Ontario is among the most important producers of forestry products in the country. Although it is not very evident in the crowded, urbanized south, every northerner knows the tremendous economic impact the forestry sector makes across the entire North.
The industry is worth $15 billion in economic activity and contributes $9.5 billion to Ontario’s balance of trade and approximately 187, 000 direct and indirect jobs in Northern and southern Ontario are dependent on the province’s publicly owned forests.
Established in 1999, Living Legacy Trust’s primary role is investing in opportunities that enhance sustainable resource management on Crown Land in Northern Ontario. To date, approximately $21.6 million has been granted to 92 projects, and an additional $34 million in cash and in-kind contributions have been leveraged.
One of the most exciting initiatives the Trust is working on is value-added wood manufacturing.
Simply defined, value-added wood manufacturing is the process of adding value to commodity wood products. Instead of shipping raw lumber to export markets, the wood is manufactured into more valuable items like roof joists for new housing construction or office furniture.
Value-added wood products can include remanufactured goods, millwork like flooring and doors, engineered wood products, cabinets, furniture, pallets and containers, plywood and a wide variety of other wood products.
Commodity timber harvesting and manufacturing has become increasingly automated causing significantly lower levels of employment throughout Northern Ontario. The value-added sector has tremendous growth opportunities for its ability to maximize wood product value and exports while creating employment opportunities.
In addition, most manufactured wood products are exempt from the current 27-per-cent duty on lumber shipments to the United States.
The Trust commissioned a thorough report, which compared Ontario with other jurisdictions and identified shortcomings and tremendous opportunities. A series of regional meetings in Kenora, Sault. Ste. Marie, Timmins, Huntsville and Thunder Bay were also organized to disseminate and discuss the report. The interest and response across the North has been absolutely outstanding.
The report revealed that on a yearly basis, this sector generates approximately $5.1 billion in revenue, creating almost 40,000 jobs in about 1000 businesses. In fact, Ontario’s value-added sector employs three to four times as many people as the commodity manufacturers.
However, most of this secondary manufacturing, much of which is exported to U.S. markets, takes place in southern Ontario.
The European experience shows us that value-added manufacturing does not have to take place close to consumer markets to be successful. Northern Ontario exhibits many similarities to Norway, Sweden and Finland – forest type, commodity products and distance from major markets – and yet the Scandinavian countries have a thriving, value-added sector. Denmark is achieving tremendous success without even having a domestic wood supply.
Yet, there are thriving, export-oriented firms in the North like NorFab in Fort Frances and Three H Furniture Systems in New Liskeard. NorFab manufactures roof trusses, garden sheds and gazebos, employing approximately 150 people, while Three H Furniture Systems produces designer furniture for homes and offices and has about 70 employees.
In Kenora, a new $225 million TimberStrand mill built by Weyerhaeuser manufactures engineered wood products and employs approximately 475 workers at the plant and in the woodlands.
Engineered wood products are made from wood by a gluing process. The resulting products have a superior strength, lighter weight, and a more uniform and predictable quality than natural wood. There is a large demand for this value-added product in the U.S. residential building market.
Overall, value-added markets in North America are worth over $200 billion US annually and are growing at a much faster rate than the $35 billion US commodity sector.
Living Legacy Trust will soon begin a final report, which will entail a market research study of specific wood value-added products and markets in the Great Lakes States. This report will identify growth areas and address market opportunities.
The secondary manufacturing of wood products increases local tax revenue, provides employment, expands exports, generates wealth creation and can be a major factor in alleviating the population drain andincreasing the economic diversity the many forest dependent communities of Northern Ontario.
Living Legacy Trust’s strategic report moves the yardstick forward. We are helping build momentum for change. However, it will be Northern Ontario’s internationally competitive private-sector companies that can take advantage of the tremendous opportunities in the value-added wood production sector.
Karan Aquino is the executive director of the Living Legacy Trust. This is one of a series of articles highlighting Living Legacy Trust’s Northern Ontario project.
