Forest industry: the importance of R&D

  • By Sirena Baudin
    • 16-11-2022
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Canada’s forest industry is a significant source of economic, social and environmental benefits, and the country has a real commercial advantage. That’s why Canada is a leader in forest products trade.

The majority of the industry’s wood comes from trees in British Columbia, but wood from southern Ontario, Quebec and Alberta is also used.

There are 3 main sub-sectors in the Canadian forest industry

  • The manufacture of solid wood products 
  • Pulp and paper products manufacturing 
  • Forestry and logging 

Since wood is a versatile material, it can be used to make many different products, such as lumber, plywood, and even by-products such as wood chips, which are used in turn for other products, etc. In terms of trade, lumber has the largest market share.

Although Canada exports the majority of its lumber production to the United States, numerous restrictions and taxes imposed by the U.S. government to enhance the value of local producers limit Canadian competition. However, Canada has been able to diversify its exports to the European Union, Japan and increasingly China.

In Quebec, the forestry industry is very present. More than 140 municipalities benefit from this sector as an economic lever. There are no less than 3,000 establishments in the field of pulp and paper, sawing, manufacturing of wood products, and transformation. This gives Quebec significant know-how in the field, identifiable in the construction projects of bridges, buildings, and others.  The sector generates numerous jobs, with approximately 60,000 jobs in the province of Quebec alone, counting only the direct jobs related to wood harvesting or woodworking.

forest industry

The forestry market also knows its limits. For example, with digitalization, printed communication products have experienced a significant decline. The environmental factor is now in the spotlight and the regulations are evolving towards stricter ones, which is detrimental to some industry players.

On the one hand, the demand for wood products is decreasing (especially for newsprint), and on the other hand, the difficulty of supplying wood due to the reduction of markets has made the growth of the sector fragile.

In order to find solutions to the decline of the industry, the federal government has put in place various solutions, although limited in its actions (again via the example of newsprint demand over which it has no control). For example, the use of wood is recommended in the construction sector, the use of residues in innovative creations of energy sources, and others, etc. In other words, the viability of the sector will rely heavily on research and development.

Therefore, it has been all the more important for this sector to develop innovative products and solutions. Wood companies have had to work hard to develop new high-tech products for new applications. These include biofuels, composite woods, personal care products, etc.

Although wood is subject to environmental restrictions, it represents a certain ecological advantage in certain fields, such as the automotive sector, where wood is perceived as being more ecological than petroleum-based materials. Thanks to these technological advances, it will be possible to stimulate competition and preserve Canada’s competitiveness in the forest industry on the world market. Many industrial cities that were heavily dependent on the wood industry are also hoping to revive their businesses with the development of these new technologies.

To support Canada’s forest industry, the government has put in place a number of funding programs to help the sector maintain its competitiveness and encourage diversification and innovation in the sector. The Canadian government has allocated over $485 million in 2020 to the forest industry.

Here are some of the grants available:

  • The Aboriginal Forestry Initiative, to support First Nations, Inuit and Métis participation in the Canadian economy;
  • The 2 Billion Tree Program, which involves tree planting projects as part of the Government of Canada’s commitment to carbon neutrality by 2050;
  • The Green Wood Building (GWB) program, which encourages the use of wood in construction projects in Canada;
  • The Market Development Program, to support the growth of market opportunities in the Canadian forest industry;
  • The Forest Innovation Program, which funds research, development and technology transfer activities in Canada’s forest sector;
  • The Investments in Forest Industry Transformation Program, on the economic, ecological and technological competitiveness of the Canadian forest sector.

Although the forestry industry is important in Canada, its growth has been greatly slowed down by the decrease in market demand as well as by the various environmental and export regulations. With the help of the Canadian government, the sector can hope to renew its products and remain competitive, provided it offers innovative solutions adapted to the new demand. 

Sources :

Author

Sirena Baudin
Sirena Baudin

Marketing executive/ Office manager

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