The Forestry Industry on Vancouver Island
While the economic contribution of the forest sector has declined on Vancouver Island, forestry is still an important part of the economy. Since 2010 the sector has been slowly recovering from the production declines that resulted from the collapse of the US housing market. This recovery has been aided by increased demand from China for commodity products including pulp, logs and lumber and more recently improvements in the US housing market.
Forestry continued on a slow and steady growth path in 2015. This was reflected in increased shipments of both Forest Products and Logs through Vancouver Island ports which were up approximately 12 percent and 8 percent respectively year over year. Overall employment in the sector remained at approximately 11,000; however, there was an increase in employment related to Forestry and Logging activities and a significant decline in Pulp and Paper related employment. These changes in employment are consistent with the longer term trends in the industry. It should be noted that the drop in employment in Pulp and Paper is likely at least partly related to the Port Alice pulp mill shutdown being extended indefinitely due to weak market conditions for dissolving pulp.
There is some indication that growth in Forestry production may be moderate in the near future. Demand from Asia is continuing to decline while demand from the US is increasing. This resulted in a net increase in BC Forest Products exports in the first six months of 2016. However, shipments to the US are likely being influenced by the expiry of the Softwood Lumber Agreement in October 2015 and the resulting 12 month grace period which is providing increased access to the US market. As a new agreement was not reached by October 2016, Canadian exports of softwood lumber to the US may be subject to tariffs. Should this happen, shipments to the US market are expected to moderate somewhat as Canadian lumber loses its price advantage.
For more detailed information on this sector including product volumes, employment, wages and number of business, consult recent editions of VIEA’s State of the Island Economic Report.