:
Good afternoon, everybody. Thank you for joining us today.
First off, thank you to both sets of witnesses, because I know this is a rescheduled attendance. We're grateful for your being able to make the time to join us again.
Today we have Mr. Meyer, who's the vice-president, operations, from Emily Creek Woodworking Limited. We also have Fred LeBlanc, who's the 13th district vice-president from the International Association of Firefighters, and joining him is Mr. Greg Hewitt, research assistant. Thank you all for being here today.
I'd like to welcome Mr. Serré back. We're glad to see you, and our hearts were with you during your absence.
For the witnesses, you each have up to 10 minutes to deliver your remarks, which you can do in either official language. You can anticipate being asked questions in French and English, and there are translation devices available should you need them.
I will open the floor to Mr. LeBlanc and Mr. Hewitt, since you're here with us today. The floor is yours.
:
Thank you, Mr. Chairman and members of the committee. I appreciate your taking the time and the opportunity to hear from the IAFF today.
As you heard, my name is Fred LeBlanc, I'm the 13th district vice-president for the IAFF. I'm a recently retired Kingston firefighter. I spent 32 years on the job. Now I'm a full-time union representative for the IAFF.
“District vice-president” means I'm vice-president for district 13, representing Ontario and Manitoba on a board of 16 members in total.
With me today is Greg Hewitt, our researcher from our Canadian office, which is located here in Ottawa. Just for full disclosure, I want to let the committee know that I suffer from a significant vision loss and it has rendered me legally blind, so I'm going to turn to Greg to read our statement and give our testimony. Together we'll be happy to answer any questions that may come before us.
At this time I'd like to turn it over to Greg Hewitt.
:
Thank you, Mr. Chair, for this opportunity to share our views on this important issue today.
To briefly introduce our organization, the International Association of Fire Fighters represents more than 310,000 professional firefighters in North America, including more than 25,000 in Canada. In Canada's largest cities and towns, our members are on scene in minutes in any kind of emergency, large or small, including structure fires, medical emergencies, water and ice rescues, hazardous materials incidents, and more.
The IAFF certainly supports a vibrant economy and a successful, sustainable wood and wood products industry, including the expansion of the forest sector, and opportunities for its workers. At the same time, as national and provincial building codes are responding quickly to the need for innovation in the expanded use of wood products, we urge the committee to exercise caution, and to do what it can to regulate or encourage the regulation of adequate fire protection, meaning firefighter and public safety.
As fire protection is a municipal responsibility, it is also provincially regulated. We suggest this should be a topic of discussion for the federal government's municipal and provincial partners. The rush to allow wood-frame construction of up to 12 storeys, which is proposed for the 2020 edition of the national building code of Canada, has been billed as an economic boost for the forestry industry.
As we have formally stated to the Canadian Commission on Building and Fire Codes, and to the federal government, we remain unconvinced about the fire performance of tall wood structures, and whether our urban fire departments and front-line personnel are really prepared to safely and effectively protect the public in the event of a fire inside a tall wood structure.
We're aware of studies that discuss the fire performance of cross-laminated timbers and glulam, and the charring effect that supposedly protects these materials from failure. Our members across Canada can attest to the fact that what happens in a large structure filled with modern combustible materials can be very different from what happens in the confines of a controlled test environment.
Our chief concern is that a majority of urban fire departments in Canada probably lack the equipment, resources, and training to safely and effectively respond to a fire in a tall or large wood-frame structure. Firefighters may be required to be inside a burning structure long after other occupants have escaped in order to search for and rescue anyone who may be trapped, and to provide aggressive interior suppression in order to save the building and its contents. This is what the public expects of firefighters. Firefighters will be inside or in close proximity to one of these structures in the event of a collapse.
In our view, there are too many unknowns about the way a completed six-, 10-, or 12-storey combustible wood-frame structure would respond in a real fire situation. It's hard to predict the weight load and the fuel load of a particular structure once it is built and populated.
There's also the prospect, as was tragically seen in the Grenfell Tower fire in London, U.K., earlier this year, that modifications, in this case flammable exterior cladding, may be made to an existing structure many years later. Neither the national building code, national fire code, nor respective provincial building codes address fire department response capabilities as they relate to the suitability or safety of a particular structure.
There was no reference in proposals for mid-rise wood-frame construction to any fire protection standards, such as NFPA 1710, the science-based standard from the National Fire Protection Association, that quantifies adequate fire department deployment in an urban setting.
The truth is that very few Canadian cities currently meet the response time and personnel standards for existing two-storey structures, let alone high-density structures made of combustible materials. In our review of previous testimony before this committee on this study, we see grand assumptions made about municipal fire protection that just aren't accurate—for example, that local fire officials are consulted on and could veto a building in their city. This just does not happen.
Even if a community does have adequate fire protection resources to protect a particular structure, there is no guarantee that they will be there during its entire lifespan. What we are actually seeing in many communities across Canada right now is the propensity to reduce fire department resources and capabilities for political and budgetary reasons. We can point to numerous communities in Canada, large and small, that have experienced station closures or firefighter layoffs, and many that are contemplating initiatives that would increase response times and decrease the fire department personnel and equipment available to respond.
This common scenario would leave the occupants of any given structure with even less protection than builders and authorities anticipated when it was built. Commonly, when these kinds of cuts are made, fire prevention and inspection are among the first to be targeted. These are the fire safety individuals the occupants of these structures would rely on most to ensure that the structure is always in compliance with codes and regulations—for example, when modifications are made.
As the population ages, a greater percentage of citizens have mobility problems, which is another factor to consider, especially if these structures are to be used for such things as hospitals, which we understand from previous testimony is a target use for wood-frame buildings in additions to schools, malls, parking garages, and bridges.
Firefighter safety is another concern. In our view, the move to permit higher and taller wood-frame buildings in the national building code is set against the backdrop of an objective-based code that does not include firefighter safety as an objective. As a result, firefighter safety cannot be used as the basis for a code change request.
We would also note that the national building code, despite being a model code, establishes the absolute minimum performance that builders are required to achieve. It is not the Cadillac level; it's the minimum. Six-storey wood-frame structures were first permitted under the British Columbia building code. The first such structure was consumed in a massive blaze in Richmond in May 2011, confirming that they are particularly vulnerable when they are under construction.
In December 2013, a four-storey wood-frame student residence under construction in downtown Kingston, Ontario caught fire, sparking a massive inferno that spread to two adjacent buildings while taxing the city's emergency response infrastructure to its limit for 48 hours. The builders were charged by the Ontario Ministry of Labour with 22 offences, 11 of which were related to fire safety precautions that were not followed.
Having fire safety regulations and having an existing level of fire protection in a community are not guarantees that any particular structure is safe. The truth is that every working fire represents a danger not only to the public, but to the firefighters who respond. Large blazes, such as the Richmond and Kingston wood-frame blazes, also reduce the resources that fire departments have available to handle simultaneous incidents.
In closing, firefighters are not opposed to a vibrant forestry sector or innovation in building codes, but if such changes occur quickly, we urge more thorough discussion of firefighter and public safety considerations against the backdrop we have described of inadequate fire protection in many communities and the prospect that any given municipality may reduce its fire protection capabilities in the future.
We appreciate this opportunity to present our views to the committee on behalf of Canada's professional firefighters, and we look forward to answering any questions the members may have.
Hello, everyone. My name is Sam Meyer, and I work in operations for an architectural millwork firm that specializes in the manufacturing of custom case goods and wood products for various commercial, industrial, and institutional industries. We are a family-run business that has been in operation for over 30 years.
In recent years we have been facing increases from various areas of our business, and the threat of higher and increased charges continues to roll in. This is coming from the provincial and federal levels, and encompasses everything from material surcharges, hydroelectricity, minimum wage and vacation time increases, to CPP and payroll taxes. It is becoming a lot more expensive to operate a business in the province of Ontario, and the opportunities to recoup these costs are diminishing.
On the material purchasing side, we have faced various increases from different levels. We have started to see carbon charge lines as well as delivery surcharges on almost all orders we receive. This was not prevalent in years past, and it is becoming harder to predict the shipping and supply costs of the various materials we bring in.
The millwork industry is dealing with varying quality, availability, and cost issues with a lot of our materials and supplies. With the latest anti-dumping ruling, brought in on imported Chinese plywood, all imported materials are slated to increase in the near future. These are unforeseen costs and not allowed for in our original quotations. We are not able to request a change for the increase in material costs.
For some of our projects, green building credits are being pursued by architects and designers through material specifications that include low or formaldehyde-free boards and certified lumber and panels. Suppliers who can supply these materials are becoming more difficult to find, especially for small orders. For example, just this past week, we required 50 sheets of material for a small part of a project and our suppliers came back stating we must order many times that amount. They said we needed a minimum order of 300-plus sheets, which is about six lifts. This not only throws the project material cost way up, but reduces our revenue, and above all, it is wasteful, given the fact that we might not be able to use this material again for other projects and must either dispose of the 250 extra sheets that aren't needed, or tie up needed square footage to store this material in the hopes that we can use it in the future.
Millwork product specifications are generally established and reused by designers and architects, some of whom have limited knowledge of wood properties, gluing, finishing, etc. This situation is problematic as we have noticed that designer specs are often of poor quality or are outdated. Unrealistic specifications force millwork companies to redesign the products ordered and then finish the technical details of designs. This additional work translates into unforeseen additional costs. All architectural millwork companies should be required to follow the strict guidelines set out by the Architectural Woodwork Manufacturers Association of Canada, or AWMAC for short. This would help to eliminate outdated and redundant specifications, allow for fairer pricing, and give the end-user a better quality product.
As we are members, we feel this would bring up all quality levels to realistic expectations, and projects would be quoted on the same level by competent competitors. This would result in fairer pricing for a better product.
On the operational expenses side, we have seen increases from various sectors and areas. The cost of hydroelectricity has just been reduced as a provincial rollout program to assist with this expense. However, we have already seen increased charges, and received letters stating further biannual increases are slated for the near future. We are being forced to use hydro as our main source of power, and penalized for that, as there are currently no cost-effective alternatives for our high-voltage industrial power needs.
We would appreciate being able to contribute to a healthy environment. However, we are lacking the resources to be able to do our part as a small business.
Recently, we received notice that the minimum wage is increasing. It has gone from $11.40 in May of this year to $11.60 this past October, and will increase to $14.00 an hour as of January 1, 2018. This is a large increase in a short time, as we sometimes quote our work upwards of a year in advance, using the current labour rates. All our contracts are binding, and we do not have grounds for increases once contracts have been signed. This is now a bottom-line hit that cannot be recovered.
This also causes a trickle-up effect. Everyone higher up in the company has said they feel entitled to a pay increase, no matter what their current pay rate is. Also, as of May this year, there were additional mandates for vacation time pay, as well as paid emergency days off. Vacation time pays are increasing from two to three weeks, and emergency days are now an additional mandatory paid two days off.
We are all for the fair treatment of our employees. However, as previously mentioned, this is another bottom line hit that cannot be recouped.
The millwork industry is currently dealing with a shortage of labour. Part of the problem results from the fact that jobs in this sector tend to be low-paying. Apprenticeship programs do exist but most training is still done in-house. There seems to be an increasing threat to the trades as a whole, as our high school system continues to push students away from attending trade schools and colleges, and gears them towards universities and professional degrees. There's a disconnect between what our schools are teaching and what we as companies can offer.
Our schooling system promises high dollar payouts. The reality is much different. On a recent visit to another local kitchen cabinet manufacturer, there was a presentation by a professor from the local college in that area and he stated a case where students can expect to earn upwards of $35 an hour, with a pension and full benefits, just for finishing their program. This reality is grossly overstated, as a qualified cabinet-maker of equal skills can expect to earn about a half of this amount, just out of school.
In conclusion, I would like to thank you all for your time, for allowing us to share our challenges and experiences operating as a business in the wood manufacturing sector in Ontario. We are positive and hopeful that we can resolve some of the challenges I've outlined and work together towards a better and stronger country from all sides.
Thank you.
:
Thank you very much, Mr. Chair.
My question is for Mr. LeBlanc.
I was a paramedic for about 30 years in Quebec. I know how important it is to assist people, and I myself have felt a desire to help. I also know how important it is to secure the intervention site. Actually, if we are helping a person in a dangerous situation and put ourselves in danger, we then have two people in danger.
You mentioned the danger of fire, especially when it comes to a wood-framed structure. Are your fears warranted and, if so, what are they based on?
You gave us the example of fires that destroyed wood-framed buildings in Kingston and Vancouver. Could you tell us what is being done elsewhere?
You also told us about the Grenfell Tower fire in London. In your opinion, would the result have been different or more disastrous had the building been made of wood?
We all remember what happened in New York. The building suffered a progressive collapse. That building was not made of wood.
I recognize your desire to protect firefighters. We completely agree on that. That being said, I remind you that in Quebec, 60,000 jobs are tied to the forestry industry. Finally, I want to remind you—and you know this, of course—that there's no such thing as zero risk.
:
Thank you for the question. I think I heard it all through the translation and I apologize. In my full disclosure, I should have said that the only French I know is my last name, so I apologize if I've missed any of this.
I don't think it's fair to try to compare what happened on 9/11—with jet airliners crashing into a building and that additional fuel, plus the weight of those airliners and everything else, and the explosions that happened when those jet airliners hit a building that was made out of cement—to say, “Well, those are cement buildings, so they shouldn't have fallen or crumbled to the ground” by comparison to what some of our concerns are with wood-frame construction.
In the Kingston scenario, what I have learned from colleagues who were at the fire—I was not at the fire, as my vision had taken me off the job sooner than that—was that what was ironic, or strange if you will, was the fuel that was present because it was all wood and so much of it was not made out of cement. This was two o'clock in the afternoon on a nice, bright sunny day, very similar to this time of year, with about 100 construction workers on site.
To have a fire start and then grow to that volume, where it did so much damage to buildings not only adjacent to it but also across the street because of that type of radiant heat, is the concern we have. It taps into, not only all of our resources that we could provide in the city of Kingston—we're not the smallest city in the province—but it took resources from as far west as Belleville to as far east as Brockville to come in to assist with that type of fire that was burning out of control.
I think that it got the national attention because of the crane operator who was trapped and had to be rescued by helicopter.
I understand there is nothing that is zero risk, but in the codes, as written up until now, when we're talking about high-rise buildings, we're talking about essentially cement blocks and cement compartments. The fire does get compartmentalized and usually contained, regardless of what's going on. Unless there have been some changes to the buildings or mechanical failures that we've experienced with fire sprinkler systems, it rarely gets beyond the compartment. That's been my high-rise firefighting experience and that is a concern when we now take it to a combustible material.
For now, we may cover it up with drywall, but we all know that when people get into their apartments, condos, homes, or whatever, they start to change things. If they know that they have wood construction, they start pulling off the drywall because they want to see the exposed wood because it can be quite beautiful. Perhaps it's structurally sound, but what we're running into is that the innovations on the engineering side are failing to take in what's happening when our members are running into those buildings and staying inside those buildings. That's the problem that we have.
We want to make sure we take this in a very stepped approach. If we get into communities, like Kingston or smaller, and we start to build buildings such as high-rise buildings or other buildings that hold a lot of occupants, then I think we need to be, and we should be, responsible enough to take into consideration what protection resources there are. A building like this could now become fully engulfed because of the different type of fuel load that we're building it out of.
Are the resources there from a protection and response or from a prevention side and if not, what can we do? Do we provide something from a federal government for assistance to municipalities for their consideration to say, “We'll accept buildings like that in our community, but we get to apply for something that helps us beef up our inspection ranks and/or our emergency response.”
Those are the things that we're trying to say here. We're not saying that we're opposed to wood innovation or the forestry industry as a sector in the creation of jobs. We want that happening in our country, but we also want to be responsible about it when it comes to public and firefighters' safety.
:
Chinese materials are actually crippling our local manufacturers. We can buy just as many domestic materials. The same domestic materials we can buy imported. What they found with the imported materials right now is that the Chinese government was caught subsidizing to a point where they were dumping them at an unfair rate.
To give you perspective, a domestic plywood sheet costs anywhere from $10 to $15, and sometimes $20 more a sheet domestically than does an imported board. What that does is that I'm forced to buy the import because the costs just aren't there for us to buy the domestic.
To be honest, if I could buy all domestic, I would, but the fact is that when we're pricing all these jobs everyone else is bidding based on the import materials, and we're stuck going that way. When we want to use the domestic side, we're stuck in the same situation where we have minimum orders for the cost, and the price is that much more.
I don't know if, as a whole, as a country, it's worth expanding that, as strong an industry as the forestry industry is. If anything, I think it's hurting our mills. In the last few years alone we've had—don't quote me on the exact number—two or three major mills either go under or be repurchased by other organizations. As an industry as a whole, we're suffering.
My thanks to all the witnesses for their presentations.
I was a municipal councillor for six years before I was elected Member of Parliament. In particular, I worked with the municipalities in my region on the risk management for fire safety. I therefore fully understood all the points made by the representative from the International Association of Fire Fighters, and I thank him for bringing those issues to our attention.
However, my questions are for Mr. Meyer, who has given a fine description of the evolution of his industry. I am particularly interested in that, because in the riding I represent, the city centre of Saint-Hyacinthe has a six-storey office tower with a wood-framed structure. This is the Synergia Complex, built by the Groupe Robin, an entrepreneur from our region. The complex was built in collaboration with Nordic Structures, a company located in Chibougamau. That office tower attracted a lot of interest, so it had no problem quickly finding tenants who now occupy all its offices. In our region, we feel that there is interest in this industry.
You talked about how your industry has evolved. We now know that high-rise buildings have been built with wood around the world. We also know that the Synergia Complex built in Saint-Hyacinthe has been studied by research groups. It is actually LEED certified.
So far, what have we learned from the existing buildings and how can this information help shape your industry in the future?
Mr. Meyer, can you answer those questions?
:
As the main one, it's a source of materials, and for us it's always the lowest number that wins. On a job, we could be pricing upwards of 10, 15, or 20 different contractors. Each contractor could have five different companies like us, so we could be bidding against 80, 90, or 100 different millwork companies per se, and it's really the lowest number that wins, regardless of what happens.
What we're seeing happen more and more is that the lower-number millwork shop doesn't always do the best job. What they hope for is that they get halfway through the job and can't complete the contract, and then they bring in another shop in to finish up the contract. Really, the contractor is ahead by paying for only half the job because the original contractor failed.
This is about better regulation on that item, for one. The second and actually bigger item would be payment terms: getting paid on time. Our biggest struggle right now is getting paid by these contractors.
We have an outlay of hundreds of thousands of dollars in materials, wages, and everything else, and we're just hoping that at the end of it we get paid. For us to get paid in 90, 120, 150, or 180 days is wishful thinking. We're forced to carry it. Our industry isn't set up so that we get deposits or money ahead of time. We're expected to front all the materials and all the labour and then hope that in six months' time we get paid for it.
:
First of all, thank you for being here.
This is very novel for me. As chair of a committee I don't usually get to ask questions, so bear with me.
I'm very pleased to see the IAFF here to speak on this issue. Long before getting into politics I worked with the YMCA. Right beside the YMCA on Hespeler Road in Cambridge is a seniors' facility—six storeys, timber construction. I remember it going up and thinking, “Holy smokes. That, to me, just does not look safe.”
Do you have any knowledge of whether, in the code, any consideration is given to the purpose of the building when they give approval to use this wood construction? I'm thinking of it in terms of mobility, and you mentioned this in your remarks. When you're talking about a seniors' facility, virtually everyone in that facility could potentially have mobility issues in a fire. Do you know if the code takes that into account?
If you think of any other of those kinds of things later, we would welcome your written submission afterward, which could also be included as an addendum to the report. Sometimes it's hard to think of all these things off the top of your head. I think that would be important input in terms of what we can advise as policy-makers that would benefit small and medium-sized developers. You often hear of programs like that, which are targeted to big multinationals or even wealthier individuals who can already afford to make adjustments, and then somehow, through either bureaucracy or unintended consequences, they exclude operators like you. I welcome you to provide any further feedback.
I want to thank both of you for being here to provide your testimony.
I come from northern Alberta. You'll recall last year that, starting on May 1, 2016, the Fort McMurray wildfires were announced, and they were fully extinguished in August 2017. At its height, it was burning just about 6,000 square kilometres, and it burned thousands of residences and 22 commercial buildings. The Insurance Bureau of Canada says it's the costliest disaster in Canadian history.
As a northern Albertan, I can't say enough how much we thank you and your members for the self-sacrifice and for the risk-taking work you do. For the people who have gone through that fire, and that community, as you know, maybe it's not in the headlines or on the front page of the news anymore, but it's still just the beginning of a long journey and process of recovery for them.
I think I'm interested, and I think all of the members—
Good afternoon, gentlemen.
We're in our second hour. From the Coast Forest Products Association, we have Mr. Rick Jeffery, president and CEO.
Thank you, sir. I know that this is a second attendance for you. We're grateful that you were able to fit us in a second time.
We also have Mr. Eric Karsh, principal, structural engineering, from Equilibrium Consulting Inc.
Gentlemen, the process for today is that each of you will be given up to 10 minutes to make a presentation. Following that, you will be asked questions by members around this table. You can deliver your remarks in French and/or English. You can anticipate that you'll be asked questions in French. I believe you have devices for translation, should you need them.
On that note, I will open the floor. Perhaps you can start us off, Mr. Jeffery, since you were kind enough to come back a second time.
:
Thank you, Mr. Chairman. It's my pleasure to be here for the second time. I hope your vote went okay the other day.
I'm going to start off by basically talking about the supply chain, the forest supply chain. It's relevant in respect of talking about secondary supply chain products. Essentially, in the forest products industry, the supply chain starts with our forest management. Of course, Canada leads the world in sustainable forest management, and that has to do with the fact that we have strong support from both the provincial governments and the federal government on the research side, and we have strong regulatory and legislative frameworks in which to operate. We also have a customer base that demands that our products be sustainable.
You really can't talk about secondary supply chain products without talking about the primary industry first. It is the primary industry that breaks down products that are then fed down the supply chain to the secondary folks. In that respect, as you do your deliberations, you should be alive to the fact that we are engaged in a dispute with our American friends around softwood lumber.
On the coast of British Columbia especially, that is an important issue for us both at the primary and the secondary levels because we produce very high-value products off the coast. In fact, 80% of what goes into the United States is cedar products and they are very high-value products. The whitewood products that go in there tend to be shop-grade products that get further manufactured by customers and the supply chain south of the border. As your government deliberates on softwood lumber and tries to negotiate an agreement, you should be aware of ensuring that the high-value sector on the coast of British Columbia gets adequate access to the U.S. market, especially if we're in some type of quota arrangement.
The way it works here, generally primary producers make the products, which then get sold here to secondary producers who manufacture all manner of things. My friend here does some amazing engineering feats with those products, but he'll be able to talk about that himself.
In terms of economic and employment benefits, the primary industry off the coast of British Columbia is a $6-billion-a-year proposition. It employs 40,000 people. Interesting for your deliberations, as many of those products move down the supply chain to secondary producers, that business in British Columbia on the coast is about a $1.6-billion proposition and employs an additional 3,000 people. Primary and secondary industries are interlinked, and without the primary breakdown, you don't get a lot of secondary products, especially on the solid wood side.
That goes to your economic and employment impacts question.
I'd like to talk a bit about the barriers and opportunities. For sure we are on the cusp of a whole range of exciting opportunities in the forest industry. We have next-generation products such as cross-laminated timber and other engineered wood products that don't necessarily fit in a box. We have all manner of next-generation products on the pulp and paper side, from biofuels to nanocrystalline cellulose to cellulose fibres, lignin, these kinds of things. The world is using wood in ways we never imagined, and in Canada, we need to be ensuring that we are doing what we can in terms of research and development and regulatory processes to facilitate the advancement of the use of wood in these exciting next-generation applications, which by definition might be what you're calling secondary supply chain products.
That is the opportunity. However, I'm going to tell you quite frankly what the barrier is. In this country, it is hard to make a business case for investment in the natural resources sector. We face uncertainty in costs. We face uncertainty in access to fibre.
Many of those barriers or issues that preclude being able to make a business case for investment revolve around things that governments do. There are regulatory things. There is species at risk. There is reconciliation with first nations. There is tax and economics, and then there is that, always, forestry always tends to be a political football.
Those issues are what I think your committee needs to turn its mind to, because it's very difficult for CEOs to go into boardrooms today and say they want to invest $100 million in a sawmill or some next-generation product, which carries all kinds of risks to begin with, and then not be able to turn to their boards of directors and investors and say where they're going to get the fibre to build these things and what the cost of that fibre is going to be.
Having said that, and not being a guy who has a black cloud over his head, there are a number of things the federal government is doing that we should celebrate and ensure continues.
You have the EMO program, or the expanding market opportunities program. That program leverages federal government, provincial government, and forest industry money to promote our products offshore. Not only does it promote our products offshore, it promotes Canadian technology, building systems, and expertise in offshore markets. That's a very good program that should continue to get funding.
You have the investments in the forest industry transformation fund, or IFIT. That fund is spurring innovation into new and secondary products in the pulp and paper sector.
You have your superclusters initiative. Here in Vancouver, one of the superclusters includes the forest industry, and that's where we're going to drive transformative change as we see the digital economy and the big data economy hit the forest sector. There are amazing opportunities for us to reduce our costs, increase utilization, and use big data and analytics to help us improve our businesses.
There is also the green construction through wood program that's part of the softwood lumber assistance package, and that helps us promote the use of wood as a low-carbon GHG energy-efficient material, which is one of the platforms for the evolution of building with wood in this country, in North America. As we speak we are doing the same thing with our friends in Japan and China.
As my day job, I'm the CEO of the Coast Forest Products Association, but in that role I'm also the president of the Canada Wood Group, which does the offshore market access and market promotion program for the industry in offshore markets like Japan, China, Korea, India, and places like that. We are in discussions with the governments of China and Japan about how to bring our technologies and products into those marketplaces so that they can begin to build with wood, much as we have built with wood here. That speaks to not only primary products but also secondary products like CLT and other engineered wood products and, just as importantly, the value-added technologies and building systems we have here in Canada.
I'm going to end it there by saying that we are on the cusp of some amazing things. We have a very mature, established supply chain here in British Columbia that centres around the primary industry, and the spinoffs from that are significant for the secondary wood products industry. Our opportunities moving forward certainly are around new products or innovative applications that exist.
Thank you very much for your time.
:
Thank you, Mr. Chairman. Also, it's a pleasure for me to be here.
My role is on the value-added or specifying side of the chain. I've been a practising engineer for 30 years and have been designing with wood since I moved to British Columbia 23 years ago. The amount of innovation and progress that has been made on the technical side of timber engineering and manufacturing in the last 23 years has been astounding.
It is true that Canada has always, or for a very long time, been seen as a leader in the production of the fibre, of softwood lumber. On the engineering side, however, when I began designing with wood 23 years ago, we were playing catch-up with the Europeans, primarily. I'm happy to say that thanks to the support of the Canadian Wood Council and organizations like FPInnovations, which have been doing a tremendous job on the research side, we are now seen as being leaders in design as well. We're exporting our knowledge and expertise all over the world at this time.
These advances have included new products, many of which have been developed here in Canada, engineered wood products such as Parallam as an example, but also manufacturing with CNC fabrication, or computer-controlled robots. Most recently, as Rick mentioned, mass timber products such as CLT have really had a huge impact on the way we design buildings in wood today.
As you may know, we have been slowly, due to this innovation in the last two decades, been using wood in commercial construction more and more, and you can see structures in wood nowadays in hospitals, airports, and museums. Just about any kind of building you can think of, we can now build in wood. I think we have demonstrated that wood can be used successfully in all those building types, including more recently, in high-rises.
The use of mass timber, such as cross-laminated timber, has made it possible for engineers now to design high-rises in wood, and following the publication of our report, our feasibility study in 2012 called “The Case for Tall Wood”, the discussion around timber high-rises and the potential use of it for high-rises has grown very quickly, not just in Canada but all over the world.
We're at a point now where we are to move from demonstration to mass use, and there are a number of barriers that still stand in the way for this to happen. One is that the timber manufacturing and value-added sector is still relatively small, not only in Canada but all over the world.
There is a challenge on the education side. As an engineer, you cannot get an engineering degree without taking a steel engineering and concrete engineering course, but you can, in Canada, graduate without an introduction to timber engineering, and not only can you graduate without an introduction to timber engineering, but you may have a hard time finding a university in Canada that will teach that course. It is, I think, important for Canada, which is the largest producer and exporter of softwood lumber in the world, to pay attention to the need to educate professionals in the technology and the design of timber structures and other products.
The other barrier is that because the market in the value-added sector is quite small, there is a lack of competition and there is a lack of stability in the pricing, which is a challenge when you try to convince a developer or a contractor to use the product. We believe that we are just about at the point where we're crossing that line. Developers and contractors increasingly recognize the advantages of building with mass timber.
It's a lot faster than building with steel and concrete. It is sustainable and wood, of course, is a renewable material. With the development of mass timber we can now build timber structures that perform as well from a serviceability point of view as concrete and steel.
The advantages have been demonstrated. We now need to develop a supply chain that is reliable, both in terms of capability and expertise but also in terms of pricing or costing. In the United States right now there are companies that are building new CLT plants that are going to have very large output capacity, so I think there's going to be an increase in supply, which will probably help in stabilizing prices and also with bringing prices down. That will go a long way in increasing the use of mass timber in construction, but we shouldn't take for granted that it will actually bring us over the hump. Even if the supply side comes on online, we still have the issue of not having enough professionals to be able to keep up with the demand that we expect will take place.
One option we have been looking at, as designers.... I'm also involved in a not-for-profit design-build school called DBR. We've been teaching design-build courses. We invite designers of different kinds, architects, engineers, landscape designers, to come to the classroom, design a building or pavilion or some other small project, and then go in the shop and actually fabricate and install the structure. That's helpful in providing hands-on training to designers who may not get the opportunity in a university setting.
The requirement for knowledge is actually at the global level and it is significant, so we've been talking about trying to put together an online university course that will be not for profit again and will not be accredited but will at least make the information available.
When you design a building out of wood, the amount of information and the variety of information that is required to do your job is really quite surprising. We have to address structural issues, of course. We have to address issues of supply, manufacturing, fire protection, acoustics, and so on. It is a significant amount of work to catch up on the professional expertise side to meet the demand that we hope will actually come online very soon.
That is the essence of what I have to say. I look forward to your questions.
First and foremost, let me say that governments of all stripes that have dealt with this issue have taken it very seriously and done a very good job to represent Canada's interest in softwood lumber. It is not a partisan issue. It is an issue that is incredibly important to whoever is in government, because of the size and importance of the industry. The current government here in Canada has done what they can to try to negotiate a deal; however, if you don't have a willing partner on the other side of the border to negotiate a deal with, you can't get a deal. That remains our case today. The U.S. coalition is not interested in a deal, and until they are it is unlikely we will be able to fashion one. That's just the nature of how the law works down there.
The impact on my membership right now has been fairly benign to this point in time. The price of lumber has risen in the United States, and essentially what's happening today is that U.S. consumers are paying the brunt of protectionist actions by a handful of forest companies.
However, we've been down this road before. The last time we were in this was from 2001 to 2006. What we know is that markets will adjust over time, so it's our expectation that as we fight the legal case, the price of lumber will start to drop, and then it will start to bite and we'll start to see reduced shifts in mills and logging operations, and those kinds of things.
It is certainly very difficult for a CEO to be able to go to a board and ask for investment money when you have a 21% duty on your products. I mentioned earlier that on the coast here 80% of what we send to the United States is cedar. It's our biggest market for cedar. It's probably the only market that's willing to pay for the price of cedar. The average value of cedar going into the United States is $1,200 a thousand board feet. When you put a 21% duty on top of that, you're looking at paying over $400 in duties. The market will not sustain that kind of pricing for a long period of time.
We're already starting to see prices come off. As prices come off, we will see an impact on employment and economic activity, and certainly on the investment front.
The Species at Risk Act has a very big impact on the certainty of supply and the cost of supply. That's a federal statute. It is not a terribly well-written federal statute. Socio-economic impacts do not get considered in the development of species-at-risk plans and recovery strategies. They don't get considered until the very end, when it could potentially go to cabinet and cabinet could say, “We are willing to do something other than the recovery strategy because of the socio-economic costs of it.” That's way too late in the game. Again, at a boardroom table, you cannot talk about making an investment if you can't tell people where the trees are going to come from. To hope that, on a species-at-risk issue, the federal cabinet will weigh the socio-economic impacts at the end is just absurd. That weighs heavily.
All across the country, there is a big issue around caribou now. I would encourage you to look at the Forest Products Association of Canada's website to see about caribou. That's not something that happens on the coast. We don't have caribou here, but we have northern goshawks, marbled murrelets, and things like that. That's one area.
The second area is that we need to get on with reconciliation with first nations. Applying the spirit and intent of UNDRIP and these kinds of things in dealing with first nations is a laudable goal, but the fact of the matter is that we have to get on with reconciliation so that benefits are flowing to first nations. Quite frankly, the federal government needs to step up to the plate here in British Columbia to help us with that reconciliation process. There are things we can do that are wins for first nations, for the industry, and for governments. We need to get on with doing those things, and the federal government is an important partner there.
Those would be the top two items.
The last one is that the government has a very well-thought-out investment strategy around the things I talked about—like the green construction through wood, the IFIT program, and those things—and we would encourage you to continue to invest in that kind of research and development to help our industry on the forest management, products, and technology side.
:
As I explained, five years ago we published the research report showing that we could build tall wood-framed buildings.
At that time, there was a lot of criticism on the Internet. As might be expected, a lot of people reacted, saying that wood-framed high-rises were vulnerable to fire, termites, and so on. In just five years, I think there has been enough discussion and research to show that high-rise wood-framed buildings can be built very safely.
Right now, we are working on the design of high-rise buildings in Brazil, China, France, Canada and the United States. More and more, I think it's becoming an international trend. Yet more importantly, we are moving from demonstration buildings to buildings that are financed by commercial investors. We are not necessarily talking about 20- to 30-storey buildings, but six to 12-storey buildings.
This is the future. This will have a major impact on the use of solid wood.
:
Perhaps I could just add to that.
I have another hat, as a director of the Canadian Wood Council. We have done extensive research. When you talk about construction up to six floors, we have changes now to the national building code that provinces have been adopting. Here in British Columbia, almost all six-floor buildings being built now are being built with wood. That is a big market segment for us.
We've done market segment analysis on the sixth-to-twelfth-floor building segment. That's another building segment that is important here in Canada. It is probably even more important in the United States. We have a lot of effort going into the building codes around the sixth-to-twelfth-floor segment and into developing the technologies and building systems to meet that segment, because it is fairly significant. I don't have the numbers in front of me, but we can certainly get them to you. The Canadian Wood Council can get them to you as well.
We are also looking at commercial low-rise. A lot of these malls and things that you see that are done with cinder-block bricks and steel trusses could equally be done using wood construction techniques and gain the benefit of energy efficiency and savings in the carbon GHG world.
There's significant research on up to six floors, the sixth-to-twelfth-floor segment, and low-rise commercial. Those are the new segments that we as an industry are focusing in on beyond just residential housing.
:
What I would say is that we have a very rigorous process around building codes. We need to ensure that we continue to do the research and development in support of building codes, to make sure building codes are designed in a way that supports safe buildings with any kind of material, whether it be concrete, steel, or wood.
The 2020 building code will be a results-based code rather than a prescriptive code. As we embark upon completing that code, we need to make sure that we build in all of the safeguards that we need to ensure we have safe buildings.
On top of that, as I said earlier, there are a number of federal government programs around green construction through wood that will help us promote the use of wood in construction in Canada, over the next four years.
Also, as government undertakes a procurement policy for its aggressive infrastructure programs, we should make sure that wood has consideration in those projects. Then, as Eric has said, we also need to ensure that we're spending appropriate amounts of money with our engineers, designers, and architects, so that they are comfortable building with wood, as well.
Do you want to pick up on that?
The construction industry is relatively slow to move. To have codes in place is key to confirming the research and development required to ensure that the use of the material is safe. I think we're making a lot of progress in that way.
The other side of the equation, as Rick mentioned, is education. It's the chicken and the egg. If there are very few graduates who come from engineering schools that teach wood, there will be few professors who can then go back and teach it. How do you break that barrier? How do you form more engineers and architects?
At the moment, most engineers and architects who start designing with wood are self-taught. I never took a course in timber engineering. I learned it on the job, essentially. However, as the price of timber buildings comes in line with concrete—and I think we're almost there—the demand will grow very rapidly. Then there's going to be a bottleneck on the design side, or on the expertise side in general, not just in design but in manufacturing and construction.
I think we need to prepare for that growth throughout the delivery chain, including in education.
:
Those programs are very well thought out. One thing we could improve upon is being able to access them in a time- and cost-efficient manner. Quite often, some of these programs require a lot of paperwork to make your application, get selected, and be able to get the money. Streamlining those kinds of things would be good.
You've covered the waterfront, and we're extremely grateful for it. We have export development things. The additional money that's in the expanding market opportunities program is federal money. It doesn't require matching from the province or the industry. That's very useful, especially when we think about doing demonstration projects to demonstrate our technology in places like China, where they have considerably more housing starts and needs for energy-efficient, GHG-friendly buildings. We would encourage continuation of that program. It's been renewed for two years. It's hard for us as industry to be able to plan. That supports our offshore market offices in Japan, China, Korea, and India. It's hard to plan—to have staff there—if you're always working on budgetary cycles, so if we could get long-term funding in those things, that would be useful.
On the green construction through wood program, we're not sure exactly what the details are, but we're certainly looking forward to the conversation. Maybe that goes back to streamlining. When these things are developed for implementation by Treasury Board and the appropriate federal departments, pre-consultation on what they look like, how you access them, and how you track them would be useful to make effective use of those dollars.
Just to dive in on your bridge thing, that's another place where the Canadian Wood Council has identified a real market opportunity—bridges in Canada. There are hundreds and hundreds of bridges across this country up for replacement. Wood could be a good alternative in there.
I think a lot of next-gen products revolve around these engineered solid wood products, like LVL, Parallam, and cross-laminated timber. Think of them as a system, not just products. You're not just selling one product. You're saying we have these different kinds of products that can be put together in applications to do things like 350-metre spans and stuff like that. On that side, that's really where I look.
On the pulp and paper side, I talked about the importance of primary and then secondary following in behind. Pulp mills are going to be pulp mills. They're going take fibre. They're going boil it up into cellulose and lignin and make paper and those things. Paper is not a winning thing. When I think about a bunch of next-gen stuff that gets really exciting, nanocrystalline cellulose can be used in carbon fibre and coatings in glass. You can use lignin and cellulose to replace petroleum-based polycarbonates in plastics and carbon fibres.
Then there's the whole biofuels piece, where we can fuel part of our energy needs out of renewable energy that comes from wood. Those are the kinds of things that we have research on in the laboratories. Our challenge now is to de-risk those things and commercialize them. That's where government can play a role. That's where your previous government and this government have done things like IFED and forest innovation programs, and funded FPInnovations and places like that, to allow us to get this stuff from the laboratory into real life.
That's the challenge. That's where it comes back to my saying that attracting investment in this country is a hard go these days.