Forestry industry says help is not enough

News Release
Ont. Forestry Industry

In just three years Ontario’s forest industries have experienced a dramatic loss of competitive advantage. The industry “is in the unenviable position of operating in one of the highest cost jurisdictions in the world,” and the Government of Ontario has been repeatedly urged to take the necessary steps to return Ontario to a positive business climate. Today’s announcement by the Minister of Natural Resources does not address the competitive disadvantages facing an industry that is on the cusp of utter collapse in this province.
“We need the government to change the climate in which Ontario’s forest industries operate. After this announcement the weather is the same - our industry still can’t compete, and, under current conditions, there is no incentive to invest in the forest sector,” says Jamie Lim, President and CEO of the Ontario Forest Industries Association.
Today, Minister of Natural Resources David Ramsay unveiled the Minister’s Council Report on Forest Sector Competitiveness, a document that provides recommendations on how to assist Ontario’s forest industry weather multiple crises. Many of the initiatives identified in this report could serve as a roadmap to recovery, however, with today’s announcement, the government has indicated it does not plan to act immediately on key recommendations, and tthe accompanying financial package offering loan guarantees falls far short of offering any solution to improving a dismal operating climate.
The Minister’s Council report offers astute recommendations on how to assist Ontario’s multi billion forest sector overcome challenges stemming from:
* rapidly escalating energy costs,
* some of the highest delivered wood costs in the world
* the softwood lumber dispute,
* a dramatically higher Canadian dollar,
* onerous and often redundant regulatory regimes, and
* increasing competition from lower cost jurisdictions
“Ours is not a dying or sunset industry,” points out Roger Barber, Chair of the Ontario Forest Industries Association (OFIA). “We proved our potential through the 1990s when we went from a $9 billion industry to a $19 billion industry and increased direct employment from 64,000 to 85,000 people. And we can do even better, but we need the government to bring about a better investment climate.”
As case in point, an Ontario-based forest industry announced last week that it will invest $400 million building two manufacturing plants and generating 240 jobs in South Carolina.
“We’re asking for nothing less than what has been done for the auto, agriculture and film industry sectors,” adds Lim who notes the $500 million investment in the auto sector helped make Ontario number one in North American auto manufacturing.
Ontario’s forest industries generate $19 billion in annual sales, create direct and indirect employment for 250,000 people and pay taxes and stumpage fees of $2.5 billion a year — $1.3 billion federally, $800 million provincially, $160 million municipally and an average of $240 million in stumpage fees a year paid to the people of Ontario.
The Minister’s Council report identifies at least 12 more forest industry mills as being at risk in Northern Ontario, and, should they close, the impact on the entire province will be significantly harsh.
“The forest industry is in crisis and the loss of our industry is a loss for the entire province,” says Ms. Lim.
Since December 2004, there have been mill closures announced at two pulp and paper mills, one veneer mill, one particle board mill and four sawmills in Ontario. More recent closures include plants in Cornwall, Brantford, and, last week, a two week shutdown of Bowater’s newsprint operations in Thunder Bay was announced.
Ms. Lim notes financial analysis has shown that further closure of the 12 mills at risk in the province will result in 13,000 job losses in Southern Ontario, 7,500 direct job losses in the north, 17,500 indirect job losses in the north - that’s 34,000 jobs in addition to the 4,163 people left unemployed due to closures and downsizing within the industry just in the past 36 months.
Furthermore, the financial impact of lost business will strike the heart of Ontario’s golden horseshoe.