Industry faces challenges and embraces opportunities
Edmonton – In the first half of 2015 Alberta’s forest sector began to slow, but remains stable. Values of lumber, pulp and paper, and panelboard manufactured by Alberta Forest Products Association (AFPA) members totaled $750 million in the 1st quarter of 2015 and $718 million in the 2nd quarter. The numbers reflect a 4.4% increase from the 1st quarter of 2014, followed by a year-over-year decline of 1.3% in the 2nd quarter.
“Our industry has many opportunities that bode well for the future,” said AFPA President and CEO Paul Whittaker. “We have seen an increase in the generation of green power, development of markets abroad, and the use of cutting-edge technology in facilities.” Whittaker noted that despite some positive news, the industry also faces a number of challenges, including the expiration of the Softwood Lumber Agreement with the United States, the mountain pine beetle, and a slowing economy in Canada. “Some of these challenges are certainly contributing to slower growth in the sector. Now, more than ever, it is important for the forestry sector, government, and communities to work closely together to ensure that the forest industry remains a vital contributor to Alberta.”
Alberta’s forest industry is a significant contributor to 70 Alberta communities. 15,000 Albertans work in the industry and an additional 30,000 are employed through economic activities generated by the sector. The industry has invested in future sustainability through market diversification initiatives and capital projects. These include an increased focus on Asian market development and investments to generate electricity from renewable forestry biomass.
More information can be found on our website at albertaforestproducts.ca.
The Alberta Forest Products Association is a private, non-profit industry organization, representing lumber, panelboard, pulp and paper, and secondary manufacturing wood products companies operating in Alberta. AFPA member companies are active participants in sustainability advancements that contribute economic, environmental, and social benefits for Albertans.
BACKGROUND INFORMATION
GREEN POWER GENERATION – The forest sector can be a key part of Alberta’s efforts to address climate change. Forests are our best defence against climate change, since they sequester carbon. Sustainable harvesting operations prevent carbon from being released into the atmosphere as a result of forest fires. The forest sector manages 38 million hectares of forested land, an area equivalent in size to Japan. Using residuals (bark, sawdust, etc.) the sector generates enough power for 3 to 4 cities the size of Grande Prairie. Power produced from forestry residuals has a lower carbon footprint than fossil fuels and comes from a fully renewable source.
ECONOMIC DIVERSIFICATION – A strong forestry sector is a key part of Alberta’s diverse economy. The sector directly employs 15,000 Albertans and creates jobs for 30,000 more people through its economic activity. Having a strong forestry sector helps to mitigate the impacts on communities when prices for other commodities falter. The industry relies on a predictable wood supply to continue to create jobs and contribute to economic diversification.
THE SOFTWOOD LUMBER AGREEMENT – The Softwood Lumber Agreement with the United States expired on October 12, 2015. Upon expiration of the agreement, both Canada and the United States entered into a one year ‘standstill period’ during which both sides are prohibited from taking unilateral action, including imposing duties or tariffs. Achieving a new agreement is critical for Alberta’s forest sector, as the United States is its largest export market for lumber. The sector will work closely with the Government of Canada and the Government of Alberta to provide the information necessary to negotiate a new agreement.
Alberta’s Forest Industry by the Numbers
15,000 – Number of people directly employed the industry
2 – Number of spinoff jobs created for every forest industry job
70 – Number of communities that are supported by the forest industry
4 billion – Number of dollars generated annually by the forest industry for Alberta’s economy
320 – Megawatts (MW) of power generated by Alberta’s forest industry using materials that were previously wasted
80 – The City of Grande Prairie’s approximate power demand (in MW)
0 – The number of additional trees that are cut down to make power (only by-products like bark and sawdust are used for power generation)
65 million – Number of trees planted by the industry in 2015
1.5 billion – Dollars of capital investment by Alberta’s forest industry between 2011 and 2015
Sector Analysis
LUMBER – AFPA-member companies produced 822 million board feet of lumber in the 1st quarter of 2015 with a value of $312 million. Compared to the 1st quarter of 2014, production increased by 76 million board feet (10.2%) and values increased by $10 million (3.4%). For the 2nd quarter of 2015, companies produced 896 million board feet of lumber valued at $299 million. This represents an increase of 25 million board feet (2.9%) from the 2nd quarter of 2014, but shipment values declined by $19 million (6.1%).
PANELBOARD – AFPA-member panelboard operators produced 301 million square feet of 7/16 inch equivalent product in the 1st quarter of 2015, valued at $96 million. Compared to the 1st quarter of 2014, production increased by 10 million square feet (3.5%), and values increased by $5 million (5.2%). In the 2nd quarter of 2015, companies produced 282 million square feet of panel valued at $88 million. Compared to the 2nd quarter of 2014, panel production declined 8 million square feet (2.6%) and values dropped by $3 million (3%).
PULP & PAPER – Pulp and paper sector production by AFPA-member companies for the 1st quarter of 2015 was 378,100 air dried metric tonnes (ADMT) valued at $342 million. Production was down 10,500 ADMT (2.7%) from the same period in 2014, but stronger prices caused values to increase by $17 million (5.1%). In the 2nd quarter of 2015, pulp and paper production was
376,300 ADMT valued at $331 million. This represents a decline of 15,000 ADMT (3.8%) from the 2nd quarter of 2014, while values increased $12.6 million (4%).
Production Figures and Values – (2014 and 2015)
|
Lumber |
2014 |
2015 |
||
|
Year/Quarter |
Production (mmfbm) |
$C Value (000,000s) |
Production (mmfbm) |
$C Value (000,000s) |
|
1st Quarter |
746.4 |
$301.6 |
822.3 |
$311.8 |
|
2nd Quarter |
871.5 |
$318.2 |
896.4 |
$298.8 |
|
3rd Quarter |
883.9 |
$342.3 |
||
|
4th Quarter |
806.8 |
$342.8 |
||
|
Yearly Totals |
3,308.6 |
$1,304.9 |
1,718.7 |
$610.6 |
Source: Random Lengths (S-P-F, Western Kiln Dried 2×4, STD&BTR, Random, Prices Net FOB Mill)
|
Panelboard |
2014 |
2015 |
||
|
Year/Quarter |
Production (mm sq ft) |
$C Value (000,000s) |
Production (mm sq ft) |
$C Value (000,000s) |
| 1st Quarter |
290.9 |
$91.5 |
301.1 |
$96.2 |
| 2nd Quarter |
289.8 |
$91.2 |
282.1 |
$88.4 |
| 3rd Quarter |
264.3 |
$85.2 |
||
| 4th Quarter |
286.6 |
$93.5 |
||
| Yearly Totals |
1,131.6 |
$361.4 |
$583.2 |
$184.6 |
Source: Random Lengths, Madison’s Lumber Reporter
|
Pulp and Paper |
2014 |
2015 |
||
|
Year/Quarter |
Production (Thousand Air Dried Metric Tonnes) |
$C Value |
Production (Thousand Air Dried Metric Tonnes) |
$C Value (000,000s) |
| 1st Quarter |
388.5 |
$324.9 |
378.1 |
$341.6 |
| 2nd Quarter |
391.3 |
$318.6 |
376.3 |
$331.2 |
| 3rd Quarter |
339.9 |
$268.2 |
||
| 4th Quarter |
365.0 |
$308.5 |
||
| Yearly Totals |
1484.7 |
$1,220.2 |
754.3 |
$672.8 |
Source: Pulp & Paper Week – Resource Information Systems Incorporated
CUMULATIVE TOTALS – ALL AFPA SECTORS
Q1 2014 $718,000,000 Q1 2015 $749,640,000
Q2 2014 $727,910,000 Q2 2015 $718,412,000