Proceedings of the Subcommittee on the
Boreal Forest
Issue 6 - Evidence - Evening sitting
TIMMINS, Thursday, October 8, 1998
The Subcommittee on Boreal Forest of the Standing Senate Committee on Agriculture and Forestry met this day at 7:10 p.m. to continue its study on the present state and future of forestry in Canada as it relates to the boreal forest.
Senator Nicholas W. Taylor (Chairman) in the Chair.
[English]
The Chairman: Welcome to our evening session, honourable senators. Our first witness this evening is Mr. Chown, who is with Abitibi Consolidated.
Mr. Chown, please take a couple of moments to summarize your long career and to introduce yourself.
Mr. R. David Chown, Director of Production, Fibre, Abitibi Consolidated: I am with Abitibi Consolidated in Iroquois Falls. I have been with the company since 1965. I have worked in various aspects of the firm's woodlands operations, both in Ontario and Manitoba. Although my comments will touch on aspects of the whole company, they will be focused primarily on Ontario and specifically on Iroquois Falls, which is my present jurisdiction.
The Chairman: Can you tell me how far Iroquois Falls is from here and what is its size?
Mr. Chown: Yes. I have an overhead that will orient us. Iroquois Falls is 45 miles from Timmins. I think we used to beat Schumacher quite often in hockey.
Senator Mahovlich: Not in football.
Mr. Chown: The agenda that I will follow is to tell you where we are and who we are. Parts of the boreal forest presentation will focus on our woodlands certification activities at Abitibi and our stakeholder role in the Lake Abitibi Model Forest. I will follow with concluding remarks.
What you are looking at here is the Iroquois Falls Forest. It sits on the border with the province of Quebec. The forest extends across more than 1.3 million hectares on either side of Lake Abitibi.
Senator Mahovlich: How many square miles is that?
Mr. Chown: It is 1.3 million hectares.
Mr. Rick Groves, Chief Forester, Malette Division, Tembec: Divide by 100 square kilometres.
Mr. Chown: It is 3,000 square miles. The boreal forest has a 120-year rotation, so we only cut 1/120 of that annually.
Keeping in mind that the history of the Iroquois Forest dates back to 1913, I will describe some of our recent investments. We harvested along either side of the lake and also through a rail line that ran up the north-east corridor, supplying the mill in Iroquois Falls over time.
Abitibi has an operation in Thunder Bay and two on the western side of the province, in Kenora and Fort Frances. We have a total of 19 mills. Abitibi has a presence in Ontario, Quebec, Newfoundland, the United States, and England, which represents our full complement of newsprint.
Since the merger last year between Abitibi-Price and Stone Consolidated, we have become the world's largest newsprint manufacturer. We also produce lumber, groundwood and specialty papers.
The mill in Iroquois Falls has evolved. I have left some product samples with Ms Reynolds, the Clerk of the Committee. Originally, our mill produced newsprint. As market conditions and requirements changed, so did we. Of our three mills in Iroquois Falls, one is a large newsprint mill and the other two manufacture a multitude of products. For instance, those two mills manufacture a lot of construction paper -- school-grade type, for young kids -- and have become quite expert at coloured papers. The fact that we have a special pulping process makes these products very highly regarded in the market-place.
The company employs 12,000 people and it enjoys a very broad Canadian-based ownership level.
As I said, the technology has changed, and this has changed the product mix. Of the four Ontario locations, three are single-industry towns. Our industry is the principal reason those communities exist. We have contributed widely to their well-being over the years.
Our business is capital-intensive and labour-intensive. To thrive, we depend on certainty of supply, allowing us to reinvest in our facilities.
The dollar figure before you now is the total amount of money that has been spent. In Iroquois Falls, in particular, we have spent in excess of $200 million over the last four years. We have put in a state-of-the-art thermal mechanical pulping process. We have installed environmental control measures in the mill; as well, we have built a new wood room, to better utilize, diameter-wise and species-wise, the wood coming into the mill.
We have three electric generating facilities in Iroquois Falls and the Abitibi River. We have spent money to upgrade those facilities, as well.
We have taken a great deal of responsibility for our position in the forest. At the present time, we are regenerating all areas that we harvest. We were the first company to sign on to the FMA in Ontario in 1980. When the federal government started the model forest competition, we were one of the applicants in Iroquois Falls. We were successful, and that has brought many stakeholders into our area. Also, as a measure of Abitibi's interest and involvement in forest management, of the ten original model forests, four were Abitibi concerns. At that time, we also owned the mill in Pine Falls, Manitoba.
All our operations go through a rigorous planning process to obtain licences and the necessary permits. It is our stated intention that we will meet or exceed all compliance and regulatory standards that affect our woods operations and manufacturing operations.
There is a growing public concern worldwide as to how forests are managed. We determined this year to take on a measurement system, of which two or three are available. The Canadian Standards Association is developing a standard. The FSC, Forest Stewardship Council, is another organization that will certify woods operations. It has some worldwide implications.
We have chosen ISO as a means of going forward. We have chosen it because it is fairly well known. It is complementary to manufacturing processes that have gone with ISO certification. It will have more common relationships because we span three provinces. The provincial regulations and legislations in Quebec, Newfoundland and Ontario make ISO a more appropriate standard to apply to each province. We intend to be ready for ISO 14001 accreditation by the end of the year 2000.
Before the merger, Abitibi-Price conducted audits of our operations every second year. Generally speaking, if there was a criticism, it was that not enough record-keeping and communicating was being done, which is a key component of any accreditation process. The rigor of ISO 14001 will see us produce an environmental management system that will cause us to produce very rigorous documentation outlining what we are doing, and then ensuring that, when it is measured, we did what we said we would do. Also, it will provide a ladder effect on which the improvement, year after year, will be so noted.
Besides ISO, as of this year in Ontario, industry members are being required to develop their own compliance and monitoring plans, which are submitted with the annual work schedules for government approval. We have done that. In fact, because we are monitoring ourselves, we are doing it much more frequently. I would say that we are harder on ourselves than the government when, in the past, they did the monitoring.
We have our own environmental audit program, as I said. I have left with Ms Reynolds our latest publication on our standing in environmental measurement in the mills and in the woodlands. It has just been printed and, unfortunately, there are not a lot of copies, but I wanted to leave a copy with the committee.
As part of Lake Abitibi Model Forest's involvement in the second phase of the five-year program, we have to meet criteria set out as part of the certification process. Moreover, our code of forest practice in Ontario was developed by a broad stakeholder group in the province and has been refined over the years. We apply that to our woods operations as well.
Why are we doing this? We need to know where we are to know where we are going. We need a tool with which to measure our progress. Our goal is to do the work on the ground and to show continual improvement in that work year over year, which a certification program will provide.
What you are looking at now is a typical model of an environmental management system of a manufacturing process. We start with establishing policy. We build our plans around what we are going to do. We implement our operations. An auditing process verifies what has been done. It then goes to management for a review. An improvement practice is then put in place. It is very similar to a financial audit. In fact, our financial people are involved in the auditing process to give it good rigor. The audit goes right through to an environmental committee of our board of directors, and changes, adjustments and corrections are followed through at the board of directors level.
As I said earlier, we started manufacturing our first paper in 1913 in Iroquois Falls. Hence, we have been on this forest land base for 85 years. We are investing and planning to be here for a significant period into the future. To accomplish that, we believe that we must ensure that the forest is managed sustainably, not just for our own requirements but for the many stakeholders that are involved in the forest. We do not use all the species that are present in the boreal forest. Other companies in the region use the other species in the forest.
We are indelibly linked with Mr. Groves, who is our colleague from Tembec. We ensure that species and dimensions of trees are put through their mills before they come to our mill. In north-eastern Ontario, the industry is very closely aligned, maybe more so than in other parts of the country that you have visited.
We strive to be the best. We will always be in conformance with our laws and regulations. If any division has been non-compliant in the last three years, the environmental report will indicate that. We share both our good new stories and our bad news stories with the public. We continue to benchmark opportunities for improving on our practices as well.
ISO may only be a first step to one of the other registration processes, but it is the one that we are choosing for now. There are presently only three systems -- I touched briefly on the other two systems. The other two are still somewhat in their infancy and not as well understood as ISO. ISO has a worldwide inference. That is not to say that we would not eventually embrace other systems, particularly as development continues to take place with the other two.
I understand that you have had some conversations related to the Canadian Model Forest Network. We feel very pleased with our involvement in the Lake Abitibi Model Forest. It has brought many stakeholders into our operations. There has been a spin-off effect.
Mr. Litchfield will speak about the forest management planning process in Ontario.
The province appoints local citizens' committees. It so happens that many of the stakeholders in the Lake Abitibi Model Forest are also members of the local citizens' committee in our region. These committees participate in the development of our forest management plans. The learning process has been beneficial, in helping stakeholders to understand how the forest works and to become involved on the ground in a variety of activities.
During the first five-year period of the model forest, we received recognition for undertaking research that had good application across the country. We did what we call a careful logging project, which is suited specifically to areas in the boreal forest, given the mixed age of the black spruce stand. We only cut down to 15 centimetres or a 12-centimetre limit in corridor fashion. It leaves a significant amount of the forest in place and provides advance regeneration, which is ready for harvest in a somewhat reduced period of time than the present 120-year rotation.
During this five-year period of the model forest, our focus is on developing the criterion indicators that become a component of a certification program on forest management. Those are the two areas that I wanted to talk about.
I have a couple of concluding remarks that may upset the panel. Until recently, we did have five-year federal-provincial agreements that were designated to the forest. I was in Manitoba in the late 1980s when the GIS, Geographic Information System, was brought in through that funding process. The funding process also allowed for the development of some First Nations nursery growers. As far as I know, there are no agreements in place at this point in time. That is a disappointment.
The model forest was a federal government initiative. The funding in the second five-year period has been halved. What will happen at the conclusion of this five-year period? Since measuring and developing sustainable forest management practices has become almost world-renowned, it would seem a shame for it to disappear.
Recent provincial downloading has seen responsibility over accessing or traversing waterways revert to the federal government. My appeal to the committee would be that we do not see an increase in regulation as a result of some of your recommendations. Take the example of establishing a water crossing. This was strictly an office exercise, in which the government people involved were not even prepared to carry out an on-the-site investigation. If there are regulation recommendations, they should be in concert with the willingness and ability to have enough funds to do an on-site investigation.
The Chairman: Thank you. Our next witness is from E.B. Eddy, a company that is intricately connected to Ottawa's history.
Mr. Martin Litchfield, General Manager, Forest Resources, E.B. Eddy Forest Products Ltd.: I am a 1972 graduate forester from the University of New Brunswick. I have had 26 years of professional forestry experience, 19 of which have been with industry in British Columbia, New Brunswick, and Ontario. Therefore, I have a fairly good breadth of experience in forest activities across Canada. I have had seven years of government experience, both here in Timmins and in Sault Ste. Marie, as regional forester and district manager.
Our company is E.B. Eddy. Our slide presentation will familiarize you with our organizational structure. We are very proud of being in Ontario for over 150 years. My mandate, as general manager of forestry, is to ensure a sustainable wood supply for 150 to 300 years into the future. We take pride in our longevity and our sustainability in Ontario.
My submission today will address changes in the way we do business and how we are progressing towards the future in Ontario forestry.
As you can see, in the earlier days, we started off more in the development and exploitation phase, where the industry was used to create the infrastructure for our towns, highways, hospitals and schools in the development of Ontario.
Then through the 1950s and 1960s, the industry had responsibility for forest management, and one saw some initial development in terms of nurseries and regeneration programs. In Ontario, that process was changed in 1962 and the government took more responsibility for that. Over time, it was recognized that the people who harvested the resource should be more actively involved in that.
As Mr. Chown stated, the early 1980s saw the first forest management agreements. At that time, industry took on more responsibility for management planning, regeneration, road access, and protection from insects and disease. Now we have moved into an even more advanced stage, which we are calling sustainable forest licences in Ontario, where the role of industry and the role of government is very clearly defined. We are working very closely together to achieve our goals on sustainability.
In the handouts I have given you, you will find some additional slides and background information about the industry and some of our companies. I will skim over that. If you have questions about it later, I will be pleased to answer them.
E.B. Eddy has recently been purchased by Domtar, which is primarily out of Quebec. The E.B. Eddy group of companies has mills in Ottawa and Hull. We have a major pulp and paper mill in Espanola. We have a recycling and specialty paper mill in Port Huron, Michigan. We have a specialty paper mill outside of Vancouver, in Delta, British Columbia. We have sawmills that provide specialty lumber, veneer, and chips to our pulp mills in Nairn, which is outside of Espanola, Chapleau, Timmins, Elk Lake, which is in the New Liskeard area, and Sault Ste. Marie. We are a fairly big company and cover quite a large area.
As Mr. Chown from Abitibi indicated, they cover a large geographical area. We, too, take a very significant geographical role in management in Ontario. Our area covers from Lake Superior to the Quebec border, and from Lake Huron up to the Timmins area. The amount of area that we manage, directly or indirectly, with our partners is 4.5 million hectares, which is in excess of 10 million acres. It is a large area and requires a lot of forestry expertise and commitment from the company.
As we address the aspect of sustainability and sustainable forest management, one of the things we must keep in mind is that sustainability and sustainable management systems are not a tangible product goal. You cannot say, "I have now achieved utopian sustainability." It is a concept; it is an ideal. Sustainability is a work in progress; it is part of our continuous improvement. As more science becomes available, we incorporate the better science into our sustainable programs. As foresters and managers, we want to make sure that our consumption and the production from the resources are in concert.
Our overriding objective and foundation is that we manage the ecosystem for integrity and health while sustaining our dependent industries and communities. Hence, it is a balance of sustainability not only for the forests and resources but also for the people and communities that are based on that. The federal government, through the Canadian Council of Forest Ministers, did a superb job of defining for Canada the principal elements of sustainability. They identified specific criteria. In addressing sustainability, issues of conservation, biological diversity, and the maintenance and enhancement of the forest ecosystems must also be addressed. That has been accepted all across Canada. We are now building those specific components into our management plans, and these are the criteria of sustainability.
As Mr. Chown mentioned, we are now working on the indicators as to how to know that there is a reasonable balance of biological diversity. These indicators, which will be incorporated into each and every one of our plans, will help to determine the range of what are the acceptable bounds of biodiversity. Those indicators will assist us in determining whether we are meeting our objectives. The federal government's involvement has given guidance to the province and the industry.
This is the foundation of the Canadian Standards Association fundamentals for sustainability, and it is built into the management plans. The federal government has shown a key leadership role in forestry. It has shown how all the provinces and companies can work within that framework.
As we look at that element of sustainability, questions of forest ecosystem health, biodiversity, and sustainability of wood supply are not all talk. We have been around for 150 years. We are taking steps to show not only what we are harvesting tomorrow and five years from now, but also -- the increments that you see on the bottom of this slide, that "T14," are ten-year increments -- predicting the supply in 140 years into the future. In this way, we can ensure that the steps we are taking today will provide for sustainability into the future. We build those into our plans and they are available for public review and peer review on a five-year basis and renewed every five years. Therefore, we are always projecting out in the future.
What you are looking at now is our timber projection. The question is: How do we build in other considerations? Obviously, a forest products company is interested in timber, but we are also interested in our effect on habitat, for other users of the forest; in other words, the effect on bird, moose, pileated woodpecker, and pine marten populations.
You can see that we are projecting 140, 150 years out for biodiversity in wildlife habitat. For instance, that very first one there, the BSSA, that is the blue-spotted salamander. We look at the small critters in the forest. We look at the pine marten. We look at the northern flycatcher. We look at moose, we look at lynx, we look at all sorts of things.
We have professional biologists and ecologists working with us to define the ranges and help us ensure that the habitat requirements and the old growth requirements or the young vegetation requirements, for a multitude of species and habitats, are protected over time.
Why pursue the sustainability? We believe that our sustainable forests will mean sustainable industries, and it is a good, sound business practice. We know that sustainability is a requirement of the Crown Forest Sustainability Act. Our key customers are telling us that if we want them to buy our product over the long term, we must show them that we are sustainable. They want to know that we are doing a good job in forest management. This is coming to us not only from major product consumers in Europe but also in North America.
We sell to the McDonald's corporation. We had to go down to Chicago to show them that our forest practices are sustainable. McDonald's has a wildlife habitat biologist on staff who comes out to monitor our resources, to make sure we are doing things that meet their standards for an environmentally preferred customer. Not only do we take it seriously, so does much of the market-place.
Some changes have helped us address this new approach in forest management, notably a couple of things Ontario has put in place. Number one was the Timber Environmental Assessment, which not only approved the basic format and mandate for forestry in Ontario, but also outlined 115 terms and conditions to practice forestry in Ontario. Ontario raised the bar in terms of standards and expectations.
In 1994, and then established in 1995, the Crown Forest Sustainability Act changed the focus from timber production to more of a forest ecosystem approach to resource management and gave industry more responsibilities and broader requirements.
How have we approached those things? What are we achieving in Ontario today? We have a more open, transparent process for forest management planning. The management responsibilities are moving to industry via the sustainable forest licences. The person who harvests the resource and uses the resource ensures the renewability of that resource.
As you heard today from Dr. Naysmith, Ontario has forest renewal trust funds -- for example, the Forestry Futures Trust fund -- that guarantee professional foresters that money is there for regeneration in perpetuity. There is no question of someone saying they are sorry but they have no cash; it is guaranteed to be there.
As you heard from Abitibi, there is a commitment from the major companies to approach land-based registration or product certification, be it ISO or CSA or FSC. Abitibi is approaching ISO. Our company is pursuing Canadian Standards Association certification for one of the forests immediately adjacent to Espanola, Ontario. There are changes in Ontario with the expansion of the program for parks and protected areas under Lands for Life. Mr. Groves may be saying a few words on that.
I would like to look at it in summary form, in terms of where we came from and where we are going. We believe that we have come a long way from a reputation of "hewers of wood." We are now moving more towards "managers of the ecosystem." It has worked out quite well with the Ontario government, in terms of clarifying that the government is the policy maker. Industry does the work as the planner and the manager; government does the work as the policy maker and the compliance reviewer.
We are not duplicating the work; we are not stepping on each other's toes. The expression I have heard some government people use is this: "They steer the ship, we row the ship." We may have a few more rowers. We may juice-up the engines every once in a while, but the system seems to be working. Tomorrow's challenge is to win public support and trust by proving our sustainability.
I have included in your package a number of recommendations that we would like this group to look at. I am not going to go into all the details of the recommendations.
In Ontario, things have worked out well. Government and industry's role has been clearly defined. We have to think along the same line for federal forestry and the federal responsibility. We have to clarify what the federal government does and where it can best fit in.
In Kyoto, we have heard about climate change. Many changes need to be made concerning carbon emissions, carbon sequestering, the role of the forest in taking up some of those carbon gases. I see a role for federal forestry and the federal government to help lead in that aspect. I have given a few ideas on that.
We are not asking for handouts from the federal government, but there are things the government can do to help us. The government can assist in ensuring that we are competitive with our friends in the United States and Europe, in terms of things like deregulated energy, competitive rail transportation systems.
We would like the roles of the federal and provincial governments to be clarified. An area that is of major concern to me is the role of research. There is duplication and overlap between the Canadian Forestry Service, the Ontario Ministry of Natural Resources, and the universities. Not enough coordinated research is being done. People are tripping over each other and, rather than collaborating, they are running interference. We need a leader. We need an organizing body. We need someone to focus the research and have people work together, have the federal government take its part, the provincial government take its part, and not have two separate stove pipes, each in its own domain, each not consulting with its neighbours.
That is an area where we need direction and leadership, in the same way that we got leadership on criteria for sustainability. If the federal government can take that leadership role, in directing and focussing the forest research, it would be a great help. We would know where the government's work is on policy and planning and we would know at what point industry is in carrying out policies, et cetera.
The Chairman: Our next witness is Mr. Groves, from Tembec.
Mr. Groves: There should be a package in front of you that outlines my biography and highlights my notes. I graduated from the University of Toronto in 1979. You can read the rest of the highlights.
The only thing I will point out is the following: It was not that long ago I sat on the industry side. I represented the forest industry on the Boreal East Round Table in the Lands for Life process. It is nice to sit on this side of the fence for a change.
I am going to take a couple of minutes to give you a bit of background on Tembec because, unlike my partners on my right and left, we are a fairly young company. Following that, I will talk about one of the issues that we have not talked about tonight, and that is the aboriginal people. Specifically, I am going to deal with the policies and programs that are needed to address the interests and rights of the aboriginal people.
Tembec has become a leading integrated Canadian forest products company. Our company is only 25 years old. We were born in the town of Témiscamingue. From that time, Tembec's operations have spread out over most of the boreal forests in Canada. We have offices in Manitoba, Ontario, Quebec and New Brunswick. The heart of our operations is north-eastern Ontario and north-western Quebec. In the four provinces in which we have offices, Tembec is now the largest consumer of roundwood. We have grown from one pulp mill in Témiscamingue to a fairly large conglomerate of operations. In Ontario alone -- our operations run along the Highway 11 corridor -- we have a sawmill in Hearst, a pulp and paper mill and sawmill in Kapuskasing, another pulp mill at Smooth Rock, a sawmill in Cochrane, a sawmill in Kirkland Lake, and another one in Timmins. We occupy a fair portion of north-eastern Ontario.
Annually, Tembec relies on the boreal forest for 4.7 million cubic metres of spruce, jack pine and balsalm fir, and another 0.6 million cubic metres of poplar and white birch. To get that wood, we have taken on the responsibility of managing the majority of the land base that produces that fibre. The remaining portion of the fibre comes from companies like Domtar and Abitibi Consolidated, looking for fibre exchanges, ensuring that we get the right wood in the right mill.
Tembec attempts to ensure that the greatest value is gained from every cubic metre of wood that is harvested from the forest. To do this, we have explored every dimension of our operation.
Tembec pulp mills depend primarily on wood chips. Those chips are by-products of producing lumber at our sawmills or our panel board facilities. The paper mills are also continually exploring new market grades and new markets. Tembec has developed markets for material that was considered only waste a few years ago. Tembec has a chemical division that depends on waste from our pulp mills for its raw fibre. We now produce products like ethanol, which is used for make-up, salad dressings and material like that. Many years ago, it was simply waste. We are trying to find markets for everything.
Tembec is not only trying to be dynamic in the pulp and paper sector but also in our solid wood products sector. Tembec was one of the first mills to use poplar to make laminated veneer lumber. Tembec is also trying to make better use of the fibre. We are constructing, as we speak, a finger jointing facility in LaSarre, a location of another one of our spruce, pine, fir sawmills. They will take the mill ends that we could not convert into long lumber at our other facilities and convert them into lumber that is eight feet or longer. That concludes my remarks about Tembec.
What about forest management and the aboriginal community?
Tembec's philosophy is one of progressiveness in developing a positive relationship with the aboriginal communities. Tembec began as an employee-owned company, committed to the communities in which it was located. Its philosophy is to work with all First Nations whose traditional areas overlap our woodshed. Our corporate mission incorporates an objective to create a positive, long-term social, cultural, and economic benefit for the region and its peoples, employees and shareholders. The aboriginal community is a part of that region and part of the people.
To that end, Tembec has hired aboriginal people to help it gain traditional knowledge on the forest ecosystem and to help it integrate this knowledge into its planning process. This sounds good. What do they actually do?
One individual's focus is to help us collect information about where the caribou are located. Where do they exist? What do they feed on? Where do they travel? The First Nations people have been living with these animals for hundreds of years. We need to gather this information about the caribou.
We knew that woodland caribou were present in north-eastern Ontario, and we have crossed paths with them, but we did not know how many were in the herd. Only recently did we discover that the herd is much larger than we realized. The aboriginal people who are helping us are talking to their elders, collecting information, summarizing it, and bringing it back to us.
The next step will see the aboriginal people work with our scientists and our forest planners to determine how to integrate the scientific knowledge and the historical traditional knowledge. In that way, we will plan well for the future and incorporate this new information. We do not have time to stop operations to study an animal for years and years, to find out what it does, where it feeds, where it goes. We need to incorporate as much of that knowledge as possible.
The second aboriginal gentleman's focus is to integrate traditional knowledge of trapping -- for example, where do the fur-bearing animals live -- into our forest planning process. What is the impact of clear-cutting on trappers, on the fur-bearing animals on which those trappers depend?
Hence, the focus of the two aboriginal people I have told you about is to work with our planning group and other scientific and research groups.
Tembec has entered into a variety of agreements with aboriginal communities across all four provinces. These agreements have a broad range. In Manitoba, we are entering into a detailed, long-term co-management agreement with an aboriginal community, for management of a new chunk of land, so that the aboriginal community can start a sawmill from which we gain the chips. In other areas, agreements involve developing short-term contracts for harvesting of wood, for planting trees, for tending the forests in a variety of ways.
Tembec has attempted to be creative and dynamic in the various areas, to develop something that is unique to each community. It takes a lot of time and energy, but it can be very productive and very rewarding.
What are some of the issues that we face in trying to build these relationships? Tembec often finds itself caught between two governments and the aboriginal communities in an argument over who really owns the resources. "Is it mine? Is it yours?" Tembec wants to stay out of that. In an attempt to develop economic benefits, we often find ourselves in the middle of who owns the resources, who we should be dealing with, and whose right it is to grant us the right to harvest the wood. It is very difficult to develop relationships that way.
In an attempt to develop economic benefits, the politics of the issue often gets in the way, and politics is in play on many levels. Whose traditional area is it? Who should we sit down with to develop economic benefits from the harvesting of those resources, Band A or Band B? Is it between the band and the government? Is it an in-band decision? Is it between the chief and the economic development group? These are all issues that we have to deal with that make it difficult for us to sit down and develop a long-term business partnership.
Another issue is the difficulty integrating traditional uses with a need to develop natural resources to provide for economic benefit. It is also a difficult challenge for most First Nations communities. As in every other community, there are differing opinions. One part of the community wants the forest to be used for traditional uses. Another part of the community is in favour of some development. We lack the knowledge to integrate that. It is an information base. We need to expand on that. We need to develop that because the communities want to maintain their traditional ways to a certain extent but need to access the resources to provide some economic benefit.
What are some of the potential solutions? Both levels of government, the industry, and the aboriginal communities must be at the table. If only one or two of the players are present, it is unlikely that negotiations will be successful. If all players are not present at the table, solutions cannot be developed and politics will get in the way. We need the federal government at the table when we are negotiating; we need the provincial government at the table; and we need the native communities at the table.
Mr. Litchfield talked about the roles and responsibility of the federal and provincial governments with regard to managing the resources. These roles need to be clarified for all present at the table. Does Condition 77 come into play here, in terms of providing economic benefit? In some people's minds in the provincial government, it is the industry's role to deliver on that. We need to sort that out. First Nations need to know who it is they are dealing with.
The last one is potential solutions. We need help in training and education, not only us, but the First Nations community and whoever is going to represent the provincial and federal governments at the table. All parties need to understand the issues each party brings to the table and the values all parties have at the table. Each one of us has a different value set. If we do not understand each one of those different value sets, we will never come to a positive negotiation. The key to any win-win negotiations is that each party understands exactly what are the other one's needs and what are the other one's values. Hence, a common solution can be arrived at. There needs to be training done on all sides, to help everybody know that.
Senator Spivak: The first thing I want to know from all three gentlemen is whether your companies are all publicly traded.
Mr. Chown: We are publicly traded. We are on the Toronto Stock Exchange and the New York Stock Exchange.
Senator Spivak: Can you give me some idea of your market capitalization and your profit picture as of this year?
Mr. Chown: After the merger, we crossed the $160-million-profit threshold at the end of May.
Senator Spivak: Is that on an annual basis?
Mr. Chown: That is after nine months; since the merger.
Senator Spivak: What is your market capitalization?
Mr. Chown: As in how many shares are outstanding? I would not want to say. I would be guessing, even though I am a shareholder.
Senator Spivak: Are both of your companies publicly traded?
Mr. Groves: Yes, we are publicly traded.
Senator Spivak: Therefore, this information that I am asking you is public.
Mr. Groves: Yes.
The Chairman: It is probably on the Internet.
Senator Spivak: Yes, but we are not on the Internet at the moment.
Mr. Groves: I wish I could give you an accurate answer but, like Mr. Chown, I would be guessing. Our year-end was last week, so we are in the process of calculating the numbers.
Mr. Litchfield: E.B. Eddy was a private company. It only became a public company a couple of months ago. Our E.B. Eddy annual profitability is in the $85-million range. There was previously only one share, owned by Mr. Weston.
Senator Spivak: In other words, you are all profitable companies.
Mr. Chown, how many hectares of forest does Abitibi have?
Mr. Chown: The company has 1.3 million hectares in Iroquois Falls.
Senator Spivak: Was it you, or someone else, who indicated that your company was going to double the amount of resources it harvests?
Mr. Chown: It was Mr. Litchfield. He was growing his resource base.
Senator Spivak: My question applies, nevertheless. If you have an annual allowable cut, whatever that is, do you see that increasing, decreasing, or remaining the same, in the next ten years?
Mr. Chown: I see it increasing over the next ten-year period, primarily because of our ability to apply some of the research work we did in the first model forest period, notably the method of harvesting whereby we do not harvest all the trees. We leave the smaller-diameter trees behind. It mimics the earlier method of harvest in Canada, which was horse logging. We see a reduction in the rotation age from 120 years, say, to 80 years, which gives us a boost on our allowable annual cut.
The Chairman: Do you mean you are doing away with clear-cuts?
Mr. Chown: Yes. It depends on how you define a clear-cut.
Senator Spivak: You are saying that you are going to get more out of it throughout the cycle.
Mr. Chown: We are going to reduce the cycle by leaving more trees behind.
Senator Spivak: You are going to double it.
Mr. Chown: That is the way we are doing it in the boreal forest.
Senator Spivak: The E.B. Eddy people are going to double it; is that correct?
Mr. Litchfield: I do not remember saying we are going to double.
Senator Spivak: I think I saw that graph. It looked like it was almost double.
Mr. Litchfield: When the plantations and the investments the company are making today are realized, then, yes, that will be true. Currently, Domtar is investing $24 million a year to grow the forest for the future. We will not start realizing increased yields from those forests until 2020, 2030, 2040, when those trees become of merchantable size.
Senator Spivak: I find it difficult to understand, given the new legislation and the need to have sustainable development, how it is possible for you to simultaneously increase your yield and accommodate all of the other needs and uses of the forest. We have not even identified all the species that are in the forest.
We saw this morning some idea of how difficult it is to micro-manage these things, to know where all the eagles' nests are, for example. I am finding this a little difficult to understand.
You are all profitable companies yet you all want the government to do a little more for you, either through capital depreciation or whatever it is. I find that a little difficult to understand, given the fact that you are utilizing Crown lands. Maybe you feel the stumpage fees are excessive. Could you rationalize that for me?
Mr. Litchfield: I will say a couple of words in answer to that question. Yes, we are making money but, as you saw, someone is investing $1 billion. What is a reasonable return on that investment? How many Canadians are investing in Canadian forest stocks? Now many, because our profit relative to the capital we are putting back in our mills to create that product is not worth it. They can get a better return on their money in other investments.
Senator Spivak: Actually, I am interested in that because I have heard that particular thesis. I have heard it is not all that profitable.
The Chairman: As a matter of fact, I think Conrad Black finds it more profitable to go into the newspaper business -- which probably illustrates your point.
Senator Spivak: Do any of you gentlemen want to comment on the profitability issue?
Mr. Groves: I will say a few words about that. If you check our annual report, Tembec has not been the most profitable company. In fact, we have not turned a profit in recent years, and most of our shareholders are not happy with the return on investments. At the last shareholders' meeting, the major issue was that the return is not there. I do not think, from a corporate perspective, we are necessarily asking for handouts. We are dealing with a Crown resource. We feel we are managing the Crown resource for the people who really own the land, who get a lot of benefit from it, and we are paying for a lot of that benefit. We are looking for some assistance from one of the other owners of the land to help us in the managing of those resources.
Senator Spivak: That is a valid argument.
Mr. Litchfield, you said that the forest is a provincial resource but that some federal legislation applies -- for example, migratory birds -- and that this may create inefficiencies. Do you really mean that? You surely understand why the migratory birds, fish, and endangered species legislation is vital to the protection of these things.
Mr. Litchfield: You do realize the confusion vis-à-vis provincial jurisdictions and federal jurisdictions.
Senator Spivak: They have just signed a harmonization agreement. Furthermore, most studies I have seen do not really see inefficiencies; they see a lack of monitoring and enforcement.
Mr. Litchfield: We are not speaking about the question of monitoring and enforcement but of responsibility -- the birds and animals, endangered species legislation. Where does federal jurisdiction begin and provincial jurisdiction end? We would like to know which level of government we are dealing with. We are having some problems there.
Senator Mahovlich: Is the research in your companies ongoing, or has it all been done?
Mr. Litchfield: There are various levels of research. We have market research as well as product research, which is related to new pulp machines, new paper, new lumber, and that type of thing. We also have industrial-product research.
Senator Mahovlich: I meant environmental research.
Mr. Litchfield: We have pure environmental research as it relates to chemicals, environmental standards and pollutant standards. We also conduct research in forest management. We are working, for instance, with Abitibi on the criterion indicators. For instance, what are the habitat requirements of a blue-backed salamander? How many are out there? We are going in, at our cost, and putting in telemetric receivers.
Senator Mahovlich: Is the government not helping you with this at all?
Mr. Litchfield: In some cases they do, yes. However, on others, it is all our cost.
Mr. Chown: The criterion indicators in forest management are a component of the model forest program, so that would have federal government support.
Senator Mahovlich: There would be some support.
Mr. Chown: Yes.
Senator Mahovlich: You are not clear-cutting. You are leaving trees such as cherry trees, trees that you do not use, which rot and the chemicals stay in the ground to support your popular trees like spruce. If you do away with all these other trees, will the ground stay healthy for the next 100 years?
Mr. Litchfield: We are not getting rid of all the other trees. There is a program, for instance, for birds. You must leave so many trees per hectare for birds.
A pine marten is a small weasel in the forest. They eat voles. If we leave a certain amount of "down," woody debris, it will create a habitat for mice. We want some of that material to be left behind.
This area is just on the border between the boreal forest and the Great Lakes forest. We are now getting into, as you have heard, some protection of advanced regeneration or retention cuts. We are also into shelter wood cuts, where you only take out some of the trees. With some of the hardwoods, such as maples, there is no clear-cutting. It is individual tree selection. The decisions about the harvest prescription, the silviculture prescription, vary according to the ecological considerations. If you did a selection cut on jack pines, the trees would not regenerate. They must have sunlight, so you have to open up the area a certain amount.
The Chairman: In your forecast, have you factored in any consideration for global warming?
Mr. Litchfield: No, we have not. That is why I mentioned that I can see a leadership role for the federal forestry department in the matter of global climate changes. We have assessed and continue to assess soil changes. We have ecological site characteristics that are based on nutrition and moisture of the soils so that, if we can see the moisture content is changing, we have the ability to forecast what that means.
For instance, I have a problem as a professional forester if I am making decisions now as to what the forest will be like 50 to 80 years into the future. What trees do I plant? What do I grow? Do I grow the trees we have now? If global warming occurs, it may be too hot for them. You notice there are no maple trees here in beautiful downtown Timmins. There is no red colour in the fall. We have yellow trees, birch and poplar. Those are the types of trees that grow here. That is because we do not have the climate for maple. If it warms up over the next 50 to 100 years, maple trees may grow here.
In Sarnia, you have black walnut and shagbark hickories. I have heard it said that, with global warming, those types of trees will be growing here. As a forester, if I know 80 to 100 years from now it is going to be warmer, I will not plant maples and black walnut trees now because they will die during the first winter.
The Chairman: That is not being factored in now.
Mr. Litchfield: It is not being factored in. We are basing what we do on our current knowledge of the infrastructure and our current knowledge of the site. We adjust every five years, so if there is new science, new climate global changes, we have a chance to go back and project again and re-analyze the sustainability.
Senator Whelan: I am amazed that you cannot tell us how much money you are making or losing. You put me in mind of a bunch of bankers.
Mr. Litchfield: We are a bunch of foresters, so we can tell you how many trees we have and where they are.
Senator Whelan: As an old farmer, I can tell you how many bushels of wheat I can grow and how much it is worth. A Quebec farmer will be able to tell you how many pigs he has, how much they are worth, and how much of a loss there will be.
I was parliamentary secretary to Jack Davis, the Minister of Fisheries and Forestry, for two and a half years. I found forestry exciting, especially the research that was being done at that time. I am a very strong believer in research and education, even though I do not have much.
I remember writing to every forestry company, wanting them to take over a school that was being abandoned at New Liskeard. I did not get one response. I was hired to try to find some body that could make use of that school. I thought it would have been a perfect place to use for forestry education. I believe you are currently doing some research in agriculture in a French school out there.
Even with my legislative history, I find the federal legislation as it relates to forestry and agriculture quite confusing. Before, when I dealt with 10 provinces and the federal government, the authority was split 50/50. When I dealt with my big cousin, the United States, one secretary of agriculture, representing 265 million people, had total authority, for agriculture and forestry.
Here we keep talking about giving more authority to the provinces. Can we really accept that 10 provincial secretaries will be able to deal with the United States of America, our biggest trading partner, the biggest consumer of your product?
Mr. Litchfield: I guess that is where the confusion is between the role of the provincial and federal governments.
I think the governments are trying to address the responsibility of forests as a provincial matter in working with industry; but there is a definite role for the federal government in international trade. The federal government must work with the provinces to ensure that our interests are represented.
Senator Whelan: I have a question for the representatives of Tembec. I have visited your plant at Témiscamingue several times. You were an exporter to Russia. Did you ever get paid?
Mr. Groves: How long ago was that?
Senator Whelan: That was several years ago. We were trying to negotiate a settlement, but we never struck a deal.
Senator Mahovlich: That is why they do not know how much they made.
Mr. Chown: There is an account accruable.
Senator Mahovlich: It is long outstanding.
Senator Whelan: Do you use wood products to make the ethanol?
Mr. Groves: Yes.
Senator Whelan: Does the wood product come from both Ontario and Quebec?
Mr. Groves: The Témiscamingue plant has fibre from both provinces.
Senator Whelan: If Quebec separates, then a big part of your market will move down to my area, to the H.J. Heinz company.
Mr. Groves: That is correct.
Senator Whelan: We talk about invisible provincial borders now, but there are different rules and regulations regarding forestry. Even the environmental rules are different from one province to the other. Do you think the situation would improve if it were under one authority?
Mr. Groves: At this point in time, because of the way the two provinces have evolved separately or the multiple ways the provinces have evolved separately, to convert to one common practice would be very difficult. One would have to accept certain standards as the most common set of rules and regulations. There would be mayhem for everybody else because of the variability that exists.
In most cases, the rules have evolved for good reasons. A company like ours "sits on the line," so to speak. We will operate in one township, move to another, and find a separate set of rules, both often difficult to understand. If we were to try to convert now to one set of rules, short term, I would not like to be around trying to manage the forest while you were trying to change all the rules and regulations. The costs associated with that would be unbelievable.
Senator Whelan: Do you mean you would not want the same authority that your biggest trading company and your biggest customer has in running their operation?
Mr. Groves: It would be nice to have a little more uniformity and one person speaking for the industry as a whole, but setting the rules and regulations for how things happen on the ground would be a different set of circumstances.
Senator Whelan: For 11 years I dealt with 10 provincial ministers, administrations from four different political parties. We made many agreements together. The producers, the provinces, and the federal government built what was probably one of the best agricultural industries in the world, under some of the most severe conditions. We produced 55 per cent of our domestic product further north than any other country in the world. We also did a lot of research, including research related to developing crops that would grow in the clay belt.
Even in Western Canada, trees are being developed that will grow under some of the most severe conditions in the world. One of the best research stations for trees or forestry is at Indian Head, Saskatchewan, which deals with Prairie farm rehabilitation. They keep talking about closing that. They give away millions of trees every year to be used as wind breaks and to stop soil erosion.
Do you have any comment about the Province of Ontario ceasing to give trees away?
Mr. Groves: At this point in time, where we are and where we do our business, the Crown's program of giving trees away does not impact us much one way or the other.
Mr. Litchfield: I think the tree growing business has been one of the major successes in Ontario. Instead of the government growing the trees, they have handed it over to the private sector. As a company, we go into direct business-to-business deals with small business entrepreneurs. One of the best examples of that is here in Timmins. Millson Nurseries started their own container tree-growing facilities. We are now into long-term working arrangements with them. They hire staff. They are in the growing business. They do that very well. They are our partners. They supply us with the material. They benefit economically, as do we. The trees are green and healthy. We do not need the government in that particular line of work. We have been able to develop that as a business-to-business relationship. We know what we have to do; they know what they have to do.
Where we need government involvement is in research and some of the coordination of the longer-term research that is beyond the mandate of the direct, short-term business.
Mr. Chown: Our experience is the same. We now have one principal grower, a businessman, who has conducted a considerable amount of research in the last few years. The focus of his research is nutrient loading the root system of the black spruce to cause it to grow faster in a shorter period of time and to have a better opportunity to survive once planted out in the field. We are finding that the results are much better than they have been in the past.
Senator Whelan: Maybe I am on a different track from you. My concern relates to the neglect of trees, whether they are part of the boreal forest or not, where there are wind or erosion problems. It may not necessarily be the property owner's fault. I believe that the government has a responsibility, whether they produce the trees themselves or somehow distribute them. I am a strong believer in massive reforestation, not only here in the north but also in other parts of Ontario.
Senator Stratton: Dr. Naysmith, please forgive me if I put words in your mouth.
I believe he said that there will be a gap that will last for 15 or 20 years, as I understand it. How do you perceive dealing with it in your terms?
Mr. Litchfield: The gap varies by species, product lines, and locations. No one answer will fit because we deal with different products and different concerns. I will give you the best example I have. In hardwood pulp, we are in the selection harvest system. There is no decline. There is actually an increase in fibre available over time. Some people perceive a decline in white and red pine. There is actually an increase in red and white pine, but it is in the smaller sizes.
Senator Stratton: Is it in the younger stock?
Mr. Litchfield: Yes. You do not have as much solid and veneer. In that case, the solid and veneer may change. Our answer is that perhaps we should redesign the mills to incorporate a breakdown configuration that can take the smaller materials.
In the case of spruce, pine and fir that we use in our McChesney Sawmill in town here, there is a prediction that the wood supply will decline because of the natural age classes. The trees are just getting old and dying off before the young ones are fully operable to take their place. What do you do? Our answer is to have a program of pre-commercial thinning, to space the trees out so the remaining trees have more room to grow. That is in combination with commercial thinnings. We go into some of the younger stands, take out some pulpwood material to leave room so the trees remaining can grow a little bit faster.
Therefore, to plug the gap, we are investing in commercial thinnings to bring those stands into an operable commercial size at a faster rate. There are examples of that going on here in Timmins and in Chapleau.
In our management plan, we forecast increases in commercial thinnings to plug that gap. That is a little more expensive and the size is a little bit smaller. We are working with our manufacturing people to see how it will affect the sawmill, and with our marketing people to determine where we can sell it. We are asking: Does it have the same strengths? We are into machine stress-rated lumber. Do we have to develop new markets? Therefore, we are dealing with a combination of marketing, manufacturing, and some forestry changes.
Mr. Chown: There have been some technological improvements in how the forest is harvested and how we are able to process wood in our mill in Iroquois Falls. We are taking more of the tree into the process and leaving less of the tree behind in the forest because of improvements in our processing.
We are looking at adding some different species to our grade mix. For example, we are considering adding 10 per cent of aspen into the mix so we are not totally reliant on black spruce in our newsprint production. We have different equipment that is able to better access the very soft ground conditions in the boreal forest without damaging it in the open season. We have high flotation equipment, so we can access and harvest more forest than we could in the past. Most mills are moving to a pulping process that requires chips. That results in a better mix of the right size and diameter and species of tree going to the sawmill, as well as the use of the residue or the chips from the sawmill. That is also putting back into the supply of the forest.
There are many changes taking place in the types of seedlings that we are growing. Most of us have tree improvement farms where we are using seed from super trees that will grow faster and survive better. Those kinds of developments are taking place to help close the gap that Dr. Naysmith referred to and which we all recognize may be there.
Senator Stratton: I understand that the technology has developed to the stage where truss joists are being used instead of floor joists. They are being used instead of two-by-twelves or two-by-tens.
Mr. Groves: We have two facilities, and you will see examples of what products they are producing in the handout. One is called "laminated veneer lumber." We started with a plywood plant that used to make poplar subfloor for underneath linoleum. We converted that facility to produce laminated veneer lumber. It is the same peeling process but it can be stacked and you can then make a two-by-four, a two-by-eight, or a two-by-twelve. The length is limited by the length of the press. Our press is over 50 feet long, so we can produce long pieces. Along with that, in conjunction with oriented strand board, which we also produce, you can make wooden I-beams.
Within our own corporation, we are looking at machine stress-rated lumber. It physically tests lumber. Engineers are guaranteed it has a certain strength, just as is the case with metal beams. Those are the things we are looking at, bearing in mind that we know that we are going to have fewer logs available. All our sawmills have targets to produce the same amount of lumber but to use less amount of roundwood going in.
To give you some idea of the potential, it was not that long ago that it took five and a half cubic metres to make 1,000 board feet of wood, whether it was two-by-four, two-by-three, or whatever. Now, most sawmills are down under five cubic metres. Most sawmills have targets in the neighbourhood of four and a half cubic metres in the next couple of years in this part of the province. We are using one less cubic metre to make 1,000 board feet so we can have the same, if not greater, output, with less or no change in roundwood going in. Those are some of the ways we are adapting.
Some of our facilities once used sawdust planer shavings for heating. In most cases, we are now trying to recover that fibre, either to put it into a pulp mill or into another particle-board facility. We use natural gas for heating. We are looking at ways to use every single piece of fibre that is produced from the time the saw is put into the tree to the end product.
Senator Stratton: In taking those steps, do you feel confident about closing or eliminating the gap? Is it still going to be a challenge, despite all that you have said?
Mr. Litchfield: It will be a challenge, but it is possible. It is going to require us using the best science and the best silviculture available. Dr. Naysmith may have been addressing this because of our need to develop new technologies. We must also keep in mind where the investment is coming from -- how much would come from the renewal funds that the companies contribute; and how much would come out of the Forestry Futures Trust. Those are the questions we have to consider. It is not a cheap process. Is it biologically available? Yes, we believe it is. We think it is within the realm of reasonable expectation.
Senator Stratton: Thank you very much, gentlemen.
The Chairman: I would like to raise a subject I have not heard the three of you mention, although you are all involved in marketing. Out west, they often complain about the U.S. import duties and quotas. There are also some complaints about the market share of the U.S. market and how it is divided between Ontario and the West. Would you care to comment?
Mr. Litchfield: Are they bringing in breakfast?
The Chairman: Bear in mind that the majority of our committee is from the West. I want to know what message you would like us to take back to Ralph Klein.
Mr. Litchfield: It is a very serious situation. A double effect has hit us in Western Canada: the American quota limitations in terms of how much we can put into the United States. I am not going to open up the question of why B.C. got more than their fair share, since I cannot do anything about that.
The other whammy that hit us was the Asian meltdown. Many of the B.C. interior mills were shipping into Japan. They could not ship into Japan and they could not ship to the United States. Instead, they put it on the trains and sent it to Toronto, Montreal and Halifax, which were our traditional markets. Now we are fighting against the Weldwoods and the Northwoods of the world.
The Chairman: It is dumped wood from the west.
Mr. Litchfield: Whether it is dumped or they are pushing it east, it is a very serious problem. The question is: How are we dealing with it? We are looking to find alternate markets. We are looking at alternate products. That is why we have gone into machine stress-rated lumber. I think most people are aware they pre-drill studs to bring it to a semi-finished state. Our company is now looking at smaller specialty markets. Instead of looking at the housing construction components in the United States, we are looking at the specialty decking market and the decking market in shorter lengths. We are looking at specialty species, and we are sorting our spruce from our pine. We are taking it down to 12-foot lengths. This caused problems in the manufacturing, but at least we can sell it to specialty markets in Montreal or Toronto.
The Chairman: It seems that most Canadian timberlands are controlled by the government and, therefore, the government sets the royalty and stumpage fees. Are the provinces cooperating in the lumber market?
Mr. Groves: I do not think the provinces are working well together. One illustration is that, between Quebec and Ontario, we often find that action in one province definitely does not get a positive reaction or have a positive impact on the neighbouring province.
Wood flow across the border is an important issue in our company, especially when there are facilities on both sides and wood could more easily be moved across the border to a facility in the other province. The provinces do not work well enough together to make those types of things possible.
Senator Whelan: When I think about the compost in the forest, it brings to mind my experience of the use of urea to speed up the composting process. It also increases the growth of the commodity, the product. Have you used any of that at all to increase production?
Earlier the question of global warming was raised and many of us, I think, believe that that would cause trees to grow faster. However, as you said, some species will not respond to the heat units.
Mr. Chown: There is some work being done on spreading bio-solids from the pulp mills or from the process on to farm fields. One of the main examples relates to the Donahue mill in Southern Ontario. It is a success story but I gather that some people have run into problems.
Senator Whelan: You mean Domtar is doing it.
Mr. Chown: We do some of it here. Some research work has been done on the West Coast on forest plantations, tree plantations. The biggest problem we face in our neighbourhood is access. We do not have the road systems in the boreal forest. It is primarily a low-lying clay system with anywhere up to seven feet of overburden. For example, it costs $85,000 a kilometre to build a forest road through an area like that. That limits the use of that product, as well as being able to do some significant work in that area.
Senator Whelan: For part of the last 28 years, I have lived on a little island in Red Cedar Lake, just off Highway 64 where it meets Highway 11 at Marten River. Mr. Chairman, we talk about the environment improving. Until now, I have never seen so many frogs of different sizes on the island. They say that is one sign that the environment is really improving. In your forests, do you check on what is happening in the swamps?
Mr. Litchfield: Yes, we do. In particular, we are monitoring salamanders as indicators. You cannot deal with every single species. We have tried to work with biologists to try to pick indicators that are representative of the different types of microhabitats.
Senator Whelan: Across this nation, we use supply and demand as indicators for very perishable products: milk, eggs, chickens, turkeys. It works very well. If you are an efficient producer, you get paid for what you produce, but it has to be a high-quality product.
I am not one who believes that we must impose all kinds of regulation on every segment of our society, but I am concerned when I see the actions of one industry or group destroying another, or destroying productivity. We must consider things like that. Big companies are headed towards globalization. I call it "gobble-ization." They eliminate their competition by buying them out. Is that what E.B. Eddy does, or Abitibi does, or Tembec does? Are you trying to control supply in a different way?
Mr. Litchfield: We are trying to be more focused. We are not trying to be everything to everybody. For instance, our company is not into orientated strand board. We are not into particle board. We are not into intermediate density fibre board. We are trying to do the best job we can in certain product lines and certain species. We are developing high-quality specialty papers. We are not into commodity papers. We know where we are and where we are going.
Have we grown? Yes, we have. Some of it is because of synergies and efficiencies of operations. We have a marketing synergy and opportunity. Our goal is not to be number one in the world. Do we want to be an efficient, effective producer of a high line of forest products and specialties? Yes, we do.
You may see some people falling off because there are additional costs in the forest industry today, and some of the smaller family units cannot afford, for example, all those detailed charts that I have for wildlife habitat 150 years in the future. The small, family sawmill operation that now has to take on those responsibilities cannot afford the infrastructure, the computer mapping, and all the requirements that go with that. Some of those companies are falling off the table.
The Chairman: I want to thank the witnesses for their assistance. I am most impressed with your command of your subject. We also enjoyed the tour out to the countryside. It has been a great day.
The committee adjourned.