Ontario Forest Industries Association

Ontario Forest Industries Association

September 29, 2005 10:10 ET

Ontario Forest Industries Association: Critical Core Competitiveness Issues Not Addressed

TORONTO, ONTARIO--(CCNMatthews - Sept. 29, 2005) -

Forest crisis announcement

One of the biggest challenges facing Ontario's forest industries is delivered wood costs - the price paid to get wood from the forest to the mill. At $55 a cubic metre, Ontario's delivered wood costs are among the highest in the world that averages $35 a cubic metre.

"Today's announcement by the Minister of Natural Resources does not substantively reduce costs," explains Ms. Jamie Lim, President/CEO of the Ontario Forest Industries Association, who notes the highly anticipated government package will reduce wood costs by about one dollar a cubic metre when the benchmark reduction needs to be in the $20 range."

"We certainly did not expect today's announcement to completely close the $20 gap, but we did expect a more material gain that would have resulted in delivered wood costs of below $50."

"The announcement pledged by Premier McGuinty last month may, through a promised prosperity fund, address some of the needs of a few companies, but we remain critically concerned that the cost of operating in Ontario remains unacceptably high," adds Ms. Lim pointing out that business and industry seek out low cost jurisdictions and will only invest in Ontario if they are operating in a low cost jurisdiction.

Ms. Lim states, " It has been the collective goal of both industry and our municipalities to ensure that successful multinational forest companies that invest globally continue to invest in Ontario. Our government needs to decide if it wants to enable Ontario to be a low cost jurisdiction that will keep companies operating in our province and attract new investment and opportunities.

The forestry sector appreciates the efforts of Minister of Natural Resources David Ramsay who last November brought together a 17-member council representing a broad spectrum of stakeholders, including community mayors, unions, first nations, environmentalists and industry representatives. The council prepared a highly comprehensive report on the issues and remedies needed to reestablish Ontario as a competitive jurisdiction in which the province's second largest industrial sector can operate.

The industry identified four key recommendations from the Minister's council report and urged immediate action to address issues under provincial control. Today's announcement responded to the recommendations as follows:

1. Asking for: A 50 percent fuel tax credit for trucks hauling logs
from the forest to the mill

Response -- government declined to address

2. Asking for: A return to a cost sharing formula for road
construction and maintenance - 100 percent of primary
roads and 50 percent of secondary

Response: -- $ 28 million for primary road maintenance only

3. Asking for: A prosperity fund similar to the $500 million package
offered to the automotive sector

Response: -- $150 million over three years earmarked for
research and development of new wood products, loan
and grant assistance for mill improvements, assistance
for addressing energy issues i.e. co-generation, green
energy initiatives

4. Asking for: Changes to electricity regulations to assure a
reliable supply of affordable electricity

Response: -- Announcement expected at a later date

We are encouraged by the government's willingness to review, revise and reassume financial responsibility for the Forest Resource Inventory. However, the changes proposed in today's announcement will not address near term costs as companies normally undertake Forest Resource Inventory on a 20 year cycle, and, for many, the benefits may not be felt for a decade or more.

Industry is further encouraged that the government last month struck a Forestry Sector Competitiveness Secretariat - a new branch of government that is to be tasked with addressing regulatory stumbling blocks to industry competitiveness.

Expressing the reaction of the Forest Crisis Coalition that includes municipalities, Chambers of Commerce and industry, Michael Power, Mayor of the Municipality of Greenstone and President of the Northwestern Ontario Municipal Association (NOMA) says, "The proof of how this package will affect Ontario will be demonstrated by the ability of the sector to remain a viable business in Ontario."

"While I am pleased that our coalition efforts have put this issue on the government's radar screen, it is clear that more work needs to be done. Today's announcement is one step toward returning Ontario to be a competitive jurisdiction for the forest industry," he adds.

"With the right public policy we can return the province to its competitive position of three short years ago and keep successful companies here in Ontario. Without the right policy we'll continue to see an out-migration of industry, jobs and prosperity," Ms. Lim says, observing that government has worked with other sectors such as automotive, agriculture, steel manufacturing and the film industry to ensure job creation and prosperity are enhanced and the same must be done for forestry.

The Ontario Forest Industries Association represents companies responsible for the stewardship of 75-80 percent of the Crown land harvested for timber in Ontario. Forestry directly and indirectly employs 275,000 people in Ontario and annually pays over $1 billion in taxes and fees to the people of this province.

Contact Information

  • Ontario Forest Industries Association
    Jamie Lim
    416-368-5445 (FAX)
    Mayor Michael Power