PROFILE OF

FORESTRY IN NORTHWEST CANADA

Prepared by: Forestry Canada

January 1990

INl"'RODUCI10N ........................................................ 1

AN OVERVIEW OF THE NORTHWEST REGION .............. . . . . . . . . . . . . . . . . 1

The forest resource in the Northwest Region ................................. 1 The economy of the Northwest Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The forest industry in the Northwest Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Forest industry developments in the Northwest Region . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Current issues, opportunities and constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

MANITOBA FORESTRY PROFILE Appendix A •..•••..•..••......••............ 5

mSTORICAL PERSPECI1VE .............•................................ 6

The Federal Role ...................................................... 6

THE FOREST RESOURCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

THE PROVINCIAL ECONOMY .. . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

An Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~ . . . . . . . . . . . . . . . . . . 7 Gross Domestic Product by Industry ........................................ 8 Capitallnvestment ..................................................... 8 Export Markets . . . . • . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Population and Employment ........................... . . . . . . . . . . . . . . . . . . . 9 Economic Outlook ..................................................... 9

THE FOREST INDUSTRY IN MANITOBA .................................... 9

Position of the forest industry within the provincial economy . . . . . . . . . . . . . . . . . . . . . . 9 Production by the Primary Wood-Using Industry Groups. . . . . . . . . . . . . . . . . . . . . . . .. 10 Markets for Manitoba's Forest Products ..................................... 12

. Socioeconomic Impact of the Forestry Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12

FOREST INDUSTRY DEVELOPMENTS ...................................... 13

CURRENT ISSUES, OPPORTUNITIES AND CONSTRAINTS ..................... 13

SELECTED READINGS ................................................... 15

SASKATCHEWAN FORESTRY PROFILE Appendix B ...... ..... . . . . . .. . . .. . .. . . .. 18

mSTORICAL PERSPECI1VE .............................................. 19

THE FOREST RESOURCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19

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TIlE FOREST ECONOMY ................................................. 20

Overview .•.•.........•..•.....•...............•.•...•............... 20 Gross Domestic Product by Industry ...•..•..........•.••... . . . . • . . . . . . . . . .. 21 Capital Investment ...••..•••............•......•..•..........•......... 21 Export Markets • . . . . . . . • . • • . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 21 Population and Employment •• . • • • • . . . . . . . . . . . . . • " • • . . . . . . . . . . . . . . . . . . . . .. 22 Economic Outlook ...•...•...••.........•........•..................... 22

TIlE FOREST INDUSTRY IN SASKATCHEWAN ............................... 22

Position of the Forest Industry in Saskatchewan's Economy. . . . • • • . . . • . . . . . . . . . . .. 22 Forest Products and Markets . . • . • . . . . • . • • . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22 Socioeconomic Impact of the forest industry • • . . • . . . . . . . • . . . . . . . • . . . . . . . . . . . .. 24

FOREST INDUSTRY DEVELOPMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 24

CURRENT ISSUES, OPPORTUNITIES AND CONSTRAINTS ..................... 25

Sources and Selected Readings ..•..•.••....•••.•.•........................ 25

ALBERTA FORESTRY PROFILE Appendix C ..•......••......•...•............. 29

HISTORICAL PERSPECTIVE ....•....•.................................... 30

:Federal Role . . . • • . • • . . . • • . . . • . . . . • . . . . . . • . . . . . . . . . . . . . . . . . • . . . . . . . . . .. 30

TIlE FOREST RESOURCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 31

TIlE PROVINCIAL ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 33

Overview ..••.•....•.•.••.........•.................................. 33 GDP by Industry . . . . . • . . . • • . . . . • . . . . . . . . . . . . . . . . . . . • . • . . . . . . . • . . . . . . . .. 33 Capital Investment .•.....•.•........................................... 33 Export Markets . • . . . • . . • . • . . . . • . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . .. 33 Population and Employment ......•.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 34 Economic Outlook .•.••...•............................................ 34

TIlE FOREST INDUSTRY IN ALBERTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 34

Position of the Forest Industry Alberta's Economy ............................. 34 Forest Products and Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 35 Socioeconomic Impact of the Forest Industry ................................. 37

FOREST INDUSTRY DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 38

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CURRENT ISSUES OPPORTUNITIES AND CONSTRAINTS. . . . . . . . . . . . . . . . . . . . .. 38

Economic Diversification ..•••••••...............•....................... 39 Wood Supply .......•..••.•.••......•.......•...•............••....... 39 Technicallnnovations •••...••........••.•••••.........•.......•......... 39

SELECTED READINGS ................................................... 40

NORTHWEST TERRITORIES FORESTRY PROFILE Appendix D 41

IDSTORICAL PERSPECTIVE 42

The :Federal Role ..........•.•...•............................•........ 42

TIIE FOREST RESOURCE. . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 43

TIIE ECONOMY OF TIIE NORTIIWEST TERRITORIES ........................ 43

An Overview • . • • . . . . . . . • • • . • • . • . • • . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . .. 43 Capital Investment •.••.••.••••.•••.•••..•.••••.••.......•.•...•........ 44 Population and Employment • . • . . • . . . . . . • . . • . . . • • . . . . . . . . . . . . . . . • . . . • . . . .. 44

TIIE FOREST INDUSTRY IN TIIE NORTHWEST TERRITORIES 44

CURRENT ISSUES, OPPORTUNITIES AND CONSTRAINTS 45

SELECTED READINGS ................................................... 46

FORESTRY CANADA ACf (Excerpts) Appendix E ............................... 48

A NATIONAL FOREST SECfOR STRATEGY FOR CANADA Appendix F 50

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 51

INTRODUCflON

Forestry Canada is the newly formed federal department of forestry. The department's mandate relating directly to the forest sector includes the promotion of co-operation between governments and industry, and the development and dissemination of scientific and management information. Though responsibility for management of the forest resource rests with provincial and territorial governments, Forestry Canada plays an important role in providing research and development services to these governments and to clients in the private sector. Forestry Canada also administers federal-provincial forestry agreements and other initiatives such as employment development programs which may impact on the forest resource.

The Northwest Region is the largest of Forestry Canada's administrative regions in terms of area. It includes the three Prairie Provinces of Manitoba, Saskatchewan, and Alberta, as well as the Northwest Thrritories. In this region, Forestry Canada's programs are delivered froin both the regional headquarters at the Northern Forestry Centre in Edmonton, Alberta and from the district offices at Prince Albert, Saskatchewan and Wmnipeg, Manitoba.

The wide geographical expanse of the region inevitably results in great diversity in terms of the forest resource and the economic activity occurring both within the sector and in the region in general. The region's diversity has created a need for examination of the forest sector in perspective. This report was prepared as a reference document summarizing topics of interest to individuals and agencies concerned with regional economic development in the forest sector. It is also designed to supply those unfamiliar with the region's forest sector and resource with an introduction to this rapidly developing segment of the economy. The report provides information on the state of the forest resource, importance of the sector to the regional economies, the forest industry, and current issues and opportunities for future development. Frrst, a regional overview is presented providing general descriptors of the sector in the region, then provincial profiles giving detailed information are presented in the appendices. Additional appendices present excerpts from the Department of Forestry Act, and from the National Forest Sector Strategy for Canada.

AN OVERVIEW OF TIlE NORTHWEST REGION

1. The forest resource in the Northwest Reeion

The Northwest Region occupies almost 5 million km2 of land area. About one third is distnbuted among the three Prairies Provinces while the remaining two thirds makes up the Northwest Thrritories (NWT). Among the Prairie Provinces, 30% of the land area is classified as productive or potentially productive forest land. In the NWl; 42% of the land lies within the tree line with about 23% (143 000 km~ of this area classed as productive forest land The crown is the principle owner of forest land in the region with 92% ownership in the Prairies and 100% in the NWr

The Boreal Forest is the predominant forest classification in the region. The extreme southeast comer of Manitoba belongs to the Great Lakes - St Lawrence Forest while parts of western Alberta contain Subalpine and Montane forests. Grasslands-to-forest transition zones occur in the south while in the north, forests gradually give way to tundra.

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The region's land base supports a total of 3.1 billion m3 of wood with 92% occurring in the Prairie Provinces. Softwood timber is the more common both in terms of area covered and volume. Spruce and pine are the more abundant softwood species and occur in pure stands in northern parts of the region. Hardwoods, mainly poplars, prevail in the south while mixedwoods comprised mostly of spruce and aspen characterize the central parts. Mature to over mature timber make up over half the forests in the region.

2. The economy of the Northwest ReiUon

The Gross Domestic Product from the economies of the three provinces and the territory comprising the Northwest Region totalled $104 billion at market prices in 1988. While these economies differ from one another, each is highly dependent on resource based industries, and relies heavily on exports of unmanufactured or relatively low value added products.

Many resource commodities suffered price falls in recent years. Agriculture for example has seen drops in grain prices while at the same time, drought has lowered production. This has had a significant effect on farm incomes in the Prairies, particularly in Saskatchewan. The dramatic fall in oil and gas prices during the 1980's dealt a further blow to Alberta's economy. Manitoba on the other hand, enjoys a more diversified economy and has fared better during the years of economic decline. Manitoba's manufacturing base, large hydro development projects, and mineral extraction industries have contnouted to that province's economic diversification and dampened the effects of the recession of the early SO's. The economy of the NWf is still in its development stages importing most of its products and depending heavily on its mining industry to generate income.

The population of the region is relatively low compared to the rest of Canada. In recent years, emigration has resulted in declines in the population growth rate. This has been primarily the result of the economic boom experienced in central Canada that siphoned labor from the region as well as redirected potential immigrants to those areas of high labor demand Unemployment rates throughout the Prairies provinces averaged between 7.5% and 8.0% during 1988, much the same as the rest of Canada. Unemployment rates for the NWf are not available although statistics indicate stable employment levels over the last few years.

The forest sector has been targeted as an area for investment by both governments and industry. Major industry developments are occurring in the Prairies particularly in Alberta. These industries contnoute to the manufacturing base and help diversify economies. Strong prices for forest products during recent years suggest a bright future for areas where forest industries exist or are being developed.

3. The forest industry in the Northwest ReiUon

The forest industry is an important component of the economy of the Northwest Region contnouting to the diversity of the economy as well as providing employment and export dollars.

The primary wood-using industry in the Northwest Region includes sawmills, planing mills, wood treating plants, pulp, paper and fibreboard mills and other miscellaneous mills. There are about 900 mills in the region ranging in size from the small owner operated portable sawmill producing less than

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100,000 fbm of lumber annually to the large integrated pulp and paper mills producing thousands of tons of pulp or paper, millions of fb~ of lumber, and hundreds of permanent and high paying jobs. Major plants currently in operation include - 6 pulp mills, about 40 large sawmills and 7 panelboard producers. The industry utilizes a range of sophistication in technology from completely manual methods in smaller mills to fully automated systems utilizing state of the art laser scanning and computer aided operations in larger plants.

The forest industry is an important element of the region's manufacturing sector. The value of shipments from the industry exceeds $2 billion annually. In Saskatchewan, this industry is ranked second within the manufacturing sector even though the forest industry there is smaller than in Manitoba or Alberta. This indicates the valuable contnbution the industry makes to that province's economic diversification. In the other parts of the region, with perhaps the exception of the NWI; the industry is still ranked high - in the top 5 industry groups - within the manufacturing sector.

A large portion of the industry's production is exported from the region. The majority of pulp and paper production is destined for U.S. markets. For example, virtually all Alberta's pulp production is exported to the U.S. Sawmill production is also an important export earner with about half the lumber produced going to markets outside the region. Export lumber markets are generally served by the larger mills while smaller mills supply local demands.

Over 25 000 jobs both direct and indirect, are dependent on the region's primary wood-using industry. Generally, every direct job in the industry will create almost two jobs in another sector of the economy. These are significant employment figures. In Manitoba for example, direct and indirect employment resulting from the forest industry is responsible for 4% of total employment in that province. The nature of the industry is such that developments are often located in remote areas of the region. This is particularly advantageous since such areas often lack other employment opportunities.

The forest industry in the Northwest Region will likely continue to be an important element of the regional economy in the future. International demand for Canada's forest products is forecast to continue. Strong growth is expected in all segments of the forest sector particularly in pulp and paper. The region's vast hardwood resource has placed it in a unique position to capitalize on the new demands for hardwood pulps. The industry has responded to this demand with significant investments in capital facilities. Once operational, these facilities are expected to add 12 000 direct and indirect jobs to the region. Much of the new investment is in pulp and paper manufacturing which provide export dollars and create permanent and relatively high paying jobs. The Northwest Region as a forest products manufacturing area will become more important in a national context as the industry grows and develops to its potential.

4. Forest industty developments in the Northwest Region

Diversification and development of the forest sector is recognised by governments to be an important economic development mechanism for the Northwest Region. Opportunities for generating employment within this industry are considerable. Th this end, governments have planned for the orderly exploitation of the region's forest resource to allow the industry to expand.

The forest industry in the region is undergoing substantial growth. Within the last few years, over $4 billion have been invested or planned to be invested in the region's forest industries. Alberta

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leads with the addition of several new pulp mills and expansion of some existing sawmill facilities. A new pulp mill and additions and upgrading to the existing pulp mills is planned in Saskatchewan and Manitoba. Saskatchewan and more recently Manitoba have reduced government ownership of forest industry facilities. The industry's willingness to invest in milling facilities and infrastructure and purchase government owned plants suggests the private sector is confident in the industry's future.

5. Current issues, opportunities and constraints.

The Northwest Region is faced with several issues that could or do impact on the forest industry. These are detailed in the appendices as they relate to specific province or territory. Below is a brief discussion of issues that generally impact on the region.

Economic Diversification: The choice of any economy is to be sufficiently diversified that downswings in one sector will be compensated by upswings in another. Western Canada, with a resource based economy, has long been striving to insulate itself from the vagaries of cyclical swings in resource commodity prices determined on international markets. Provincial governments, particularly in Alberta have identified economic diversification as a top priority and targeted the forest industry as an important vehicle to help reach their target.

Wood supply: Generally, the region has been endowed with an abundance of timber to meet all its demands. Recently, however, industry expansion has resulted in the majority of timber tracts becoming allocated. This is particularly evident in Alberta with its many new industrial developments. Tunber shortages are occurring on a loca1level in different Parts of the region and are foreseen to be much more wide spread by the tum of the century. Programs need to be initiated to overcome these shortages. This could be accomplished through higher levels of forest management, including restocking of cutovers, stand tending, and site amelioration. Development of private woodlots can also contn'bute to the industrial wood supply. This source is new to western Canada but has the potential to not only increase easily accessible wood volumes, but also improve and stabilize income levels for farmers.

Product and technical development: 'Thchnica1 innovation is needed to modernize industrial processes as well as to develop new products. In a region where several new pulp mills are being constructed, expanded or proposed, innovation is required to develop technology both in the mill and in the cutovers to minimjze or eliminate environmental degradation. The sawmilling industry has numerous mills where productivity falls below the national average. Such mills need to be modernized to remain competitive, particularly on the international markets. Product development is an important element to the economic viability of the forest industry. Recent developments where the region's hardwoods were transformed from weed species to commercial timber is an example of the importance of product development.

Fmally, an issue that is, with all likelihood, common to all regions of Canada is that of sustainable development. Sustainable development, as defined by the World Commission on Environment and Development, is " ... development that meets the needs of the present without compromising the ability of future generations." This issue or concept encompasses all the aforementioned issues and is very compatible with the notions of forestry in general.

MANITOBAFORruITRYPRO~

Appendix A

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1. mSTORICAL PERSPECTIVE

Manitoba became a province in the Dominion of Canada in 1870. At that time the province was comprised of a small area in the southern agricultural belt. The current boundaries which extend north to the 60th parallel of latitude were established in 1912

Jurisdiction and management of Manitoba's natural resources were with the Dominion Government until 1930 when ownership was transferred to the province. The provincial legislature subsequently passed the Forest Act giving authority to administer forest land to the Manitoba Forest Service of the provincial Department of Mines and Natural Resources. This authority now rests with the Forestry Branch of Manitoba's Department of Natural Resources.

Commercial exploitation of Manitoba's forests began during the mid to late 1800's. Lumber requirements of the region's early settlers coupled with needs for wood products during construction of the Canadian Pacific Railway created sufficient demand to warrant development of·. Manitoba's forest industry. From this period to the early 1900's, Manitoba's forest industry was dominated by large sawmill operations in the southern part of the province. By the tum of the century, these mills produced 34 million FBM of lumber annually. Gradually, smaller stationary and portable sawmills began to replace the larger ones and by 1916, the last of the original large mills in the south was closed.

In 1910, logging operations expanded to the northern part of the province with the creation of The Pas Lumber Company at The Pas. That company produced lumber from logs harvested on the Saskatchewan side of the border and eventually ceased operations in 1958.

The next major development in the industry came in 1927 when the Prairie Provinces' first pulp and paper mill was completed at Pine Falls in Southeastern Manitoba. This facility now operated by Abitibi-Price Inc. remains one of the major components of the province's forest industry. Subsequent developments OCCurred throughout the province and in 1971, an integrated pulp, paper and sawmilling facility was constructed at The Pas. The industrial complex was operated by Manitoba Forest Resources Ltd, a provincial crown corporation, and is now one of the major producers in the forest industry of Manitoba.

Over the forest industry's 100 or so years of history, production has increased many times over although fluctuations have been substantial. Lumber production peaked during the mid 70's and again in the early 80's at between 650 and 700 thousand m3

• Pul~ production also peaked during the same times with production reaching about 1.4 million m •

The Federal Role

The transfer of ownership of natural resources from the federal to provincial governments in 1930, reduced federal involvement in forestry in Manitoba to periodical cost-shared agreements between the two levels of government. The first Canada-Manitoba cost sharing program in support of forest management was introduced in 1951 under the Canada Forestry Act. That agreement provided 50-.50 cost sharing of various activities including forest inventory, reforestation, fire protection, access roads and nursery construction. In 1979, the Department of Regional Economic Expansion implemented "Forestry Initiatives", a program of the Northlands sub-agreement. The two year $5.2 million cost-shared agreement funded activities such as forest management and

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employment, forest resource infrastructure, and forest harvesting and development plans. In 1984, a five-year Canada-Manitoba agreement was signed providing $27 million in cost shared funding for numerous forest management activities. The federal portion of this agreement was administered and implemented by Forestry Canada.

2. TIlE FOREST RESOURCE

Manitoba covers an area of 650 088 km2, 84% of which is land. 149,114 km2 is classed as productive or potentially productive forested land and 131 500 km2 or 88% is open to harvest or open with some restrictions. Area classification and ownership details on Manitoba's land base are presented in 'Thble 1.

Pure softwood stands are the dominant cover type in terms of both area and volumes. Generally, softwoods prevail in the northern parts of the province, hardwoods are most common in the south and mixedwoods dominate the central portions.

The merchantable volume of growing stock on Manitoba's productive forest land is approximately 745 million m3

, 62% of which are softwoods and 38% hardwoods. The most prominent species are black spruce making up 31% of total merchantable volume, trembling aspen with 28% and jack pine with 22%. These volumes can be categorized into two size classes; 10-24 em diameter at breast height representing material suitable for pulpwood, and 24+ em in diameter representing sawlog material. White spruce, although comprising only 7% of the merchantable volume of growing stock is the most important species for lumber production with about 1/2 its volume in the sawlog category. About 13% of the total softwood growing stock and 30% of the hardwoods are in the larger diameter classes.

The Annual Allowable Cut (AAC) in Manitoba totals 5.9 million m3 of softwoods and 2.4 million m3 of hardwoods. 'Thble 2 provides detailed statistics on AAe and cutting levels by forest section for Manitoba. Based on current cutting levels (i.e. average annual cut during the S-year period 1981-85), only 24% of softwood AAe and 7% of hardwood AAe is utilized. This apparent under-utilization is in part the result of the inaccessibility of large amounts of the resource, particularly in the northern forest sections. There, significant volumes of timber exist that cannot be exploited because of the poorly developed transportation infrastructure. Ongoing access developments however can rapidly change the amount of timber available for exploitation in remote areaS. Even in easily accessible forest sections however, surplus AAe is available. The large timber volumes available in the province therefore point to substantial opportunity for expansion of the forest industry in Manitoba.

3. TIlEPRO~CMLECONOMY

An Overview

Lower inflation rates and an improved international economy during the 1980's created the longest period of sustained economic growth in Canada in the past 40 years. Manitoba also prospered during this time. The province's real growth in Gross Domestic Product (GOP) averaged 5% annually between 1983 and 1987 compared to 4.5% for the whole of Canada during that period. The effect of the drought of 1988 however severely dampened the provincial economy. GDP for 1988 was $21.6 billion representing a real growth rate of less than 1 %. Drought induced declines in

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agricultural crop production subtracted 1.3 percentage points from real GDP growth. Nevertheless some sectors of the economy continued to grow. The mining industry led with mineral production up by 68% in 1988 to $1.7 billion. Even during the good years however, Manitoba lagged behind Canada and the other western provinces in per capita GDP and per capita investment. During 1987, the gap between Manitoba and the nation as a whole widened with virtually no growth recorded in total capital investment, a slight decline in private investment, and less than 1% growth in employment. GDP for Manitoba during 1987 was $20.3 billion, a real increase of 3.1% compared to 4.0% for Canada. Much of the overall growth was attnouted to international exports while domestic demand showed little gain.

Gross Domestic Product by IndustIy

One third of Manitoba's GDP is accounted for by the goods producing sector while the remaining two thirds is in the service or non-goods producing sector. Within the goods producing sector, the resource sector, which includes primarily agriculture, hydro-electric generation, mining and forestry, accounted for 14% of provincial GDP in 1987 - about the same proportion as the rest of Canada - but less than half the resource share of other Prairie provinces. This relatively smaller share of the economy attnouted to the resource sector indicates Manitoba is less dependent on capital intensive primary industries than are the other Prairie provinces. The service sector accounts for a higher proportion of the provincial economy than in the other Prairie provinces.

Mining and manufacturing are among the growth leaders in Manitoba's economy. The province's mineral production increased by one 68% in 1988 to a record $1.7 billion. Increased production resulting from new mines as well as reopening of existing facilities assures continued high production levels will continue. The manufacturing sector's good performance is illustrated by its 5.8% growth for a total value of shipments of $6.2 billion for 1988. This compares to growth rates of 27% and 3.4% in 1986 and 1987. Employment in manufacturing industries increased by 125%, it highest level since 1981.

Capital Investment

Economic recovery in the province is beginning to show in the resumption of growth in capital investment. During 1988 investment grew by 5.6% to $3.7 billion following a 1.9% decline the previous year. Over two-thirds of the increase occurred in non-residential investments where transportation, communications, other utilities, and commercial services sectors posted the highest growth. Investment in housing during 1988 increased by less than 1% totalling about $1 billion.

Export Markets

Access to export markets is important to continued growth and development of Manitoba's economy. During 1987, Manitoba's exports totalled $26 billion with one job in seven dependent on this trade. Manitoba's central geographical location in North America helps offset the long distances to its export customers and enables it to take advantage of new opportunities in the United States.

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Population and Employment

Thtal population as of October 1, 1989 is estimated at 1 085 300 people, an increase of about 1000 persons from the June 1 figures for 1988. Most population growth in Manitoba is the result of natural increases, i.e births minus deaths. Interprovincial flows have constrained population growth. In recent years, British Columbia and Ontario have enjoyed strong increases in employment opportunities and have therefore gained population from interprovincial migration. The additional population drain in the second half of 1988 emphasises the impact of the drought on the Prairie economy. Net international migration to Manitoba has been stable in recent years.

Manitoba's population of labor force age, i.e. person 15 years of age and over, averaged 803 000 during 1989. 67% of these persons participated in the labor force and 92% of employed persons held' non-agriculture related jobs. The number of paid workers increased by 5 000 or 1.2% in 1988 to 411 000. 80% of this increase occurred in the private sector. The seasonally adjusted unemployment rate for April, 1989 was 7.8%.

The goods-producing sector which accounts for 113 of GDP provided 28% of the employment during 1988. Manufacturing provided 13% of the jobs while 10% were accounted for by resource based industries. Employment in'the service sector was split 48% for commercial services industries (eg. transportation, retail trade) and 25% for non-commercial services (eg education, hospitals).

Economic Outlook

Prospects for Manitoba's near future appear bright. Overall growth in the provincial economy however is tied largely to recovery of the agriculture industry as well as growth in the national economy on which Manitoba is highly dependent. A full recovery in the agriculture sector will add 1.5% to real growth in GDP. The province's central location, rich natural resources, diversified industrial base, and well developed transportation sector will attract investments to several industries, particularly manufacturing.

4. THE FOREST INDUSTRY IN MANITOBA

Position of the forest industa within the provincial economy

The assortment and dissimilarity of industries comprising a manufacturing sector contnbute to a provincial economy's diversification. The greater the variety of industries, the less vulnerable is the province or region to fluctUations in economic activities elsewhere. The forest industry is within Manitoba's manufacturing sector and contnbutes to that economy's diversification. The industry's position within the manufacturing sector can be used to descn"be its rank within the provincial economy.

In 1985, the forest industry as a whole (which comprises the logging industries, wood industries and the paper and allied industries) ranked 4th in value added among industry groups within the manufacturing sector of Manitoba. Value added created by the industry totalled $194 million compared to $438 million by the top ranked food industry, $272 million by the second placed primary metals group and $210 million by the third place printing and publishing industry.

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The total value of shipments of the forest industry was $463 million and was surpassed only by the electrical industry with shipments valued at $499 million.

Wages and salaries paid by the forest industry group ( as opposed to the primary wood­using industry alone) totalled $94.7 million in 1985 again ranking 4th among industry groups within the manufacturing sector. This expenditure resulted in an average income of $23 366 per employee. 1btal wages and salaries paid by the top ranked industry groups were the food industry ranked first at $209 million, followed by the printing and publishing industry at $104 million and the clothing industry at $98 million.

The forest industry as a whole displayed about average rates of labor intensity relative to other groups in the manufacturing sector. In 1985 about 1/5 of the industry's sales were spent on wages and salaries. Within that sector, the paper and allied industries being the most capital intensive used about 17% of sales to compensate labor, while logging and wood industries contnbuted about 24% each of their total sales toward wages and salaries.

Production by the Primaty Wood-Usin& IndustIy Groups

The industry groups making up Manitoba's primary wood-using industries include sawmills, independent planing mills, wood treating plants, pulp, paper and fiberboard mills and other miscellaneous mills. In total there are 176 individuals firms or mills scattered throughout the province although most of the industry is concentrated in five forest sections. Forest sections with the greatest concentration of firms include Aspen Parkland with 28 firms, Pineland with 31, Mountain with 51, Saskatchewan River with 9 and Interlake with 45 firms. These firms include all sizes from the smallest operators producing less than 100M ibm annually up to the largest such as the two pulp and paper mills located in Pineland and in Saskatchewan River Forest Sections. Production from these firms in 1985 is summarized below.

Industty Group

Sawmills-planing mills complexes

Independent planing

Wood treating plants

Pulp, paper and fibreboard mills

Miscellaneous wood-using industries

No of Mills

153

5

2

4

12

Production

116 MM ibm lumber 219 M m3 roundwood 78 M tonnes wood c~ps

3 8.5 MM ibm lumber mills (includes sawmills' rough lumber)

5 MM ibm treated lumber 17 M m3 treated stock

165 M tonnes newsprint 116 M tonnes pulp and paper 26 MM m2 insulation board (1mm)

840 M ibm lumber 96 M m3 posts, poles, industries

roundwood 3.9 M tonnes wood chips 18 M m3 hog fuel

11

In 1985 the largest industry group in terms of number of firms was the sawmill group with 153 mills. This is a decline from 181 mills five years earlier. Output for this group in 1985 was 116MM ibm of lumber products, down from 135MM ibm in 1980. Peclines in number of firms and provincial output for the sawmill industry group was mainly the result of the 1981-82 recession. Most hard-hit were the medium size mills, i.e. mills producing between IMM and 5MM ibm annually. These mills declined from 19 firms in 1980 to 11 firms in 1985 and production fell from 32MM to 20MM ibm of lumber products during the period. Nevertheless, medium and large firms (large firms are those producing more than 5MM ibm annually) still account for 85% of provincial lumber production even though they make up only 10% of the number of mills. The apparent dominant position of medium and large firms however does not mean small mills are not important to Manitoba. In 1985, 137 mills or 90% of the total number of sawmills in the province, produced less than IMM ibm annually (109 produced less than 100M ibm). These small mills play an important role in local economies even though their contdbution to total provincial production is relatively small (in 1985 these mills produced 18MM ibm or 15% of the total provincial sawmill production). Manitoba's small sawmill operations are of particular importance because they generate income for independent operators, provide Iow-cost building materials in rural areas and because of their size, are able to utilize small tracts of land which would otherwise not be harvested by larger firms.

Independent planing mills, i.e. mills whose only function is to plane rough lumber, form another group within the forest industry. All large sawmills and some medium size mills are in fact sawmillingfplaning complexes. Sawmills without planing facilities bring their output - rough lumber­to independent planing mills. There were five independent planing mills in Manitoba in 1985, the same number as in 1980. These mills planed 38MM ibm of lumber in 1985, an increase of 136% over five years earlier. This growth was the result of expansion of existing mills and replacement of two smaller mills with larger more efficient operations.

1Wo wood treating plants operated in the province in 1985, one was integrated with a sawmill the other was independent. These mills produced treated lumber ( 4.5MM ibm), treated posts and poles (17M m3

) and preserved plywood (84M M~. Only a small portion of their output was custom production.

The pulp, paper and fiberboard industry group is the most important component of Manitoba's primary wood-using industry. This group includes one newsprint mill at Pine Falls, an unbleached kraft pulp and paper mill at The Pas, a construction grade paper mill in Wmnipeg and a fiberboard plant also located in Wmnipeg. In 1985, these mills produced 165 000 tonnes of newsprint, an increase of 5400 tonnes from 1980, 107 000 tonnes of unbleached kraft pulf. and paper, a 19% reduction from five years earlier, 9000 tonnes of roofing felt and 25.5 million m (lmm thick basis) of insulation and fiberboard materials. There was little change over the five year period in fiberboard production while the slump in building construction caused roofing felts to drop by 80% from 1980 levels.

The number of firms in the miscellaneous wood-using industry group increased from 10 in 1980 to 12 in 1985. Collectively, these firms produced 2 743 m30f building timbers or house logs (8 plants), 218000 untreated posts and 1700 untreated poles (3 plants),and 17500 m30f hog fuel (1 plant). This industry group is a relatively minor component of Manitoba's forest industry.

12

Markets for Manitoba's Forest Products

The total value of shipments by the primary wood-using industry of Manitoba in 1985 was approximately $220 million. 70% or about $153 million was exported from the province. Forest products exports to the U.S., Manitoba's best customer, totalled $96 million with the remaining $57 million bound for other Canadian provinces and for overseas markets.

The pulp, paper, and fiberboard industry group was the largest earner of export dollars. 80% of the newsprint and over 90% of kraft pulp and paper, roofing felts and insulation boards were sold outside the province with the majority going to U.s. markets.

Lumber products were the next most important earner of export dollars. Generally, the largest sawmills, i.e. those producing more than 5MM ibm annually were the major exporters. Those mills exported about half of their production to the U.S. with the rest remaining in Canada and mostly sold within Manitoba. Smaller sawmills mainly serviced local and provincial markets. Approximately 1/3 of the output from independent planing mills was exported to the U.S. and Europe with most of the remaining production sold within the province. In all cases, dimension and board lumber was the most popular size for export.

'freated wood products were largely sold within Manitoba. 'neated posts are usually consumed by local farmers while about 1/3 of treated poles were exported to other western provinces and a small amount going to the U.S. About III of treated lumber and timbers stayed in Manitoba with most of the remainder going to the U.S. All treated plywood was shipped outside the province and split equally between eastern provinces and the U.s.

Production from the miscellaneous industry group was also sold mainly in Manitoba. The biggest export market was the eastern provinces who received all of Manitoba's untreated poles and about 15% of building logs. Small amounts of house logs were also shipped to western Canada and to the U.S.

Socioeconomic Impact of the Forestry Industry

Employment created by an industry is the most visible and perhaps one of the most important measures of an industry's contnbution to the economic and social well-being of a province or region. Manitoba's primary wood-using industries created a total of 2848 person-years of direct employment during 1985. This is 1.4% of the province's employed work force. Indirect employment was 5 543 jobs for a total industry employment of 8 391. This means that for every job created in this industry group, almost two more jobs were created elsewhere in the provincial economy (i.e the employment multiplier is 2946). The forest industry therefore is responsible for about 4% of Manitoba's employed labor force.

One important aspect of employment in the forest industry is the geographical location of the work. Most of Manitoba's forest industry is situated in rural areas thereby providing jobs where employment opportunities are otherwise limited. For example, Manitoba's indigenous native population which is largely located in rural and often remote areas, have many employment opportunities in the forest industry. In 1985, 18% (519 person-years) of forestry workers in the province were of native ancestry.

13

The most important industry group in terms of employment was the pulp, paper, and fiberboard industry (4 plants) which accounted for 56% of all forestry jobs. Large sawmills, i.e. those producing more than 5MM tbm annually were the second largest employers with 23% of jobs.

Almost all jobs were associated with woodlands operations (46%) and miWoffice and sales (48%). Employment in the mills or in sales are relatively stable throughout the year however woodlands jobs are by their nature cyclical. The winter months when logging operations are feasible over a wide range of ground conditions is when woodlands employment is maximum but drops when thawed ground conditions during the spring and summer reduce the level of harvesting and hauling activities. This is particularly advantageous since winter is often when other sectors of the economy experience high unemployment.

The primary wood-using industry's wages and salaries bill for 1985 totalled over $74 million for an industry average of about $26 000 per year per employee. The pulp, paper and fiberboard industry contnDuted 64% of total wages and salaries while 32% went to sawmill industry workers. Within the sawmill industry group, $18.7 million or 25% of the provincial total was paid by the large mills.

5. FOREST INDUSTRY DEVELOPMENTS

The hardwood resource of the Prairie provinces has attracted considerable interest over the last few years. In Manitoba several development proposals aimed at the hardwood resource, particularly aspen are being considered. This would substantially diversify the industry as well as increase the utilization opportunities. Indications are that the accessible aspen resource could be fully committed within three years. This will also likely lead to significant increases in the amount of accessible softwood volumes committed. Accessible stands with a high hardwood component mixed with the conifers will become economically operable once a hardwoods market is developed.

Negotiations regarding the sale of the Manfor forestry complex at The Pas by REPAP are reaching their final stages. Included in the sale is an expansion of the cutting area available to the company. The sale will result in a $1 billion capital construction program by the purchasing company. The investment will begin with $200 million for conversion of the current facilities to bleached kraft paper production followed by $800 million for a bleached kraft pulp mill. A forest harvesting administration centre and wood-chipping facilities will be established in Swan River. Some hardwood utilization by the pulp mill is expected. Substantial access development as well as significant expenditures in training of personnel are also anticipated. These investments will add 350 to 400 new jobs to the present workforce of 850.

A particleboard plant will soon be in operation in Wmnipeg. That plant will initially consume 75 000 m3 of roundwood annually and will double its wood requirements over the next few years. The particleboard produced will be fully utilized by a furniture manufacturer in the city who has well established markets in the U.S. .

6. CURRENT ISSUES, OPPORTUNITIES AND CONSTRAINTS

There are several issues and opportunities facing the forest sector in Manitoba. Perhaps the most pressing issue is that of wood supply. Although Manitoba has ample wood supplies for its

14

immediate needs, the future is less secure. Manitoba's 2O-year forest management plan indicates that by the 1990's, the softwood supply in the currently utilized forest sections will not meet expected demands. 'Ihldng no action on this issue will result in a 7% decline in Annual Allowable Cut with a similar fall in the socio-economic benefits derived from the industry and resource. Expected shortages can be overcome by implementing higher levels of forest management. The increase in forest management activity necessm:y to offset the shortages is estimated at $50 million over the first five years. Continuance at this level of management is required over a 2O-year period to prevent the supply shortage. The first $50 million has been assembled with $27 million from the Canada­Manitoba Forest Renewal Agreement, $7 million from agreements between the province and the major forest industries and the remaining $16 million being made up of annual commitments from the Job Fund Sectoral Project in Forestry, a provincial program. The significance of a new federal­provincial agreement to Manitoba becomes readily apparent in the context of wood supplies.

Wood supplies may also be enhanced by means other than forest management, for example by the development of non-traditional sources. Small private land holdings as a timber source is a common occurrence in Eastern Canada but in the Western Provinces, this source has been largely untapped. There is an opportunity to develop this source of timber supplies in Manitoba particularly along the agricultural fringe zones. Such developments would have the added benefit of providing alternative income sources as well as some degree of income stability to the agricultural community.

The federal government's presence in Manitoba is an important issue to the province's forestry community. Currently this presence is dependent on the Canada-Manitoba Forest Renewal Agreement which expired in March 1989. The federal government's involvement will be much diminished once funding from this agreement is curtaBed. Continued federal-provincial agreements or incremental "A-base" funding is needed to ensure a Forestry Canada District office in Manitoba. A district office is required to ensure the department's role is well established within that province's forestry community and to allow continued access by provincial and industrial agencies to federal government programs and the research expertise traditionally supplied by Forestry Canada.

A recent study has indicated that Manitoba's sawmilling industry operates with aging equipment. The study also showed the industry's productivity to be average or below average compared to the rest of the country. Although some of the low productivity is the result of the forest resource, i.e. small trees and low volumes, some is also due to the aging equipment. A sawmill modernization program is needed to enhance the industry's competitiveness particularly for trade on U.S. markets.

Recently developed hardwood products are now readily accepted both on Canadian as well as international markets. Hardwoods are now commonly used for pulp production. Manitoba has substantial hardwood resources and must capitalize now on this resource. There is a need for studies to identify markets for Manitoba's hardwoods or to identify market niches for hardwood products. Some industrial development is already underway, for example, the previously mentioned hardwood-using fiberboard plant in WInnipeg and the development proposals being considered for the central part of the province. Such developments will help diversify the forest industry and the provincial economy in general.

Environmental issues impacting on the forest industry are mainly centered on the use of herbicides in forestry, timber harvesting practices, and on pulp mill emuent control. Herbicides are generally used to control or kill fast growing hardwoods to release the slower growing conifers.

15

Public perception however is that these chemical are harmful to the environment. Information systems must be developed to ensure the public is kept current on developments in chemical uses for forestry. The issues of timber harvesting practices and of pulp mill emuent control are changing rapidly as the general public becomes more involved. Again information systems must be developed to inform the public on developments.

Human resources present an important opportunity for Manitoba's forest sector. 70% of the province's population currently resides in the city of Wmnipeg and the trend is for continued migration from rural areas to urban centers. The rural to urban migration trend is largely due to the. lack of employment opportunities in rural areas. Therefore there is a need to develop employment opportunities in these regions. Forestry is ideally suited to create jobs in rural areas. In addition, much of Manitoba's native population, an underemployed group, resides in rural and often remote locations. These areas are ideal candidates for job creation through forest industry development. There is an opportunity to conduct numerous forestry activities from logging to silviculture work to create employment in rural areas. Such employment development will lead to community stability -there will be less need for residents, particularly young people, to leave their rural communities once employment exists for them at home.

SELECfED READINGS

Anon. 1989. The 1989 Manitoba budget address. Province of Manitoba, June,1989.

Anon. 1986. Forestry Perspectives '86 Regional Profiles: Alberta, Saskatchewan, Manitoba and Northwest 1.erritories. Internal Report, Northern Forestry Centre, Edmonton.

Giles, D.R.; and Bohning, R.A 1986. Directory of primary wood-using industries in Manitoba, 1985. Canadian Forestry Service, Wmnipeg, Manitoba, and Manitoba Natural Resource, Forestry Branch WInnipeg.

Manitoba Natural Resources. 1986. Five-year report on the status of forestry. Volume 1 and 2. Manitoba Natural Resources, Forestry Branch.

Ondto, WJ., and Williamson, LB. 1984. The forest industry in the economy of Manitoba, 1979-80. Northern Forest Research Centre, Edmonton. Information report NOR-X-263.

Samoil, J.K. (ed). 1987. Manitoba's forests. Northern Forestry Centre, Edmonton. Forestry Report no.32.

Steele, 'Iw., and Williamson 'IB. 1988. Manitoba's forest industry - 1985. Economic and Regional Development Agreement Report. Wmnipeg.

Thble 1. Ownership and classification of lands in Manitoba, 1986

Forest land (in sq. kms)

Land classification Productive Potentially Non-productive Nonforested land Thtal productive

Provincial land

Closed 3209 112 1587 327 5235

Open

Forest zones and parks 60351 7254 53177 16281 137063

Forest agreement areas 53293 8092 44167 7537 113089

Restricted 1823 138 492 469 2922

Others

Community pasture 537 12 97 1065 1711

Tundra and transitional 0 0 83366 117449 200 815

TIdal flats 0 0 0 1878 1878

Private lands 9692 193 1783 64420 76088

Federal crown lands 2308 158 170 465 3101

Municipal 5 0 1 8 14

Local government districts 890 101 194 492 1677

Indian reserves 851 95 288 901 2135

1btal 132959 16155 185 322 211292 545728

Source: Manitoba Natural Resources, Forestry Branch.

Table 2 Annual allowable cut and actual harvest by forest section (m' per year)

Softwoods Hardwoods 'Ibtal

Forest section AlInual ADnual

Annual allowable Indicated Surplua as allowable cut Indicated Surpluaas % allowable cut Indicated Surplua as % cut (AAC) Cvrrentcut" lurplua % ofAAC (AAC) Cvrrentcut" surplua ofAAC (AAC) Cvrrentcut' lurplua ofAAC

Aspen Parkland 2990 1145 1845 62 647SO 4290 60460 93 67740 S435 62305 92

Mountain 402180 281807 120373 30 578290 42415 535 875 SO 980470 324 222 6S6 248 67

Pineland 179 430 ISO 724 28706 16 173 340 86297 87043 SO 352770 '137021 115749 33

Lake Winnipeg East 787960 299 090 488870 62 268 520 28682 '139838 89 1056 480 327m 728 708 69

Interlake 4S0040 64266 38S 774 86 343 OSO 7756 335 294 98 793090 72022 721068 91

Saskatchewan River 484 410 241510 242900 SO 118890 2812 116078 98 603 300 244 322 358978 60

.Highrock 967930 398600 S69 330 59 250080 2709 247371 99 1218010 401309 816701 67

Churchill 81790 0 81790 100 7040 0 7040 100 88830 0 88830 100

Nelson River 952440 9913 942527 99 247610 2470 245140 99 1200 OSO 12383 1187 667 99

Hayes River 1608 410 0 1608 410 100 351810 0 351810 100 1960 220 0 1960 220 100

Total 5917580 1447 0S4 4470 526 76 2403380 117432 2 22S 948 93 8320960 1624486 6696 474 80

'Current cut is average over S-year period 1981-85 Source: Manitoba Natural Resources 1987.

SASKATCHEWAN FORESTRY PROFILE

Appendix B

18

Forestry Canada January 1990

19

1. IDSTORICAL PERSPECTIVE

The commercial utilization of Saskatchewan's forests began in 1876 when a grist and small sawmill were erected on the east side of Prince Albert. In 1880, the Hudson's Bay Co. followed with another grist mill and by the early 1900's three more mills had been built in Prince Albert. Large sawmills were built by the tum of the centwy at Big River, Crooked River, Prairie River and a large sawmill at The Pas, Manitoba depended almost entirely on timber from Saskatchewan. Demands for homestead and commercial holding materials, construction materials for railroads and fuelwood continued to grow and provide markets for sawmilled products. This approach to use of forestry resources remained unchanged until the 1950's.

After the war, plans were initially developed for a kraft pulpmill in the Dore Lake area. This was cancelled, but the Meadow Lake area was opened with the building of a stud mill. In 1968, a kraft pulp mill was built at Prince Albert. In September 1986, Weyerhaeuser Canada Ltd acquired the assets and facilities of the Prince Albert Pulp Co. Ud. and the Big River sawmill.

From early development, through the admission of the Province of Saskatchewan to Confederation in 1905 and until 1930, the ownership and management of the forest rested with the federalgovernmenL

Since 1930, the primary responsibility for forest management in Saskatchewan has rested with the provincial governmenL The federal government has recognized, however, that in carrying out its responsibilities for the general economic development of Canada, it is important to provide support to the forestry activities of Saskatchewan and other provinces. The federal government has maintained research facilities which have contnbuted significantly to the development of new technology for both the management and utilization of the forest resource. The federal government has also contnbuted to the acquisition of fire-fighting equipment, including water bombers. From the early 1950's, federal-provincial agreements have assisted in the establishment of improved inventories, reforestation, fire suppression programs and access roads.

In 1979, a Forest Development Subsidiary Agreement between Canada and Saskatchewan under the direction of the former Department of Regional :Economic Expansion, provided for the development and management of the forest resource. In 1984, a Canada­Saskatchewan agreement was signed which provided $28 million in cost shared funding over five years for a number of forest management activities. That agreement which expired in March 1989 was administered by Forestry Canada from its district office in Prince Albert, and from its regional headquarters at the Northern Forestry Centre in Edmonton.

2. THE FOREST RESOURCE

Saskatchewan has a total land area of 65.2 million hectares, of which land accounts for approximately 87% and water 13%. Forests cover 29.9 million hectares or 46% of the total area. Non-forested lands account for 41% of the province (see Thble 1).

Most of Saskatchewan's provincial forest lands are situated in the northern half of the province. VIrtually all the land has been retained by the Crown (97%) and the province plays a leading role in management of the forests (see Thble 2). For these provincial Crown lands, the forest

20

has been divided into two categories: the Commercial Forest Zone in the south and the Northern Reconnaissance Zone in the far north. "

In the Commercial Forest Zone, productive forest lands account for 6.5 million hectares, non-productive land for 5.2 million hectares and productive not available for 1.2 million hectares. Due to timber quality and accessibility, the Reconnaissance Zone is not considered commercially available at this time. Therefore, only about 10% of Saskatchewan's total area may be considered productive, available, commercial forest. Nevertheless, Saskatchewan's Commercial Forest Zone

"contains 129,000 lan2 of commercial forest lands with some 6.98 million m3 of Harvest Volume Schedule (HVS) available annually. Thus, in terms of forest land area and potential merchantable volume, Saskatchewan ranks sixth among Canadian provinces.

Almost all of Saskatchewan's forests fall into the boreal forest region. In terms of both area and volume, pure softwood stands are the dominant cover -type. The boreal forest accounts for 285,249 lan2 containing black spruce, jack pine and white spruce mainly. The most productiVe forest areas lie in the mixedwood and mixed wood-parkland transition areas. Some 111,564 lan2 are covered by pure aspen, jack pine and black spruce stands, as well as mixed white spruce-aspen stands.

In order to manage the forest on an even flow basis, an Annual Allowable Cut (MC) is calculated. The total MC is 7.9 million m3 with 4.4 million m3 of softwoods and 3.5 million m3

of hardwoods. The average annual softwood harvest is 25 million m3 of softwood and 1.0 million m3

of hardwoods for a total of 3.5 million m3• Fuelwood is estimated to account for 70,000 m3 of

softwoods and 63,000 m3 of hardwoods. Overall, Saskatchewan has a surplus of about 1.8 million m3

of softwoods and 24 million m3 of hardwoods.

All supply areas, except Hudson Bay, have surpluses of softwoods. However, there are shortages in areas close to mills. 1b meet the size and quality requirements of existing sawmills, larger logs must be selectively sorted and transported long distances across the province. A potential softwood deficit in the Prince Albert supply area was eliminated when the pulpmill increased its utilization of hardwoods and subsequently reduced its softwood harvest. Hardwood timber supply is in a surplus situation for all regions of the province. In three areas, Hudson Bay, Meadow Lake, Bronson Forest, there is a considerable surplus of hardwoods and significant economic development opportunities (see Thble 3).

3. THE FOREST ECONOMY

Overview

The strength of the Saskatchewan economy lies mainly in the production and export of unprocessed resource commodities "led by grain, crude oil, potash and uranium, and much less on manufactured goods. In the late 1980's, an increasingly volatile world economy threatened Saskatchewan's economic and financial well-being as international prices for all major commodities " fell sharply and suddenly. As one in four jobs in the province depends on trade, it is critical that the province seek more stability through industrial development and economic diversification.

Saskatchewan has the smallest population and lowest Gross Domestic Product (GDP) of any western province ($18.578 billion). In 1988, despite the impact of the drought on the economy, Saskatchewan

21

had the second lowest unemployment rate, and the non-agricultural employment rate actually rose by 3.0 percent. Labour income lags both the national and western Canada averages.

Oil and gas wen drilling increased by 30 percent and Saskatchewan became a net exporter of natural gas in 1988. Retail sales rose 4.8 percent to $5.5 billion. As agriculture rebounds from the drought, it is anticipated that economic growth will accelerate.

Gross Domestic Product by Industry

The proportion of the goods producing industries and of the service producing industries in Saskatchewan were around the national average in 1988. However, the proportion of Saskatchewan's agriculture (10%) sector was proportionately five times larger and the mining sector (65%) proportionately over twice as large as national averages for these sectors. In addition, the province's transportation, storage and communications sector (8.5%) was significantly larger than the national average, reflecting its importance to this province and its trade. The Manufacturing Sector represents only 6% of the provincial economy whereas it represents 21.3% of the national economy; however, the value of manufacturing shipments has risen steadily during the eighties.

The forestry component of Saskatchewan's real GDP grew by approximately 5% in 1988 and the long term prospects for the industry in this province appears to be one of moderate growth in the range of 1.5% to 3.2%.

Capital Investment

With the exception of the 1986 downturn, annual private and public investment in new construction, machinery and equipment plus repairs in Saskatchewan has increased some 18% from 1984 to 1988's high of $6.2 billion donars. 1btal new construction accounts for 51 %, of which some 53% is shared about equally by primary industries and housing. A growing natural gas industry, the start up of Newgrade and Husky oil upgraders, both scheduled to come on stream in the early 19908, a new nitrogen fertilizer plant and new forestry developments will significantly support investment levels in the energy and other sectors.

Export Markets

Access to export markets is critical for the continued growth of Saskatchewan's commodity resource-based economy. One job in four depends on trade. In 1987, Saskatchewan's total domestic exports totalled $5.1 billion, of which 43% were agricultural products.

The province's central prairie location, distance from ports and distance from central Canada or mid-west American markets will continue to challenge the ingenuity and trade acumen of provincial exporters.

22

Population and Employment

1btal population as of October 1, 1989 is estimated at 1,004,000 people, a slight decrease from 1988. In 1988, the rate of natural increase in the province rose for the first time since 1984. Immigration by new Canadians continues to add about 2000 persons annually to the population figures. Net migration figures, however, show that many more people leave Saskatchewan than move to it and this has resulted in the declining population trend.

Saskatchewan's labour force totalled 488 000 in 1988, a small decline from 1986-87. Sixty-six % of the population over 15 years of age participated in the labour force. Of these, 16% were employed in the agriculture industry - a higher rate than for most other provinces.

Economic Outlook

Through the 1990s, as Saskatchewan diversifies its economy and as the trade environment improves (due to the Canada-U.S. trade agreement), construction for natural gas and petroleum pipelines, as well as upgraders, natural gas exploration are expected to show significant increases. Agriculture will continue to grow also, but employment will continue to decline gradually. More growth is also expected from other primary sectors such as uranium (due to the FfA), and potash which is expected to continue to increase its world market share over time. The manufacturing sector will receive a greater stability and diversity from stronger forestry and food manufacturing industries as well as a nitrogen fertilizer plant at Belle Plain.

4. THE FOREST INDUSTRY IN SASKATCHEWAN

Position of the Forest IndustlY in Saskatchewan's Economy

In 1986, the entire forest industry, from logging to wood industries, paper and allied industries ranked fifth in value-added at an estimated $170 million. It was significantly below the value-added figures for mining and agriculture.

Saskatchewan is concentrating its efforts in developing value added industry. In this sector of the economy, there has been some successes. Weyerhaeuser has plans to construct a sheeter in Prince Albert to cut the rolls of paper produced by the mill for export to the U.S. and other parts of Canada. Also, the construction of a hardwood pulp mill in Meadow Lake has been announced.

Forest Products and Markets

Saskatchewan's primary wood-using industry is made of 180 firms that manufacture a variety of forest products. These firms can be organized into five district industry groups: sawmills (with or without associated planning facilities); independent planing mills; wood-treating plants; miscellaneous mills; and plywood, waferboard, and pulp, paper and waferboard mills. Production from these firms is summarized below.

. Industry

Sawmill-planing complexes producing more than 5MMibm pulpwood

peelers

Sawmill-planing complexes producing 1 MM to less pulpwood than 100 M ibm

Independent planing mills

Wood treating plants

Pulp and paper mill tonnes

Waferboard mill

Plywood mill

Miscellaneous wood-using industries

TOTAL

Number of firms

6

154

2

12

1

1

1

3

180

23

Production

220.1 MM ibm 328.9 M m3 chips 84.9 M m3

146.8 M m3

20.1 MM ibm 20.8 M m3

Q3 M nf tire\\axi

8.0MMibm

78.5 M m3

264.4 M metric

1050 MM ft2 (1/16" basis)

80.6 MM ft2 (3/8" basis) 66.0 M m3 chips

1.0 M m3

45.0 M ibm

During 1980-85, there have been structural changes, and declines in production, as the total number of wood-processing plants (including small sawmills of less than 100 M ibm) declined from 309 to 180. Each industry group has been affected differently. The largest declines were in sawmills in the 100 M to 1 MM ibm annual production range as well as independent planing mills, with smaller declines in the wood-treating and miscellaneous wood-using industries.

Saskatchewan's primary wood-using industry is concentrated in three regions: Meadow Lake, Prince Albert and Hudson Bay. These regions together account for 79.7% of all forestry operations in the province. At. a group, they share two important characteristics: first, they contain sufficient timber supplies to support a viable forest industry and secondly, they possess a well­developed transportation network that is necessary for getting wood fibre from the stump to the mill and critical for shipping final products to distant markets.

24

In 1985, the total value of shipments by the primary wood using industry was $305.9 million. The pulp and paper, plywood and waferboard sector accounted for 71 % of the export dollars ($218 million). The next largest earning market product was lumber at $57 million.

Most of Saskatchewan's forest products are shipped to the U.S.A Softwood lumber products find 56% of their market, pulp at 47% and waferboard at 50%, in the American mid-west. Eighty-four percent of the plywood is shipped to other provinces. The remainder as well as other miscellaneous products are sold mainly in local areas.

Socioeconomic Impact of the forest industty

The forest industry is Saskatchewan's second largest manufacturing industry. It directly creates over 2700 jobs with another 5700 persons employed indirectly in such areas as silviculture contracting, fire protection work, forest community dependent industries and services.

In 1984, the forest industry paid out approximately $70 million to its employees which was approximately 14% of the total wages paid by the manufacturing sector. The pulp, paper, waferboard and plywood industry contnbuted 57% of all gross wages and salaries paid by the industry. As expected, this group also directed some 69% of their wage/salary payments to the millIoffice and sales personnel as opposed to woodlands operations.

The forest industry is a critical element in the province's relatively undeveloped northern economy. Approximately 30 communities, such as Hudson Bay, Big River, Carrot River, La Loche and Meadow Lake are dependent on the forest industry. Many other communities are at least marginally dependent on forestry.

furestry provides employment to persons of native ancestry, who make up about 9% of the work force. In 1984-85, about 275 person years of employment were provided to native peoples in the Saskatchewan forest industry. .

5. FOREST INDUSTRY DEVELOPMENT

Recent technological innovations in the ability to pulp aspen hardwood have led to the development of two new major developments in Saskatchewan. Weyerhaeuser Canada Ud. purchased the PAPCO bleached kraft mill in 1986 and has expanded and modified the mill to process aspen as part of the pulp mix. They have invested $150 million in a new fine paper machine creating 215 new jobs in the mill. Currently a paper cutting facility is being added.

Millar Western has announced that it will build at $235 million CfMp mill at Meadow Lake. The mill will create 119 full-time jobs and some 250 for wood cutters. In both cases, the utilization of aspen has changed the utilization patterns and tenure arrangements associated with the softwoods, which will result in better forest management practices.

Simpson Ttmber Co. (Saskatchewan) Ud. has announced that they will be closing their stud mill at Hudson Bay in June 1990 due to the depletion of economically accessible softwood stocks. The mill closure affects 165 mill workers and 400-450 loggers who supply the mill. While there is a possibility of a new mill which would utilize small softwood and hardwood materia~ this

25

closure underlines the importance of implementation of the CCFM recommendations (see Appendix F). It is also possible that rationalization of wood supplies and feed stock flows (e.g. interprovinciaIly) could occur.

6. CURRENT ISSUES, OPPORTUNITIES AND CONSTRAINTS

Saskatchewan's forest industry contnbutes stability and diversity to a provincial economy dominated by agriculture and mining. However, high manufacturing and transportation costs and low productivity jeopardize the future health of the industty. In addition, most of the firms manufacture and sell commodity forest products with little value-added. Possibilities of market oversupply, depressed product prices and increasing competition (both domestic and international) can threaten profitability of firms. In addition, overdependence on U.S. markets and the uncertainty of future trading relationships e.g. the softwood lumber export charge, create more uncertainty.

Saskatchewan does enjoy a comparative advantage by possessing a surplus of hardwood and softwood fibre which could support a significant expansion of the forest sector. Allocation problems of timber supplies among firms, adequate levels of forest regeneration and protection as well as the manufacture of high value-added products will be needed to ensure the growth and maintenance of a significant forest sector.

Sources and Selected Readings

Anon. 1986. R>restry Perspectives '86. Regional Profiles: Alberta, Saskatchewan, Manitoba and Northwest Thrritories. Unpublished report. Nrothern R>restty Centre, Edmonton.

Anon. 1988. The 1988 Saskatchewan Budget Address. Province of Saskatchewan. 1988.

Anon. 1988. Monthly Statistical Review. Bureau of Statistics. Government of Saskatchewan. 1987, 1988.

Giles, D.R; and Bohning, RA 1986. Directory of primary wood-using industries in Saskatchewan. Can. R>r. Serv., Edmonton.

Statistics Canada. 1988. Canadian Economic Observer.

Steele, 1:w.; Boylen, D.M. and Baumgartner, A. 1988. Saskatchewan's R>rest Industty, 1985. Can. R>r. Serv., NoFC Info. Rep. NOR-X-295.

26

TABLE 1. Area Oassification

Saskatchewan Canada

'000 km2 % '000 km2 %

Land Oassification

Forested

Commercial forest

- Productive 77

- Unproductive 52

-lOtal 129 20

Northern reconnaissance

forest&

- Productive 40

- Unproductive 130

- Total 170 26

lOtal forested land 299 46 4364 44

Agriculture 264 40 672 7

Urban and cleared 4 1 34 _b

Other 3 b 4097 41

lOtal Land 570 87 9167 92

Total water 82 13 755 8

Total area 652 100 9922 100

&Best estimate of noninventoried forest land, with forest defined as land primarily intended for growing or currently supporting forest

bLess than 1%.

CJ>rimarily wild land that includes tundra, alpines, and barrens and is generally uninfluenced by human activity.

Sources: The Canadian Forestry Service and Saskatchewan Parks, Recreation and Culture.

TABLE 2 Stocked, productive, and nonreselVed forest land by ownership

Saskatchewan

Ownership '000 lan2

Provincial crown

Federal crownb

Private

Municipal

Thtal

·Commercial forest only.

~ group includes Indian reselVe lands.

'Less than 1%.

63-

2

0

0

65

% '000 lan2

97 1549

3 197

0 164

0 1

100 1911

Canada

%

81

10

9 c -

100

Sources: The Canadian rorestry Service and Saskatchewan Parks, Recreation and Culture.

27

TABLE 3. Forest Balance (capital)

Softwoods Hardwoods

Gross available Annual Gross available Annual

Supply area supply depletion Balance supply depletions

-----------------------(1CHJ() Dl3/r)----------__ -----------------------(1CHJ() Dl3f){r)-------------------------

Hudson Bay 375 750 (375) 1131 625 506

CUDlberland House 50 18 32 53 13 40

Creighton 438 139 299 189 34 155

Reserve TiDlber #2 382 97 285 92 24 68

Public Working Circle #1 135 80 55 161 47 114

Prince Albert 1369 1411 (42) 981 840 141

Reserve TiDlber #1 394 99 295 128 32 96

Meadow Lake 482 221 261 767 183 584

L&M 70 70 0 55 55 0

Bronson Forest 46 8 38 261 58 203

Public Working Circle #2 297 155 142 155 85 70

VerDlette Reserve 248 62 186 203 61 142

Tumor Lake 608 151 457 231 73 158

1btal 4894 3261 1633 4407 2130 2277

ALBERTA FORESTRY PROFILE

Appendix C

29

Forestry Canada January 1990

30

1. mSTORICAL PERSPECTIVE

The forest industry is one of Alberta's oldest industries. From the earliest period of European settlement, forests were used as a supply source of fuel wood, homestead building supplies and construction materials for railroads. In the period 1880-84, the first recorded sales of timber rights occurred in the Crowsnest Pass area. By 1880, two steam powered mills were operational in Edmonton using logs cut along the North Saskatchewan River. By 1908, the number of sawmills had increased to 40, with the industry being centred in the south-west portion of the Alberta District of the N.W.1:

The rapid increase in demands for land, timber and water resulting from settlement growth and the expansion of irrigated lands led to concerns about watershed and water supply protection for the prairies. 10 meet the increasing need for forest management and protection, Parliament enacted the Forest Reserve Act of 1906 and the Dominion Forest Reserve and Parks Act of 1911.

. In 1930, responsibility for managing public lands and natural resources was transferred from the federal government to Alberta. At that time there were 31,000 km2 in designated Forest Reserves and 383,000 km2 in the Northern Alberta Forest District.

After 1945, parallel federal and provincial legislation led to the establishment of the Eastern Rockies Forest Conservation Board to improve forest management and watershed protection. In 1948, the province established the Green Zone, designating the forest area, which allowed for effective forest management and restriction of agricultural land development. 'Ibday, the productive forest land base amounts to 236,000 km2• Subsequent to the 1hmsfer of Resources Act of 1930, the Alberta Forest Service was established as an agency of the Department of Lands and Forests. In 1986, forestry was elevated to full departmental status within the creation of the Department of Forestry, Lands and Wildlife.

Harvest level increased from 200,000 m3 in 1908 to 2,600,000 m3 in 1950. Lumber manufacturing accounted for 85% by volume of total forest production. Considerable growth occurred in industry from 1950 onward, as the pulp industry developed. In 1987-88, the annual harvest had increased to a level of 8,333,899m3

•

Federal Role

The federal role in forest management and resource development in Alberta has evolved through time. Prior to 1930, the province's forest resource was administered by the Dominion Forestry Branch of the federal Department of the Interior. In 1930, jurisdiction for resources was transferred to the province and the federal role become a supportive one. Between 1967 and 1983, federal participation was concentrated in the areas of research, development, and technology transfer. Many significant contributions in the areas of renewal, protection, resource and economic statistics, mensuration, inventory, environmental protection and others were made. Contnoutions since 1983 include a continued commitment to R&D, The Canada/Alberta Forest Resource Development Agreement, and a joint agreement for the purchase of state-of-art CL-215 water bombers.

31

2. THE FOREST RESOURCE

Of Alberta's 66.12 million ha of area, 37.75 million ha or 57.1 % is classified as forest land (Thble 1). Productive forest composes 25.44 million ha of this totaL Almost all of Alberta's forest land is in the administrative area called the Green Area. The vast majority of the Green Area (97.7%) and indeed the province is provincial crown land (Thble 2). Alberta does have however the largest percentage of federal crown land of any province.

Softwoods account for almost two-thirds (1684 million m3) of the provincial growing

stock with white spruce and pine (89% of total softwood volume) being the dominant species. Aspen and other poplars (81% of total hardwood volume) are the most common hardwoods which account for the 971 million m3 of growing stock. Aspen is the dominant tree species in Alberta's boreal mixedwood ecoregion which is found in the northern half of the province and represents about 43% of the province.

A significant proportion of the forest land area is in overmature age classes (i.e. 100 years or older). This allows for the possibility of an accelerated harvest rate in the first rotation. There is also a large area of land in the 41-60 year old age class resulting from heavy fire losses (3.5 million ha) between 1925 and 1945 which could also result in increased AAC as the area grows into mature age classes.

Regulatory guidelines for establishing rates of flow in Alberta are based on a general policy of non-declining yield With this policy, decade to decade harvests are maintained at the average conversion period harvest rate, with general consideration of the post-conversion period harvest in setting the current AAC. Thus, falldowns are not included in the approved estimates of AAC.

At present 69% of the coniferous AAC of 14.2 million m3 and 23% of the deciduous AAC of 11.5 million m3 is allocated to the forest industry. These volumes are all considered to be economically accessible. The remaining 4.4 million m3 of coniferous AAC and 8.9 million m3 of deciduous AAC represents Alberta's physically available timber reserve.

Recently, a number of major forest industry developments were announced. The annual softwood and hardwood requirements for these as well as new quota and other commitments is 24 million m3 of softwood AAC and 3.4 million m3 of hardwood AAC. If these developments are realized, the residual physical reserves of softwood and hardwood AAC will be 21 million m3 and 5.5. million m3 respectively.

32

Land Qassification Area % (1 ()()() ()()() ha)

Forest land 37.75 57.1 Productive 25.44 38.5 Unproductive 11.82 17.9 Unspecified productivity 0.49 0.7

Nonforest land 26.69 40.3 Agriculture 20.66 31.2 Other 6.03 9.1

Water 1.68 2.5

Thble 1. Area classification of Alberta

Area % (1 ()()() ()()() ha)

Federal Crown 3.53 9.4 Provincial Crown 3299 87.4 Private 1.12 3.0 Municipal 0.01 0.0 Unclassified 0.10 0.3

Thtal 37.75 100.0

Thble 2: Alberta forest land ownership

33

3. THE PROVINCIAL ECONOMY

Overview

Alberta's economy was dominated by agriculture through the 19408 while the next thirty years saw oil as a driving force. The multiple impacts of the major North American recession in the early 19808, the National Energy Program, the drastic decline in crude oil and natural gas prices in the mid 19808, weak grain prices and repeated droughts rocked Albert's economy. These factors resulted in major decreases in exploration and drilling activity in the oil patch, a number of mega projects being placed on hold, drastic decreases in property values, failures in a number of financial institutions, increased farm and small business bankruptcies, a 250% increase in the unemployment rate between 1977 and 1984, a provincial budget deficit and significant out-migration of the population base. Between 1978 and 1988 Alberta had the second lowest GDP growth of any Canadian province. These developments emphasize the risks inherent with an undiversified economy whose health is dependent on volatile, external market and non-market forces (eg. American and BEC farm subsidies and OPEC). This difficult period has created the incentive for the more broadly based economy which is developing in the province today. Natural gas, forestry, tourism and other manufacturing and service sectors are becoming increasingly more important engines of Alberta's improving economic prospects.

GDP by Industry

Alberta's Gross Domestic Product (GDP) in 1988 was $626 billion (at market prices). The service sector (ie, transportation, trade, finance, personal services, and public administration.) accounted for 62% of the total provincial GDP. This represents an increase of 5% over 1977 when the service sector accounted for 57.5%5 of provincial GDP. Within the goods producing sector, mining (which is primarily oil and gas related) is the dominant activity accounting for 42% of the goods sector GDP. Agriculture accounted for 12% of goods sector output. Manufacturing accounted for 22%, however, a significant proportion of total manufacturing sector activity involves the secondary processing of agricultural and petroleum based products.

Capital Investment

Annual capital spending lagged with the rest of the economy through the early 1980s with spending changing little from year to year. This trend halted in 1988 when investment increased by $26 billion and is estimated to have increased a further $700 million in 1989 to an annual total of $16 billion. Repair expenditures are also showing an increase. Manufacturing, transportation and utilities are exhibiting the greatest growth.

Export Markets

Alberta exported $13 billion of goods in 1988. Crude petroleum and natural gas accounted for 44% of this total while wheat made up a further 8%. About 75% of Alberta's exports go to the USA Japan is the province's second most important customer at 9%.

34

Population and Employment

The population of Alberta as of October 1989 was estimated to be 245 million people. The rate population growth has been unstable over the decade of the '808 as a result of changes in net migration patterns. More people left Alberta than moved to it in every year between 1983 and 1987. The most significant decline occurred in 1984 when net migration from Alberta was 30,000 people. Annual interprovincial net migration numbers are improving but continue to be negative; international migration numbers, however, have been sufficient to cause net migration numbers top be positive for 1988 and 1989.

With a seasonally adjusted labour force participation rate of just over 72% and an employment/population ratio of about 67% during 1989, Alberta lead the nation in these two categories. Alberta's labour force is 1.3 million people. Since the peak unemployment rate of 11.1 % in 1984, Alberta's average annual unemployment rate has been has been on a downward trend and through the third quarter of 1989 was at 7.4%. For the twelve month period ending in September 1989, employed labour force growth was greatest in the transportation and construction sectors while the primary industries declined for the eighth consecutive year-over-year period.

Economic Outlook

The general prognosis for the Alberta economy is uncertain, reflecting the current instability of the world energy and agriculture economy. On the positive side, the Canada-US Free nade Agreement should have a favourable impact by allowing the petro-chemical industry duty free access to the US market. This opportunity will result in higher value-added production of Alberta's energy resources. Demand for natural gas is expected to rise in the years to come and this along with new forestry investments and various types of manufacturing are expected to be the engines of Alberta's economic growth in the nineties.

4. THE FOREST INDUSTRY IN ALBERTA

Position of the Forest IndustIy Alberta's Economy

Forest industry activity (not including logging and log transportation) is considered to be a manufacturing activity. The total value of shipments by the forest industry (ie, wood industries and pulp, paper and allied industries) in 1988 was $1.3 billion. The forest products industry represented 7% of the manufacturing sector in terms of value of shipments in 1988.

The forest industry has been one of Alberta's most active sectors recently. Continuous growth in the North American economy, relatively low interest rates, a favourable exchange rate, and significant modernization in the sawmill industry during the '808 resulted in record production levels, record prices, and record levels of investment in the forest industry.

Based on total timber harvest, Alberta's forest industry ranks fourth in the country following British COlumbia, Quebec, and Ontario. This has not always been the case. Alberta's position in the national forest sector has grown dramatically in the past 15 years. In 1970, the Alberta forest industry accounted for 3.4 percent of the national harvest. In 1986, the proportion

35

had increased to 6.0 percent. With the additional $3.4 billion in new investment announced recently, the proportion of the total national harvest accounted for by Alberta producers will increase further.

Forest Products and Markets

The Alberta forest industry is very diverse. Fums range from small, unincorporated, part­time, sawmill operations producing for localized markets, to large multi-national, conglomerates producing for international markets. A recent Alberta Forest Service survey showed that there are at least 130 small (producing less than 1 million board feet) sawmill operations in the province.

Alberta's forest industry comprised 59 major industrial plants in 1985. Specifically, the industry included; 48 large sawmill/planer mills, 3 pulp mills, five panel producers, and four large wood preservation plants.

Since 1985, a number of major new industrial developments have been announced (Thble 3.)

Type of Company

Pelican Spruce Mills Ltd. Pelican Spruce Mills Ltd. Weldwood of Canada Ltd. Weldwood of Canada Ltd.

Millar Western Pulp Ltd. Blue Ridge Lumber Ltd. Procter and Gamble Cellulose Ltd.

Mostowich Lumber Ltd. Sunpine Forest Products Ltd.

Atlas Lumber (Alberta) Ltd. Grand Cache Forest Products Ltd. Daishowa

Alberta Newsprint Co. Blue Ridge Lumber Ltd.

Source: Forestry, Lands and Wildli(e, 1989.

Location

Drayton Valley Drayton Valley Slave Lake Hinton

Whitecourt Blue Ridge Grande Prairie

Fox Creek Sundre

Sentinal Grande Cache Peace River

Whitecourt Blue Ridge

Development

OSB Sawmill Conversion to OSB Doubling of Kraft pulp capacity CfMP mill MDFplant Modification of pulpmill for aspen pulping Sawmill Sawmill and wood Preservation plant Sawmill modernization Sawmill modernization Bleached hardwood Kraft pulp mill Newsprint mill Expanded sawmill

Table 3: Recent forest industry investment initiatives (projects completed or con s t r u c t ion initiated) in Alberta since 1986.

36

Selected forest industry (ie, primary manufacturing level only) production for the most recent year available and its approximate market distn1>ution is shown in 1able 4. The estimated market value of forest industry production was about $1.3 billion in 1988. Over three quarters of these revenues were generated from the sale of products to out-of-province markets. Softwood lumber and bleached kraft pulp are Alberta's most important forest products. The primary destination of these products is the United States market. The ability of Alberta producers to compete in the United States market is due primarily to the high quality of Alberta products and the relative cost competitiveness of Alberta producers.

Alberta's spruce-pine-fir lumber is known for its consistent high quality. Features such as good strength qualities, ease of handling, low weight/volume ratio,straight grain, and attractive colouring make Alberta's produced lumber a highly marketable product. The ability to provide a product with these qualities consistently is ensured by grading and sorting on the basis of Alberta Products Association (AFPA) grade rule.

Wood pulp is the basic furnish used in the production of a number of secondary products including; newsprint, printing and writing papers, tissues and special papers, packaging and industrial papers, linerboard, corrugating medium, and boxboard. The future outlook for wood pulp is therefore directly related to the demand for the various papers, paperboard, and specialty products listed.

Alberta's long-fibred bleached kraft pulp is also considered to be a high quality product. The strength and brightness of Alberta kraft pulp is due to climatic factors (short growing season, and long daylight hours) and species (spruce and pine).

The principal wood pulp products of relevance to the Alberta scene are softwood bleached kraft pulp and chemi-thermo-mechanical pulp. Bleached kraft pulp is currently being produced at two locations within the province: Procter and Gamble Cellulose Ud., at Grande Prairie, and Weldwood at Hinton. The province's first chemi-thermo-mechanical pulp mill (Millar-Western Industries Ltd) began production in 1981. The United States is by far the most important market for Alberta's market pulp. Ninety-seven percent of total softwood bleached kraft pulp production is shipped to the United States market. The remaining three percent is sold in the Pacific Rim and western Canada.

37

Thble 4. Thtal Production and Market Distnoution, 1985

Estimated market distnoution (1987)

Domestic United States offshore

Product Production % % %

Softwood lumber 3516 thousand m3 feet 55 45 <1

Bleached kraft pulp 492,000 tonnes 1 97 2

Plywood 232,000 M sq. ft. (3/8") 100 Nil Nil

Oriented strand board 607,000 M sq. ft. (3/8") 28 70 2

MDF 125,000 M sq. ft (3/8") 30 5 65

Preserved ties (1985) 1,260,000 pieces 100 Nil Nil

Preserved posts and poles 1,181,135 pieces 100 Nil Nil (1985)

Socioeconomic Impact of the Forest Industry

The forest industry provides alternative economic opportunities within the energy and agriculture dominated Alberta economy. No single criterion can fully capture these contnoutions. Aspects considered here include direct employment generation, value of shipments, community dependence, and export values.

Alberta's forest products industry generated over 8800 jobs in 1986. Additional direct employment was generated by the Alberta Forest Service and industry in site preparation, tree planting, fire control, nursery operations, inventory, timber management, and in the administrative and program support operations of the Alberta Forest Service.

Like the agricultural sector, forestry employment tends to be seasonal. However, unlike agriculture, forest industry employment peaks in the winter months. Therefore, forestry activity complements the agricultural sector by providing off season employment opportunities for fanners and other agricultural workers.

Forestry in Alberta is a billion dollar business. The total value of shipments for the forest industry (ie, logging, wood industries, and paper and allied industries) in 1986 was $1.207 billion. The total value-added generated by the industry was $545 million.

The forest industry in Alberta has become a main-stay economic activity in a number of Alberta communities. Some of the larger population centres with a high degree of dependence on the industry include Grande Prairie, Hinton, Slave Lake, High Level, Whitecourt, High Prairie, and Fox Creek. These communities represent a combined population of over 50,000 persons.

38

Another important feature of Alberta's forest industry is the production of good for export. The dollars earned from exporting help to compensate for expenditures incurred on the purchase of goods and setvices imported into the domestic economy. Most of the total production of Alberta's forest industry is exported from the province.

5. FOREST INDUSTRY DEVELOPMENT

With respect to costs, the main disadvantage of Alberta producers is lack of access to tidewater and long overland transportation distances to consumer markets. This disadvantage, however, is more than offset by a number of advantages including; low wood costs, low energy costs, the employment of state-of-the-art production technology, and a highly integrated industrial structure.

Delivered wood costs for Alberta producers are and will remain low for number of reasons. First, the Alberta terrain is relatively uniform. Second, access into the forest zone is well developed due to oil and gas exploration activity. Third, volumes per hectare on Alberta's stocked, productive forest lands are among the highest in Canada ranking second only to British Columbia Alberta's commitment to forest fire control and reforestation has ensured a secure supply of economically operable wood for future utilization.

The favourable investment climate has resulted in considerable commitment of private sector capital in forestry operation over the past 30 years and with new technology making use aspen for pulp many new developments have recently been completed or committed to (Thble 3). In particular, Alberta's system of tenures (for example, FMAs and Quotas) have provided conditionally secure access to Alberta's timber reserves thereby eliminating the arbitrary investment risks associated with short term. disposal systems. The result is a number of world scale production facilities utilizing state-of-the-art manufacturing technology. fur example, in the sawmill industry, the trend has been to construction of larger, more capital intensive plants. In 1979 output of lumber per mill for large sawmills (more than 1 million board feet) averaged 13 million board feet per year. By 1985, average yearly production per mill had more than tripled to 42 million board feet. The productivity of labour also increased dramatically during this period. In 1980, lumber production per person-year was 231 thousand board feet. In 1985, 335 thousand board feet of lumber was produced per person-year of labour employed.

A number of firms in the Alberta forest industry are multi-plant enterprises. The economic advantages of industrial integration include; lower unit fixed costs, economies of scale, more efficient resource utilization, greater security in raw material supply, greater economic stability for firms (for example, less dependence on single commodities), and greater capacity for generating capital. An integrated industrial structure is a very positive feature vis-a-vis the competitiveness of Alberta producers in global forest products markets.

7. CURRENT ISSUES OPPORTUNITIES AND CONSTRAINTS

Key Alberta issues requiring federal attention vis-a-vis the forest sector include economic diversification, wood supply, and technological innovation (forest products).

39

Economic Diversification:

A strategic concern of regional economic planners in Alberta is the over dependence of the provincial economy on the oil and gas and agriculture sectors. This form of industrial structure leads to a particularly unstable economic environment as the provincial economy swings from boom to bust in response to the cyclical swing in resource commodity prices in international markets. Additional concerns are expressed about the non-renewable nature of petroleum resources. The response of the Government of Alberta to these concerns has been to attempt to diversify the economic base of the provincial economy and to encourage a higher level of value-added production. The forest industry was targeted as one of the main sectors of consideration in a strategy to diversify the economic base of the provincial economy.

The forest industry is an appropriate sector for economic diversification for a number of reasons. First, the industry is export oriented. Second, the industry is generally countercycical to petroleum and agriculture related activities. Third, direct activity in the forest sector results in considerable indirect activity in other sectors of the economy (ie, the multiplier effect is high relative to the production of other commodities and services.)

Wood Supply:

The available supply of uncommitted surplus softwood and hardwood AAC in Alberta is decreasing as new forest industry developments continue to be announced. The combined effects of anticipated increases in demand for Alberta timber, alienation of forest lands, and re-zoning will ultimately be the realization of a fully committed resource supply. The point in time when the physical demand for timber will equal the sustainable supply is not known. On the basis of current rates of development, however, timber supply could be a constraining factor to further development by the early-mid 1990s.

Understanding the inter-relationships between site factors, treatments, and stand development dynamics. An increased commitment to the determination of biologically effective, environmentally safe, and economically justified stand establishment prescriptions is required.

The federal contnbution to the basic and intensive forest management function is through the Canada-Alberta Forest Resource Development Agreement. Although federal funds were not directly applied to renewal on Provincial Crown Lands, the provincial funding was incremented and therefore a higher level of renewal activity was achieved.

The prodUCtivity of Alberta's forest land base is among the highest in Canada (second only to British Columbia). A continued or enhanced federal role in forestry research and forestry development agreements would significantly contribute to the capability of the province to achieve or surpass timber supply objective.

Thchnical Innovations:

Canada is the world's leading exporting nation of forest products accounting for 20.6% of total world exports in 1987. To achieve this dominant position, Canada's forest industry has relied on a plentiful supply of old-growth forest, inexpensive energy, a trained and experienced work force,

40

access to specialized technical, engineering, managerial, and marketing expertise, and long-standing tradition in forest products manufacturing.

Canadian producers will be subjected to heightened competitive pressures on traditional product lines. There are, however, alternatives. 'Thchnological innovations in the areas of pulping, bleaching, papermaking, composite wood products, and solid wood products offer potential development opportunities for the Canadian industry. 'Thcbnology also offers similar opportunities to the area of secondary manufacturing. The president of the Pulp and Paper Research IDstitute of Canada, P. Wrist, has been quoted as saying that: "The industry is in a period of transition. It will emerge, as it has done before on similar previous occasions, structurally changed in its primary raw materials, it manufacturing processes, and in its major product lines. There are strong reason for optimism that the transition will lead to further expansion of the industry."

SELECTED READINGS

Alberta Bureau of Statistics. 1989. Alberta Statistical Review. Alberta 1feaswy. Edmonton, AB.

Alberta Forestry Lands and Wildlife. 1989. Annual Report 1987-88.

Bamsey, c.R. (ed.) 1988. Directory of Primary Wood-using Industries in Alberta - 1988. Forestry Canada and Alberta Forestry, Lands and WIldlife. Edmonton, AB.

Forestry Canada. 1989. Selected Forestry Statistics Canada 1988. Information Report E-X-41. Economics Branch, Forestry Canada. Ottawa.

NORTHWEST TERRITORIES FORESTRY PROFILE

AppendixD

41

42

1. mSTORICAL PERSPECTIVE

The first permanent settlements in the Northwest Thrritories were established by European fur traders during the early 1800's. Initially the forests surrounding the settlements or trading posts provided fuelwood and building logs, but with the growing population and expanding services, a market for milled lumber soon developed. These markets were served by several community sawmills. One of the earliest was constructed at furt Resolution during the 1840's.

Industrial developments resulted in further growth of the forest industry. In 1920 the discovery of oil at Norman Wells and in 1929 mineral exploration activities at Pine Point created a need for mine props, timbers, and construction lumber. Subsequent developments at Great Bear Lake, Port Radium, Yellowknife, and Upper Flat River further increased demands for wood products. By the 1930's, four sawmills were in operation; two near furt Smith, one at furt Resolution, and one at furt Simpson. Products from these mills were transported by boat along the MacKenzie and Slave river systems from furt Smith to Aklavik.

Early statistics on forest harvesting are generally not available or are incomplete. Records from the Lands, Parks and furests Branch of the federal Department of the Interior indicate that in the ~ timber permits in 1930 were issued for the cutting of 57,000 linear feet of timber, 120 M (thousand) ibm of lumber, 893 roof poles and 2466 cords of fuelwood.

In the 1950s and 1960s, economic development evolved around an expansion of communication, transportation and government service centres such as Inuvik, Hay River, Yellowknife and furt Smith. The construction boom associated with these developments generated further demand for wood products. Petroleum exploration during the 1970's and 1980's in the Mackenzie Delta and the Beaufort sea, continued oil development at Norman Wells, and a general expansion phase in the mining sector sustained the demand for wood products.

The Federal Role

The North West Thrritory was originally part of a massive region known as Rupert's Land In 1870, the region was transferred to Canada and in 1905 was divided into today's territorial and . provincial boundaries. The Northwest Thrritory was initially governed from Ottawa by a Commissioner and an appointed council, but in 1967, the 12-member territorial council was moved to Yellowknife.

The federal minister of the Department of Indian Affairs and Northern Development is responsible for the administration and management of virtually all lands including forests in the NWr In 1984, the federal government began devolving policy and program responsibilities to the Thrritorial Government and by 1986, the Government of the Northwest Thrritories assumed control for forest and fire management programs. The Government of The Northwest Thrritories (GNWI) through the department of Renewable Resources has now assumed management of the forest resource.

furestry Canada (and its antecedents) has provided research and development services to the NWT over the past thirty years. furestry related activities such as forest management and protection (including fire research and insect and disease surveys), economic development and environmental impact assessments were included in furestry Canada's program. In recent years,

43

furestry Canada has also provided assistance in forest policy development to the Government of the Northwest Thrritories (GNW!) and other federal government departments.

The federal government has also been involved with the GNWf in forestry or economic development agreements. The five-year CanadalNWTEconomic Development Agreement of 1982-87 was intended to develop skills, support business initiatives and to plan development in the renewable and non-renewable resource sectors. The forestry component of that agreement included subprograms to address commercial use of NWf forest products, and inventory assessment projects to determine commercial potential of the resource. Agreements have also led to acquisition of high technology for forest inventory and planning.

2 TIlE FOREST RESOURCE

The land area of the Northwest Thrritories makes up 3.4 million km2, or about 1/3 of Canada's total land area. 40% of NWf's land area is classed as forest land (614 000 km~and 23% is productive forest land (143 000 km~.

Commercially significant forests are concentrated in the Upper Liard, Hay River, and Southern Mackenzie forest sections of the Boreal furest Region. These sections cover about 55,262 km2 however most commercial forests occur in the river valleys. 1btal gross merchantable volume (10 em top) is 446 million m3 with 70% being coniferous. The predominant species are white and black spruce, jack pine, and poplars. White spruce is the most important commercial tree species and is the only species utilized to any great extent in the NWI

The annual allowable cut for the NWf is more than 25 million board feet (ibm), far in excess of current annual production of about four million ibm. This suggests a high potential for development of the forest resource thus reducing the need to import wood products into the NWI Thble 1 presents lumber consumption by market region in the NWI

3. TIlE ECONOMY OF TIlE NORTHWEST TERRITORIES

An Overview

The economy of the NWf is in its early stages of development. Few goods and services that sustain economic and community development are produced locally. Most are imported from the south, financed primarily through government transfer payments and the export of non-renewable resources.

The last decade has seen strong economic growth in the Nwt. Gross domestic product (GDP) at market prices was $1.7 billion in 1988, with GDP growth being the fastest in Canada (some 13%). Other measures of economic growth including wages, incomes, population and employment have increased faster than the national averages suggesting continued growth will likely persist.

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Capital Investment

The NWf economy has regained some of the momentum lost during the downturn of 1986 but investment has fallen due to the volatile non-renewable resource markets, especially oil. Capital investment in 1989 is estimated at $963 million compared to $881 million in 1988. Recovery is evident but investments are well behind the $2 billion level of 1982. Investment, particularly in the non-renewable resources, overshadows all other components of growth and is an important element of the economy of the NWI:

The private sector provides most of the capital investment in the NWI: Private investment in 1989 totalled $586 million compared to $377 million by the public sector. The ratio has been as high as 23:1, when large expenditures were made for the Norman WeUs pipeline project and the Beaufort Sea explorations. It is necessary to realize however that most of these large investments happen over a very such short time period, and the territorial business community and labor force does not have a significant opportunity to participate. Consequently, large peaks in the investment cycle have little impact on territorial growth and development.

Population and Employment

1btal population as of July 1, 1989 is estimated at 53 300, an increase of 1000 from the previous year. This gain is mostly the result of natural increases as net migration since 1985 has been negative. Almost half the population live in the Fort Smith region which includes Yellowknife, and they represent most of the 15% of the population migration activity. The other 50% of the population are scattered among 30 small communities, most of which have populations less than 500.

The goods-producing sector provided 20% of the jobs while the service industries made up the remaining 80%. The business and personal services industries and public administration each provided one-third of the jobs in the service sector.

Unemployment rates are not available for the NWf due to lack of coverage by Statistics Canada. However the number of regular unemployment insurance beneficiaries during the last quarter of 1988/89 averaged 1 361 per month. This is the same as the number during the same period in the previous year.

4. THE FOREST INDUSTRY IN THE NORTIIWEST TERRITORIES

Currently, the NWf has four small scale commercial sawmills located at Fort Smith, Fort Resolution, Fort Simpson and Hay River. In 1987, these mi11s employed about 50 loggers and sawmillers. Many of these jobs were seasonal. Production and value figures are shown below.

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Lumber ProductioD, Northwest Territories

1985-86 1984-85 1983-84 1982-83 1981-82 1980-81

($000,000)

Value 1.0 1.1 1.6 20 22 22

("000 m3)

Quantity 21.7 22.9 31.4 40.0 34.3 34.3

In 1985, the total commercial value of NWr lumber, roundwood and fuelwood was estimated at $4.2 million. Fuelwood was the highest value product at $24 million for 20 000 cords. Fuelwood production is an important component of the forest industry in the NWI: A forest industry survey in 1980-81 indicated 18% or 16 person-years of employment were created by commercial fuelwood suppliers and an additional 39 person-years of employment was generated by domestic or non-commercial fuelwood operations.

During 1987-88 the approved harvest was: fuelwood 25 576 m3; roundwood 722 m3;

sawtimber 40 886 m3

Numerous forestry businesses operate on an irregular basis to suit local or personal needs, for example to harvest fuelwood 01' cut rough lumber for building repairs. Wood volumes, particularly fuelwood from such operations are not always reported.

Although the forest industry is relatively small in the NWI; five communities with populations totalling 1500 people are fuI1y dependent on the forest industry while another 14 communities are considered heavily dependent.

5. CURRENT ISSUES, OPPORTUNlTIES AND CONSTRAINTS

The NWr is currently utilizing about 20% of the annual allowable cut and supplying about 10% of its market demand. Studies indicate there is enough raw material in the liard Valley to allow an annual cut of 20 million tbm. This volume is sufficient to meet the demand for most of the Western Arctic on a continuous basis. Fully integrated forest resource development in the Liard could result in the creation of over 150 jobs.

Fuelwood harvesting operations, accompanied by increased institutional and industrial conversions to wood heat in the Fort Smith and Inuvik regions,can create an estimated 250 additional jobs.

There are a number of constraints to further development of the NWT forest sector. These include:

(i) a small and limited market for forest products;

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(ii) out-of-date and inaccurate inventory data which makes it difficult to make accurate resource allocation decisions;

(iii) absence of silviculture programs which will affect long-term productivity of the NWT forest resources;

(iv) large continuous blocks of over overmature timber in the Liard River Valley which make the area very suscepnble to insects, disease and fire; and

(v) a shortage of skilled labour and management expertise in the forestry sector.

Other constraints on the forest sector are related to distance, climate and politics, and affect all economic development activities. These include:

(vi) restricted channels of distnbution; (vii) short logging, shipping and construction seasons; and

(viii) pending land claims which currently limit any land resource related development.

6. SELECTED READINGS

Anon. 1989. Statistics Quarterly. September 1989. Bureau of Statistics, Government of Northwest Thrritories.

Anon. 1989. Alberta/NWT Economic and Labor Market Review and Outlook 1989-1990. Employment and Immigration Canada, Alberta/NWT Region.

Anon. _. A Guide to the Economic Development Agreement in the Northwest Thrritories. EDA Secretariat. Yellowknife.

Anon. 1988. Annual Report. Government of the Northwest Thrritories.

Anon. 1988. NWf Economic Highlights. EDA Policy Committee Meeting, May 1988.

Anon. NWf 1tade and Investments. Northwest Thrritories Economic Development and Thurism. November 15, 1988.

Anon. 1988. Review of the NWf Forest Sector. Dept. of Renewable Resources. Dept. of Economic Development and Thurism. January 1988.

Bohning, RA 1986. The Forest Industry in the Economy of the Northwest Thrritories, 1980-81. Northern Forestry Centre, Edmonton. Information Report NOR-X-277.

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Thble 1. Consumption of lumber in the NWf by Market Region, 1983-84 (Thousand Board Feet).

Lumber distnouted via: Lumber used

Hay River Inuvik by gas & oil

Area industry Private 'R>tal Percent

furt Smith 851 n/a n/a 600 1,451 53

Hay River 1,605 n/a n/a 1,320 2,925 10.8

furt Simpson 805 n/a 300 1,150 4.2

Yellowknife 2,685 n/a 700 1,823 5,208 19.1

Norman Wells 1,570 300 1,500 3,370 124

Inuvik & 4,241 5,900 2,600 300 13,04 8.1 Eastern Arctic

Total 10,802 6,200 5,100 4,043 27,145 100.0

Source: NoFC lumber industry SUlVey, 1984.

FORESTRY CANADA ACf (Excerpts)

Appendix E

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Excerpts from:

Bill C-29 - Department of Forestry Act 2nd Session, 34th Parliament 38 Elizabeth IT, 1989

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An Act to establish the Department of Forestry, to amend the Forestry Development and Research Act and to make related amendments to other Acts.

Powers, Duties and Functions of the Minister:

6. In exercising the powers and performing the duties and functions assigned to the Minister by section 5, the Minister shall:

(a) coordinate the development and implementation of forestry and forest resources policy, and of programs and practices established pursuant to that policy;

(b) assist the development of Canadian scientific and technological capabilities in forest management;

(c) promote the development and application of forest management codes and standards; and

(d) have regard to the sustainable development of Canada's forest resources and the enhancement of the international competitiveness of the Canadian forest sector.

7. In exercising the powers and performing the duties and functions assigned to the Minister by section 5, the Minister shall:

( a) promote cooperation in relation to the forest resources of Canada, with the governments of the provinces and with non-governmental organizations in Canada, and participate in the promotion of such eo<;>peration with the governments of other countries and with international organizations; and

. (b) gather, compile, analyses, coordinate and disseminate information respecting scientific, technological, industrial, managerial, marketing and related activities and developments affecting the forest resources of Canada.

Annual Report

10. (1) The Minister shall cause to be laid before each House of Parliament, not later than the fifth sitting day of that House after January 31 next following the end of each fiscal year, report showing the operations of the Department of Forestry for the fiscal year.

(2) Each report laid before Parliament under subsection (1) shall include an account of the condition of the forest resources of Canada and their contribution to the Canadian economy.

A NATIONAL FOREST SECfOR STRATEGY FOR CANADA

Appendix F

50

51

A NATIONAL FOREST SEcroR STRATEGY FOR CANADA

RECOMMENDATIONS

Concerning 1h1de and Investment

1. It is recommended that Canada in the pursuit of hberalized trade with the United States and with other countries seek advice from and be cognizant of the concerns of the forest sector.

2. It is recommended that cooperative efforts to further develop markets for Canadian forest products be continued and expanded.

3. It is recommended that a full federal department of forestry and forest industries be created to provide the necess8I)' coordination for the national forest sector.

ConcerniDg the Forest and Its Management

4. It is recommended that all elements of the forest sector assist in the development of provincial conservation strategies, endorse these strategies where appropriate, and ensure that forest management goals and practices meet requirements for sustainable development.

5. It is recommended that the forest sector expand its commitment to forest management including forest renewal, and work together to define objectives for the management of specific forest areas.

6. It is recommended that forest management planning for industrial raw material and other benefits of the forest focus on maintaining the long-term dynamics of healthy, stable, and well­balanced forest ecosystems.

7. It is recommended that foresters and wildlife managers cooperate in the review and development' of forest, fisheries, wildlife, and integrated management.

. More specifically, the reviewer might consider:

* * * *

*

establishment of short-and-Iong-term objectives for forest wildlife; development of integrated planning processes; converting wildlife information into usable forest wildlife; implementing harvesting and silviculture practices and assessing the achievement of objectives in terms of wildlife response; and the examination of costs and benefits to support the enhancement of wildlife habitat.

8. It is recommended that efforts be continued to improve and increase the effectiveness of forest fire management technology and capability to reduce losses and to facilitate the use of prescn"bed fire as a safe and natural management tooL

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9. It is recommended that all elements of the forest sector recognize that pesticides are among the legitimate means of effective forest management in specific areas, that their use continue to be regulated, and;

• • • •

ensure that all pest management operations are ecologically and economically justified; encourage development and use of effective alternative methods of pest oontroJ, inchxting integrated pest management; accelerate research into the environmental effects of pesticides; and ensure that the process for registration of pesticides for forest use is not cost-prohibitive and is open to public scrutiny.

10. It is recommended that more intensive levels of silviculture be practiced to sustain the level of benefits now expected from the forest.

11. It is recommended that forestry knowledge and techniques continue to be developed to ensure that silviculture treatments are ecologically sound, cost-effective, and efficient.

12 It is recommended that investments in forestry be made to achieve regional and national social and economic objectives, recognizing the major long-term contnoution of forestry to Canada's economic well-being.

13. It is recommended that long-term tenures on public lands be subject to to regular review of performance.

14. It is recommended that the allocation of harvesting rights on public lands generally not be in excess of sustainable harvests.

15. It is recommended that woodlot owners be encouraged and assisted to playa more important role in supplying forest products and benefits from other forest-related uses.

16. It is recommended that:

• •

•

•

the federal role in funding forest managements be confirmed; commitment to federaJ/provincial agreements and search for additional funding mechanisms be continued to secure continuity and stability in forest management; where necessary, explicit legislation be developed that defines responsibilities for funding; and it be clarified how governments delegate responsibility and authority to indusuy and other agencies.

17. It is recommended that the forest sector encourage public participation in developing forest management objectives.

18. It is recommended that planning processes be fostered that encourage the development of specific and measurable objectives for the management of defined areas of land including timber and non-timber values such as wildlife, fisheries, and recreation.

19.

20.

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It is recommended that allocations to exclusive uses be subjected to rigorous costlbenefit analysis, and the loss of supply through reallocation or withdrawal of commercial forest levels be offset where practicable by more intensive management on the remaining forests.

It is recommended that federal and provincial governments take strong action to reduce the impact of pollution on forest ecosystems by:

* * *

an adequate system of monitoring the deposition of pollutants on the forest; reducing the emission of pollutants; and ensuring that research be continued to understand the mechanisms at work and impacts of all major forms of atmospheric pollution and to determine what measures can be taken to reduce or compensate for their effects.

Concerning Employment

21. It is recommended that development of a national labor-market information base and other worker adjustment measures be continued to facilitate development of training and retraining initiatives.

22. It is recommended that all parties, that is, federal and provincial governments, industry and labor, cooperate to develop programs that would ensure that displaced workers would benefit from productivity gains.

23. It is recommended that the Association of University and 'Thchnical furestry Schools of Canada develop strategic plans, including accreditation, and improve the effectiveness of facilities and programs.

24. It is recommended that provincial and federal agencies and forest industries identify and develop mechanisms by which the major university programs serving the forest sector may be enabled to play the dynamic and vital roles expected of them.

25. It is recommended that the sector attempt to extend the work season where practical and work . towards developing a stable industry to attract people who will elect to make a career in silviculture.

26. It is recommended that employment creation projects be consistent with forest management objectives. Care should be taken not to displace existing silviculture businesses.

27. It is recommended that the forest sector encourage and work towards awarding contracts for silviculture work on and end-result basis.

Concerning Research, Development, and Innovation

28. It is recommended that mechanisms be enhanced to ensure that Canada's R&D programs are market-oriented and appropriately aligned with the forest sector's requirements.

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29. It is recommended that a high priority be assigned to improve the transfer of technologies, developed in Canada and elsewhere, that are applicable for use in the Canadian forest sector.

30. It is recommended that all elements of the forest sector, government, industry, and university strive to increase the effectiveness of research through unremitting evaluation of programs to ensure that they correctly address the crucial issues facing the sector.

31. It is further recommended that funding levels be increased to be commensurate with needs and that the industry be encouraged to actively pursue opportunities presented by Government

. matching-funds programs.

32 It is recommended that there be strengthened educational training programs and expansion of employment opportunities for young scientists in research and development.

33. It is recommended that the Canadian Council of Forest Ministers sponsor a special Canadian Forestry Forum on R&D in the forest sector in 1988, as a first step, to review the results of current assessments of R&D capability, orientation, and structure with particular emphasis on advanced technologies.

ConcemiDg Public Awareness

34. It is recommended that all segments of the forest sector:

*

* *

*

continue and enhance national, regional, and local programs to assist the public to understand the forest and seek their cooperation in its wise use and management. reinforce awareness efforts through cooperation, coordination, and sharing information; develop long-term educational curricula to provide school children of all ages with accurate information on the significance of Canada's forests; and support extracurricular, forest-based, and activity-oriented youth programs to encourage involvement in and commitment to forest resources management.