Step aside lumber, the forestry sector needs to embrace state-of-the-art technologies if it’s ever going to shed its cyclical nature.
This according to proponents of Canada’s bio-pathways project, an industry-led initiative to seek out and develop new ways to make the most out of every fibre of wood in the nation’s forests.
Although the project was launched in 2009, bio-pathways took a leap forward in Vancouver a few weeks ago when a network of forest companies, investors, high-tech representatives and sustainability experts met at the University of British Columbia to discuss how forest product technologies could be used in other industries.
“We have quite an opportunity to produce a wide variety of additional products at pulp and paper and lumber mills in this country,” said Catherine Cobden, vice-president, economics and regulatory affairs, at the Forest Products Association of Canada (FPAC).
“One of the things [bio-pathways] pointed to was growing business relationships and partnerships with other segments of the economy,” she said.
The focus on cutting-edge technologies began a few years ago when the forest industry was forced to deal with both the pine beetle infestation and the U.S. housing market collapse, a double whammy that bankrupted some companies and forced others to rethink their business model.
Since then, FPAC and other forestry sector organizations have been researching novel ways for wood to be used in everything but lumber and pulp and paper.
Earlier this year, FPAC predicted the global bio-market would total $200 billion in just four years, with Canada accounting for one-quarter of it.
A report envisioning that new market explained how wood fibre could not only be used to generate heat and power but also to manufacture clothing, tires, medicines and even airplane parts.
“What that tells us is not only can we do this stuff with trees, but there’s a real growing market to be served,” said Cobden.
The problem, traditionally, has been getting forestry companies to think beyond dimensional lumber.
David Fung, chairman and CEO of the locally based ACDEG Group of Companies, which has its hands in forest products and biomass energy, said industry has been reluctant to shift away from 2x4 production.
And that’s made it difficult for new forest product technologies to get off the ground.
“We have been abusing our resource because we could afford to,” said Fung.
“The time has come when the world has said, ‘Canada, we don’t need you making those low-value products’ … if we want to maintain our standard of living it’s time to start using our brains.”
But it’s not easy for forestry companies to forget about their bread and butter, especially when the market remains in recovery mode.
That’s why the bio-pathways project has brought together different sectors that could leverage their pocketbooks and know-how to get new technologies off the ground.
“It’s really hard for a commodity-based industry like the forest industry to think about doing this on their own,” said Cobden.
“So what we could do is partner with a chemical company interested in an offering to the marketplace of a biochemical. They already know that market, so the partnership is to bring people together to discuss mutually beneficial relationships.”
One company that’s already working with the forestry sector is Lockheed Martin (NYSE:LMT), one of the world’s largest defence contractors. “We’ve got big eyes and big arms so we’re really out there taking a look to see [in] what other areas this bio-industry is moving, some of them being biochemicals,” said Sean McCarthy, Lockheed’s senior contracts administrator, renewable energy products and solutions.
Although McCarthy wouldn’t provide details, he did say the company is researching how wood fibre could be used to make lightweight bio-composites for use in airplanes.
Lockheed is also investigating the use of bio-fuels to power jets and has built and installed a biomass heat and power plant at its research facilities in New York.
McCarthy is optimistic about the development of the bio-market, saying tree plantations offer fixed costs for businesses while other fuel sources continue to fluctuate.
“You know that what it’s going to cost you today it’s going to cost you 10 years from now. It’s very predictable, very monitored, so it gives great forecastability for a corporation,” McCarthy said. “And it’s renewable, at the end of the day, that’s the very basics of it.”
But the success of Canada and B.C.’s new bio-industry depends on one thing: partnerships.
Said Fung: “The big issue in bio-pathways is how fast can we start moving in that direction?”