Making a move from dimensional lumber producer to value-added wood product manufacturer is not that big of an adjustment for Ontario’s wood industry, says a consultant.
It is all a question of attitude, Peter Woodbridge says.
Woodbridge is president of Woodbridge and Associates, a consulting company focusing on the forest industry and wood products. He recently presented the results of his study, commissioned by the Ontario Living Legacy Trust, which looked at opportunities for investment in value-added manufacturing of wood products in Ontario.
A rising Canadian dollar, U.S. tariffs on softwood lumber and a glut of sawmills around the world have caused major problems for Ontario’s lumber sector, says Woodbridge. An opportunity for growth in Ontario’s export wood industry is in the area of wood components and factory-built housing.
“What we’re looking at is a lot of structural products and components and we’re looking at modular and pre-fabricated buildings,” says Woodbridge. “They are value-added in the sense that you’re looking at added labour and materials.
“What’s interesting about that is you’re not just adding materials, you’re also adding design skills and service and technical support to the product,” he says. “What you’re doing is making the homebuilder’s job easier. The nice thing about engineered products is they’re predictable for the homebuilder by being engineered to specific standards.”
Rather than focusing on merely producing lumber for shipping to the United States where it is converted to products like roofing trusses, much of that manufacturing can take place here with a minimum of capital investment. Even simple things like end pieces of logs can be easily converted to products for which there are numerous uses and which are produced south of the border from Canadian-harvested logs, says Woodbridge.
“What’s been happening in North America as distinct from most other places in the world is we are going to larger residential building sizes,” he says. “What that means is vaulted ceilings and larger room dimensions. It’s not limited to 10 by 12 rooms by any means.”
There are several models of pre-manufactured homes that are built in Canada that require products such as laminated wood products and I-joists that can be produced here in Ontario to meet many of these demands. And, because they have undergone additional production, they are no longer subject to tariffs at the Canada-U.S. border.
There are some products that would have significant competition from the south, says Woodbridge, but there are a “vast array” of other components that can be produced in Ontario.
“You can produce those products where labour and wood costs are lower and transport that competitive advantage to your export market,” he says.
Woodbridge says the major challenge for Ontario’s wood industry is not in the physical act of changing production from lumber and sawlogs to value-added products. Ontario’s labour resource already has the engineering and production knowledge. The challenge is in changing attitudes to accept a shift in focus and in approach to marketing products and opportunities.
Ontario has already shown its ability to a small extent to produce value-added products such as trusses and modular houses to its main 81-million-person market in the Great Lakes states of Michigan, Ohio and Wisconsin.
Woodbridge projects New York and Illinois are states that will be showing considerable regional growth over the next 20 years.
“The possibility of working with American companies and forming strategic alliances is an area where there is a lot of potential,” he says, adding one company from the United States is already moving manufacturing facilities to Ontario and there is potential for more.
“It’s a question of being aggressive and marketing what you have in Ontario,” he says. “Labour costs are good. We’ve got the exchange rate advantage. Productivity is good. These are some of the reasons why an American company would look at moving a plant here.
“You can’t do it by phone from Timmins or Thunder Bay. You have to get out there and find out what the customer’s needs are,” Woodbridge adds. “One of the things that has to be addressed by agencies such as the Living Legacy Trust and the industry itself is how you make that change because attitudes are the hardest things to change.”
