Ontario’s forest sector is gradually beginning to see signs of a recovery – OFIA

LogsTHUNDER BAY – Business Now – Over the last several years, Ontario’s forest sector has been faced with a host of well documented challenges – a high Canadian dollar, severely reduced housing starts in the U.S., and increasing competition from low cost jurisdictions to name a few. Despite these ongoing challenges, the Ontario Forest Industries Association (OFIA) believes that, due to the significant efforts of the private sector, their employees, and the Provincial government, Ontario’s forest sector is gradually beginning to see signs of a recovery.

Signs of that recovery are evident. The most recent annual data from the Ministry of Natural Resources show that:

• Ontario’s forest sector invested $907 million in annual capital and repair expenditures,
• annual Ontario forest product sales were estimated at $14 billion
• the province collected almost $96 million in annual revenue from the disposition of timber
• timber harvest volumes are increasing, new wood supply commitments are being implemented, and
• the forest sector continues to employ 200,000 hard working Ontarians in over 260 communities across the province.

Jamie Lim, President and CEO of the OFIA commented, “We recognize the need for government to get their fiscal house in order – our sector has had to do that ourselves over the last few years – and we are prepared to continue to work with government to achieve their objectives, however, we cannot afford to see a downloading of costs or a return to an unlevel playing field with our competitors.”

“While we recognize the need for Ontario to eliminate the provincial deficit and as such support many of the objectives of the Drummond Report, we would hope that the government’s response to this report does not result in them undoing all the good work that has been put in place since 2005 when Ontario implemented a series of policy initiatives aimed at making the province a more competitive jurisdiction for the forest sector,” stated Lim.

Prior to these measures, a Ministerial Task Force recognized that Ontario was one of the least competitive forestry jurisdictions in North America. The resulting government programs, including the sharing of public forest access road costs, hardwood stumpage rates more closely aligned with those of competing provinces, and industrial electricity rates closer to the North American average, are beginning to show tangible results, and they remain fundamental to the recovery of the sector and related employment.

Addressing Ontario’s recovery, the Drummond Report states that “governments do not create jobs in the private sector – only successful businesses can do that” (see page 310).

“While we agree with the Drummond Report, it is important to note that successful businesses choose stable, cost competitive jurisdictions in which to operate” says Scott Jackson, Manager of Forest Policy at the OFIA, adding “it is equally important to recognize that strong public policy and certainty contribute to making a jurisdiction competitive and attractive”.

“Working with the Ontario Government, Ontario based forest products companies have worked diligently to lower their operating costs and this has positioned us well for the future” says Jamie Lim, President and CEO of the OFIA, “Since January, the OFIA through its pre-budget submission as well as additional letters, has encouraged the Ontario government to maintain the competitive measures they have put in place and we, along with the 200,000 employees in over 260 communities, are looking to the government to ensure these measures remain in place in the 2012 budget.”