An Editorial Opinion – Right From The Stump, September 15, 2022
(A version of the following blog post was originally published as an article in the View From The Stump newsletter, July 2022, under the title “BC Forest Sector Jobs – What You Should Know”)
The forest sector is an important generator of employment in British Columbia. The number of jobs per thousand cubic metres of timber harvested is often used as a metric to compare British Columbia’s forest sector performance to other jurisdictions, but it does not tell the entire story.
British Columbia generated an estimated 1.01 direct jobs per thousand cubic metres of harvest in 2021. Over the last five years, that statistic has averaged 0.95 jobs. The forest sectors in Quebec and Ontario generate much higher jobs per thousand cubic metres harvested (for 2019), at 2.29 and 3.03, respectively. [Up-to-date harvest data was available for BC so that’s why 2020 and 2021 data points are shown in chart].
An immediate conclusion is that British Columbia should generate more jobs from its forest sector like Quebec and Ontario. Industry critics have said British Columbia’s comparatively low generation of jobs per thousand cubic metres harvested is due to log exports, mechanization, forest management practices and minimal value-added processing without evidence to support their assertions. Unfortunately, rarely has further analysis been done to understand the inter-provincial differences.
We can learn about the differences between these provinces by breaking down the total jobs numbers into their three main categories: Forestry & Logging; Wood Products Manufacturing; and, Pulp & Paper Manufacturing. For reference, harvest volumes are included on the left side of the following chart:
Even though Quebec and Ontario have substantially lower harvest volumes, the number of jobs created from manufacturing are close to or exceed that of British Columba. Several distinctions can be identified between the forest sectors of these provinces to explain this:
SPECIES PROFILE of Quebec and Ontario are much higher to hardwood species, which lends itself to specialty wood manufacturing (these species do not grow in British Columbia).
TRADE FLOWS show British Columbia is a net exporter of logs. Quebec is a net importer of logs (mostly from the United States) for processing in Quebec sawmills. Between 2018 to 2021, Quebec imported an average of 2.7 million m3 of logs per year.
Sawdust is another commodity that is imported in greater quantities into Ontario and Quebec than into British Columbia. Sawdust is used in wood products manufacturing for non-structural panels or pulp manufacturing.
Unfortunately, the jobs data does not reflect where the fibre comes from, meaning wood product manufacturing jobs in Quebec, and to a lesser extent Ontario, are relative higher because they represent harvested timber as well as a higher proportion of imported fibre. Whereas jobs in British Columbia and Alberta are fewer due to their significantly lower reliance on imported fibre.
PULP & PAPER SECTOR: Quebec’s and Ontario’s forest sectors are focused on pulp, paper, paperboard products which supply the large nearby population centres including those south of the border. Pulp and paper manufacturing is capital intensive and tends to suppose a lot of skilled labour.
Also, some paper product mills in Quebec and Ontario use both harvested wood fibre and recycled paper fibre for which the jobs data, again, does not distinguish between the two, thereby skewing the jobs data in favour of these two provinces.
The jobs representing British Columbia’s and Alberta’s pulp and paper manufacturing rely almost entirely on harvested virgin wood fibre.
Further complicating comparisons is a sub-industry of pulp and paper manufacturing called “converted paper product manufacturing,” which uses paper and paperboard products produced at a primary facility which is then converted into more readily consumable products for the end user at a secondary facility. In a sense, converted paper manufacturing represents “value-added manufacturing” of pulp and paper products. In 2021, approximately 39% of Ontario’s forest sector employment (14% of Quebec) came from converted paper product manufacturing.
Conversely British Columbia and Alberta generate very little converted paper products manufacturing jobs, at 3% and 4%, respectively. Why doesn’t this source of jobs exist in British Columbia or Alberta? Simply because the end-market for converted paper products is not close enough to justify production.
INDUSTRY STRUCTURE: Another differentiating factor is the number and average size of mills in each province. Quebec has by far the most sawmills, panel mills, and pulp and paper mills of any province. Many of those sawmills are small. Whereas, British Columbia has fewer mills and some of the largest sawmills in Canada. One implication is that British Columbia (and Alberta) are more efficient in terms of converting timber into various products with less labour.
Being more efficient should regarded as a positive attribute for ensuring a globally competitive forest products sector – it means jobs should be sustained when economic times get tough.
So, when critics say that British Columbia should create more jobs from harvested timber like other provinces, such as Ontario and Quebec, what they are really saying, unknowingly, is that British Columbia should import more fibre, have more pulp and paper mills and decrease the industry’s global competitiveness by becoming less efficient…none of which is likely aligned with their interests, nor the interests of the sector or the people of British Columbia.
BRITISH COLUMBIA LOG EXPORTS: When it comes to forestry and jobs, log exports are an easy target given the imagery of ships loaded with logs leaving the province without creating manufacturing jobs.
Let’s assume a full log export ban was in place and the 4.3 million m3 of logs exported in 2021 was still harvested and consumed domestically. Assuming a generous rate of jobs per thousand cubic metres at 2.0 jobs to the repatriated volume, British Columbia’s jobs per thousand cubic metres harvested in 2021 would increase from 1.01 to 1.11 jobs – technically an improvement – but a ban hardly changes the province’s position with respect to other provinces and actually may be counterproductive to job creation.
INCREASING THE NUMBER OF JOBS from harvested trees in British Columbia must overcome a number of challenges:
BC interior timber supply is declining;
There are significant uncertainties about the future available land base to conduct timber harvesting;
Investments to improve competitiveness are likely to be technology-oriented which will serve to reduce the number of workers for a given process;
Opportunities for capacity growth are limited given the bureaucracy and costs in building new greenfield projects;
Manufacturing capacity is projected to decrease;
BC government forest policies and directives including old growth deferrals are directly reducing the available log supply; and,
It is hard to find skilled workers.
To be blunt, given these challenges, British Columbia’s forest sector is facing a brewing crisis. Very strong markets of the last couple of years have delayed some of the effects of these challenges, but that has changed rapidly with recent weakening markets. Increasing the number of jobs per thousand cubic metre will be necessary to offset the projected job losses over the next few years, but so far there is no apparent plan.
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Written By David Elstone, RPF
Publisher, View From The Stump newsletter
Managing Director, Spar Tree Group Inc.