Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 2 - Evidence - Meeting of May 5, 2009
OTTAWA, Tuesday, May 5, 2009
The Standing Senate Committee on Agriculture and Forestry met this day at 5:22 p.m. to study on the current state and future of Canada's forest sector.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I see that we have quorum. I declare the meeting in session.
[Translation]
First, I would like to welcome you to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
My name is Senator Percy Mockler from New Brunswick, chair of the committee. I would ask the members of the committee to introduce themselves.
Senator Mercer: I am Senator Mercer from Nova Scotia.
Senator Fairbairn: I am Senator Fairbairn from Lethbridge, Alberta.
Senator Poulin: Welcome to the Agriculture Committee. My name is Senator Poulin and I have represent Northern Ontario in the Senate since 1995.
Senator Duffy: Good afternoon. I am Mike Duffy, a senator from Prince Edward Island.
Senator Eaton: I am Senator Eaton and I represent Ontario.
Senator Baker: I am Senator Baker from Newfoundland and Labrador.
The Chair: Thank you, senators. Today is the committee's fourth meeting for its special study on the current state and future of Canada's forest sector.
[Translation]
To develop an overview of the forest sector industry, the first phase of the study will consist in gathering general information.
[English]
We hope to share this general information with our stakeholders and to impress upon governments the state of our forestry industry across Canada.
With us today we have representatives from two groups. From the Canadian Kitchen Cabinet Association, we have Caroline Castrucci, President, and also Richard Lipman, Board Member. From the Canadian Wood Truss Association, we have Jerry Cvach, Executive Secretary. Thank you all for being here today.
Witnesses, the committee wants to take this opportunity to thank you personally for being here. I invite you to make your presentations and I leave it up to the witnesses as to who should commence.
Jerry Cvach, Executive Secretary, Canadian Wood Truss Association: I volunteer to speak first because they will look much better after I make my presentation.
Thank you, Mr. Chairman, for giving me the opportunity to appear in front of this committee. We do not get here often; it is very pleasant.
The Canadian Wood Truss Association is an umbrella organization that liaises with other associations and government agencies. Our membership is comprised of regional associations of truss manufacturers, and there are six of those across Canada. There is one each in British Columbia and Alberta; one in Manitoba and Saskatchewan combined; and one each in Ontario, Quebec and the Atlantic provinces.
The seventh member of our association is the Truss Plate Institute of Canada. These are the people who produce the connector plates; they the technical arm of our industry. The truss manufacturers themselves are members of the regional associations, and this is where all the work is being done.
The truss industry uses 650 million to 1 billion board feet of lumber per year for trusses alone. I am not sure for the forestry industry how big an amount that is, but I estimate from our cells that that is how much we use.
I have read the transcripts of the previous hearings. My eye was caught by Mr. Lazar's statement that the Forest Products Association of Canada wants the companies to innovate their way out of trouble. We agree. In our definition, however, innovations are not just new materials or products but also a new marketing approach, and possibly new organizational structures or new construction techniques. This is familiar territory.
Wood trusses, structural wood components and manufactured structural wood are relatively recent innovations that revolutionized the construction industry. In the truss industry, wall panels and ready-to-move homes were introduced only in the 1960s. Wood eye joists, parallel strand lumber, laminated veneer lumber, laminated strand lumber and oriented strand boards were invented in the 1970s and 1980s.
I started to work for the wood truss industry in 1969. I learned quickly what the difference was between the producers of raw materials and the next level of suppliers, the component structure. In one word, it is marketing.
The lumber producers are essentially harvesters of logs that they process into dimensional lumber. Some lumber does not need much technical support, and the marketing for that is done by lumber brokers directly to yards and builders. It is based simply on availability and price.
At the time, wood trusses were a new method for framing roofs. A great deal of effort went into converting carpenters from conventional framing to the use of trusses. Once that was done, we captured the residential market quite quickly. However, converting commercial construction to the use of wood trusses and wood in general is proving to be much more difficult.
When manufactured structure wood came on the market, the original producers were mostly lumber mills. They thought they had a better beam or a better piece of lumber and tried to sell it as such, but it did not work. The new product needed to be marketed with much technical support. In short order, the truss manufacturers developed takeoff and layout ability, designed expertise, participated in the development of computer software and started expanding their business by distributing the beams and joists with their trusses as a package. Now, they are the primary distributors of the manufactured structure wood products to the point that a building designed in wood inevitably will pass through the truss plant office. The imperative words are ``a building designed in wood."
Traditionally, wood is the material of choice for single family homes and condo projects, where building codes permit. The situation is different in commercial construction, where the tradition is to use brick and mortar, or steel. Furthermore, architects and engineers — the specifiers — are trained to design with steel and concrete. They make decisions on the building material, and, typically, it is not wood. It requires a tremendous effort to convert any job to wood from steel or concrete once the design is finished.
Considering that commercial buildings are our — and, by association, the forestry sector's — biggest opportunity to grow in the construction field, we must convince specifiers to use wood in the early stages of projects. The salespeople involved are selling a concept, not a product. Initially, they must be paid for by the industry and not by individual companies, and that is where we are failing. Truss manufacturers do not have the means to convert and to talk to architects and engineers. However, if we could do that, we would change from being reactive — bidding on available jobs only — to being proactive by creating new markets for wood. We would then be in control.
What needs to be done to achieve that goal? I have ventured to put down five points that might have to be dealt with. First, we need to form marketing organizations whose sole purpose will be to promote the use of wood to specifiers in commercial buildings where building codes allow it. The salesmen for these organizations must be trained intensively in product knowledge and selling skills, be closely supervised, and have clearly defined and measurable goals and objectives. They should be managed and financed regionally because each region has different needs, conditions and business culture. They should be run by and be accountable to a steering committee made up of every facet of the wood industry, such as mills, component manufacturers, wood industry associations, governments at every level and the specifiers.
Second, Canadian building codes should be friendlier to wood. In the U.S., the codes are far less restrictive. Canadian code authorities have structural and fire concerns, but these can be overcome by research. More than anything, changing a building code is a matter of having the political will to do so. Recently, the British Columbia code has increased the height of wood buildings from four to five storeys, clearly a politically motivated initiative. At page 10 of his presentation before the committee on April 23, Mr. Bill Love, Chairman of the Board, Canadian Wood Council, wrote about what the Finnish government accomplished by stimulating the use of wood in that country. I cannot say it any better than what was said here on that day.
Third, there are not enough building designers knowledgeable in wood design who are willing and motivated to specify wood. There need to be more wood design courses in technical schools and universities. As well, we need some initiatives for schools to offer such courses. Universities and technical schools are not governed by anyone. They decide what they teach. I do not know of any way other than providing an initiative for such schools to offer those courses.
Fourth, there is not enough research and development on fire issues, improved construction details, fireproofing, and so on. We also need better sound ratings to verify how truss and wood I-joist structures work as systems and to develop the next generation of wood products, whatever they might be.
Fifth, an important point that is often forgotten, we need to entice contractors to erect the entire building envelope from the ground up in the way that steel is erected. However, when architects and engineers deal with steel people, one contractor erects all of it, and when they deal with wood people, many contractors are involved on the building site. Many of them are not even professionals. Forgive me for saying this, but in Canada, the only qualifications you need to become a master carpenter are $15 and a hammer. There is absolutely no requirement for people to have a licence to be carpenters. These are the five points that we need to do.
Not all of what I said is new. You must have heard from the Canadian Wood Council that they are trying to promote the use of wood in their Wood WORKS! program and Wood Solutions Fairs. Until recently, they were the only organization practising conceptual selling. They have succeeded in having several high-profile buildings converted to wood. You might remember that a speed skating arena was highlighted for the Olympic Games. However, someone pointed out that we build a skating arena only once every 50 years or so.
It is becoming obvious that Canadian Wood Truss Association members — truss manufacturers and others — have not seen any appreciable gain in market share for the kinds of high-volume, meat-and-potatoes commercial buildings that could use their product. We wonder why that is. There is usually a problem with any business venture that is run centrally from far away, because there is not enough supervision; their modus operandi is not suited to local conditions; there is lack of flexibility to react quickly to business environment changes; and too much time and money are spent on administration, communications, reporting and non-productive travelling.
The concept of what the Canadian Wood Council is doing with their Wood WORKS! program is essentially good, but it should be run regionally. An example is the regionally run cecobois initiative in Quebec. It is successful because it is homemade and designed to meet specific conditions of their market, an initiative worth emulating. For those of you who may be interested, this is a very new initiative, just in the last half year, I believe, and you can find their website at www.cecobois.com. I would love to have read it in detail — I was made aware of it only recently — but it is all written in French, so it will take some time for me to master it. I was very impressed by the site.
Also, the Wood Truss Associations of British Columbia and Alberta are actively promoting wood in their provinces but on a very limited scale because they simply do not have the money. I think they are negotiating now for more funds from the provincial governments. This is what the Quebecers did quite well; they obtained support from the Quebec government.
What is needed is a long-term, financial commitment by all stakeholders in good times as well as in the bad. Governments must underwrite this kind of work in the lean times. It is our understanding that there is money in the budget to do just that, so we need to assure that it is properly allocated and spent productively, which I presume is what we are doing here today.
Let us re-emphasize that what will help the forestry companies is if their customers, the wood users, grow in number and need to buy more wood. The best way to grow in any business is to improve marketing and research and development. The following is a sentence from an email I got from Quebec, and I think it expresses the situation best: ``We need the governments to be creative, to help maintain a viable and competitive industrial sector going through the very hard times we are having now."
Caroline Castrucci, President, Canadian Kitchen Cabinet Association: To give you some background, I own a large kitchen company in the Ottawa area. The top three kitchen manufacturers in the Ottawa area employ probably over 500 people; that gives you an idea of our sector's employment in just our local area.
The Canadian Kitchen Cabinet Association, CKCA, is the national trade association representing the kitchen cabinet and bathroom vanity industry. Members include companies engaged in the production, sale or distribution of cabinetry, along with a wide range of suppliers, service providers, research organizations and consultants for the industry. The CKCA promotes the cabinet manufacturing industry, organizes informative and educational meetings and conducts annual surveys on varying topics related to the cabinet manufacturing sector. As an association, our major focus is in education, networking and standards development.
The CKCA has just introduced a new standard for cabinet construction and material testing as a means for Canadian cabinet manufacturers to differentiate their work from non-certified cabinets both from within and outside Canada. This program is being introduced for the benefit of Canadian cabinet producers and is a homegrown solution to the problem of differentiating the proven quality of Canadian-made cabinets from the confusion of imports. Like other well-established certification programs, such as Energy Star and CSA, this program offers producers a mechanism to build consumer confidence with a promise of consistent quality they can trust.
We do not believe that our members are directly involved in forestry operations. Our members do not harvest or operate in the forest. We are part of the value-added or advanced wood products processing sector, and our members are consumers of lumber and panel products, which are the key raw materials for our cabinets. Our industry uses softwood products, but we also utilize a wide variety of hardwood veneers and lumber.
Canada boasts many advanced wood processing companies that are internationally recognized as best-in-class for producing high-quality, reliable goods. Canada's advanced wood processing sector was vibrant and growing prior to the global economic downturn, generating more than $17 billion in sales each year. The total value of the sector's manufacturing shipments was established at around $17 billion in 2003. Exports accounted for roughly about $8 billion.
The value-added sector has experienced strong job growth over the past decade, with more than 64,000 jobs added from 1992 to 2003. It is important to note, however, that Canada's advanced wood processing sector is labour'intensive and highly fragmented. There are thousands of small shops that employ fewer than four people each, which results in a highly fragmented sector. Geographically, the sector is widely dispersed across Canada, with large concentrations of manufacturing activity in or close to metropolitan areas. Regionally, most firms and employees are in Quebec and Ontario. In 2003, of the 9,200 establishments operating in the sector within Canada, approximately 20 per cent of those produced cabinets.
Our sub-sector is one of the most successful within the advanced wood processing sector, due largely to strong demand in new construction in North America since the early 1990s and because of a growing market for these products in the home improvement business. Over this period, imports have not been as competitive with domestic supply because of the very high capital spending levels on new plants and equipment, as well as substantial productivity gains domestically.
Before the economic downturn, our sub-sector was expected to continue growing at a comparatively strong rate over at least the next decade. This assumes that sub-sector manufacturers will continue to invest heavily in productivity and quality gains. From a low of 9,846 in 1992, it had been predicted that by 2010, the total workforce would approach 30,000 persons in Canada, with growth to 36,000 by 2015. This will now be tempered by the economic downturn. Many companies are small and not mechanized, which means they typically lack the economies of scale common to sectors such as the lumber and structural panel boards sector. With the cost of production rising steadily, this fragmentation and lack of automation means that many small firms may not survive the next decade.
While the challenges described above are significant on their own, they are not the only ones the industry must confront. Globalization is an enormous challenge for the fragmented sector dominated by small shops. Globalization has created many benefits for the sector, but for some products it has also helped create the conditions for highly competitive new suppliers to emerge. Often through government-subsidized operations, low-wage economies such as China produce low price but competitively high-quality products, winning market share from higher-cost producers in North America. Offshore suppliers are successfully winning a share of domestic markets formerly supplied by Canadian and U.S. producers.
All firms in our sub-sector face increased business risks. Cyclical slowdowns occur in markets linked to new residential construction. There is a concern that the home improvement market will be sensitive to any potential future rise in interest rates. We are seeing an increase in imports of low-priced case goods and ready-to-assemble cabinetry from Asia. Managing that has required us to focus our developing niche on custom markets. This sub-sector has shown an ability to respond to shifting consumer preferences for alternative raw materials and finishes.
As a side note, the furniture industry in Canada is literally gone because of imports from offshore markets such as China. We are starting to see a major increase in imports in the low end of the cabinets coming in from China, especially into Western Canada, areas like British Columbia and Alberta.
Many cabinet-making businesses are likely to focus increasingly on customization and customer service, often providing supply and installation services, while big box retail stores are expected to dominate the commodity products, selling imported cabinets.
Canadian manufacturers of cabinets who have not already done so must invest heavily in technology to ensure engineered levels of higher-quality products. Buoyed by increased corporate earnings in recent years, many of Canada's cabinet producers have used adaptive business models to restructure their operations. They are focusing on enhancing workplace skills, some with revamped compensation policies.
The sector's exposure to export market forces, shifts in global terms of trade and Canada's liberal trade policies for imports create vulnerabilities within domestic manufacturing. In particular, the sector is vulnerable to sizeable and rapid changes in exchange rates and low-priced but often high-quality imports from low-wage nations. I will turn the presentation over now to Mr. Lipman.
Richard Lipman, Board Member, Canadian Kitchen Cabinet Association: The forest industry has been at the front end of the current recession, with the collapse of the U.S. housing market. As of October 2008, housing starts in the U.S. were 60 per cent below their 2006 peak. Between January 2006 and October 2008, the price of lumber has dropped almost 40 per cent. Unfortunately, the industry's challenges hit Canadian families and communities hard. Over the medium term, however, there will be solid growth in demand for forest products, and there are some good prospects for our products as well.
The long-term growth for U.S. lumber consumption is very positive. The average annual U.S. softwood consumption in 2011-2015 is expected to be 19.5 per cent higher than it was for 2006-2010. Global demand for forest products will continue to increase. Demand for lumber is projected to increase 3 per cent per year on average.
We know that there are tough times in the Canadian forestry sector. With the U.S. housing collapse and the global financial issues, the forestry sector lost 50,000 jobs and more than 250 mills over the past two years. Providing safety nets and economic stimulus are important steps, and we support initiatives to improve business conditions.
Both the provinces and the federal government have taken steps in the right direction. Some provinces, like British Columbia, are modernizing their tenure and forest management policies to make them more flexible and market'oriented. The recent federal budget shows recognition of the industry's promise and an acceptance that the government has a role in helping achieve that potential by doing such things as strengthening the powers of the Export Development Bank.
What is needed is a sense of urgency. If governments wait too long to improve business conditions, more jobs will be lost. We encourage the governments and provincial agencies to work together and act quickly on the recommendations that are coming from the various forestry and wood manufacturing industry groups.
The vast majority of Canadian forests are publicly owned and must be managed as a long-term investment. As mentioned, our members are significant users of hardwood products. Because of their specific biological composition, hardwood trees are harvested using a gradual or selective cutting — shelter wood — system, where only a certain portion of any stand is cut in a given year. This ensures quality trees are left to provide seed and shade necessary for proper regeneration.
CKCA members are committed to the integration of the science of sustainable harvest and production with the conservation of soil, air and water quality that preserves wildlife and fish habitat and promotes healthy forests. Programs from provincial governments to reduce forestry costs in hardwood and mixed wood forests and to allow the regeneration of our hardwood forests would be beneficial.
Provinces own most of the wood used in the industry's mills. For too long, they have managed the forest resource with an eye to short-term politics rather than long-term economic growth. A number of provinces retain the antiquated policy whereby the government, instead of the market, decides where wood will be processed on a mill-by-mill basis. There have been occasions where provincial governments have prevented companies from merging and expanding their operations, so they will not be able to withstand an economic crisis. Where governments have modernized their policies, the result has been increased investment and stronger companies that can go the distance.
Our colleagues in the primary forest sector industry are major investors in innovation. Ottawa's main incentive for R&D is through the Scientific Research and Experimental Development tax credit, but companies are having trouble taking advantage of that when they are not profitable. If they are in financial difficulty, the government withholds tax credits owed to them just to be on the safe side. This needs to change.
Companies that aggressively favour more investment get more of it, which is why places like France and the U.S. have included this approach to investment as part of their response to the recession. Canadian governments have made progress on this front by eliminating capital taxes and by harmonizing the GST and PST. Governments could extend the accelerated depreciation rates on capital investment and the loss carry-back provisions.
The forest industry is by far the largest generator of renewable energy in Canada. The future of the industry is even greater, with its potential to contribute to Canada's overall energy balance. However, to achieve this, the right policies must be in place. Investments by industry in renewable energy should be recognized.
There are many exciting new opportunities to create green fuels and chemicals using forest products, and governments should be pursuing these with the help of industry, while offering greater incentives for green production efforts already under way.
Now is the time for industry and government to work together to address the economic crisis and build the forest industry of the future. Government's role is two-fold: to take rapid action on the economic fundamentals; and to work with industry to create pathways to transformation.
As major manufacturing sectors, the forest and wood manufacturing industries will benefit from broad-based initiatives to respond to the credit crisis, to stimulate investments in R&D and innovation and to build upon the progress of key environmental issues, such as climate change, sustainable forest management and renewable energy.
We agree with the positions that have been supported by the all-party committee of the House, which has made recommendations on the manufacturing sector and, specifically, on the forest industry. We agree with the suggestions that to help secure the forest industry's future, there are several actions that the government could undertake: ensure that the forest and value-added manufacturers have access to reasonable credit; provide tax incentives for investment and innovation; invest in R&D, market development and product promotion; and extend the EI Work-Sharing program.
We think that Canada should continue to show strong economic leadership to mitigate the impact of the credit crisis on the Canadian economy. In particular, the government should intervene as necessary to secure credit markets and should take action to ensure that Canadian manufacturers, including the forest industry, can continue to obtain access to the credit they need. This may require the government to take action to protect access to credit for companies in the manufacturing sector, indirectly or through loan guarantees, on the condition that they are otherwise creditworthy but unable to access credit due to instability in financial markets.
Also, the government should provide tax incentives for investment and innovation. Various suggestions have been given already to this committee, and I will not go over those.
On investing in R&D, market development and product promotion, we can enhance and sustain our support for these efforts to grow the markets for Canadian products and for cutting-edge research, which will lead to the next generation of new products and processes. We suggest extending the funding for the forestry and wood products manufacturing industries to be able to market their products abroad by extending funding for such good programs as Canada Wood, Wood First, Value to Wood and LEAF programs, which promote sustainable Canadian forest products in international markets. These programs, which provide valuable support to the industry, are scheduled to expire soon.
Extend funding for FPInnovations' transformative technologies program, which is again slated to expire soon. This program is beneficial to the primary forest industry and also to advance wood manufacturing companies. It leads to cutting-edge research, which will lead to the next generation of Canadian forest products. Federal funding for forestry R&D is leveraged on average by a factor of 20 by other stakeholders, resulting in over $500 million in forestry R&D every year.
Extending the length of time for which companies can use the EI Work-Sharing program was a positive step. Like other industries, we are pleased with the change to this program, including extending the benefits to qualifying companies and employees to a maximum of 52 weeks. Allowing companies with existing or expired agreements to apply for new 52-week agreements is also helpful.
Our association would like to thank you for the opportunity to appear and to express our views. We look forward to being part of future solutions to the challenges being faced by the forest and the advanced wood products processing sector.
[Translation]
Senator Poulin: I would like to say you how extremely interesting I found the presentations of the Canadian Kitchen Cabinet Association and the Canadian Wood Truss Association. Since the start of our study, we have heard from people who have mainly told us about the primary sector of the forest industry and told us that it would be extremely important for us to hear industry representatives on the further processing of wood.
I always ask the witnesses we hear from the same question. Our committee's first purpose is to study the causes and origins of the current forest crisis. You are participants in the forest crisis, but also major observers of that crisis. Mr. Cvach, in your opinion, what do you think is the cause or are the causes of the forest crisis we are currently experiencing in Canada?
[English]
Mr. Cvach: There are several causes. First, the forest sector is facing one major problem philosophically: a large portion of the production used to be pulp, but we have to accept that the consumption of pulp will gradually decrease due to today's technology. More and more, people will read their newspaper on the Internet. Offices will not keep records on paper. Part of the problem facing the forest sector is that they will continue to produce less, and it will not improve.
The other problem is that we are building fewer houses, which is a kind of crisis. I worked for 23 years for the company that produced connector plates for truss manufacturers. We had good years and bad years. The current low housing starts are rather regrettable, but the situation is cyclical. We will see that part of the industry rise again, which will improve the fortunes of the forest sector. Very little can be done about it. When people gain more confidence in the economy, they will have more money and they will begin to buy houses. As a country, we need to ensure that the forestry industry still has access to U.S. markets and that we develop other markets, because there is an interest in wood products in other countries around the world.
I do not know about new products. I have read the transcripts of the Senate Agriculture Committee meetings that talk about fantastic products that we can produce out of wood and fibre. Frankly, that is not my area of expertise.
The problem in Canada is a bit homemade. I am an observer of what happens in Canada. I am a proud Canadian citizen, but I came from another country, obviously. I have always looked with some amazement at what happens in Canada. Given that this country is one of the leading producers of wood in the world, I am amazed that it can be more difficult here than anywhere else to put a piece of wood into a commercial building. Throughout Europe, you see wood buildings.
I was in the truss industry when it first started. With my 200-word dictionary and an ability to speak English, I converted people to using roof trusses. We did a very good job of it. It did not take long because the culture was to build with wood. It was simply a better way to build a roof. Then we hit the commercial market. It is so maddening to fly into Toronto and see a million square feet of roofs that are all steel. When we went to commercial buildings to try to sell them roofs with wood trusses, they would say it was too difficult to convert the already determined specs. Therefore, we tried to convert the designers to using wood. We ran into people who had no concept of how to design in wood.
It seems weird, but engineers are trained to design in steel or concrete, and it is an entirely different concept to design in wood. You would think that structural engineering is always the same, but it is not. Engineers and architects graduating from university know how to design in steel and concrete, so they are leery about converting to wood. They do not understand.
In the connector plate industry, we tried to do it for our customers. We had 300 truss manufacturers in this country and about 15,000 people employed by the roof truss industries, which are small companies. Considering their overhead, they cannot hire someone to talk engineers and architects into building with wood. If I hire a salesman to knock on doors to convert a building from steel to roof truss, and he succeeds, when the building opens to bids, every truss manufacturer in that city can bid on the building. The one who will get the contract will not be me, because my bid will be too high with that extra overhead cost created by selling the roof truss. Someone else will undercut me in price.
We keep spinning our wheels on these commercial buildings. We have problems with fire codes, construction details and engineers not understanding our design procedures. Part of the crisis is that we are not replacing the loss of the wood market by getting more business from commercial construction, because we do not have the means to do so. I am not saying that government has to give us the money, although that is always nice. I blame the industry itself. I retired from the connector plate industry, and they will hate me when they will read these transcripts, so please do not send it around much.
When I retired from the truss industry, I got into this association business. I have been knocking on the doors of the plate producers, lumber companies and everyone else, saying, ``If you guys want to grow your business, these things have to be done." Yes, the truss manufacturers want bigger sales, but try to understand that they cannot do it themselves. We need the money. The Canadian Wood Council at one time was doing quite well because the lumber people were willing to pay them a levy on their production. I do not know how familiar you are with this, but they are losing their support now because everyone is claiming poverty and they are dropping out. They are cutting off the only branch they are sitting on.
To answer your question, the problem is that we are not being proactive. We just sit here and let the elements deal with us.
[Translation]
Senator Poulin: I put the same question to Ms. Castrucci on behalf of the association you represent.
[English]
Ms. Castrucci: It depends on what the crisis is in the wood industry, and what side of the coin it comes on depends on whom who speak to. As a cabinet manufacturer using wood that has been processed, we are a secondary wood user. Our big problem right now is getting quality veneers or hardwood lumber. Some very large board manufacturers in the country are having problems getting enough hardwood and softwood to manufacture things. Part of the problem is that forestry management did not really keep up with what the demand was. We are paying the price for that now, because we are having a hard time getting the quality lumber that we require.
[Translation]
Senator Poulin: It is interesting to see that your analysis as observers supplements the analysis we have received from other witnesses. That is very much appreciated.
Examining the sector in which you operate, the manufacture of kitchen cabinets, one sees a demand for that product in everyday life. How is your industry reacting to the current situation? You talked a little about it in your presentation. You also talked about increasing competition as a result of the arrival of certain products from other countries. Are your members involved in a lot of international trade?
[English]
Ms. Castrucci: I would say the majority of our members sell within Canada, and probably our major export would be to the United States. Maybe some companies out in B.C. do a significant export into the Japanese market. From Eastern Canada, where we are, we probably do some export down into the islands and maybe a little into Western Europe, but not a lot. We tend to have a lot more product shipped in from Europe to here. Some of the large cabinet makers in Germany and Italy probably export quite a bit into Canada and the U.S. We are tending to see a major increase in products coming from the Asian markets, and they are coming in at a super-reduced price because they do not have the same environmental issues that we are concerned about. They have them, but they do not have to pay for them. By the time you add up your employer health tax and your Workers' Compensation and all these other things that we have to pay, it makes our cost of doing business extremely expensive, and they do not have any of it. It is not just that they have the cheap wage, but they do not have the extra burden that we have as a manufacturer in Canada. Right now, we are seeing some major pressure with the imports coming in from the Asian markets.
Again, in regard to what is happening in the wood industry, I would say that basically it is trying to find the product that we can use that our customers will be satisfied with, but we are finding it increasingly difficult to deliver a product that hits our high standards and our customers' standards. Veneers used to be, on average, probably about one'sixteenth of an inch. Now, a piece of cherry veneer is one-fiftieth of an inch thick. That is how thin the veneers are getting because they are so hard to find. They have come up with new technology to make the veneers thinner and thinner, and that is causing a host of problems on the finishing end of it. You have problems where the glue will start coming through the face of the veneer. You have problems where you actually see through the veneer and see the substrate underneath. That is where we are finding we are having issues with the wood industry.
Mr. Lipman: I would add that those manufacturers who were doing a good business in U.S. export sales have seen that come off since the U.S. housing crisis.
Senator Eaton: Thank you all. This has been very interesting. We are learning on this committee that building a house in wood is a very green thing to do and that it would offset CO2 emissions. Why are we not using that? With all the new subdivisions going up, would it not be a good marketing tool, or would building a wooden subdivision make it so much more expensive and complicated that it is not something you can advertise or push for?
Mr. Cvach: The green card is the most powerful card we have when we market wood. It is fairly obvious. I do not want to be sidetracked here, but I am kind of surprised that, on the one side, the lumber industry has this fabulous benefit that carbon is sequestered in wood, and, at the same time, they are saying maybe we can make more use of wood by burning chips for energy, which would release the carbon. They themselves do not know where they are heading. We do not have that problem residentially. We are already building out of wood. We are not being invaded by any other material. When it comes to commercial, it is not the same, for some reason.
Senator Eaton: I understand your point that you will not go out there and try to convert every person building a commercial building. If there were more of a marketing program generally that building green was to everyone's advantage and we made people start to realize that building green is a good thing, would that not be helpful to you?
Forget about not using plastic water bottles; the supermarkets are now charging for plastic bags. Is there an incentive program that would get universities teaching young architects how to build in wood, how to use wood'friendly products?
Mr. Cvach: That would be a good way to start. I am now old enough that I speak about two generations behind me, because these are the people in university now. One thing we have going for us at this end is that the future of the earth is much dearer to young people than it is to us. That is a good tool. That would be a good way — to approach the universities and say the barrier to using this wonderful green product is the fact that you are not teaching it, but this is what the next generation wants. I think that would be a good approach, to go to schools and say we need to build more from wood because of these reasons.
Senator Eaton: And we have it.
Mr. Cvach: We have the product. Aside from that, in Canada we have more than what we need; we are actually exporting it.
That would be one way to do it. Any initiative selling that aspect of using wood ought to be very successful.
Senator Eaton: Mr. Lipman, I think in your paper you said that global lumber use was projected to increase by 3 per cent. What do you think our share of that will be? Who are our competitors, Brazil, China and Russia?
Mr. Lipman: Certainly, some of those emerging markets. With the difficulties with countervailing duty and so on, Canadians are looking at other markets to export to.
I wanted to comment on your suggestion about the marketing program. I think that would be a helpful activity. It would be interesting to ask Ms. Castrucci to comment about the consumer's preference or reaction to green products.
Ms. Castrucci: We deal directly with the consumers; our company sells to builders, renovators and the general public. Anyone who wants a kitchen we will gladly sell to.
Senator Duffy: Which company are you from?
Ms. Castrucci: Laurysen Kitchens out in Stittsville. We have been around for a while. Many of our clients are asking for green. They are very concerned with the amount of volatile organic compounds, or off-gassing. Volatile organic compounds come off of the lacquer used on this type of table. That being said, when they find out how much it costs to go green, they are not necessarily that interested in it anymore.
Senator Eaton: Why is there more cost to using wood?
Ms. Castrucci: It is not the wood. Our products are basically all wood. Our cabinets are manufactured out of a particle board with a melamine coat on top of that. The particle board has glue in it, and the glue has minute amounts of formaldehyde that tend to off-gas. Every tree and person has formaldehyde in them, but because we add glue to it, it is considered to have formaldehyde added to it. You can buy board that uses, I think, a soy-based glue that is considered to have no formaldehyde added. However, that type of board is very costly.
Senator Eaton: What about just solid wood?
Ms. Castrucci: If you did solid wood, your cabinets would cost quite a bit more. In addition, once you start using solid wood, you are using a lot more of the resources, so they have to plant more trees. Also, if you are using shelves with solid wood, you will have a lot of warping. There are a number of issues. You could make them, but you would have a funny looking kitchen after a year; it would be very crooked.
Senator Eaton: The cabinets would stand up but the shelves would not, is that it?
Ms. Castrucci: Trees grow in circles, so when you cut slices of wood, the growth rings are like this and the wood will bend like that. When you are trying to make a shelf or a gable or something like that, you have to take a number of pieces of wood and join them together. You are taking little pieces of wood and you need to have one with the growth ring this way and the other one with the growth ring that way so that this piece will work against this piece and stay straight. It cannot stay as straight as if you make something out of particle board. When you make things out of particle board, the substrate stays straighter and is more consistent.
Senator Eaton: It is not wood.
Ms. Castrucci: It is wood; it is just chopped up wood.
Mr. Lipman: On a straight piece of lumber, you have your regular piece of lumber, and people also have the option of buying green lumber or certified lumber — certified that it comes from sustainably managed forests. People are interested in having that. It is just a question of whether they are interested in paying more for it than they would pay for the regular piece of lumber.
Everyone would like to see lumber from sustainable sources. The question is whether they are willing to pay the extra price.
Senator Eaton: With respect to furniture, when you look at an antique sideboard or a table hundreds of years old, in those days, they did not have particle board.
Ms. Castrucci: It did not have particle board, but it had plywood.
Senator Eaton: An 18th century mahogany table?
Ms. Castrucci: There might have been some, and a lot of veneers were used, too. They will use a different type of wood underneath with a veneer on top. In addition, when you are using solid lumber, you have to finish it with something. You have to use a lacquer. You have to coat it with something.
Senator Eaton: Or paint it.
Ms. Castrucci: Yes, but we like to see the wood, so you would not necessarily want to cover it with something. Most of the lacquers used today are oil-based. Europe has done a much better job of having water-based finishes.
We are just starting to see water-based finishes coming into Canada. We are in the process of purchasing a new water-based system for our factory, but the cost to buy this equipment is astronomical.
Senator Eaton: We have the wood, but we have things to learn.
Ms. Castrucci: What we need is assistance on the manufacturing side to decrease our emissions. As a manufacturer and as a person who lives in this country, I do not want to have all this stuff go up in the air. If I could use a water'based product, I would much rather use that. However, the water-based product is twice as expensive and the machine is hundreds of thousands of dollars.
Senator Eaton: Eventually, if more people use it, the price will have to come down.
Ms. Castrucci: I would like to hope so. Again, it would be helpful if there were something that we could use, say a grant or tax deferment or something, when purchasing this equipment so that we can get it in. We have actually ordered the piece of equipment. We are waiting for it. It will be here sometime in September. Our emissions from our volatile organic compounds will decrease by 50 per cent.
Senator Eaton: That is a very good marketing tool.
Ms. Castrucci: It is. Believe me, I will be using that come September.
Senator Mercer: Thank you all for appearing tonight. I can tell you that anything can be made out of wood. In 1976, I was a delegate to the International Labour Organization meeting in Geneva. The ILO is made up of labour, management and government. The chairman of the labour component at the time was the president of the woodworkers union from British Columbia. I went to his office at the International Labour Organization in Geneva and saw that everything was made of wood, including the filing cabinets. It was most amazing.
Mr. Cvach, the first thing you talked about was marketing organizations to promote the use of wood in commercial buildings where building codes allow. Who should do that and how should they do that?
Mr. Cvach: First, it must be done by professional teams with that specialization. It cannot be done as part of some other job because it requires entirely different marketing tools.
Second, it must be done by people independent from the individual manufacturers, not because there is anything wrong with working with manufacturers but because their goal must be to increase the use of wood for the entire industry. Each time they convert a building from a competing material or they convince a specifier to use wood, it is a victory for the salesman, regardless of who is awarded the contract. If I were the successful salesman, I would be motivated by the fact that I helped to build out of wood. If I were working for a local truss manufacturer and putting out a great deal of effort to have a commercial building converted to wood that was constructed by another contractor, then I would be demotivated because I did not get the job. People who promote wood to specifiers as a building material of choice have to be independent from the individual manufacturers.
Who funds it? That is the question. It is either the truss industry or the wood industry. I think the truss industry, the suppliers to the truss industry and the regional governments have to proportionately fund these sales groups. These sales groups must be run regionally by the people who have the closest possible knowledge of the individual situation to govern them. If you want to increase the sale of wood to the construction industry in the Prairies, much of it will go into farm buildings. In Toronto, most of it will go into commercial and industrial buildings. There must be well-trained sales groups that do not work for the individual producers but for the industry, and the industry in cooperation with everyone else who has a stake in this will have to be the funding agents.
Senator Mercer: Obviously, we need examples. I was in Vancouver last weekend and had an opportunity to take a tour of the Olympic oval in Richmond, British Columbia, which will be used for speed skating in the Olympics. They have used over one million board feet of reclaimed wood that was damaged by the mountain pine beetle. It is an absolutely fabulous facility to look at it. As well, the acoustics of the building are enhanced by the wood. There is nothing we cannot build with wood.
It has been indicated that Asian manufacturers are a major competitor. Are they using wood that they harvest at home or are they using raw materials imported from Canada? We are exporting raw materials and buying back the finished product.
I want to tie that into your comment on the first page of your presentation. The CKCA introduced new standards for cabinet construction. You want to differentiate their work from non-certified cabinets both within and outside Canada. How do you do that? How would I know the difference? Is there a sticker or a stamp on the side to indicate that the item has been made by a certified cabinetmaker or manufacturer?
Mr. Lipman: That is the goal of the certificate program, which is being launched as we speak. A list of certified manufacturers will be available through the association. Product tags will go with the certified products so that the consumer can recognize that they are certified. It is based on a standard written by manufacturers, suppliers and interested organizations, such as housing authorities, to ensure that, as a minimum, we have a good-quality minimum standard for the construction of Canadian cabinets.
Senator Mercer: You said that where governments have modernized their policies, the result has been increased investment and stronger companies that can go the distance, which is a great, positive statement. However, you did not give us examples to help us understand what appears to be working. Which governments have modernized their policies and helped to increase investment in stronger companies?
Mr. Lipman: We will have to provide that information to the committee at a later date. That is a general statement, but we will provide you with the specifics.
Senator Mercer: There is no quick one to point to?
Mr. Lipman: No.
Ms. Castrucci: In answer to your question about resource product leaving Canada and imported as finished product, that happens with a number of products. The items I have seen do not contain any Canadian or U.S. lumber. For example, doors that we see for sale are not made of a lumber that is indigenous to North America. Possibly some imported doors at the higher end of the scale might be manufactured from red oak or aspen, which are familiar species in North America. However, it would be on the face only, and not necessarily the carcasses, which likely are made from wood indigenous to the exporter's local area.
Senator Duffy: Mr. Cvach, you mentioned in your presentation that British Columbia changed its building code to allow for wood construction up to five storeys?
Mr. Cvach: That is what I heard.
Senator Duffy: We heard a presentation before the committee last week, I believe, in which a witness showed us pictures of buildings in Europe, in particular Scandinavia, that were 10 storeys and completely made from wood. As we heard from Senator Mercer a minute ago, we have all been impressed by what has been done in British Columbia. Who sets the standards? Is there a national building code?
Mr. Cvach: There is the National Building Code of Canada. However, it is only a starting point for the provincial building codes, which follow the national code and incorporate adjustments. There are unbelievable differences from one province to another, which has always astonished me.
When a building code is determined, the provincial building codes are revised to adopt the new elements in the national code. At times new national building codes are not adopted by provincial codes.
At one time, there was a fairly major change in how to design roof trusses, called limit state design, and it came into the National Building Code of Canada. It did not take much time to get these limit state design principles applied to all building codes in all provinces, except Quebec, and I am not even sure whether they design in limit states today. The buildings codes are provincial jurisdiction. The national code is only a guiding code.
Senator Duffy: Some might consider that our report would eventually recommend that the federal government, in building new buildings or renting or leasing buildings, would ask that consideration be given to the possibility of using all wood construction. I am hearing from you that whatever the national government might want might be thwarted by the provincial governments and their rules. Is that right?
Mr. Cvach: We have a unique opportunity right now to obtain more consensus amongst provinces. If we always look for reasons or ways to unite Canada, this is a crisis that will unite us. The lumber and forestry industry is Canada'wide, and it is in every province's interest to increase the sale of wood to help forestry. If the National Building Code of Canada would take the lead and make changes that would allow more wood to be used in commercial construction, there would be a much better chance of its being adopted by provinces quickly than at any other time in history that I am aware of.
Senator Duffy: Thank you all. In reading your material, I have been impressed by the forward-looking approach you are taking to innovation and research and development, as opposed to what I consider to be the backward thinking of providing a subsidy here or there, which we all know does not lead to prosperity down the line. Congratulations on the approach you are taking, and we will see what we can do to help you reach that goal.
Senator Fairbairn: I thank all of you for appearing. You have come here for what I would say is a very hopeful and vigorous discussion with us. In what you are doing and the way you are obviously working very hard in an industry where all sorts of other things are going on, you are doing well. It is extremely encouraging for those of us sitting around this table to hear that.
I come from a part of Alberta that is right smack up against British Columbia. We are in quite a bind there now because we are a part of Canada that is huge with a variety of the lumber industry. We are coming into the grips of what appears to be a very difficult situation for the people in the industry and the way that will spin through other parts of the country as it advances. I am referring, of course, to the pine beetle.
In some of the things you have spoken about, you have been very positive in your approach, using your own history and the work that you do continuing to listen to the Canadian people to see what they want. Have you been hearing much in this last year or so about what is happening on the ground where the trees are in that part of Canada? There is the possibility of it moving, and it moves swiftly once those beetles get cranked up. They are coming into our province now, which is causing a great deal of anxiety. I am wondering whether this has yet caused any real change in the work that you are doing, looking to the future, and how you will continue conducting your business. I wonder how much anxiety this brings into your work. Mr. Cvach, you seemed to be talking about it earlier.
Mr. Cvach: I am not sure what the question is.
Senator Fairbairn: As we get into the forestry industry in parts of Canada, all of a sudden, after many years of wide open country, we are now being forced up against these creatures that are doing extraordinary damage wherever they happen to go.
Mr. Cvach: You mean the pine beetle?
Senator Fairbairn: Yes. We were talking about it earlier.
Mr. Cvach: We were talking about how it is devastating the forests in British Columbia. As far as the roof truss industry goes, it would be a big concern to us if they destroy our forests so we would not have any.
Senator Fairbairn: Exactly.
Mr. Cvach: I do not see any other concern. The pine beetle is damaging to our forests. What can you do with those trees that are dead? I do not know whether that wood can be used for anything. When there is a forest fire, if you cut the trees down immediately afterwards, they are usable in our type of industry. What happens with the trees that get damaged by these pine beetles? I do not know whether it spoils the wood to the point of being unusable. I do not have an answer. It is more an issue of how to grow the forest so that it does not happen again. I hear there is no real defence other than really bad winters.
Senator Fairbairn: When we had another series of discussions on rural issues not long ago, we were up in Northern British Columbia, in Prince George. Even though it was an awful sight to see coming down, nonetheless a small town nearby decided that, whatever colour the stuff was, they would not stand by and do nothing. This group started to create home furnishings, such as tables, chairs and beds. They were pretty, and they were doing it, which was a positive thing. After we left, we found out they could not hold up too well.
Is there an anxiety that causes you to look at areas that this has not reached? Is this an issue that you think out a bit and consider the possibilities of moving beyond those things before they get too far to do anything?
Mr. Lipman: It has been primarily a British Columbia problem. We are taking our association meetings out to B.C. in June, so we will have an opportunity to discuss that a little bit.
We have heard rumours that it is continuing to come east and perhaps it is even changing the tree species that it is attacking. I do not know for sure. That would certainly be a concern.
I do not think in the day-to-day operations that it has been a big issue. Certainly, I know some of these R&D organizations are working hard in B.C. to see what they can do to make good things out of the lumber and to salvage what is being lost.
We heard about a similar situation, where wood had been damaged by blue stain and people were making products out of it and calling it denim furniture. It was a unique marketing opportunity; they made an opportunity out of a challenge.
Senator Fairbairn: That is a good point. It was a little more on the blue side that we saw, or pink, but still, what you are saying is absolutely true. In that area, for a very short period of time, because it was close to when this was happening, there was a lot of strength, thought and purpose; in spite of it all, there was a way these people were getting around it and being able to use the wood.
It was constantly being put in our direction that it is hard to think ahead too far. However, once these things move, apparently very quickly, they may move in another direction. I was wondering whether this was something that comes in one's mind, to think ahead a bit. If this should happen, there are perhaps ways around it that would keep you flourishing in what you are doing obviously very well.
Mr. Lipman: It is a good point, which we will bring to our organization when we next get together.
Senator Baker: We take into consideration the excellent information in your briefs, which I found very interesting. However, I had one question on my mind when I was listening to you. The quality and makeup of the wood in Canada depends upon what part of Canada you are in. Each stick of lumber that we export is stamped so you know when the wood is from Ontario, Quebec, New Brunswick or Newfoundland, et cetera.
The quality varies so much in some of the northern areas, where it takes 30 years to grow a tree of any size. In other areas of Canada, it takes 15 years to grow a tree, so it makes sense that the quality of the wood must be different.
If you are getting wood for trusses, that type of wood would be different, I presume, than the wood you would require for cabinets.
Ms. Castrucci: Yes.
Senator Baker: Would you care to comment on where in Canada the best wood grows for your particular industries? Could you compare it to similar wood in similar geographic areas in Europe or in other places in the world?
Mr. Cvach: I will start. Certainly, you are 100 per cent right; the faster you grow the tree, the weaker the lumber will be. That is one reason. Actually, it depends on two conditions — it is the species and the speed with which the wood grows. It has not been a problem for us one way or the other, because there is enough modern knowledge, which has helped us over the years.
At the beginning, we have to design with wood. We have to know what the strengths are, and the structural properties of the wood. When I came to Canada and we started designing in wood, we would go by what species it was and then we knew the strength. As you can imagine, that could not take into account whether a spruce was from Ontario, from B.C. or from New Brunswick, because a spruce was a spruce. Therefore, we were not really using the wood in those days to our best advantage; they had to come with the weakest strength of that particular species. In those days, we knew that spruce was not as strong lumber as Douglas fir was from B.C., for instance.
Then a very good invention came — machine stress rating, MSR, of wood. Every piece of wood that is produced is put into the machine and the machine tests it. Suddenly, we have very precise values of this wood in our hands. A spruce tree that grows in a drier part of the country is stronger, so it will make a higher grade in machine stress rating work.
As for where the strongest wood is in Canada, I think it is around the interior of B.C. The climate there is drier and the trees grow more slowly, so they have denser rings and stronger wood. Most of the high-grade MSR comes from B.C.
I know you are from Newfoundland, so you are looking at me saying what the hell is going on with this guy? I know that the trees in Newfoundland grow slowly because I have driven across and I can see how the trees are struggling. I do not know whether they actually grade lumber in Newfoundland with MSR machines. It has really taken hold of the lumber industry in B.C., and this is where most of the MSR used to come from. If you do not have it now in Newfoundland, maybe those mills need some help to introduce these machines.
Senator Baker: Surely, you must admit that you have just contradicted yourself. When you started out, you said that the slower-growing wood is stronger than the fast-growing wood. If you have a tree that grows to a certain height in 15 years, the wood would be of less substance than a tree that takes 30 years to grow to the same size. I thought that is what you said at the beginning of your argument. Then you said, in conclusion, that the B.C. forests were perhaps the strongest, but they grow the fastest.
Mr. Cvach: Not in the interior of B.C.; it is very dry. On the coast, the trees grow quickly and the wood is not as strong. You will not machine stress rate wood that comes from Vancouver Island or the coastal areas as successfully as you will wood that comes from around Kamloops.
Senator Baker: How about the cabinets? You are hardwood, but —
Ms. Castrucci: We are located west of Ottawa, so most of our hardwoods come from the Quebec region. Our panel processers are all in the Gaspé area, so they are taking wood from the Gaspé region.
There is also some panel processing up near Mont Laurier, but I think that plant just closed. A number of plants have closed recently.
Most of the panel processers need a very close supply of both hardwood and softwood, so their plants will be located in areas of dense forestation. However, that involves trucking materials out of the Gaspé region to either Toronto or Montreal or to some of the rail yards.
I can speak only from my experience, which is mostly in the Quebec region. Some of our hardwoods come from New York State and Pennsylvania and a smaller amount from New Brunswick. In Alberta, they use a lot of aspen, common to the area.
In Ontario, we use maple or birch. Someone mentioned antiques constructed of mahogany. Today, we no longer have a supply of old growth trees. When you cut down a tree that is only 50 years old and compare it to one that is 150 years old, you can see a huge difference in the lumber. The biggest problem we deal with today in terms of buying hardwood or any kind of dimensional lumber is the fact that the trees are so much smaller than they were 50 years ago. The number one problem in purchasing solid lumber today is the size of the boards.
When solid lumber is rated, the export grade is the best and most of it is exported and not shipped within Canada. It is extremely difficult for me to buy export-grade lumber. I can buy only select and better lumber.
Senator Baker: Mr. Cvach, what are the connector plates made of?
Mr. Cvach: They are made of galvanized steel. Typically, a 20-gauge plate is forty thousandths of an inch thick. The steel comes from the mill in rolls that are typically 12 inches wide and galvanized on both sides. They go through punch presses that make the connector plate. The connector plate is a piece of steel that has teeth punched out through it. When you look at the face of a truss, you will see the holes in the truss and the material that has been bent down to make a tooth.
Senator Baker: Thank you.
Senator Cordy: I learned a great deal this afternoon. After building a house, I thought I knew quite a bit about these things.
My first question is about the marketing of Canadian wood products. I visited the Olympic oval in Richmond. It is a remarkable structure. Could such a building be used in marketing? That all-wood ceiling gave warmth to what normally is not considered a warm building. How much marketing is done for Canadian wood products by the federal government? Who pays for the marketing of Canadian wood products? The last budget contained $10 million for offshore markets. I thought that was earmarked for building houses in Asian markets in particular. Would that include Canadian wood trusses and Canadian wood cabinets? Was any of the money in the budget used for those specifics?
Ms. Castrucci, you said that we are importing cabinetry from Asian markets and that Canadian furniture manufacturers have all but disappeared, except for small niche markets. Many years ago, one had a choice of Canadian manufacturers when buying furniture, but that is not the case today.
A friend of mine made a vow to buy her grandchildren Christmas gifts made in Canada only, but was unable to do so. That is happening not only in wood products but all across the spectrum.
What role should the federal government play in marketing wood trusses and cabinets?
Ms. Castrucci: The government has a great opportunity to market the wood industry as a viable employment area, which is key these days. Getting people involved in the wood industry as a job would be great. The University of British Columbia has an advanced wood processing degree and is constantly looking for students. Conestoga College also has a good program for the secondary wood industry. As well, there is WoodLINKS at the high school level. We have to market our industry as a potential employer for well-paying jobs.
Students graduating from the program at the University of British Columbia are getting jobs. It is likely they could have two or three jobs, because they are in demand. The issue is getting the message to people that the industry offers good employment. Students do not have to go to the high-tech sector to find a rewarding career. We have to get out the message that it is a career, not just a job.
Senator Cordy: Do we market our made-in-Canada products internationally and nationally?
Mr. Lipman: We made some reference on the last page of our brief to some of those programs, such as Canada Wood and Wood First, which support export market development. Regional organizations, such as BC Wood; Q'WEB, the Quebec Wood Export Bureau; and Atlantic Wood Industries are looking at primarily export market development, for which they have government funding. Ms. Castrucci mentioned that many mill manufacturers are making a good product but are worried about getting it out the door. They need the expertise of these organizations to do some of that export market development.
As Mr. Cvach said, you need dedicated experts to help the small manufacturers to spread the word to export markets about the high quality of Canadian products. Certainly, that would be beneficial to our sector and others.
Mr. Cvach: We are different in that our product cannot easily be transported great distances. When you stack trusses for shipping, you are shipping air. We cannot hope to increase our production and use of wood by shipping trusses abroad, except south across the border, in which the industry has been successful. The truss industry here surprised me with how efficient it is at competing with Americans, who screamed all the way to their Senate that they were facing unfair competition. By the same token, we do not have to fear that someone from China will destroy our market.
Keep in mind that I am here today because our industry is trying to help the forest industry, and we are the users. If we increase, then more lumber will be spent. The government is doing a good job of spending money to market Canadian wood abroad. That is the goal. We want to improve forestry.
As for helping forestry internally, the government is not really spending money on helping us to convert to our material from other materials domestically. If the government would also increase the funding, or help us at least match the funds that would be collected, or whatever formula is devised, we could increase the use of wood in Canada if we were getting more of the construction work.
We have made a fantastic gain in B.C., in that we have gone from four storeys to five, and down in Finland they are building 10-storey buildings. We are wondering why that is not possible here. The further down the line you go in government, the more local you are thinking. Usually the federal government or state governments in various countries are more interested in long-term results than the municipal governments. We need the codes to allow us to build that high, and then we need to persuade the architects and engineers that tall buildings can be structurally as strong and certainly very much greener buildings than any other others. The biggest lead we need from the government is to help with these code changes, and whenever the code changes, we need research and development. We need to give confidence to the people to write the codes with scientific evidence that we can go that high. I think that would help a lot. Then we need some money going to the industry marketing, because the individual fabricators, as I have said, do not have the budgets to send people out to work on behalf of the industry and their competitors.
Senator Cordy: It all goes back to marketing wood products. You mentioned earlier about having to get into the schools and community colleges and universities to teach what we can do with wood products. You mentioned the engineers and the architects, but there are also the planners, the urban planners and the rural planners, and the drafters who can design buildings or look at buildings so that it is not a major thing that we have gone from five to six storeys but we can go to 10 storeys made of wood. How would you go about getting people within the schools to promote the use of wood? Do you do that outside of the schools?
Mr. Cvach: You need everything. You really need, to put it bluntly, door-to-door salesmen who go to these architects and engineers and say, ``What is your next project? What are you planning to build it with?" You have to be there at that moment and say, ``Why not build it out of wood?" At the same time, you need to have in your hands a building code that allows this guy to build it, because he will shut you out quickly if he says it is more square feet than what the building code allows or higher than what the building code allows. Even if you have that thing in your hand, you still need to be talking to that person who would say, ``I love to design in that wood, because I know how. It is a wonderful product."
You have to realize that an engineer who designs a building is responsible for that building until he dies. I know engineers now who are in retirement and still not sleeping well because they are worried about a building they designed 30 years ago. Before he decides to use that wood, the engineer has to be comfortable that he has enough knowledge to perform due diligence on this building. He needs to be trained. If he is not trained from school, that is okay, because somebody will train him. We can do that afterward. We can take a 40-year-old engineer and say, ``We can teach you. We will give you a tool. We have a computer program that will help you."
We need those things. We need codes and research to support the codes, and we need door-to-door, highly skilled salesman, highly motivated, to go to these people every day and be there when the decision is made.
The Chair: With the indulgence of honourable senators, I have a few questions I would like to ask.
Could you provide us with the percentage of Canadian kitchen cabinets produced in Canada province by province? What percentage would be coming from outside of Canada?
Mr. Lipman: We can try to find that out. Generally, across the value-added wood products business, not kitchens only but kitchens, furniture, windows and prefabricated buildings, about 85 per cent of the value of product produced comes from Ontario and Quebec. It would be about 50 per cent Ontario, 35 per cent Quebec, and then the rest is spread across the country. We can get specific numbers for cabinets, if you want.
The Chair: We would appreciate that. We are asking you to help us so that we can have mechanisms or programs in place for sustainability of softwood and hardwood.
In looking at the wood basket and growing wood, we have to be mindful of the forest management in hardwood and softwood stands. Could you provide the committee a written answer, given that we are running out of time, with your comments on management of our forests in the sectors of softwood and hardwood, and could you tell us what proportion of your industry's purchase consists of hardwood in comparison to softwood or oriented strand board?
Lastly, could you share with us, if it is not an industry secret, the ratings of cabinet kitchens and furniture, Canadian quality versus the competition from outside Canada?
Ms. Castrucci: Both European and Asian?
The Chair: Yes.
If there are no additional questions from senators, I will thank each of the witnesses. In the event that you follow the committee's work and you want to add additional information, please feel free to do so. Thank you very much for coming to our committee.
Senators, we have another meeting scheduled this Thursday at 8 a.m.
(The committee adjourned.)