A worker at Western Forest Products Duke Point Sawmill, in Nanaimo, B.C. Canadian lumber remains primarily an export industry, with roughly 90 per cent of exports going to the U.S., though there are efforts to diversify.DARRYL DYCK/The Canadian Press
Shortly after Prime Minister Mark Carney’s August announcement of $500-million in funding to help Canada’s softwood-lumber industry decrease its reliance on the hostile U.S. market, B.C.’s Forestry Minister offered what seemed on its face to be a modest target.
“I think if we are able to take 10 per cent of what we currently ship to the United States and open that up to other markets,” Ravi Parmar said in a recent interview at his legislative office, “we are going to be in a much more competitive position than we are today.”
History suggests, however, that even that degree of market diversification stands to be an uphill battle − which also makes it one of the more telling tests of the national push to reset trade relationships.
For decades, amid an endless trade dispute in which Washington has (dubiously, according to the World Trade Organization) accused Canada of unfairly subsidizing its softwood-lumber sector and imposed retaliatory duties, governments and industry have talked about finding other buyers.
But while there have been modest inroads in China and Japan, diversification has mostly proved quixotic − partly because the proximity of the massive U.S. housing market, for which there is not enough lumber harvested stateside to serve, has been a disincentive to reach further.
“The forestry sector has done an absolutely miserable job as a whole at truly diversifying,” Mr. Parmar said bluntly.
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Courtesy of President Donald Trump’s trade war, there is now greater impetus to get serious about reducing U.S. dependence. His escalation includes a dramatic recent hike to duties on Canadian wood that brings them to around 35 per cent, a national-security investigation that threatens further tariffs on top of that, and more uncertainty than ever about the export relationship going forward.
That may happen partly through increased domestic use of Canadian wood, as part of the national housing strategy that Mr. Carney launched on Sunday. But lumber is still primarily an export industry, and roughly 90 per cent of those exports continuing to go to the U.S. looks untenable.
Nowhere is that urgency more strongly felt than in B.C. Although still boasting Canada’s largest softwood-lumber industry (followed by Quebec and Alberta), usually contributing north of $10-billion to annual GDP, it has precipitously declined; the total softwood harvest was roughly cut in half over the past decade, and jobs are about half what they were at the industry’s peak.
That’s due to a confluence of factors − including a pine-beetle infestation and forest fires, both connected to climate change, as well as permitting issues − atop cross-border tensions.
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On the bright side, the province’s Pacific ports give it some advantage in trying to maximize the value of every stick of harvested wood by accessing other markets.
But from the interviews with Mr. Parmar as well as sectoral representatives and experts, it’s clear that acting on the opportunity will require some lane-picking − about which products to offer, and which countries to target − and much more patient focus than governments or industry have shown previously.
Broadly, the $500-million − and whatever provincial money might be layered with it − is likely to serve two purposes.
Per Forest Products Association of Canada president Derek Nighbor, the expectation in the industry is that a sizable chunk will go toward supporting investments and innovation in new equipment and product lines, and another toward promotion in new markets.
For the capital-investment component, some options seem basic, if possibly overdue.
Russ Taylor, a prominent Vancouver-based industry analyst, emphasized that one of the biggest barriers to accessing overseas markets is that almost all Canadian lumber is cut to imperial-size measurements (largely 2x4s) mostly only used in North America. So investments in machinery that cut to metric-system specifications could be helpful.
Mr. Taylor also suggested that log merchandizers − machines that efficiently cut and sort wood to multiple sizes, which have caught on more among northern European forestry companies − could be helpful in meeting the preferences of multiple markets.
That investment could be a form of value adding, getting more revenue and jobs per log than if they’re exported in rawer form. This is a widely identified objective for an industry that (for environmental, regulatory and other reasons) is unlikely to see its total harvest dramatically rise again.
The value-adding prospect raised most often, though, is mass timber, which refers to a range of products in which multiple pieces of wood are bound together to form structural building materials.
Canada’s softwood lumber is well suited to that purpose, but less than 1 per cent currently goes toward it. Bentley Allen, an industrial policy expert who has done work with the forestry sector, suggested that 10 per cent could be attainable within a decade.
Mass timber, which Europe has also moved faster on, may get a particular boost from Mr. Carney’s domestic housing ambitions. It lends itself to prefabricated construction, which he wants to ramp up because it can be quicker, cheaper and more environmentally sustainable.
But a share of the diversification fund’s $500-million could also go toward encouraging supply-chain investments, and to pursuing export markets that are also fertile ground for those products.
Deciding which other countries to target, for raw wood and mass timber alike, is where the lane-picking need could prove particularly acute.
There appear to be many, many places where industry advocates see potential growth in wood use, and the opportunity to compete with other exporters to supply it.
Asked about where Canada could target, Rick Doman − a veteran forestry executive recently appointed by Mr. Parmar to chair B.C.’s Forestry Innovation Investment board − mentioned South Korea, Vietnam, India, Australia, Britain, and various European, Middle Eastern and Northern African countries.
That’s atop China and Japan, where Canada has a foothold, but which have become more challenging because of declining populations (and, in China’s case, because of Russia dumping cheap wood while being sanctioned elsewhere).
There may be some ways to target a bunch of countries at once. For instance, Mr. Parmar said he is proposing to Ottawa that some money go toward subsidizing freight costs, which can be prohibitively expensive.
But people such as Canada Wood Group president Bruce St. John, whose industry organization is devoted to expanding into countries where wood use has previously been limited, describe it as a painstaking process involving promotional efforts, direct engagement with local governments on building codes and standards, and expertise-building for industry.
And they stress that every market needs its own unique strategy covering those bases, because of variations in what sorts of buildings fit their environments.
That likely requires identifying a few best bets. It also, crucially, means sticking with them.
To the extent that Canada has attempted lumber-export diversification previously, the efforts have tended to be fleeting, which several people interviewed for this story suggested has caused a reputation for unreliability in some of the same countries now likely to be targeted anew.
To succeed, particularly amid growing softwood-export competition from Europe especially, will require steady focus through and perhaps beyond the Trump era − making it all the more a measure of Canada’s commitment to reducing U.S. reliance, even if the urgency of the current moment ebbs.