The Canadian forest industry is an export-oriented manufacturing sector, accounting for almost 6% of all Canadian exports in 2012 ($28 billion). Traditional forest products form the backbone of the Canadian forest industry, with employment and production being dominated by products such as softwood lumber, northern bleached softwood kraft pulp (NBSK), newsprint, and uncoated printing and writing paper. These products are also what Canada excels with on the world stage. Canada is the largest exporter and second largest producer of softwood lumber, the largest NBSK producer (with more than one-third of world production), and the largest newsprint producer.
Although it contributes less to the GDP than other resource sectors do, the forest sector is still a leading contributor to the Canadian economy. Compared with the minerals and metals sector and the energy sector, for example, the forest sector creates more jobs and exports for every dollar of value added.
Benefits to Canada’s economy
| Sector | Contribution to GDP (billions of dollars) | Exports per dollar of value added | Balance of trade per dollar of value added | Employment per million dollars of value added |
|---|---|---|---|---|
| Forests | $19.8 | $1.44 | $0.97 | 9.34 |
| Minerals and metals | $53.6 | $1.71 | $0.34 | 6.13 |
| Energy | $151.5 | $0.78 | $0.43 | 1.94 |
Trade globalization is changing the market and business environment in which Canadian producers operate. In particular, the rapid growth in demand for forest products in China has fundamentally altered forest sector trade over the past 10 years, leading to what is rapidly becoming a single global market for lumber, pulp and paper. Inventory management decisions in China now have a large influence on the daily operations of many Canadian pulp mills.
These changes are bringing opportunities. For example, market diversification and global price convergence are major benefits to Canadian forest producers, offering a buffer against the cyclical swings and price volatility that have traditionally plagued regional markets.
New and innovative products, materials and services are also being produced in Canada’s forest sector today. These include new building materials, biofuels that can substitute for fossil fuels, and biochemicals that can be used to produce bio-based pharmaceuticals, biodegradable plastics, personal care products and industrial chemicals. The Government of Canada has been supporting the transformation of the forest sector with a number of initiatives to support traditional and new production. Examples are the Investments in Forest Industry Transformation program, the Expanding Market Opportunities program, and the Forest Innovation program.
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