Don Roberts, president and CEO of Nawitka Capital Advisors Ltd. said diversification could help save the forest industry and return it to its former glory.
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The future of the forest industry isn’t nearly as bleak as it’s been for much of the past decade, industry experts say.
While Don Roberts remains emphatic he wouldn’t invest in the pulp and paper industry, the president and CEO of Nawitka Capital Advisors Ltd. on Wednesday said there is plenty to like about where the forest sector is heading in Canada and Northwestern Ontario.
According to projections, Canada-wide the forest sector is expected to add 60,000 new jobs by 2020, a 25 per cent increase over the 238,000 jobs already in place.
“I think there are some elements that are quite attractive. The things that we like the most tends to be the solid-wood side of the business, with some kind of energy component, whether it be electricity or fuels, some of the newer technologies that we’re exploring,” Roberts told about 175 people on Day 2 of the Ontario Professional Forester Association’s annual general conference being held this week in Thunder Bay.
“There are some that are quite interesting. Quite frankly, pulp and paper aren’t part of it.”
But rather than look at that as bad news, Roberts said industry insiders should look at it as a new challenge.
But it’s one that he feels can be overcome.
“The thing that you’ve got here is that you’ve got some established infrastructure. The thing is, what do you do with it? Increasingly, what we’re looking at is changing from a producer of straight newsprint or … pulp to a bio-refinery,” he said.
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The concept draws itself out of the oil industry, where a whole array of products is produced from a single source material.
The issue for the forest industry is determining which products to manufacture.
“I think there is some opportunity here if you’re a forestry worker,” Roberts said.
Catherine Cobden, executive vice-president of the Forest Products Association of Canada is quite as down on the pulp and paper industry as Roberts, saying she’s seen growth in the sector since the downturn began a decade ago, costing tens of thousands of jobs in Ontario alone.
Optimism remains high, she added, for many of the same reasons pointed out by Roberts.
It has a lot to do with the adoption of new technologies and diversification of existing manufacturers and their willingness to try something new to stay afloat. New markets are also opening up or expanding, she said.
Take China, for example, where Canadian exports of lumber has grown 1,625 per cent since 2003. Exports to Asia have more than doubled to 27 per cent of Canada's total in the past nine years. Where once the United States comprised 80 per cent of all Canada's forest exports, that number has dropped to 60 per cent today.
“We like to say the next China is China in terms of market potential. And we’re also diversifying the types of products. We’re extracting more value from the forests we harvest. So whether it’s solid bio-fuels, whether it’s bio-energy, whether it’s plugging into the supply chain of the textile industry in India, the Canadian forest sector is positioning and playing in those markets,” she said.
This will build on the traditional markets and materials that remain strong, especially with the rebound of the housing market in the United States.
“The U.S. is still our predominant market and it will continue to be, but the amount that China has grown in our marketplace is significant.”
Roberts added that while Northern Ontario companies might not deal directly with China, opportunities might arise in nearer markets through a trickle-down effect.