The pulp and paper sector is facing increased global competition, growing concerns about fibre availability and affordability and rising pressures from the strong Canadian dollar.
While B.C.’s pulp and paper sector is at a crossroads with respect to its future prospects, the B.C. Pulp and Paper Task Force believes that sound public policy that fosters growth and increased competitiveness for the pulp and paper sector can help it be a significant contributor to the B.C. economy for years to come.
Challenges
- Due to poor market conditions, the pulp and paper industry is not well equipped to compete in global markets, as capital assets are older than in competing jurisdictions and the reinvestment rate is below the level required to be sustainable.
- The industry has achieved only a four per cent return on capital employed over the past 15 years, which is far below the minimum 12 per cent return expected for a healthy industry.
- B.C.’s large supply of high quality fibre is at risk. The ongoing pine beetle infestation will reduce interior harvest volumes by more than 25% in the next 10 years.
- There is potentially a growing use for biomass. In developing new forest policy, decision makers are challenged with balancing the needs of pulp and paper mills that generate much of their electrical power needs from biomass, with a desire to develop an independent power industry.
Opportunities
- The road to renewal is clear — consolidation, restructuring and subsequent reinvestment in world-class assets. The industry needs fewer, larger companies that are better able to compete.
- Significant capital investments in B.C.’s pulp and paper sector can be encouraged by:
- developing and supporting energy policies that provide revenue incentives for biomass-based energy produced by the pulp and paper sector;
- establishing a tax structure—particularly municipal property tax rates—that is more in line with competing jurisdictions;
- supporting employee training and development at all levels, including apprenticeships, technical training, and management training; and
- funding research that supports the sawmill sector making a successful transition to post-pine beetle forest conditions.
See: Future Development of BC’s Pulp and Paper Industry, Poyry Forest Industry Consulting.