New Brunswick Forest Industry Economic Impacts March 2018 - - PowerPoint PPT Presentation

New Brunswick Forest Industry Economic Impacts

March 2018

Introduction

Introduction

The aim is to inform policy-makers and the public about the contribution

• f the forest sector to the New

Brunswick and Canadian economies.

Purpose Scope

Pulp & Paper Wood Products Forestry & Logging Support Activities

Sector Overview

Source: Statistics Canada Cansim 552-0002.

NB firms are big (employee size)

Forestry and Logging – 405 NB firms Wood Products – 117 NB firms Pulp & Paper – 20 NB firms

68% 70% 62% 69% 22% 20% 20% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% NB NS QC ON 500+ 200 to 499 100 to 199 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4 14% 19% 18% 22% 16% 15% 19% 17% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% NB NS QC ON 500+ 200 to 499 100 to 199 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4 47% 58% 55% 62% 26% 20% 19% 19% 10% 15% 9% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% NB NS QC ON 500+ 200 to 499 100 to 199 50 to 99 20 to 49 10 to 19 5 to 9 1 to 4

Note: Over 600 firms in the sector Including 63 Support Services firms

NB NB NB

Sector Overview

Harvest volumes have made strong recovery

Sources: New Brunswick Department of Energy and Resource Development, 2018

Annual volumes by land tenure Harvest recovery since 2006 by jurisdiction

50 60 70 80 90 100 110 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % NB ME NS

• 1,000,000
• 2,000,000
• 3,000,000
• 4,000,000
• 5,000,000
• 6,000,000
• 7,000,000
• 8,000,000
• 9,000,000
• 10,000,000
• 2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Non-industrial Industrial Crown Total

Sector Overview

Recovery since 2009 has been strong, but not back to previous highs. Total exports in 2016 were $1.7 billion, with 61% in pulp and paper, 37% in wood products, and 2% in primary wood. Since 2009, wood products ↑138%, and pulp and paper ↑3%.

Product Manufacturing

Source: Statistics Canada Trade Data Online.

• $-
• $500,000,000
• $1,000,000,000
• $1,500,000,000
• $2,000,000,000
• $2,500,000,000
• 2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Wood products Pulp & Paper Primary products

Sector Overview

2005 % share 2016 % share U.S.A. 1,670 86% 1,337 78% India 48 2% 121 7% China 10 0% 39 2%

• S. & C. America

24 1% 27 2% E.U. 84 4% 26 2% Other 96 7% 174 9% Total 1,932 100% 1,724 100%

Forest product exports by country (2005, 2016)

Sources: Canadian Forest Service, 2017; Industry Canada Trade Data Online, 2017.

• NB exports to over 60 countries and represents 15% of provincial exports.

Economic Impacts

The New Brunswick forest industry generated over $1.7 billion in economic impact in 2016.

$3.2 billion direct OUTPUT $699 million direct GDP 9,725 direct JOBS $529 million direct INCOME $2.6 billion spinoff OUTPUT $989 million spinoff GDP 14,142 spinoff JOBS $649 million Spinoff INCOME

DIRECT IMPACT SPINOFF IMPACT 2016 NB Economic Impacts – Direct and Spinoff

Sources: Gardner Pinfold, Statistics Canada, Canadian Forest Service Note: Direct is processing (mills) and spinoffs include logging and support services.

Economic Impact Results

Direct NB Canada Output $3.2 billion $5.9 billion $8.7 billion GDP $699 million $1.7 billion $3.1 billion Jobs 9,725 23,867 35,435 Income $529 million $1.2 billion $1.9 billion

Total 2016 Economic Impact – Direct and Total impacts

Source: Gardner Pinfold, Statistics Canada Interprovincial Input-Output Model, 2014

• Supply chain of 2,500+ firms in the province (8% of NB firms).
• One in 14 NB jobs are linked to forestry sector.
• NB contributes significant impacts to other parts of Canada.

Economic Impact Results

Taxes on goods and services purchased Total Provincial $109 million Federal $39 million Income taxes Provincial $90 million Federal $117 million

Total 2015 Economic Impact – Taxes

Source: Gardner Pinfold, Statistics Canada Interprovincial Input-Output Model, 2014; Government of New Brunswick 2016/17 Budget - Main Estimates

• Forest sector tax revenues to the provincial government represent

$1 of every $42 worth of expenditure in the 2016/17 budget.

Economic Impact Results

Crown harvest – Stumpage and fee revenues

Source: New Brunswick Department of Energy and Resource Development, 2018

• 1,000,000
• 2,000,000
• 3,000,000
• 4,000,000
• 5,000,000
• 6,000,000
• $-
• $10,000
• $20,000
• $30,000
• $40,000
• $50,000
• $60,000
• $70,000
• $80,000
• $90,000
• 2008

2009 2010 2011 2012 2013 2014 2015 2016 Stumpage & fees Crown volume (m3)

Economic Impact Results

2016 Spending Map*

Source: Survey of Forest NB manufacturing members.

Economic Impact Results

2016 Employee Map

Source: Survey of Forest NB manufacturing members.

Economic Impact Results

County and Electoral District Dependence on Forestry*

*Total income and job impacts distributed according to mill spending and jobs by postal code

Rank County (15) Income ($000s) County% 1 Restigouche County $232,524 34.9% 2 Madawaska County $142,134 18.4% 3 Northumberland County $117,540 11.8% 4 Victoria County $44,077 11.4% Rank Provincial Electoral District (49) Income ($000s) County% 1 Restigouche West $221,026 33.2% 2 Carleton - Victoria $41,842 8.4% 3 Edmundston - Madawaska Centre $61,165 7.9% 4 Madawaska Les Lacs Edmundston $53,180 6.9% Rank Federal Electoral District (10) Income ($000s) County% 1 Madawaska - Restigouche $363,159 26.6% 2 New Brunswick Southwest $196,911 11.3% 3 Miramichi $129,038 10.7% 4 Fundy Royal $130,156 5.6%

Economic Impact Results

Average income by county

Sources: 2016 Census; StatCan Input-Output Model, 2014 Note: Forest manufacturing 2016 average is for wood product and pulp and paper product employed individuals. County averages are for individual employment income.

• 29,124
• 54,419
• 20,000

40,000 60,000 80,000

• Queens

Victoria Restigouche Gloucester Madawaska Saint John Kent Northumberland Charlotte Carleton New Brunswick Westmorland York Albert Sunbury Kings Forest Manufacturing Avg.

Economic Impact Results

One of the top private GDP generators in NB

Note: NAICS level-1 sectors are larger, but this compares forest activities versus others at the same NAICS level-2.

200 400 600 800 1000 1200 Furniture and related product manufacturing Machinery manufacturing Non-metallic mineral product manufacturing Beverage and tobacco product manufacturing Plastics and rubber products manufacturing

• Fabricated

metal product manufacturing Fishing, hunting and trapping Mining and quarrying (except

• il

and gas) Crop and animal production Primary metal manufacturing Petroleum and coal product manufacturing Food manufacturing Electric power generation, transmission and distribution Forest products (paper and wood manufacturing, logging) Construction (residential, non-residential, engineering)

Sector Competitiveness

NB NS QC ON Canada Forestry & log Capital 8.0% 1.9% 2.3% 3.5% 4.1% Repair 4.0% 0.0% 0.5% 2.6% 2.8% Pulp & paper Capital 5.6% 7.3% 3.3% 1.5% 3.2% Repair 3.9% 3.2% 2.3% 1.8% 2.8% Wood product Capital 1.3% 2.0% 2.3% 2.5% 3.7% Repair 0.8% 1.2% 1.9% 1.8% 2.1%

Sources: Canadian Forest Service, 2017; StatCan Cansim Table 029-0045 Note: Capital and repair investment average for last five years

Capital and repair investment % of revenues, 2016

Sector Competitiveness

NB NS QC ON Canada Forestry & log Revenu e $463 $389 $426 $363 $448

(532 NB firms)

Net% 9.3% 10.3% 12.4% 14.6% 15.0% Support activity Revenu e $711 $600 $579 $743 $584

(73 NB firms)

Net% 6.2% 12.3% 13.5% 13.5% 11.2% Wood product Revenu e $753 $529 $741 $669 $683

(114 firms)

Net% 0.6% 1.7% 5.5% 4.9% 5.5%

Sources: Industry Canada Financial Performance Data, 2018. Small firms have revenues from $30K to $5M.

Forestry financial performance of small firms, 2015

Note: Pulp and Paper net profit 6.8% for Canada (not available by province).

Sector Competitiveness

Truck transportation as a percentage

• f operating expenses are highest in

NB. Pulpwood and petroleum products are second highest for NB.

Operating Expenses – Pulp and Paper

0% 2% 4% 6% 8% 10% 12% 14% Electricity Pulpwood Truck transportation services Petroleum products Taxes on products Wood by- products NS NB PQ ON

Pulp and Paper Industry Operating Expenses as % of Total, 2015

Source: Statistics Canada, CANSIM Table 381-0035

Industry Competitiveness

Index numbers are a way of expressing the difference between two measurements by designating one number as the "base", giving it the value 100 and then expressing the second number as a percentage of the first. In this case, the highest electricity rates in Nova Scotia are set to 100, and the

• ther three provinces are examined in

relative terms. New Brunswick has the second highest rates across each power usage range, except 40kw and 5,000kw.

10 20 30 40 50 60 70 80 90 100 40 kW 500 kW 1,000 kW 2,500 kW 5,000 kW 50,000 kW

Nova Scotia New Brunswick Quebec Ontario

Industrial Electricity Rates

Source: http://www.hydroquebec.com/publications/en/docs/comparaison-electricity-prices/comp_2015_en.pdf

Indexed Industrial Electricity Rates by Monthly Power Demand and Province 2015

Sector Competitiveness

Low* High Average

• 1. Operational efficiency

15% 60% 25%

• 2. Expand in new markets

10% 100% 20%

• 3. Seek lower cost inputs

5% 33% 12%

• 4. Process innovation

5% 25% 9%

• 5. Product innovation

5% 25% 8%

• 6. Invest in labour development

5% 20% 8%

• 7. Strategic partnerships

5% 20% 7%

• 8. Improve regulatory environment

5% 10% 5%

• 9. Invest in marketing

5% 5% 3%

• 10. Invest in research

5% 5% 3%

Source: Survey of Forest NB manufacturing members. * Some firms report zero for strategies, the low figure is for those that report any investment in the strategy.

Growth strategies of NB mills, 2017

Note: Most firms invest in at least 5 strategies and have done so for many years.