Thursday, December 13, 2018Canada's Leading Online Business Magazine

Forest NB

Growing a Future for Our Communities

Forestry is the single-largest contributor to New Brunswick’s economy from the private sector, which translates into about 3.5% of the provincial GDP. Over the last five years the forestry component has grown five times more rapidly than the rest of the manufacturing sector as a whole.

For more than six decades Forest NB is New Brunswick’s has served as the advocacy voice on behalf of the entire sector in the province and staunchly supports the efforts to provide for economic, social and environmental needs of its communities with a reliance on the scientific community to educate and ensure the proper path is being taken in order to meet each important obligation.

As an association that represents one of the province’s most valuable and renewable resources, Forest NB puts strong emphasis on responsible forest management and giving back to local communities as a means of maintaining a strong economy and healthy New Brunswick forest.

The organization was launched in 1957 and until 2014 was known as the New Brunswick Forest Products Association prior to its rebranding. Forest NB serves as a means to unify the forestry industry with one voice in representation before the government regarding advocacy and lobbying efforts. It was also to ensure that the provincial crown land assets were being managed in a way that was best for everyone.

The industry as a whole has certainly changed a great deal over the past six decades. Back in the 1950s and 1960s the province had more than 200 small sawmills in operation and the pulp & paper sector was starting to emerge. It was also an era when forest management was geared towards supplying pulp to the mills.

The Canadian Business Journal recently spoke with Forest NB Executive Director Mike Legere from his office in Fredericton about the transformation within his province and his vision for the future. As with most industries, the forestry sector has moved with ebbs and flows in the markets.

“We’ve always traditionally been an exporter to the U.S. and especially the eastern seaboard,” says Legere. “We also had a long history of exporting timber into the United Kingdom from 1957 to the mid-1990s. Over time there was an abandonment of the UK market in favour of the U.S.”

In the past the organization focused on advocating directly to government but it was realized, especially in the 1990s, there was a significant need to engage more with the public and treat them as clients.

“We recognize that today’s public opinion becomes tomorrow’s public policy,” says Legere.

While there is an inherent need to keep the public well informed about policy and procedures there is also the challenge of having to deal with misconceptions about the sector and forest management.

A significant turning point for the industry occurred in 1982 when the province came out with the Crown Lands and Forest Act. If effectively took the day-to-day management of the forest resource out of the hands of the government and the Department of Natural Resources and put it into the hands of industry and in particular, large pulp & paper.

In the mid- to late 1970s a lot of research work was being done on the impact of spruce budworm on forest yield. An interesting result came to light after one of the researchers removed the spruce budworm epidemic variable and it was discovered there was still a trending decrease in wood supply.

“The projection back then was that the wood supply would crash in 2017,” says Legere. “We were effectively harvesting for years in an unsustainable fashion. Concern was raised to the government and there was quick movement to head off what appeared to be an impending disaster for the forestry sector.”

Moving forward it was determined that forest management would be best served in the hands of what are called licensees – those who would be responsible for managing the forest to ensure the wood being allocated was always done in a sustainable manner. There was heavy investment into site preparation, planting, thinning and vegetation management.

“Since 1982 we’ve invested well over $500 million and it’s worked brilliantly,” notes Legere. “Our association was very instrumental in supporting that decision to move to a licensee management plan. We’re projecting ample wood supply on the softwood side in particular.”

Even with the ebbs and flows within the industry, the pulp mills always managed to maintain their presence, which has been a crucial anchor that propelled the sector through some of the more depressed times. A particularly rough patch unfolded in 2006 with the start of the global economic downturn, whose residual effects lasted until the latter part of 2011. When the dust settled the province went from 10 pulp mills to six and from 100 sawmills down to about 50.

“It was just a perfect storm of the high Canadian dollar, crisis in the U.S. and global economies, housing starts were down and it ended up being another turning point in the history of our association,” recalls Legere.

Representation

Forest NB represents the majority of the forest product manufacturers in the province, including 39 sawmills in the province.

“We represent what we call 16 full-producing members. In terms of output we would account for about 50% of the industry in terms of products being manufactured,” he explains.

The other half of the sector is driven by powerhouse JD Irving, which has opted to work independently for more than a decade now. Despite being separated as competitors, Legere says there is an effective, collaborative relationship between the two entities.

New Brunswick is the most trade export dependent province in the country, with about 84% of its forest products sent out beyond our borders. Of that 84% export rate it’s estimated that about 75% is destined for the United States. Some Asian markets including China and India are also accounting for some burgeoning markets that hopefully will expand in the coming years.

Environment & Sustainability

First and foremost the industry must be sustainable. One of the major concerns has always been how to balance the management of forests for commercial purposes and non-commercial purposes, the latter of which would include conservation, biodiversity, recreational, cultural and in the case of First Nations there is a spiritual element. Trying to juggle all those balls is not easy. The province has about 6 million hectares of forest, both public and private. About 50% is public land, 30% is private and 20% is owned by industrial freehold.

On public land the current proposed conservation area is 28% after having been 23% for quite some time. The rest would be considered working forest. But there is also land that is essentially inaccessible and when that is taken into account the figure likely rises to about 35% that is under the conservation side.

“I know our colleagues at the Forest Products Association of Canada have really been promoting that forestry provides a very good solution to mitigating climate change, especially in managed forests, which are excellent sources of carbon sequestration. New Brunswick leads the country in growth and yield,” says Legere.

Forest NB prides itself on not only providing opportunities in terms of employment and economic contribution but in the environmental space as well.

The First Nations Bands in New Brunswick are rights holders but not stakeholders. As such, the dealings are mostly done with the province. Several years ago the province set aside 5% of timber allocation to the First Nations with the intention they could choose to harvest the 5% themselves and offer it on the market or hire a third-party contractor to harvest for them. Economic development is very important to the First Nations and they see forestry as an excellent way to build capacity.

Looking to the Future

Since 2015 there has been more than $750 million of investments in pulp & paper and sawmills. Competitiveness is often singled out by FPAC’s members as the major factor impacting the industry. New Brunswick is a smaller jurisdiction and very reliant on exporting and for that reason Legere emphasizes the importance of maintaining, and hopefully increasing, wood supply, especially hardwood.

“We pay very high royalty rates here in New Brunswick – second only to Nova Scotia. We have to constantly work on keeping our costs down at the harvesting level. Our forests are also much different than western Canada. Here they are small trees and mixed forests and that presents challenges with operating on that type of land,” he reveals.

There is also an aging workforce and the need to fill at least 1,000 positions on the forestry operations side, including logging truck drivers and mechanized forest equipment operators.

Legere and the team at Forest NB have worked diligently to spread the word about forestry and its potential in many schools and the communities as a means of promoting the industry. A myriad of various jobs and skills are required and goes far beyond the old stereotypical worker in a plaid jacket, hard hat and a chainsaw. Occupations such as chemists, technicians, engineers, biologists and admin staff such as human resources and accounting are essential to ensuring a fluid, working platform. The opportunities are endless. It’s now a mission to get the word out to people about those opportunities. Currently, one in 14 workers in New Brunswick has jobs related to the forestry sector, which equals 24,000 jobs. Legere believes that number has the potential to be increased.

“We’re in the second year of a three-year strategic plan and we’re focusing on three areas: competitiveness, where would at least like to maintain, if not increase, wood supply. We would like to see the province have a long-term vision for the industry,” he says. “The second aspect is growing our association. There is more than 2,000 SMEs connected in the supply chain and we’d like to see more involvement in the association from those businesses. The third aspect is public awareness and understanding of the sector. By 2020 we would hope we can move public opinion on forest management. One concern is clear cutting and the misconception of it. Clear cutting is actually a mimicking of natural disturbance, which is really what formed the forests of New Brunswick, which is Acadian.”

Legere says the people of New Brunswick have a special relationship with the Forest. It has shaped the very fabric and character of so many communities. Forests provide great natural and recreational benefits that can be assured for future generations with well managed woodlands and protected natural areas.

“Together we are growing a future for our communities through renewable forests,” concludes Legere.

www.forestnb.com

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