Innovation and Competitiveness in Canada's Forests

(Photo: R.Gal, with permission from Papiers Masson)

The past couple of years have been anything but smooth for Canada’s forest industry. As described elsewhere in this report (see “Industry and Communities in Transition” in this report), a number of forces—including changes in supply and demand, competition from low-cost producers, the softwood lumber dispute, higher input costs, a strong Canadian dollar—have combined to create an unsettled climate for this vital Canadian industry.

Yet the demand for forest products is there. In fact, it is growing. According to the Forest Products Association of Canada, the global appetite for forest products is expected to increase by US$4–7 billion a year for the next few years. If the Canadian industry is to help satisfy this appetite, it must adapt to the current climate. Our country’s traditional advantages—high-quality fibre that is easy to access and low energy costs—have eroded over time. To keep pace, the forest sector must become more responsive to customers’ needs, more diversified, more focused on getting maximum value from the forest resource. The message is clear—innovate or stagnate.

Innovation and the Forest Sector

At first glance, innovation seems like a simple concept: the creation or adoption of something new. But in the forest sector, innovation means many things. It may mean bringing a new or improved technology, process or service into a company. It may mean designing a new or improved product. It may mean changing the way a firm is organized or conducts its business. It may mean tapping into human ingenuity to dream up processes, products and solutions that no one has ever thought of before.

Innovation has long shaped Canada’s forest sector. It gave rise to hardwood pulping, to oriented strandboard, to sawmills able to handle small-diameter logs and to products made from undervalued species. Thanks to innovation, the sector has improved its environmental record by reducing carbon dioxide emissions, using more biofuel for energy and leading the world in certification of sustainable forest management. In some cases, the forest sector has developed its own innovations. In others, it has looked beyond itself, becoming a leader in adopting new technologies from other manufacturing sectors and from service providers.

Forest innovation has gone through several phases. Initially, because harvesting was the main industrial activity, research focused on improving how trees were removed from the forest. When the sector shifted its focus to production, research shifted to improving productivity and trimming manufacturing costs. Recently, the sector has taken another turn. In the face of stiff competition, marketing has become a key issue. Research is following suit, concentrating on innovations that are more customer-driven, more tailored to the marketplace.

With its history of innovation, Canada’s forest sector has grown into a high-tech industry that boasts leading-edge technology. Today’s mill employees are more likely to spend their days operating computers than handling hydraulic controls. Yet observers generally agree that the industry has further to go if it hopes to compete head on with other forest producers, many of which outstrip Canada in research and development (R&D) spending. The Canadian forest sector needs to push harder to improve productivity and environmental performance. It needs to develop technologies and products that use fibre more efficiently. It needs to develop more uses for residues, new by-products, alternative fuels. It needs to expand its markets and become more nimble and responsive to customers’ expectations. It needs to think ahead, to create ground-breaking products and to find new markets for those products.

The way to innovate effectively, say many in the sector, is to harness the research conducted across the country and the funding available at different levels so that it serves a more unified purpose—namely, to maximize the sustainability, value and marketability of the country’s forest resource. With the competitiveness of Canada’s forest industry hanging in the balance, it is time for innovative research to be seen, not as a cost, but as an investment.

Who are the Innovators?

Innovation in Canada’s forest sector seldom comes about because of one scientist in one university lab, or one product designer in one company, or one technology specialist in one research centre. It comes about through a unique blend of public- and private-sector researchers, facilities, funding and ideas. 

Governments, companies, universities, research institutes—all are vital links in Canada’s forest innovation chain. Government researchers, at both the federal and provincial levels, tend to focus on forestry. The Canadian Forest Service, for instance, is the largest forest science research organization in Canada, with five research centres across the country. Forest companies, on the other hand, concentrate on more competitive R&D related to products and processes; they often employ technology and service providers in their quest for innovation. As for academia, eight Canadian universities house forestry faculties whose work ranges from forest genetics to silviculture to processing to product development. Many other post-secondary institutions contribute to forest R&D through other disciplines, including biology, engineering and environmental studies.

Canada’s forest sector is particularly fortunate to be able to draw on the expertise of three non-profit forest research institutes. These institutes, with funding from industry as well as support from governments (especially in the cases of FERIC and Forintek), concentrate on specific areas of forest R&D.

• FERIC (Forest Engineering Research Institute of Canada) does field-oriented research into the harvesting, processing and transportation of forest resources, as well as into silvicultural operations and small-scale forest operations. FERIC has dozens of projects active across Canada at any given time, each run by a team of scientists, researchers, industry representatives, government partners, universities, technology firms, equipment manufacturers and forest contractors.

• Forintek Canada Corp. carries out research for the wood products industry. Forintek focuses on optimizing manufacturing processes, getting higher-value products from the available resource and meeting customers’ needs for performance, durability and affordability. By transferring technology to its members, Forintek helps the industry take advantage of market opportunities created by technological innovation.

• Paprican (Pulp and Paper Research Institute of Canada) conducts research intended to improve the competitiveness of the pulp and paper industry. Transferring technology to meet its members’ needs is a large part of Paprican’s mandate. The institute builds its research programs around issues such as product quality and value, cost competitiveness, environmental responsibility and sustainability.

For the forest sector, innovation is crucial at every stage—from stewardship and stand management in the forest to computerized technologies in the mill to product offerings in the market. As competition in the global forest industry heats up, many are realizing the importance of focusing Canada’s research capabilities, lining them up so they serve a common end.

Focusing Innovation

To strengthen its global competitiveness, Canada’s forest sector has been re-examining the spread-out research structure that has served it in the past. In 2003, senior representatives from governments and the forest industry got together to create a national innovation strategy for the forest sector. The newly formed Canadian Forest Innovation Council (CFIC) noted, among other things, that the forest sector needs to place more emphasis on “upstream” research—research into how the forest itself (the qualities of wood and species, for instance) links upward to issues of productivity and competitiveness in the marketplace.

In response to CFIC’s observation, on March 31, 2006, the Canadian Forest Service unveiled the new national Fibre Centre. This virtual centre—virtual in that it groups together existing research jobs and facilities rather than creating new ones—will develop a research program with three main aims: improving forest productivity, enhancing fibre quality and improving the forest balance sheet by either upping revenues or cutting production costs. (For more detail,
see “Change and Innovation—Keeping Canada a Forestry Leader” in this report.)

In a parallel move, work is also underway to restructure the three forest research institutes. The hope is that eventually the Fibre Centre and the institutes will form the core of a new national institute for research into forest products, expected to be the largest of its kind in the world.

Other plans are in the works to establish regional research “clusters” across the country. These clusters will enable provincial governments, universities, industry and other partners to work together on innovations useful to their regions and to bring those innovations to market.

Two such clusters were launched in 2005. The first is science enterprise Algoma. Headquartered in Sault Ste. Marie, Ontario, this cluster focuses on science-based economic development and commercialization. Among other activities, the cluster is currently working to establish the proposed Centre for Excellence in Forest Innovation, as well as an invasive alien species centre. It is also involved in bioproducts and bioenergy activities. The second cluster, Forest Research Opportunity B.C., is profiled below.

Innovation has already carried Canada’s forest sector far. From the earliest harvesting equipment to the newest GPS systems, from turn-of-the-century sawmills to the latest high-speed paper machines, the forest sector has changed with the times, then changed again. The willingness to change, to invent, to be flexible, to tap into ingenuity—this is the most valuable asset of Canada’s forest sector.