Canada’s Forestry Sector: Rooted in Canada’s Economic History

Posted on Posted in Industry News

What’s the status of Canada’s forestry industry today? This informative article illustrates the recent challenges the sector has faced, and why innovation will be the driver of future growth. This is the first of a three-part series: once you’ve finishing reading, branch out your knowledge with Softwood Lumber, Part V, an infographic explaining the history of the Canada-U.S. softwood lumber dispute, and Innovation, Diversification Bud New Opportunities for Forestry Sector, discussing where and how the industry will find new opportunities for growth.

By the numbers

Canada is by nature a global forestry leader. It boasts the third-largest forested area in the world – its 347 million hectares represent nine per cent of the globe’s total. Approximately 94 per cent of Canada’s forests are on government-owned land, most of which are located in remote northern parts of the nation.

Canada is not only the world’s largest producer of newsprint and northern bleached softwood kraft pulp, but is also the second-largest producer of softwood lumber.
Canada is not only the world’s largest producer of newsprint and northern bleached softwood kraft pulp, but is also the second-largest producer of softwood lumber.
The sector accounts for 12.5 per cent of Canada’s manufacturing gross domestic product (GDP).
The sector accounts for
12.5 per cent
of Canada’s manufacturing
gross domestic product (GDP).
The forestry sector is an export-oriented manufacturing industry and accounted for almost seven per cent ($32.7 billion) of all Canadian exports in 2015. Traditional forest products form the backbone of the sector: Canada is not only the world’s largest producer of newsprint and northern bleached softwood kraft pulp, but is also the second-largest producer of softwood lumber.

With revenues of $67 billion in 2016, the sector accounts for 12.5 per cent of Canada’s manufacturing gross domestic product (GDP), or 1.3 per cent of overall GDP. While this may be lower than the contributions of other resource sectors, forestry is still a key player in the Canadian economy. It creates more jobs and contributes more to the balance of trade than do the minerals, metals and energy sectors.

Forestry employed 201,645 Canadians in 2015 and created 9,500 jobs in indigenous communities. More than 200 communities across rural Canada depend on the industry for at least half of their base income.

A resilient industry

Over the past few years, the industry has weathered many storms that have permanently changed its nature.

In this digital age, newsprint and stationery use has declined steadily as bits and bytes have replaced pen and paper. Tablet and smartphone apps are also displacing traditional newspapers as the news medium of choice.

To add to this perfect storm, the biggest shock to Canada’s lumber companies arrived in the form of the Great Recession in the United States and the ensuing stall in the U.S. housing market. The result was a 30 per cent decline in Canadian total exports in approximately 90 days. In the forestry sector, real GDP and output plummeted. Between 2006 and 2009, lumber production in Canada declined by 44 per cent, reverting to a production level not seen since the early 1980s. Pulp production also fell by almost 27 per cent.

Despite all this adversity, the industry is now turning challenge into opportunity through innovation. Non-traditional forest products have become more important to the sector and are fostering new clean-tech development opportunities. Expanding product markets include the bio-economy, nanotechnology and 3D printing.

Canada’s Forest Products Industry, a report developed by the Forest Products Association of Canada, the national voice for wood, pulp and paper producers, strikes the new note of innovation: “Expect us in the unexpected: we are no longer your father’s forest products industry. Yes, we still produce lumber and pulp and paper, but innovation is now the engine of growth as companies turn waste streams into revenue streams and extract more value from every harvested tree.”

But innovation doesn’t start solely in the mill. It begins in the forest and focuses on sustainability.

Expect us in the unexpected: we are no longer your father’s forest products industry. Yes, we still produce lumber and pulp and paper, but innovation is now the engine of growth as companies turn waste streams into revenue streams and extract more value from every harvested tree.
Canada’s Forest Products Industry,
Forest Products Association of Canada
A commitment to sustainability

Canada has earned a reputation as a global leader in the progressive management of its renewable forest resources. According to a 2014 Leger marketing survey of international customers, the Canadian sector has the best environmental reputation in the world.

Earning this reputation is a result of establishing and abiding by stringent forest management guidelines. One such indicator is the certification of forests – an independent assessment of whether a company abides by progressive and social practices. Canada has more than 160 million certified hectares, or 43 per cent of the globe’s certified forests, the most of any country in the world.

International destinations

Canada is a key player in feeding the world’s appetite for forest products. By value, Canada is the world’s fourth-largest forest product exporter, but is the world’s leading exporter of softwood lumber and newsprint.

In 2016, forestry sector exports totaled $34.6 billion. Wood products from our lumber companies accounted for $17.6 billion of this, or slightly more than half of all forest-related goods destined for international markets. Paper generated $9.6 billion (just under 28 per cent) of global sales, with pulp registering $7.6 billion (22 per cent) of overall exports.

The forestry export trend since the Great Recession has been market diversification, especially to China and Japan, with the U.S. share of Canada’s forest product exports declining from 81 per cent in 2005 to 68 per cent in 2015. Buoyed by the resurgence in the U.S. housing market, however, and despite the ongoing trade dispute over softwood lumber tariffs, the United States will remain Canada’s main forestry export destination for the foreseeable future.

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