The Forest Products Association of Canada says the demand for toilet paper has skyrocketed — increasing by 241 per cent during the COVID-19 pandemic.
Association president Derek Nighbor told the House of Commons finance committee today that the forest products industry has rarely enjoyed such a high profile.
That’s not just because it produces toilet paper, which Canadians began stockpiling as soon as it became clear early last month that orders to stay home were imminent.
He says the sector is supplying the pulp needed to make sanitary wipes, paper towels, protective masks and hospital gowns.
And he says it’s supplying the wood pellets, biofuels and green energy that feed heating systems and provincial power grids.
Yet, Nighbor says 39 sawmills across the country have been forced to shut down due to the pandemic and that has meant a reduction in the supply of wood chips that are needed to make pulp.
The interconnectedness of Canada’s forest sector was central to Nighbor’s remarks to MPs. While lumber markets have struggled, experiencing a near 40 per cent price drop in recent weeks, many sawmills have made the tough decision to temporarily shut down. Those closures have not only put thousands out of work, but the impacts are now being felt downstream by pulp mill workers and their communities. “We are a highly integrated sector. Our sawmills are our industry’s heartbeat. We need to find a way now to keep our sawmills operating so chips can continue to feed our pulp and paper mills. If we don’t have chips flowing, our industry’s biggest artery is cut off – and thousands more will be out of work,” Nighbor said.
The forest sector’s inability to tap into the federal government’s wage subsidy program in a significant way has been a source of frustration for FPAC and its members. The program’s construct simply does not fit with forest sector business models.
Nighbor recommended adjustments like government considering individual mills or segments, which would allow more operations to qualify for support, and keep more Canadian forestry workers working. He also suggested that government consider a sliding scale, so that if revenues are down by 10 or 15 per cent, a company could qualify for wage supports at perhaps 50 per cent, instead of 75 per cent.
He also stressed the need for easily accessible supports for the months ahead to help companies manage cash flow challenges. The industry is confident about the future, but needs an immediate boost to get through the next few months.“On the lumber side, our markets took a massive hit in late 2018. We have been in recovery mode since and just as we were starting to turn the corner, COVID-19 hit.
We need liquidity supports now,” said Nighbor. “Measures that move with speed and ease in the face of markets that are falling for the short-term. Measures that are not going to force companies to provide more security as many of our companies just do not have the flexibility to do that right now. Measures that are responsive to the realities of this crisis – and have lenders who are prepared to be more risk tolerant than our main street banks,” Nighbor added.
While the main discussion with MPs was about the here and now, Nighbor was clear about his optimism for the future. “Our industry is not looking for a bailout, but rather bolstered cash flow supports to keep our businesses operating through these difficult next two to three quarters. As we look to 2021 and beyond, Canada’s forest products sector has the opportunity to be one of the bright lights in the Canadian recovery – especially for northern and rural communities,” he concluded.