air quality. We’re certain that modernizing or optimizing manufacturing processes in the industry will further reduce emissions of greenhouse gases, smog-causing pollutants, and toxic releases. To that end, FPAC is spearheading a multi-stakeholder process—the Pulp and Paper Air Quality Forum—to draft a 10-year action plan on lowering air emissions that should become the foundation for future government air regulation of mills across Canada.
Source: Pulp and Paper Products Council.
ENVIRONMENTAL CATALYST The transformation of the forest products industry will bring added impetus to our continuing efforts to shrink the environmental footprint of our operations. Large capital upgrade projects often yield significant environmental and economic benefits, a dual dividend.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
1990
<
THE NATIONAL PAPER RECOVERY RATE IS 46%, BUT WITH CONCERTED EFFORT BY INDIVIDUALS IT COULD RISE TO 55% OR HIGHER.
of paths to follow in pursuit of additional goals. Among the policy options the 10-year plan is expected to promote are community-based, multi-stakeholder risk management approaches that would endeavour to lower specific emissions. INDUSTRY’S GOAL: NO GOOD PAPER TO LANDFILL In a few years, it will be hard to imagine any rationale for sending good paper to landfill. Virtually all paper waste can be used either as recycled fibre for making new products like boxboard and containerboard or as newsprint. Our objective as an industry is for no good paper to go to landfill. What we used to think of as waste materials should be recovered.
The paper industry can use all the waste paper it can get. The industry needs consumers, businesses, and local governments to increase the amount of paper collected and to ensure that it is clean and free of glass and plastic contaminants, which can damage paper-making equipment. The industry supports the efforts of Canadians across the country in collecting reusable fibre and encourages municipalities to collect paper products separately in their recycling programs to maximize the amount that can be used.
“As I traveled through Canada touring several thousands of acres of forests by foot, plane, and vehicle, visiting mill operations, and talking with timber owners, forest contractors, environmentalists, and other timber and wood-products buyers, I came away with greater appreciation and first-hand knowledge that these companies are doing more than the minimum of what’s required and are taking great pride in advancing forest sustainability in an environmentally sound manner.” Leroy Custer Vice-President, Marketing and Purchasing BMC West
21/28
COLLABORATION
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
F O RWA R D P R O G R E S S T H R O U G H C O N S T R U C T I V E PA RT N E R S H I P S
BUILDING TRUST Canadian forest products companies are becoming catalysts for positive change by striving for consensus with other interested stakeholders. These trust-building activities will be a dominant characteristic of how we do business in the future. Already, co-operative leadership is becoming second nature to us, as reflected in many noteworthy partnership achievements. Nationally, FPAC, in conjunction with the Canadian Boreal Initiative, Canadian Wildlife Federation, Ducks Unlimited Canada, World Wildlife Fund, and others, is undertaking numerous pan-Canadian initiatives to improve forest management practices and conservation in key ecosystems. These undertakings include: Land-use agreements. Major forest companies have negotiated landmark multi-stakeholder land-use agreements in key ecosystems. Managing sensitive forests. FPAC and member companies have partnered with World Wildlife Fund to identify ecologically significant forests within company operating areas. Healthy rivers and streams. FPAC and member companies are supporting work with Ducks Unlimited Canada to reduce the potential impact of forestry operations on fresh water in the boreal forest. Model forests. Canada’s network of model working forests, supported by many stakeholders, including forest companies, is considered the world’s finest.
Sustainable Forest Management Network. Member companies are supporting research and, more importantly, putting results into practice in the forest. Cleaner air. FPAC’s Pulp and Paper Air Quality Forum is demonstrating how stakeholders can work together efficiently to advance a key environmental file. Forestry planning and certification. Canada is unique in the extent to which the public (i.e., local communities as well as other forest users) provides input into company forest management programs on public lands, which constitute 93% of Canadian forests. Public consultation occurs by statute or as a requirement of some certification standards. Species at risk. With industry and environmental partners, FPAC advocated for the development of Canada’s Species at Risk Act. Now, it meets with some of the partners to ensure that the act is implemented in a collaborative manner. Multi-industry collaboration. In Alberta, a forestry company and a petroleum company jointly manage common forest area, sharing road construction and access, securing caribou habitat, protecting fish streams, and tending to reforestation. Aboriginal job training. In northwestern Ontario, a large forest company initiated a major community college training program in Thunder Bay to prepare Aboriginal youth for careers in the industry. The program is now supported by several major forest companies active in the region.
CONTINUING DIALOGUE WITH CUSTOMERS There is also a collective role for industry in helping to market Canadian wood and paper products. It’s another form of adding value to our customer relationships. Retailers want to sell more wood and paper, and we can produce it sustainably. Expanding our efforts to market the sustainable virtues of Canadian forest products will help maintain our markets in North America and develop new ones overseas. Large customers also want their suppliers to validate their sustainable procurement policies. Canadian producers would like to ensure that these policies recognize the rigour of forestry regulations, standards, and practices in Canada. By engaging in a continuing dialogue, each side gains a better understanding of the other. Some large buyers are working collectively through coalitions like MetaFore, whose membership includes large users of paper like Time, Starbucks, Kinko’s, and Toyota. MetaFore is championing the environmentally preferable procurement of forest products. For its part, FPAC has created the Market Acceptance Program, whose mandate is to complement member company efforts to engage customers—including collaborative organizations like MetaFore—on Canadian environmental practices. When we bring customer representatives to tour Canadian forestry operations, they give us a great deal of positive feedback, because they see tangible proof of our progress on the ground.
Trade liberalization. FPAC is working with a coalition of national forest products associations to elevate forest products on the agenda of trade liberalization processes like the WTO’s Doha Round. 23/28
F PA C S U S TA I N A B I L I T Y I N I T I AT I V E FPAC VISION A L E A D E R I N A D VA N C I N G T H E G L O B A L C O M P E T I T I V E N E S S A N D S U S TA I N A B L E S T E WA R D S H I P O F T H E C A N A D I A N F O R E S T P R O D U C T S I N D U S T RY
F PA C S U S TA I N A B I L I T Y S TAT E M E N T The Canadian forest products industry contributes to society’s well-being through its products and activities—from forest to market. FPAC members are committed to a sustainable development path built on a profitable and competitive industry. We will operate in a manner that is: Economically viable, Environmentally responsible, Socially desirable
ECONOMIC VIABILITY To maintain the profitability of our industry as the basis for sustainable development • Financial viability: Ensure the profitability of our industry and its long-term economic viability. • Competitiveness: Continuously improve the competitiveness of our industry within the global marketplace. • Customer focus: Develop and deliver quality products and services to meet present customer and future market needs.
E N V I R O N M E N TA L R E S P O N S I B I L I T Y To ensure that our activities are conducted in a sustainable manner that protects the environment
SOCIAL DESIRABILITY To conduct our business with integrity and reflect evolving societal values in our performance
• Environmental performance: Comply with all applicable regulatory requirements and continuously improve the environmental performance of our operations.
• Our employees and workplace safety: Provide economic opportunities and a safe and productive work environment for our employees and contractors.
• Sustainable forest management: Practice sustainable forest management in all our operations in accordance with recognized standards and ensure that wood supply is from legal sources.
• Community and stakeholder relations: Engage our stakeholders in a proactive and transparent manner and be respectful of their interests.
• Resource use: Continuously improve the efficient use of natural resources, material, and energy. • Product recycling: Promote and continuously improve product recovery and re-use.
• Relations with Aboriginal Peoples: Be respectful of the economic and cultural interests of Aboriginal Peoples and encourage their participation in the forest products industry. • Economic contribution: Contribute to the economic and social well-being in communities where we operate, as well as regionally and nationally.
F O R E S T P R O D U C T S A S S O C I AT I O N O F C A N A D A
OUR COMMITMENTS
FPAC will be a leader in advancing the global competitiveness and sustainable stewardship of the Canadian forest products industry. Leaders lead by deeds. Four years ago, it was decided that as a condition of continuing membership all FPAC members would be required to have all of their Canadian forestry operations 3rd-party certified to one of three major sustainable forest management standards by the end of 2006. By the end of 2005, we were 95% of the way there. Now, the membership is taking accountability to the next level through the FPAC Sustainability Initiative. Every two years, FPAC will report on the collective performance of its members in three key areas: economic viability, environmental responsibility, and social desirability. Reporting biennially in this fashion recognizes the integrated nature of these three key pillars and demonstrates our commitment to continual improvement. In this 2005 Annual Review, we report an initial set of eight environmental and forestry indicators that will be expanded for 2007. For added context, FPAC performance will be compared with that of the rest of the Canadian forest products industry.
Economic Viability: Maintaining an economically strong industry will ensure that we can meet the expectations of major stakeholders, including customers, lenders, and investors, by providing a platform for sustainable development and continual improvement. An economically viable industry produces a greater magnitude of benefit for society. The single-most important facets of economic viability are being competitive on a global scale and retaining a strong customer focus— delivering quality products and services to meet present customer and future market needs.
Environmental Responsibility: Our commitment includes compliance with all applicable regulations and more. By promoting continual improvements in every aspect of our environmental performance, we will strive to reduce the environmental footprint of our operations through efficient use of raw materials and energy and to promote even more recovery and re-use/recycling. Practising sustainable forest management along with forest certification will assure customers that the products they buy are made from wood legally sourced and from forestry operations managed in accordance with internationally recognized standards.
“The Canadian forest products industry wants to make a statement: FPAC members are proud of their improving record pursuing sustainability in every aspect of our business. In 2005, FPAC’s Board of Directors approved the FPAC Sustainability Initiative formalizing our commitment to achieve further sustainability improvements, and expanding our accountability to all Canadians. As a result, FPAC members will now publicly benchmark and report on their performance every two years against a range of environmental, social, and economic indicators that are litmus tests for sustainable development and global competitiveness. We’re not going to make it easy on ourselves. We welcome the challenge.”
Social Desirability: This is about being good neighbours and employers. We will provide economic opportunities and productive and safe work environments for employees and contractors as well as encourage the participation of Aboriginal Canadians in the industry in a manner consistent with their economic and cultural interests. By engaging our communities in a proactive and transparent manner and striving to contribute to their economic and social well-being, this industry can be a source of strength and stability, locally, regionally, and nationally.
John W. Weaver Chairman, FPAC Sustainability Committee President & CEO, Abitibi-Consolidated
25/28
TOTAL PARTICULATE MATTER (PM) EMISSIONS (kg/tonne) Average for pulp and paper mills reporting
TOTAL REDUCED SULPHUR (SO2) EMISSIONS (kg/tonne) Average for pulp and paper mills reporting
FPAC Members
2.0
Source: FPAC Environmental Data Survey.
2003
2001
2000
1999
2003
2001
2000
1999
0
ENERGY INTENSITY (Pulp and Paper Mills) Percentage change (GJ/tonne product)
GREENHOUSE-GAS EMISSION INTENSITY (Pulp and Paper Mills) Percentage change (CO2e kg/tonne product)
FPAC members continue to make energy efficiency improvements to enable pulp and paper mills to reduce their energy consumption per tonne of product. Minimizing site disturbance: As part of its certification requirements, an Ontario company has helped develop guidelines for minimizing site disturbance and damage from harvesting. This has been successful in further reducing the extent of rutting and site disturbance on harvested areas.
Maintaining bird populations: A Manitoba company has undertaken a forest bird monitoring project to study the relationship between stand-level habitat attributes and the presence and abundance of specific species during breeding season. This will help develop biodiversity strategies predicting the population of species as the forest landscape changes over time.
Source: FPAC Energy Monitoring Report.
Non-FPAC
2004
2002
-60
2001
-40
2000
2004
2003
2002
2001
2000
-20
FPAC Members
-20
Non-FPAC
2003
FPAC Members
-5
-15
Better watercourse conservation: To mitigate soil disturbance and sedimentation into watercourses, a Nova Scotia company is incorporating a GIS tool developed by the University of New Brunswick into its management planning to identify potential unmapped watercourses.
1
FPAC members are decreasing sulphur dioxide emissions, reducing a pollutant that contributes to smog and acid rain and is associated mainly with the burning of fossil fuels.
-10
FOR FPAC MEMBERS FROM COAST TO COAST, EVERY ECOSYSTEM IS A LIVING LABORATORY FOR IMPROVING CANADAâ&#x20AC;&#x2122;S ENVIRONMENT.
2
FPAC members are reducing total emissions of particulate matter, a significant component of poor air quality.
Source: FPAC Energy Monitoring Report.
ENVIRONMENTAL INDICATORS
TRACKING OUR PROGRESS
1998
.5
3
1998
Source: FPAC Environmental Data Survey.
1.0
THE FPAC SUSTAINABILITY INITIATIVE
Non-FPAC
4
1.5
0
FPAC Members
5
Non-FPAC
FPAC pulp and paper members have made significant reductions in greenhouse-gas emissions per tonne of product.
Caribou conservation: Protecting woodland caribou is a priority across Canada. In Quebec, one company has developed a new logging pattern that conserves caribou habitat. It hopes to learn more about how forestry impacts the herds and to adapt forest management planning and practices to maintain and even increase current caribou populations.
Carbon tracking: An Alberta company recently commissioned a carbon lifecycle analysis for its operations as well as a critique of its current business plan. This is helping prepare the company for regulatory emission reductions as well as for development of initiatives enabling carbon uptake and storage.
SFM CERTIFICATION IN CANADA 2001–2005 Millions of hectares
EFFLUENT FLOW: BOD and TSS per tonne trend (kg/tonne) Average for pulp and paper mills reporting
100 Total Forest Land Certified – FPAC Members
4
Fossil fuel
19%
Purchased electricity
20%
Other
Source: FPAC Energy Monitoring Report 2004.
BIOMASS SHARE 2004 (Pulp and Paper Mills) 59%
2%
Biomass and small hydro power accounts for nearly 60% of the energy used by Canadian pulp and paper producers.
Sowing the urban forest: FPAC members recycle over five million tonnes of waste paper annually. This is more than 20 million cubic metres of material diverted from landfill, or about enough to fill Toronto’s domed stadium 13 times over.
20 0
FORESTRY INDICATORS
FPAC members are contributing to the reduction of BOD (Biochemical Oxygen Demand) and TSS (Total Suspended Solids), two indicators of water quality. The lower each indicator is, the less the impact of mill operations on river health and aquatic life.
Self-generated (biomass, small hydro)
40
2003
2001
2000
1999
1998
1
60
2002
2
Source: Canadian Sustainable Forestry Certification Coalition, December 2005.
Source: FPAC Environmental Data Survey.
3
0
Total Forest Land Certified – Non-FPAC
80
2005
TSS per tonne – Non-FPAC
FPAC members have committed to full 3rd-party certification (CSA, FSC, or SFI) of forest lands under their management by the end of 2006.They are currently 95% (96 million hectares) towards achieving their goal.
ANNUAL ALLOWABLE CUT (AAC) Millions of cubic metres
Total AAC certified in Canada (FPAC and non-FPAC) 100
Total AAC certified in Canada by FPAC members only 73
Source: Canadian Sustainable Forestry Certification Coalition, December 2005.
TSS per tonne – FPAC Members
BOD per tonne – Non-FPAC
2004
BOD per tonne – FPAC Members
2003
5
Of the annual allowable cut from certified forests in Canada (100 million m3), FPAC members account for 73% (73 million m3).
Fuel conversion: A Manitoba company recently upgraded its energy system by including a wet fuel burner/dryer energy system to burn 100% of its wood residues, resulting in significant energy savings, waste reduction, and lower emissions, including of greenhouse gases. The design includes a recirculation feature that helps to reduce energy demand from the mill’s pollution-control equipment, further reducing greenhouse-gas emissions.
Waste not: A Quebec paper mill derives about 75% of its thermal power needs from landfill gas piped in from a municipal landfill nearly 13 kilometres away. The gas provides steam for the mill’s paper machines and heats the buildings in winter. It replaces 36 million cubic metres of natural gas and reduces carbon dioxide emissions by 540,000 tonnes per year.
Aboriginal partnership: The Missanabie Cree First Nation of Ontario signed a comprehensive forestry partnership agreement with the province and an FPAC member to generate jobs, training, and other benefits in exchange for access to forest harvesting rights in part of the First Nation’s traditional territories.
Air quality improvements: FPAC launched the Pulp and Paper Air Quality Forum process to stimulate investments at pulp and paper mills that improve air quality. One example: Taking biomass that used to be incinerated in beehive burners and using it to fire a cogeneration plant will give two mills in Prince George, B.C., all the heat and electricity they need plus enough surplus power for 39,000 homes, while closing the beehive burners will lower emissions significantly in the local airshed.
FPAC Member Companies
The Forest Products Association of Canada (FPAC) is the voice of Canada’s wood, pulp, and paper producers nationally and internationally in government, trade, and environmental affairs. The forest products industry represents 3% of GDP, exports $45 billion annually, and is one of Canada’s largest employers, operating in hundreds of communities and providing over 900,000 direct and indirect jobs across the country. With the help of member companies, FPAC designs programs to promote Canada’s leadership in trade and economic matters, sustainable forest management, and environmental stewardship.
Call us, contact us, invite us to brief you: In Canada Forest Products Association of Canada 99 Bank Street, Suite 410 Ottawa, Ontario, Canada K1P 6B9
In Europe Forest Products of Canada 12A, Place Stéphanie, 1050 Brussels Belgium
Tel: (613) 563-1441 Fax: (613) 563-4720 www.fpac.ca ottawa@fpac.ca
Tel: 32-2-512 50 51 Fax: 32-2-502 54 02
Abitibi-Consolidated Alberta-Pacific Forest Industries Inc. Bennett Fleet Inc. Bowater Incorporated Canfor Corporation Cariboo Pulp & Paper Company Cascades Inc. Catalyst Paper Corporation F.F. Soucy, Inc. Howe Sound Pulp and Paper Ltd. Partnership Kruger Inc. Louisiana-Pacific Canada Ltd. Marathon Pulp Inc. Mill & Timber Products Ltd. Papier Masson Ltée Stora Enso Port Hawkesbury Limited Tembec Inc. Tolko Industries Ltd. UPM-Kymmene Miramichi, Inc. West Fraser Timber Co. Ltd. Weyerhaeuser Company Limited
FPAC would like to thank FERIC, FORINTEK, and PAPRICAN for their contribution to this report, and in particular we wish to express our sincere gratitude to Kevin McElhatton and his team at PPPC.
The Forest Products Association of Canada is a proud partner of the Canada Wood program.
www.abitibiconsolidated.com www.alpac.ca www.bennett-fleet.com www.bowater.com www.canfor.com www.westfraser.com www.cascades.com www.catalystpaper.com
www.howesoundpp.com www.kruger.com www.lpcorp.com www.marathonpulp.com www.millandtimber.com www.papiermasson.com www.storaenso.com www.tembec.com www.tolko.com www.upm-kymmene.com www.westfraser.com www.weyerhaeuser.com
This annual review is printed on Canadian offset paper containing 20% post-consumer fibres. Publié également en français.
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