bc-forest-industry-economic-impact-study

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3. PROFILE OF THE BC FOREST INDUSTRY
INDUSTRY OVERVIEW
The BC forest industry is a key contributor to the BC economy and is important to the social fabric and
economic well-being of many communities throughout the province. Through its many activities, the industry
provides employment and economic opportunities, generates government revenue and develops
relationships with First Nations communities. In this section, we provide an overview of the industry and its
activities.
Forest Regions and Fibre Supply
In total, roughly 55 million hectares of BC’s total land base is considered productive forests. These forests
provide a diverse and abundant supply of timber. Tree species from BC forests are primarily coniferous,
and include douglas-fir, western hemlock, amabilis fir, western red cedar, lodgepole pine and interior
spruce. The BC government issues timber tenures, allowing companies to harvest timber in exchange for
stumpage fees and forest management responsibilities. 24
The industry is divided into two main regions, coast and interior. The coast region produces a wide variety
of high-quality products from larger diameter logs and sought-after species, such as douglas-fir, hemlock
and western red cedar. Fibre costs are high in the coast region, and the industry focuses on making
products that maximize value from the forest resource.
The interior region typically produces structural building products from smaller diameter logs and species,
such as spruce, pine and fir. The interior mills compete in global commodity markets, and focus on finding
efficiencies, maximizing production and minimizing costs. The interior region produces more than 80
percent of BC’s softwood lumber. 25
By 2016, the mountain pine beetle infestation in the interior region is projected to infect or destroy 58 percent
of the merchantable lodgepole pine in the province. As a result of the infestation, there has been a 20
percent reduction in the annual allowable harvest from levels prior to the beetle infestation. A tightening
timber supply is projected to lead to higher fibre costs as the industry’s sawmill, panel, pulp and paper,
wood pellet and bioenergy operations compete for a reduced supply of timber. 26
Sectors and Size of the Industry
BC forest industry operations can be categorised into six main sectors. These are:
Primary manufacturing.
Forest management.
Secondary manufacturing.
Fibre supply and wholesale.
Forest innovation.
Silviculture.
In aggregate, the total revenue from these sectors was estimated at
approximately $15.7 billion in 2013 27 (Table 1). Approximately 62 percent of
this revenue is estimated to have been generated from the interior region
and 38 percent from the coast region 28 (Figure 1). The largest sectors were
primary manufacturing, forest management and secondary manufacturing,
which together accounted for more than 95 percent of total industry revenue.
Figure 1: Regional Share
of BC Forest Industry
Revenue
38%
Coast
62%
Interior
24
Trade and Invest in British Columbia, available here: http://www.britishcolumbia.ca/invest/industry-sectors/forestry.aspx
25
Council of Forest Industries, Forest Facts, available here: http://www.cofi.org/educationcareers/forest-education-links/forest-facts/
26
Girvan, J., Hall, M. Van Leeuwen, G., “B.C. Mountain Pine Beetle: Evolving Impacts and Opportunities” International Wood
Markets, May 2012. Web April 2013
27
MNP estimate. Please see Appendix B for a description of our calculations
28
Ibid
BC FOREST INDUSTRY: ECONOMIC IMPACT STUDY
MNP LLP