The Forest Sector Innovation in the Bio-Economy
Luncheon Event Summary Report May 2013
ppforum.ca
The Public Policy Forum is an independent, not-for-profit organization dedicated to improving the quality of government in Canada through enhanced dialogue among the public, private and voluntary sectors. The Forum’s members, drawn from business, federal, provincial and territorial governments, the voluntary sector and organized labour, share a belief that an efficient and effective public service is important in ensuring Canada’s competitiveness abroad and quality of life at home. Established in 1987, the Forum has earned a reputation as a trusted, non-partisan facilitator, capable of bringing together a wide range of stakeholders in productive dialogue. Its research program provides a neutral base to inform collective decision making. By promoting information-sharing and greater links between governments and other sectors, the Forum helps ensure public policy in our country is dynamic, coordinated and responsive to future challenges and opportunities.
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. Canada's forest products industry is a 57 billion dollar a year industry that represents 12% of Canada's manufacturing GDP. The industry is one of Canada's largest employers, operating in 200 forest-dependent communities from coast to coast, and directly employing 230,000 Canadians across the country. FPAC represents the largest Canadian producers of forest products, and all FPAC members are signatories of the historic Canadian Boreal Forest Agreement. Its members are responsible for 66% of certified forest lands in Canada. Third-party certification of member companies' forest practices is a condition of membership in the Association – a world first. This report is a product of the Public Policy Forum, in partnership with the Forest Products Association of Canada. © 2013, Public Policy Forum 1405-130 Albert St. Ottawa, ON K1P 5G4 Tel: 613.238.7160 Fax: 613-238-7990 www.ppforum.ca
The Forest Sector Innovation in the Bio-Economy Introduction The Canadian forest products sector has been a foundation of the Canadian economy and will continue as a driver of growth and innovation for many years to come. Canada has a natural advantage in forest products, owing to the bounty of our territory and the inventiveness of the industry. th
In March 2013, the Forest Products Association of Canada (FPAC) marked its 100 anniversary under the banner: ‘Proud Past, Promising Future’. The sector has been fundamental to shaping the social and economic development of Canada, influencing the development of villages and towns, roads and railways, employment and immigration, in most regions of the country. In recent years, the sector has rebuilt and renewed itself through innovative thinking, approaches and products. In 2013, its centennial year, FPAC is seeking to engage Canadians on their vision for sustainability, as significant contributor to the bio-economy of the 21st century. nd
On May 22 , 2013, Canada’s Public Policy Forum was pleased to convene a luncheon discussion among senior leaders from the private, public and research sectors, in partnership with FPAC. Conversation David Mitchell, President and CEO of the Public Policy Forum, opened the event by noting the long-standing relationships which the forest sector has with provincial and federal governments. In this spirit, the Forum invited David Lindsay, President and CEO of FPAC, and Serge Dupont, Deputy Minister, Natural Resources Canada, to lead the discussion. th
Mr. Lindsay briefly presented the sector’s long economic record – from its boom in the 19 century (including the Capital City’s former service as lumber town) to its position as the largest th employer and exporter in the country for most of the 20 century. In recent years, the forest products sector has faced a confluence of adverse factors, including a high-valued Canadian dollar, cyclical decline in US housing starts, and structural decline in the demand for pulp and paper. In light of these challenges, the sector is seeking to renew itself through a vision for greater efficiency, innovation and competitiveness, as laid out in the Association’s Vision 2020. This vision seeks to make the greatest use of sector resources, and greatest use of every single part of the trees harvested. Three pillars, which FPAC calls the “three Ps”, support this new approach, with objectives for the year 2020: 1.
Products The sector currently accounts for $54 billion in production each year. The objective is to add $20 billion to this figure by 2020. This growth (more than twice the rate of overall GDP growth) will require a strong focus on innovation, new market development, and increased trade capacity. New business models and a focus on value-added, and innovative new uses for cellulose fibre, will also be required.
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The Forest Sector Innovation in the Bio-Economy 2.
Performance The sector aims for a further 35% reduction in its environmental footprint, with a focus on a set of 12 key metrics (including greenhouse gas emissions, water usage, electricity usage and solid waste production).
3.
People A skilled, innovative workforce is the cornerstone of sector renewal, and focus must be placed on attracting and retaining the best workers across all levels (skilled, expert and management). The demographics of the sector are challenging, with 40,000 employees being at or near retirement. This attrition, coupled with a need for 20,000 new employees to support sector growth objectives, makes human capital a key focus. Attracting immigrants, women and indigenous workers are important priorities to meet these targets.
In offering his thoughts on this forward vision, Mr. Dupont demonstrated the Government of Canada’s strong commitment to the sector. The forest industry has actually been active for 400 years in Canada (dating back to New France). It was forestry, in fact, which first set the precedent for provincial control of natural resources, through the right of the provinces of Lower and Upper Canada in the early 1800s to set duties for logging on Crown land. As well, the sector has partnered with the federal government to support inter-provincial cooperation. Sir John A. Macdonald even noted in 1871 the value of a prospective joint Quebec-Ontario commission on forestry. The Government of Canada has long supported the industry, and the Deputy Minister opined that as the sector grows over the next 10 years, multi-sector collaborations will be critical to its success. Four key factors, which the Government of Canada supports, will contribute to the ongoing health of the forest sector and the bio-economy. These include: 1.
2.
Investment climate Canada has the lowest debt-to-GDP ratio in the G7, and the best credit rating. We have the lowest taxes on new business investments, and strongest economic growth in the G7 (including being the first G7 country to recover employment and investment losses due to the recession). Macro-economic strength in Canada benefits the forest products sector in the long-term. Knowledge The Federal Government is able to aid innovation in the sector by supporting knowledge development and transfer, through partnership and research support. Large-scale issues which affect the sector, such as climate change and invasive species, are also key areas of government focus. The government also supports development of highly skilled researchers through scientific training.
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The Forest Sector Innovation in the Bio-Economy 3.
4.
Markets Ongoing market development, through the expansion of free-trade negotiations and services to support export-development, are key focus areas for government. China and Japan are very strong markets for Canadian softwood lumber, and focus is needed to build on these opportunities. Working on less visible areas of policy, such as commerce regulations and building code advances, also helps to open new market areas for forest products. Social license Sustaining the social license to operate is an area where collaboration between the sector and government regulators is essential. The third-party certification for sustainable forest management, which serves as a requirement for FPAC membership, is an example of a best practice in this regard. Ongoing efforts to incorporate Indigenous engagement in development and business opportunities also reinforce this objective.
In concluding, both David Lindsay and Serge Dupont articulated the vital need for cooperative and collaborative public policy on the issue of social licence, and a shift to a more globallyoriented forest products sector. The objectives of Vision2020 align with areas where government can make the strongest contributions to industry goals (e.g. market development and strategic human resource development). Discussion Moving to an open discussion with session participants, a question was asked regarding the status of the Boreal Forest Agreement, given recent media coverage indicating negotiations had broken down. David Lindsay stated that, in fact, the agreement still stands. FPAC and its members continue to be committed to negotiations; as are environmental groups. Recent reports relate only to a delay in talks between one specific company and environmental groups, on a discrete parcel of land. In response to a question regarding the best opportunities for value-added developments in the sector, the role of innovation investment was underscored. Such investments must be ongoing, and throughout the supply chain in order to help develop new products and capture new markets. Value-added products will be critical to the sector’s goals for growth by 2020. Currently, processing uses about 90% of the tree, but with innovation and new product development that use could be even greater. New building designs, and new uses of the natural carbon molecules in the wood fibre, are also areas of potential future development. The role of human capital in the sector was also reinforced, along with a cross-sector focus on the continuum of skills required in the forest products industry. Skills, such as communication, technology literacy, and environmental sustainability are needed across the entire sector. The education system in Canada would be well-served to focus on some of these learning needs to help support and supply the future labour force. The role of various levels of education in producing the talents needed was also discussed, with a focus on highly qualified personnel (universities), skilled workers (colleges and polytechnics) and leadership (management training).
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The Forest Sector Innovation in the Bio-Economy A final element of the open discussion centred on the importance of community engagement in developing forest resources. Key institutions, such as the Canadian Model Forest Network, demonstrate the value of local, aboriginal and community knowledge in forest management. Enhanced engagement and collaboration with such organizations could benefit the forest products sector in achieving its vision of greater innovation and sustainability. Conclusion In closing the session, David Mitchell thanked the speakers and participants for their valuable perspective, and reiterated the importance which Canada’s Public Policy Forum places on multisector discussions to inform public policy. This session in particular exemplifies this model, and serves as strong starting point for continued policy collaboration in this vital area. In many ways, the sector reflects the broader Canadian economy: it is traditional, yet highly innovative; it is community-focused, but globally-oriented. Maintaining these advantages will be key as the forest products sector continues to evolve in the years to come.
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The Forest Sector Innovation in the Bio-Economy Appendix A nd
Luncheon Agenda, May 22 , 2013
The Forest Sector: Innovation in the Bio-Economy 11:30 a.m. – 1:30 p.m. Wednesday May 22, 2013 Rideau Club 99 Bank St., Ottawa
Agenda 11:30 am – 11:45 am
Arrival, networking
11:45 am – 11:55 am
Welcoming Remarks David Mitchell, President and Chief Executive Officer, Canada’s Public Policy Forum
11:55 am – 12:30 pm
Lunch
12:30 pm – 12:50 pm
Remarks David Lindsay, President and Chief Executive Officer, Forest Products Association of Canada Response Serge Dupont, Deputy Minister, Natural Resources Canada
12:50 pm – 1:25 pm 1:25 pm
Discussion Closing Remarks David Mitchell
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The Forest Sector Innovation in the Bio-Economy Appendix B: List of Participants Jill Baker Vice-President Public Policy Forum
Amanda Dacyk Policy Analyst Canadian Forest Services Natural Resources Canada
Bob Ballantyne President Canadian Industrial Transportation Association
Andrew DeVries Director, Conservation Biology Forest Products Association of Canada
Brian Barkley President Canadian Model Forest Network
Hala Domloge Executive Secretary to the President and CEO and Secretary to the Board of Directors Public Policy Forum
George Bruemmer Executive Director Canadian Forest Service Natural Resources Canada
Madelaine Drohan Canada Corespondent The Economist
Jim Burpee President & CEO Canadian Electricity Association
Serge Dupont Deputy Minister Natural Resources Canada
Julie Cafley Vice-President Public Policy Forum
Leanne Elliott General Manager Canadian Model Forest Network
Graham Campbell Executive Director Carleton Sustainable Energy Research Centre Carleton University
Robert Fleet Vice-President Enviroment and Forestry Tolko Industries Ltd.
Catherine Cobden Executive Vice-President Forest Products Association of Canada
Jon Flemming Vice-President Industry Affairs BIOTECanada
Ryan Conway Project Lead Public Policy Forum Fiona Cook Director, Business & Economics Chemistry Industry Association of Canada Anne-Marie Creskey Editor The Hill Times/Embassy
Natasha Gauthier Director of Communications Public Policy Forum Michael Giroux President Canadian Wood Council Dianne Gravel-Normand Senior Project Administrator Public Policy Forum 6
The Forest Sector Innovation in the Bio-Economy
Brendan Haley, Ph.D. (cand). School of Public Policy Carleton University
David Mitchell President & CEO Public Policy Forum
Glenn Hargrove Executive Director West Coast Energy Infrastructure Secretariat Natural Resources Canada
Walter Mlynaryk Board of Directors Kruger Inc.
Francesca Iacurto Director, Government & External Relations Forest Products Association of Canada Paul Lansbergen Vice-President, Regulations & Partnerships, Corporate Secretary Forest Products Association of Canada Sandra Lawn Ontario East Wood Centre Project Leader Canadian Model Forest Network Jean-Francois Levasseur Investments in Forest Industry Transformation Program Lead Canadian Forest Service Natural Resources Canada David Lindsay President and Chief Executive Officer Forest Products Association of Canada David Ljunggren National Political Correspondent Reuters Kevin Lockhart Graduate Student Carleton University L. Ian MacDonald Editor Policy Magazine Jean-Pierre Martel Vice-President Strategic Partnerships FPInnovations
Stephanie Muccilli Policy Analyst Polytechnics Canada James Munson Reporter iPolitics Susan Murray Executive Director, Public Relations Forest Products Association of Canada Julia Oliveira Project Administrator Public Policy Forum Richard Parfett Acting Director Canadian Forest Service Natural Resources Canada Daniel Rogers Director, Government Relations Railway Association of Canada Tom Rosser Assistant Deputy Minister Natural Resources Canada Ken Sheilds Chairman of the Board, CEO, President ConifexTimber Inc. W. Scott Thurlow President Canadian Renewable Fuels Association Glen Toner Professor, Public Policy Administration Carleton University 7
The Forest Sector Innovation in the Bio-Economy
Michael van Aanhout Chairman Stratos Inc.
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