Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 14 - Evidence - Meeting of February 8, 2007
OTTAWA, Thursday, February 8, 2007
The Standing Senate Committee on Agriculture and Forestry met this day at 8:02 a.m. to examine and report on rural poverty in Canada.
Senator Joyce Fairbairn (Chairman) in the chair.
[English]
The Chairman: Good morning. Last May, this committee was authorized to examine and report on rural poverty in Canada. Last fall, we heard from a number of expert witnesses who gave us an overview of rural poverty in Canada. On the basis of that testimony, the committee prepared an interim report, which was released in December 2006 and which, by all accounts, truly struck a nerve. For too long the plight of the rural poor has been ignored by policy- makers and politicians. Well, not any longer. To our knowledge, this is the first time that there has been a study on rural poverty in Canada. We are now beginning the second phase of our research.
Our goal is to meet with rural Canadians, the rural poor and the people who work with them. We want to hear first- hand about the challenges of being poor in rural Canada and about what we can do to help. To that end, the committee is holding some preparatory meetings in Ottawa ahead of the planned travel to rural communities across Canada.
We are delighted to have with us this morning representatives from the Communications, Energy and Paperworkers Union of Canada, CEP. Just a little over two weeks ago, the CEP staged a large rally on Parliament Hill to let parliamentarians know that dozens of rural communities face extinction and that thousands of forestry workers risk losing their jobs if something is not done to help the forestry sector. In 2005, some 50 mills announced closures or downsizing and nearly 9,000 jobs were lost, threatening the very existence of dozens of small towns across this land.
From the CEP to tell us more about these and other troubling facts are Mr. Dave Coles, National President, and Mr. Gaétan Ménard, Secretary-Treasurer.
Dave Coles, National President, Communications, Energy and Paperworkers Union of Canada: I thank you very much for inviting us here this morning. This is an extremely important endeavour that you have undertaken. I am afraid that many of your friends in the other place are not paying attention to the crisis in the forest industry and what it does to rural Canada and the farming communities, because there is a link.
I will give you a brief background of myself so that you can understand the knowledge base from which we come. I will let Mr. Ménard do the same.
For more than a century, my family has been in the forest industry, both here in Canada and in the United States. My great grandfather, grandfather, father and I have all worked in the forest industry. I worked in the solid wood side and in the pulp and paper sector in British Columbia for 20 years before I became an activist and was elected to office in the Communications, Energy and Paperworkers Union of Canada and its predecessor unions. I worked primarily in Western Canada, although I spent 10 years with the union as an organizer/servicing rep in the Prairies. I was stationed in Alberta and spent a fair amount of time working with the National Farmers Union on issues that link unemployment and off-farm employment. Across northern Canada and Quebec, in many rural forest communities, family farmers or their partners work in the solid wood side and the pulp and paper sector to augment off-farm employment. This crisis in the forest industry affects small farm families across Canada.
[Translation]
Gaétan Ménard, Secretary-Treasurer, Communications, Energy and Paperworkers Union of Canada: Madam Chairman, I must say that it brought a smile to my face when I learned that I was invited to give a presentation to the Standing Senate Committee on Agriculture and Forestry because I have spent my whole life working in the agriculture and forestry industry. I was born on a farm. My grandparents and my great-grandparents had a farm, so I spent my youth on a dairy farm in Masson, Quebec.
Subsequently, I worked in a pulp and paper mill in Masson for 15 years, a job that I lost as a result of technological change, as is happening to other members elsewhere. Although that was a difficult time, at least the technological change ensured the mill's survival.
This led to a job as a union representative where I met many people who had lost jobs in the pulp, paper and paperboard mills — people in their 30's, 40's or 50's with a multitude of skills, not necessarily transferable, and who had to face the harsh reality of being out of work.
Recently, I was elected officer at the Communications, Energy and Paperworkers Union of Canada and I now work at the national office with my friend Dave Coles.
[English]
Mr. Coles: As I mentioned earlier, we are extremely encouraged by the work of the Senate Committee on Agriculture and Forestry. We offer our complete cooperation and support in helping you to achieve your goals.
The CEP is one of the largest private-sector unions in this country. We represent people in every corner of the nation from coast to coast to coast, from high profile media workers in downtown Halifax and Vancouver to oil exploration workers in Fort McMurray, Alberta, telephone workers in Montreal and Toronto and mill workers across this country.
The most relevant segment of our membership for today's discussion works and lives in what we consider the rural heartland of Canada and Quebec, what urbanites refer to as ``small town Canada.'' Three years ago, more than 60,000 CEP members were employed in mills in that heartland. Today, that number is less than 50,000 and, sad to say, growing smaller as we sit here today.
Remember, ladies and gentlemen, we are talking about our membership in only one union. Beyond the CEP, there are another 12,000 direct job losses in the pulp and paper and sawmill sectors. Combine those job losses with what the economists call the ``spin-off effect'' and the overall impact of what we are calling a crisis in the forest industry can realistically be pegged at close to 100,000 jobs. That is because the forest sector jobs that are being lost are the economic base of Canada's heartland.
When a mill shut down in Smooth Rock Falls, Ontario, some 200 CEP members and their families were immediately devastated because of the loss of family income; but that was only the beginning. Within weeks of that same closure, the real estate market collapsed so that today in Smooth Rock Falls, you can buy yourself a pretty good three or four bedroom bungalow on a huge lot for less than $20,000 — except there is nobody around to buy it. Why? Because the grocery store is closing, as is the pharmacy and many other small businesses, which are the glue that keeps our community together.
The town is already being forced to cut back basic services because it knows its tax base is gone. Tembec was not only the biggest employer in Smooth Rock Falls, it was the biggest taxpayer. Combine that with the loss in property taxes from the mill workers and you have a community in crisis.
Inevitably, the schools will be next. As people move, classrooms will become empty; custodians will be laid off, to be followed by teachers. In short, it is a vicious circle that is being repeated far too often right across our country.
In Prince George and Prince Albert, in The Pas, Manitoba, in communities across Ontario from Dryden and Cornwall to Smooth Rock Falls, in communities throughout Quebec — New Richmond, St-Félicien, Pontiac — and in Atlantic Canada from Stephenville, Newfoundland, to Bathurst, New Brunswick, the story is exactly the same.
[Translation]
Mr. Ménard: We were very happy to learn that your committee was planning to visit some of these communities in order to personally see and hear what is going on. It is very important that your committee witness this first-hand.
When we say that the heartland of Canada is in crisis, this is not an exaggeration. We also believe that this is just the beginning. The economic devastation has indeed hit hard. It is especially dramatic for the many thousands of 40- and 50-year-olds who have worked in the mills all their lives, and who are still supporting children at various levels of schooling.
But the economic devastation is only part of the story. It is those very mills and forests surrounding them that have provided employment to rural Canada for more than a century. Many regions depend on this industry and still cling to the hope that it will survive, but if the mills close, there is nowhere else to work. At present, mill workers are facing possible closure in Lebel-sur-Quevillon in Quebec. Here, if you do not work in the pulp and paper mill, you have to trap hares for a living, as there is nothing else to do.
Kapuskasing is not Toronto; Chandler is not Montreal; and Prince Albert is not Saskatoon. There are no alternatives for these working people. Too often thousands of people must leave their region, their communities and families to find work elsewhere. At present, they are fleeing west to the oil sands development where the money is good. There may be money there, but that is the only good thing to be said about this region.
In Alberta, limits are being pushed beyond the tolerance level because there is no infrastructure in place to accommodate all of the migrants from other parts of Canada. Even if the infrastructure were in place, we do not believe that moving people to the oil sands is a good idea. What we need to do is keep our communities alive rather than encourage migration of this nature, which is only a short-term solution.
The first thing we need from the industry and the governments across Canada is recognition that there is a crisis in the heartland, which will just keep getting worse unless we as a nation come to grips with it. On January 22, the industry did acknowledge the problem, but we are still awaiting a response from the governments, in particular the federal government. Above everything, we need this to be recognized.
Any hope of eradicating existing poverty in many of these regions will be lost without such recognition. In fact, we believe that poverty will increase well above current levels if we do not take quick action.
We appreciate the work that you are doing in forcing industry and provincial governments to pay particular attention to the mill towns and to consider future prospects if immediate action is not taken. Your visits to these communities, therefore, will open your eyes to the plight of these people and enable you to pay closer attention to today's reality.
We support you in your work and would like to cooperate in any way we can. We will be with you all the way. Our organization is present in all regions across Canada, from sea to sea, and so it is out of the question for us to consider giving up the fight for the survival of these regions. We will fight to the end because we believe that forestry jobs are worth saving, as there are no other alternatives for these regions. We need to work hard to stamp out increasing poverty in these regions. Thank you very much for your attention. We are ready to answer your questions.
[English]
The Chairman: Thank you both. You have a sombre story to tell and I am glad that you are here to tell it.
Senator Gustafson: Rural poverty and the difficulty of keeping our young people in rural areas have been long- standing problems. Saskatchewan today has a booming economy due to oil, but agriculture is in trouble. I talked to a farmer this past week who indicated that he had to let the men go that were working on his farm because he could not afford to keep them. They go into the oil industry and they get high paying jobs.
Our young people want to go to the cities. They want to go to the big centres. You may not find that in the lumber industry as much, but that has been a trend. In the past few years, maybe our governments have been negligent in terms of even recognizing that there is a need in rural Canada. When I first became a member of Parliament 28 years ago, we were building skating rinks in municipalities and smaller towns, but those are now closed. That is because, for some reason, our young people do not want to stay in rural areas. How do we keep them there? What has the government done wrong?
I could go on and on. The wealth of this country comes from the land, whether through lumber, oil, gas, or agriculture. Nothing seems to go back in. That is for political reasons. There is no political will to do it. How do we deal with this problem?
Forestry is a renewable resource, so there is a hope. How can we bring people back without offering interesting jobs? To offer attractive employment, our industries have to evolve and produce more than lumber. The young people went away for better education, so we must provide interesting job opportunities to entice them to come back. They would not be interested in returning to build a sawmill, but they would like to be engineers in a mill where the process will be much more exciting and sophisticated. This is part of the solution.
[Translation]
Mr. Ménard: Actually, one of the reasons why young people tend to leave these regions is to search for better education. Most of the time, young people will leave the mill communities to continue their studies in institutions of higher education.
Perhaps, what we should be asking ourselves is not how can we stop these young people from leaving, but how can we attract them to these regions? Of course, employment is the main issue here. Without jobs, how can we possibly think of enticing our young people to come back to these remote areas?
Why do we still have hope? We are more familiar with forestry than we are with agriculture, and forestry is a renewable resource; therefore, there is hope. So, how do we bring the young people back? By offering them interesting job opportunities. That is just part of the solution. In order to provide interesting job opportunities, we must help our industries to develop their production activities to offer products other than 2 x 4s and 2 x 6s. Whether we offer high value-added products or hi-tech products, interesting job opportunities will be created for our young people who would be interested in coming back to the communities that they had previously abandoned for a better education. They would not be interested in coming back to operate a sawmill, but they may be interested in working as engineers in a mill which has undergone major changes. This is part of the solution.
[English]
Mr. Coles: Senator Gustafson, I am very pleased that you mentioned Saskatchewan. I was the senior officer for our union for six years and, quite sadly, I had to live through the closure of the Prince Albert pulp mill owned by Weyerhaeuser, now Domtar. Saskatchewan is the worst example of the forestry industry in Canada. There is no forest industry left; it has shut down. It has a tremendous impact on rural Saskatchewan, both farming and forestry. You will get natural rationalization — I hate to use that word because it is a corporate term — across the Prairies where small communities are moving to somewhat larger communities. Those somewhat larger communities, such as Saskatoon and Prince Albert, are being devastated by the collapse of the forestry industry. It is affecting both agriculture and forestry, because many of those farmers' sons, daughters and family members worked in the forest industry. There is hardly a sawmill running in Saskatchewan. The whole industry is shut down. The pulp mill is shut down. The income to the province may be up, but people will move away because there is no employment. It is simple. It does not matter if you are a mill manager or an engineer; Weyerhaeuser has laid off all of its senior management staff, and all of its corporate head office people are all gone. A province has been razed. I hope you look seriously at that. The forestry industry is affecting both the agriculture and forestry sectors.
Senator Tkachuk: My father actually worked in the Prince Albert pulp mill for a good portion of his life. He was a member of the union there and retired 24 years ago. He is still alive and was quite devastated by what happened when that pulp mill closed. It was a big part of his and our family's life.
What is causing the shut down of the pulp mills, not only in Prince Albert, but in other parts of the country as well?
Mr. Coles: Prince Albert was a corporate decision, not based on profitability. It just did not fit Weyerhaeuser's niche. When you shut the pulp and its fine grade paper mill down, that has a spin-off effect, because you cannot have a profitable solid wood side sawmill without a pulp mill. The waste from the sawmill is called residuals, a fancy word for chips. A sawmill also produces hog, which is bark and scraps. If you cannot get rid of those, you cannot function. You cannot burn them because that is not good for the environment, although it is economical. You need to have a healthy pulp mill and paper mill in order to have a solid wood side. That is why Saskatchewan shut down.
There are a number of factors in the rest of Canada. Some would say market conditions, which is relatively true. In our terms, the real reason has been a capital strike for three decades. Our equipment in Canada is very old. It has not been modernized, in most cases, and it is not competitive worldwide. That lack of investment has continued. Many of the firms that are shutting down and leaving Canada have invested large sums in offshore countries that compete directly with Canada. Primarily our industry is old and antiquated. By and large, it cannot compete internationally.
Senator Tkachuk: What causes that? Why would companies go somewhere else instead of reinvesting in their pulp mills in Canada?
Mr. Coles: It is the same reason they came to Canada in the first place: it was cheap, with cheap water, cheap fibre, and no regulations. Do you remember what Canada was like before we had regulations? We used to dump the stuff right across from here into the river. Companies will move to South America or Indonesia, anywhere they can invest and avoid environmental regulations, tax regimes, et cetera.
Senator Tkachuk: There has not been a fall off in demand.
Mr. Coles: There has been some fall off in demand, no question about it, particularly in the fine grades, the printing papers. The computer is now hitting us in newsprint. There is still a huge demand worldwide, and there has been rationalization of the industry and natural closures over time. Our biggest problem in Canada right now is that on many grades of paper we are not competitive. Canada is one of the very few foresting countries in the world that has no industrial strategy. Look at what the governments of the Scandinavian countries have done around taxation and cutting edge research and development. We used to manufacture the machines that make paper; now those machines are manufactured in Europe. The cutting edge in the forestry industry is in Europe. The most modern equipment is coming out of Europe. We do not produce forestry engineers in Canada. About a million things have gone wrong, and very few have gone right.
Regardless of who has been in power, there has not been a federal industrial strategy for the forest sector even though it is our biggest commodity.
Senator Tkachuk: That was interesting. This is about not only what caused the failure of these industries but also what government policies we could put in place either to reinvigorate the industry or to sustain what we still have.
Beyond the policies within the industry, I want to examine the area of workers devastated by job-loss and what government policies might help them to find jobs elsewhere. We can develop industry policy but it takes years to have an effect. Meanwhile, people sit without jobs in these small communities.
In Prince Albert, where my parents' home was, there were many migrant workers. People came from all over Canada, specifically from the Quebec pulp and paper industry and from Newfoundland, to work in the pulp mill. Many of them did not go back home but stayed until they retired. They became part of the community.
Even though we might not like what is happening in this kind of wild west Alberta oil and tar sands industry because of the large influx of workers, it is a tremendous economic opportunity. How do we help people to find work and relocate where they can earn good money and build a base for their families? Is that possible and how can it be done?
Mr. Coles: There is a system that we call ``just transition.'' The term is not well defined, even by us. Quebec and British Columbia have reduced the annual allowable cut because society said that to sustain the industry, fewer trees should be cut. Society has a responsibility to the people and to the communities. Tax breaks to the communities would help them to remain vibrant until they transition. It is an issue of adequate training and allowing the existing regimes to remain in place so that people are able to upgrade their skills. The CEP also represents many workers in Fort McMurray, which is not the panacea of North America.
Senator Tkachuk: I did not say that it was.
Mr. Coles: Intellectually, we have to look at the concept of having one economic driver in a country that we can all depend upon: the tar sands or the oil industry. That is problematic. When a community is completely devastated, the people need to be given transitional funding to move into new industries. Those jobs in Alberta are classified as highly skilled. There are few jobs for labourers. We represent both construction workers in the oil patch and refinery workers in Alberta. Those are highly skilled positions. A person cannot simply move from the wood room at Prince Albert into the refinery at Suncor.
Senator Tkachuk: In the West, we call the economic engine ``diversification.'' We always thought that having the economic engine in Southern Ontario was not good for the country either. We think that this is our opportunity. All of those jobs bring a tremendous amount of economic activity. All of it is built around the fact of those highly skilled jobs in the oil industry in Alberta. The mining industry in Saskatchewan has brought opportunity to the people of my province; and that has been a good thing. Saskatoon does not really have an unemployment rate. It has been fantastic. We can welcome some workers to our province. There are many jobs to be had and employers are crying for workers. Everywhere there are signs that read, ``we need you.''
Senator Gustafson: I have a short supplementary question. I spoke to someone from China who said that they can hire a worker in China for U.S. $100 per month. We are into a global problem that will affect all of North America in a big way. How will we compete globally with such low wages? The pumps used to get the oil out of the ground in Saskatchewan have come from China, having capitalized on the market.
[Translation]
Mr. Ménard: First, we need to compare labour costs. At the same time, we also need to compare labour skills.
How can we compete with these people? By having an extremely skilled labour force and by producing highly- refined products here. Instead of producing commodity products, we need to concentrate on products that the Chinese are not able to produce.
However, we need help to accomplish this change, so we need to make this about-face very quickly. Earlier, my colleague Mr. Coles indicated that the industry has neglected to invest in equipment for years. As a result, our industry is not currently proving competitive because we are producing lower grade products.
We therefore need to make investments to be able to make changes and to produce higher value-added products. Then we will be able to compete with China and India.
But to do this, as I mentioned earlier, we need help. The industry needs to benefit from fiscal measures or specific government programmes. So, if we were to take a look at Canada's tax base, we would see that the money is in Ottawa. The government has the means to develop a training and employment plan to help the industry and the communities.
[English]
Senator Gustafson: This morning, Chrysler is laying off 2,000 workers; so there you go. How will we compete with this kind of action?
Mr. Coles: If I may, I have a quick answer to that. In the sectors that we are talking about — oil and gas — wages are not the issue because they are only a small percentage of the costs. Suncor or Syncrude will tell you that wages are not the issue because they are capital intensive industries. Those jobs are created on a skill-base level, and that is the issue.
Senator Gustafson: None of these jobs do either. That could be a factor.
Senator Peterson: My issues are much the same as Senator Tkachuk's. We have to find the root issue so that we know precisely what we are dealing with. We ruled out overcapacity and there is no lack of raw product, being a renewable resource. That brings us to the failure to modernize. Does that mean we should fight and not give up on the industry? What do we fight for? Is that the issue? Is there a niche market where Canada excels that we could focus on to try to save this industry?
The Senate recognizes that there is a crisis and wants to find solutions. However, we cannot be all over the map. We have to focus. We need you to tell us what the issue is so that we can come up with a strategy to move forward.
Mr. Coles: To correct my statement, there are capacity issues, namely, overproduction. That is worldwide. Everyone has been shrinking, but in Canada we have gone way past what would be natural reduction as markets change, because of our inability to compete. We have old equipment, and it inflates the cost of producing any given tonne of product.
We need immediate research and development. We have good fibre here. We should stop competing in low grade commodities and compete in high grade commodities. I have listened to the industry go on and on saying there must be something else we can do. I am not a scientist or a researcher, but my instincts tell me that if we have not done any research and development for three decades, we are behind the eight ball. As I understand it, we have a taxation regime that impairs the ability to invest.
Together with the Forest Products Association of Canada, we have produced a joint statement on where we should go with the government and the industry. We are calling for a number of measures. We are asking for a summit in Canada of the industry, the government, the workers, communities, First Nations and environmentalists. Forestry is a renewable resource. We could be doing many things, but we need someone to step up to the plate.
[Translation]
Mr. Ménard: I would like to make a small comment. Canada is a vast country. When you ask if there is a particular niche market for us, I do not believe that there is only one solution. For this reason, we are asking for a national summit where representatives from all the provincial governments and communities can get involved. The solution for Northern Quebec is not the same solution for British Columbia. We do not make the same products, and we do not work with the same kind of lumber. I come from Quebec and the first time I saw the lumber in British Columbia, I was very impressed; it is very different. Therefore, there is not just the one solution to this problem.
[English]
Senator Callbeck: You have painted a picture of how devastating a mill closure can be and how it affects housing prices, businesses and so on, as in Smooth Rock Falls, for example, where 200 jobs were lost.
What are your major recommendations to the government regarding policies to help the industry? You mentioned research, taxation and relocating people. If the government asked you for your top five recommendations, what would they be?
[Translation]
Mr. Ménard: To start with, we need to make changes if we want to have thriving forests. So when we talk about thriving forests, we need to talk about reinvesting in research and development activities, and set up special funds to restore previously destroyed areas. There are areas where we have overused resources. We need to reinvest in planting and management activities. We need to recreate ecosystems that will allow this renewable resource to thrive again. We need to work on this issue in accordance with the Kyoto protocol and find a more ecological way of working.
We also need to have a dynamic and prosperous industry. We have relied on this industry for years. Today, the industry needs investment support and a national strategy to encourage industries to invest in this sector. There are different ways of doing this. There are many areas where we need to focus on research activities; for example in bioenergy or hi-tech research.
Senator Tkachuk mentioned earlier that, in the meantime, we have to help those communities in crisis. There too, we need to set up specific programmes such as training or relocation programmes. These communities need our help to get through this crisis with various initiatives such as training programmes.
All these are proposals that we are putting forward with the industry. In fact, these proposals have been developed in collaboration with the industry. As a matter of priority, we need to recognize that there is a crisis. As a result, we are asking the Harper government to immediately call for a national summit on the industry's crisis. Then we can ask all the stakeholders to add their grain of salt to the proposals that I have just put forward, thus offering solutions that are better adapted to different communities and areas. Talking to communities is one of the first steps to take; they are the ones that know what their real needs are.
[English]
Senator Callbeck: You mentioned a summit. Has there ever been one?
Mr. Coles: Not to our knowledge. We have unanimous agreement between the industry and ourselves, calling upon the government to call such a summit. The industry and the union have agreed to a draft document, and we are also now working very closely with First Nations leaders, environmental groups and community groups, because we think that the solution has to be a holistic view. Just hearing from us is not good enough. You need to have a high level discussion about the crisis.
This crisis affects not only those who work in the industry. It affects all of Canada. It is a huge carbon sink. It is about Kyoto, First Nations' rights and whether we want to have a rural Canada. Maybe we do not. That is my life, but there is a debate among some sectors of society who muse that we should not have a rural society.
Those are our demands. Start at the root. The work that this committee is doing will help us get that off the ground. Before the time runs out, there are certain sectors of Canada in Quebec that I would urge you to see, where the failure of the industry has devastated whole regions. Northern Saskatchewan is another as is the northwest corner of British Columbia, where, except for one or two, every sawmill, pulp mill and logging operation has closed, including Terrace and Smithers. In The Hazletons, a sawmill that was 90 per cent First Nations — all good jobs — shut down in early 2002. Many of those workers have never gone back to work because First Nations people will not leave their community. They will not go to the patch. They were there many generations before us, and they are not leaving. Without good forestry jobs, the poverty is incredible. If you want to see poverty in rural Canada, we can give you a list where it is not just we new immigrants but also the First Nations who are suffering because of the closures in the forest industry.
Senator Callbeck: You said your union has membership in all the regions across the country. Do you have membership in every province? I come from Prince Edward Island. I believe that we have roughly a thousand people employed in the forest industry there. Do you have any numbers?
Mr. Coles: Yes, we do. We have converting plants, box plants and paper plants that we represent in Prince Edward Island. There is not a province or territory where we do not represent at least some members.
Senator Mahovlich: I am from Northern Ontario. As a young boy on school outings I visited many plants up in Smooth Rock Falls, Iroquois Falls, Kapuskasing and Timmins. Were they all purchased by Tembec? Did Tembec purchase the mills in Noranda and Smooth Rock Falls?
Mr. Coles: I would have to check; there are so many mills in Canada that I get confused. Tembec did buy a big chunk of the mills in Ontario but there are many other major players, like Abitibi-Consolidated and Domtar.
Senator Mahovlich: Large corporations control these, is that correct?
Mr. Coles: Very much so. We faced two huge mergers in the last six months.
Senator Mahovlich: Do many plants close because the corporation owns another plant 30 miles down the road?
Mr. Coles: Yes.
Senator Mahovlich: The second plant was not feasible?
Mr. Coles: It is a corporate decision.
Senator Mahovlich: The bottom line.
Mr. Coles: I do not have it with me, but we can very easily supply the committee with a road map of the closures and the corporate ownership.
Senator Mahovlich: As I recall, Smooth Rock Falls is very close to Iroquois Falls. If they had a mill in one town, they would close it and operate in the other town and use the same natural resources down the road.
Mr. Coles: Also, in Canada, particularly in Ontario, the softwood lumber dispute has just shut down half the mills in Ontario. It has been devastating to Vancouver Island and Ontario. I would think we have lost 50 per cent of the mills in Ontario as a result of the softwood lumber agreement. That puts tremendous pressure on the pulp and paper industry as well.
[Translation]
Mr. Ménard: It is quite ironic really because right now the cost of fibre here in Canada, the land of forests, is the most expensive in the world. The industry is facing huge increases in energy and fibre costs at the same time as we are seeing an incredible rise in the Canadian dollar. All this combined has suddenly contributed to the unprecedented crisis that we are currently experiencing. As a result, the mills that produce the least have had to close their doors one after the other in rapid succession. Which mills should we close first? Not necessarily the least profitable ones. This depends on the decisions made by the large companies' top management.
[English]
Senator Mahovlich: The United States of America is our largest customer for forest products, is that correct?
Mr. Coles: Yes, they are.
Senator Mahovlich: China must have a high demand for our forest products because I did not see many forests there when I visited that country.
Mr. Coles: Certain products for China are being manufactured in Canada.
Senator Mahovlich: Are we sending them a finished product? We are not sending them lumber, we are sending them a house; is that what you are saying?
Mr. Coles: Not much of that, but we are sending some grades of paper. Primarily, China is buying cheaper, less expensive kraft — which is the fundamental basis of newspaper or paper from South America and Indonesia — and remanufacturing it in China for its own needs and to export back into Canadian and U.S. markets.
Senator Oliver: You are the Communications, Energy and Paperworkers Union of Canada. You have made a major presentation on behalf of the union and workers.
The other side of the formula is to hear from management and from the owners. Today we have heard only one side of the crisis. You have said that on management's side, their equipment is old, they are not competitive, they lack investment and they need a capital infusion of many dollars.
On the union side, you have not said anything about what deficiencies there are. In the 1950s, forestry workers used a crosscut saw. Later they got power saws. In Europe, they have huge processors that can go in their big forests. One processor can do the work of two dozen men, and it works 24 hours a day.
As a union, what are you doing to meet this new reality? It is not as labour-intensive a job anymore to get product and fibre out of the woods and into the plant. You told us that the companies have not spent the money to bring modern equipment into the plants, which would also reduce the amount of manpower needed. However, what are you, the union, doing to modernize?
Mr. Coles: We have made presentations at the highest levels to both Abitibi and Bowater, major corporations in Canada.
Senator Oliver: Bowater is in Nova Scotia.
Mr. Coles: Right. Bowater and Abitibi are about to merge; Domtar and Weyerhaeuser are in the final processes. We have made presentations to them about ways that we can make those companies profitable.
We can only operate the equipment they give us. We do not buy the equipment. Those harvesting machines you mentioned are all over Canada; you are probably very conservative about how many workers they displace. One machine probably displaces hundreds of workers and that is a fact of life. We are urging the employers to modernize, which, in the end, means fewer workers, but we are not opposed to that at all.
Senator Oliver: I have workers in the woods for me now and all you do is write cheques because power saws are not the way to do it anymore.
Mr. Coles: I do not know very much about forestry in Atlantic Canada, but across the rest of Canada and in many places in Quebec, they use harvesters. There are no workers. An operator runs the harvester.
We are not opposed to the modernization of the industry. We are not Luddites. We need the industry to survive. We want investment; we work with employers to ensure that the person hours per tonne or board foot are the best in the world, that they are most efficient. That is our survival. That is how the unions in Scandinavia survived.
[Translation]
Mr. Ménard: I, myself, lost my job in 2000 after a $150-million investment in the mill. Nevertheless, 150 jobs were lost. We have never been against that. On the contrary, we have supported any measure that would ensure the mill's survival.
In these circumstances, we urge the industry and governments to help these people. What are we doing to lessen the impact on families? Traditional solutions recommended in these circumstances have included early retirement, a reduction in work hours and employee cutbacks from the top rather than from the bottom. Our mission is to help those remaining. That is what we did in our area. When I was involved as president of the local section's reclassification committee, we managed to reclassify all the workers through training activities and other initiatives. So when the industry, the union and the government work together, amazing things can be accomplished.
[English]
The Chairman: Thank you, I appreciate that. Senator Oliver, you are right on the nose here.
This has been a very good session, and we have not had one like it.
Senator Oliver: We should have more of them.
The Chairman: Right. We will be seeing some of this on our tour. We will be in the northern part of British Columbia, so we are very thankful that you came and added to our book. If we need you, we will call you back.
Mr. Coles: If you like, Madam Chairman, I will leave you a copy of the joint statement that the industry and the union put out.
The Chairman: Thank you very much.
The committee continued in camera.