Policy & Positions Manual

Provincial Issues - Forests, Lands And Natural Resource Operations

Developing a Skilled Workforce for a Globally Competitive Value Added Wood Products Industry (2009)

The rising level of competition facing BC’s companies, changes in production technologies, and changes in the nature and organization of work are all driving increases in the knowledge requirements of jobs in BC.  Foreign outsourcing has reduced the domestic demand for unskilled workers, thereby increasing the relative demand for skilled workers. The growing prominence of information–communication technology industries has also fed the demand for skilled workers who can thrive in a knowledge-based economy.

Many successful companies stay current with new technologies and commit to ongoing training and skills enhancement throughout their workforce.  BC could commit to staying current in the value-added wood products market by building a globally competitive workforce, utilizing the research, development, and innovation information available through its many institutions, and by adopting best practices from successful industries locally and globally and by training a workforce in the latest technological advances. To develop a thriving value-added product industry, current and applicable technical training, innovative product development opportunities and highly developed product design skills are pertinent. Addressing BC’s skilled labour shortage is important for the value-added manufacturing industry to expand and compete globally.

Background
The value-added wood products industry spans across all of Canada.  Companies manufacturing value-added wood products use some local wood but often import wood from other provinces or from international markets depending on the products they make.  Training a skilled workforce and industry leaders to produce value-added product from our provinces’ own wood resources could support our lumber industries, keep manufacturing jobs in BC, attract investment and strengthen our economy. 

Value-added wood products are items which have additional processing, beyond the commodity level and unlike primary and commodity forest products, value-added products are usually targeted at end-users (often consumers). An example of a value-added product is a garage door, where additional processing of primary commodities (lumber and panels) is undertaken to create a product with greater value than the sum of the primary products. Other examples are pre-fabricated housing panels and systems where complete walls panels are manufactured in a factory and the furniture and cabinetry industry where the end product is ready for retail sales.

Global examples of value-added manufacturing are the Swedish housing industry and the Danish furniture industry.  Sweden prefabricates over 90% of all new housing in factories. Swedish companies are more automated than North American prefabricated housing companies and have more flexible use of staff, employing highly trained workers at all work stations.  Their labour costs are comparable to labour costs in North America and their housing systems have a strong global market.  Factory built houses can be built year round in colder climates, they are more cost effective and quality control is easier to maintain during production. 

The furniture sector in Denmark is currently comprised of approximately 400 companies, which combined produced furniture to the value of DKK 19.4 billion ($ 4 billion) in 2006. The Danish furniture sector employs approximately 16,900 people and the combination of advanced technology and a high level of technical competence makes productivity in the sector very high.

In relation to the population of Denmark, Danish furniture production and exports are global leaders. 83% of the production is exported, making the Danish furniture sector Denmark's sixth-largest export industry. Every Dane employed in the furniture industry creates annual revenues of DKK 1 million ($183,000) on average - the second highest level in Europe, only bettered by Belgium. Profits average 4.1% of revenues, the 6th highest in the EU, ahead of countries like Germany, Italy and Sweden

Locally the production of value-added products can generate additional jobs and income from the same resource supply base used to produce primary products. To provide for a continuous and predictable flow of economic and social benefits from Ontario’s forests, Ontario monitors trends in value-added wood products as part of monitoring and supporting value-added products and services. There are currently over 2,500 value-added wood processors in Ontario. Fifty-five per cent operate with less than 10 employees, due to the low barriers to entry associated with wood processing. Most of these businesses are not owned or connected to Ontario’s forest product producers, who generally concentrate on commodity products (lumber and pulp). However, even with primary and commodity producers there is a growing focus on value-added panels, boards, and engineered wood products.

A recent study indicates that the share of Ontario-grown timber used by Ontario value-added wood manufacturers is less than 40%, often a result of a difference between specific species demanded by value-added industries, and those grown and harvested by the major forest companies. There are currently five trends affecting the value-added wood manufacturers of Ontario:

  • Increasing offshore competition in traditional wood markets (e.g. furniture);
  • A labour shortage in skilled manufacturing industries;
  • The rising value of the Canadian dollar, which makes Canadian products more expensive in many international markets;
  • New opportunities in bio-products, including energy, composites and chemicals; and
  • New product and process opportunities in traditional markets (e.g. pre-manufactured housing).

At the Maritime Lumber Bureau’s 68th Annual Meeting and Convention on May 31, 2007, the Minister of Natural Resources, said:

“We're well aware of the achievements of the value-added industries, of leaders here like Marwood [Marwood Ltd.]. It’s a great example of innovative and forward-thinking corporate strategies. Marwood has customers throughout North America and Europe with product lines produced from a variety of softwood species right across Canada. Using a leading edge technology and a lean-manufacturing strategy, Marwood has found a way to adapt to changing customer demands and scout out new markets.

In the future, maintaining and extending the life of the forest will be key not just to survival but to continued prosperity. Pressure treating, secondary manufacturing (value-added manufacturing) and a focus on green energy are examples of initiatives to remain highly competitive in the marketplace.

One of our biggest challenges as a country and as an industry in the next decade is, I think, going to be a skilled labour shortage. We're seeing it in certain parts of the country more than others, but when you look at the demographics of the population, it’s something that we have to be keenly aware of. Fifty-four percent of Canadian CEOs are saying that they're having difficulty finding and recruiting skilled and talented workers, which is threatening the profitability of their companies.”

Roland Baumeister, Manager, Secondary Manufacturing Department for Western Canada, FPInnovations-Forintek Division said that,  “the major focus of the Forintek program will be enhancing opportunities for Saskatchewan businesses in the wood products sector. The forestry and wood products sector is a vital part of the Canadian economy. At this time, the industry is being challenged from an increasing diversity of international competitors and changing consumer preferences in the markets it supplies."

The objectives of this initiative are threefold:

  • Increase business competitiveness and foster industry growth through improved productivity and quality control;
  • Encourage innovation, product development and diversification into value-added production; and
  • Sustain collaborative projects and improve the integration of investments made by the industry and governments.

FPInnovations-Forintek Division will assist small operators to add value to their product lines, improve small mill operations, provide direction to down-stream users to make new or better uses of wood products, match new market opportunities to the value-added sector, and help bring new Saskatchewan-based technologies and products to market. The value-added wood products sector includes: millwork, kitchen cabinets, prefabricated buildings, engineered wood products, wood pellets and other uses for wood waste such as bark mulch.

The Value-Added and Wood Technology Program 2007-2009 will build on the success of a previous program funded through the Economic Partnership Agreement by offering the technical and market knowledge base for a renewed wood products industry in the province.  The program, which will also encourage industry-related business opportunities in northern and First Nations communities, will have eight elements: resource-based initiatives; research implementation support; product development & design activities; technology transfer activities; training and skills upgrading initiatives; business practices support; raw material supply and sourcing services; and market development, access & intelligence services. 

The following are recent developments in the Action Plan the Ministry of Forests and Range published that address some of the recommendations in this policy.  Targeted Actions from the BC government’s March 24th Action Plan are:

Champion Wood First:

  • Stimulate the domestic market by promoting the structural use of wood for commercial, institutional and mid-rise residential buildings;
  • Maximize the use of wood in publicly owned and provincially funded buildings;
  • Encourage the use wood as a design element in new construction;
  • Showcase new and innovative wood building products and techniques; and
  • Position British Columbia as a leader in international markets.

Move Innovation from Lab to Market:

  • Expand local manufacturing capacity and build technical expertise by piloting next generation products;
  • Improve the flow of information between researchers, investors and manufacturers to promote commercial opportunities; and
  • Provide hosting conditions that attract capital investment and encourage strategic alliances.

Facilitate “Right Fibre to the Right Process”:

  • Pilot new fibre merchandising and sorting methods to get manufacturers the dimensions, species and grades of fibre they need without being burdened by material they can’t use;
  • Establish web-based mechanisms to streamline and facilitate the sale of fibre to manufacturers;
  • Work towards a target where primary mills make 25 per cent of their products available for further manufacturing; and
  • Work to increase the number and size of community forests, and encourage communities to direct some of their fibre to further manufacturing.

Promote Wood Education and Culture:

  • Increase consumer awareness about the climate-friendly attributes of wood products;
  • Build a more knowledge-based workforce by retraining existing workers and attracting youth through education programs; and
  • Address the shortage of wood design and manufacturing programs.

In addition British Columbia could commit to generating the best economic value from our forestry sector by fast-tracking the skill and technology requirements to developing a globally competitive value-added wood product industry and by working extensively with federal and global interests on these issues. These steps could strengthen the province’s current economy and build a viable and sustainable future for our forest industry.   

THE CHAMBER RECOMMENDS

That the Provincial Government:

  1. work with the Federal Government to develop policies and program initiatives that facilitate skills development meeting future value-added manufacturing industry needs through wood product industry learning at high schools and post-secondary education institutions;
  1. promote fast-tracking initiatives to develop standards for the value-added wood products industry;
  1. promote recognition and use of current reputable standards programs for trades training and quality control training;
  1. work with the Federal and local governments to identify successful value-added wood products industries and assist them in promoting apprenticeship training through university under-graduate programs, with emphasis on transferability of credits and mobility between these two education programs;
  1. work with Federal and local governments to identify leading edge research, development, technology and innovation initiatives and link those initiatives to educational institutions for training purposes; and
  1. work with Federal and local governments in collaboration with industry organizations to develop marketing strategies to attract future workforces to the value-added wood products industry.