Industry observers and insiders are dismissing a report from a left-wing think tank heavily criticizing the B.C. forest industry for failing to get the most out of its timber.
Ben Parfitt, a resource policy analyst at the Canadian Centre for Policy Alternatives, says B.C. lags well behind other provinces in generating jobs making higher-value wood products, and risks losing further ground as it exports low-value wood products to China.
It's a tune industry analyst Paul Quinn has heard sung many times before.
"I've been in forestry for 25 years and it's been talked about for a long time," said Quinn, who works for RBC Capital Markets. "When you talk about value added products you better be adding some margin... I find with a lot of the value added stuff is your margin actually goes down."
Economist say that the first rule of manufacturing is to locate the activity as close to the customer base as possible, and Quinn said the trouble is that much of B.C.'s timber stands are so distant from the markets.
Consultant Russ Taylor said there's "nothing sexy" about how B.C.'s lumber exports into China are used. He said about two-thirds of the volume is "throw-away product," used largely to make concrete forms, about one-third is good enough to go to remanufacturing plants and about "point-one per cent goes into new housing."
Something in the neighbourhood of 5,000 woodframe houses are built in China each year.
"I mean Vancouver builds more than that," said Taylor, president of Wood Markets International Group. "If they ever adopt woodframe housing, which we think they will, it's going to take another decade before we get into some reasonable numbers, so don't bank on that in the short term, bank on other things first."
But banking on value added products is not one of them, in Taylor's opinion.
"My personal view, working in the B.C. industry for 30 years, is it'll never happen or it'll happen in bits and pieces," Taylor said. "We're a commodity business."
The fact that softwood is more conducive to producing building material for the massive albeit struggling U.S. market and that B.C. forest workers expect a certain standard of living factors works against developing an extensive value added industry.
"More and more of the processing of value-added products is going to low-cost regions like China," Taylor said, adding the lumber that goes into remanufacturing plants overseas is often for products that are exported back into North America.
HARDWOOD IN HIGHER DEMAND THAN SOFTWOOD
Provincial jobs, tourism and innovation minister Pat Bell said Parfitt "missed the boat" in that he makes reference to products like furniture, cabinets and flooring.
"Anyone who knows anything about the forest industry knows that those products are made primarily out of hardwood, not softwood," Bell said.
"The reason why Quebec and Manitoba have industries that include value-added manufacturing of that nature is because they have a hardwood industry. We have an exclusively softwood industry in British Columbia."
Bell emphasized the ongoing "wood first" strategy that has included amending the Building Code to allow six-storey woodframe buildings and structurally-engineered wood products.
"When you think about buildings like the Richmond Ice Oval, that has a 330-foot span under a softwood lumber roof, that's the value-added that we can produce in British Columbia," Bell said.
He also discounted Parfitt's suggestion that B.C.'s volume-oriented strategy for China is a faulty one, noting that exports into the country are commanding a higher price than those into the United States at the moment.
"I know that there are 10,000 workers who are working directly as a result of the China market," Bell said.
WHISTLER HOSTS VALUE-ADDED CONFERENCE
Not that there isn't an effort afoot to develop an export-orient value added sector in B.C. As many as 150 buyers from 15 countries are expected to converge on Whistler, Sept. 8 to 10, for the Global Buyers Mission, hosted by BC Wood, a value-added trade association.
According to BC Wood, the province's value-added wood industry employs 19,600 people and generates $4.85 billion annually in exports. But BC Wood CEO Brian Hawrysh said value added has little presence in Prince George.
"It's primarily an SPF [spruce, pine, fir] marketplace for a resource in the Prince George area and so, what do you do with that?" Hawrysh said. "It doesn't lend itself particularly well to higher end doors and windows and stuff."
One of the few local bright lights is Winton Global, which makes engineered wood products, wood truss systems and prefabricated homes, noted Hawrysh. However, after seeing the sector falling off for the last few years, Hawrysh is predicting a resurgence aided by the container port in Prince Rupert and growing demand overseas, particularly in Japan as that country rebounds from the March earthquake and tsunami.
Communities on the northwest should be able to cash in thanks to the region's abundance of hemlock - Parfitt makes notable reference to hemlock flooring, cabinetry and door framing as significant opportunities.
Closer to home, Hawrysh sees potential for the spruce.
"You've got some beautiful spruce stands still further north in the Mackenzie area and I would say that it would be another area of growth for the region," Hawrysh said.
"As the mountain pine beetle issues work themselves through the market, there is going to be an emphasis on harvesting more and more of the spruce trees in the future which would open up some real possibilities for companies."
