Canadian forestry industry bracing for 'brutal' 2020

Friday 1 May 2020

Canada’s struggling forestry companies and its hard-hit sawmilling sector need federal support to get them through to the end of this year. The crash of lumber prices, the pandemic-related halt to the North American economy, combined with the pain felt by softwood lumber tariffs over the last two years has many industry players facing a “brutal” next couple of financial quarters, said Derek Nighbor, president-CEO of the Forest Products Association of Canada (FPAC).

Nighbor appeared as a witness before the House of Commons Standing Committee on Finance on April 17 to lay out the landscape of what the industry is experiencing. “We just need some help to keep our heads above water and keep as many people working as possible over the next few months,” he said. “The rest of 2020 is going to be about survival.”

FPAC represents Canada’s wood, pulp, paper, and wood bio-products manufacturers, a $73-billion industry employing 230,000 in northern and rural communities. In recent weeks, lumber markets have plunged with a nearly 40 per cent drop in prices, causing the temporary closure of 39 sawmills across Canada, including 24 in British Columbia.

Newsprint and paper markets are also collapsing with offices, stores and schools locked up, and advertising revenues dropping. Nighbor called sawmills the “heartbeat” of a highly integrated sector that feeds pulp and paper mills. The stoppage in wood chip production is already being felt downstream with a handful of pulp operations scheduling down time, despite their order sheets looking healthy.

“They can’t get the chips they need to make their in-demand products,” said Nighbor. “If we don’t have chips flowing, our industry’s biggest artery is cut off – and thousands more will be out of work.” With log yards full coming out of the winter harvest, Nighbor said an improved wage subsidy program would go a long way toward being able to process those inventories.

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Source: northernontariobusiness

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