HANSARD
Printed and Published by Nova Scotia Hansard Reporting Services
Mr. John MacDonell (Chairman)
Mr. William Dooks
Mr. William Langille
Mr. Gary Hines
Mr. Charles Parker
Ms. Joan Massey
Mr. Wayne Gaudet
Mr. Keith Colwell
Mr. Gerald Sampson
[Mr. John MacDonell was replaced by Mr. Howard Epstein.]
[Mr. Keith Colwell was replaced by Ms. Diana Whalen.]
In Attendance:
Ms. Mora Stevens
Legislative Committee Clerk
Mr. Jean Claude Savoie
President
Mr. Alain Bossé
General Manager
Mr. Jonathan Levesque
Manager
Mr. John Vautour
Wood Procurement Manager - Westville Division
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HALIFAX, TUESDAY, OCTOBER 19, 2004
STANDING COMMITTEE ON RESOURCES
9:00 A.M.
CHAIRMAN
Mr. John MacDonell
MR. WILLIAM DOOKS (Chairman): Good morning. I bid you all a pleasant good morning. You can see the sun is shining in Halifax, and we ordered the day especially for you folks. I hope you appreciate that. It's nice to have you with us this morning. My name is Bill Dooks, I'm the vice-chairman, and I'll be chairing the presentations and the questions this morning. Just to go over a little bit of how we handle it, we're going to introduce you, and then before we do that we're going to go around and introduce the members. We have all Parties, but at this time we only have representations from the NDP caucus (Interruptions) I'm sorry. I went right past you - a very important member I must say. After we get through the introductions, we're going to ask you to continue with your presentation, after you introduce yourselves. Then we're going to open up the committee for questioning.
[The committee members introduced themselves.]
MR. CHAIRMAN: I would first introduce Mr. Savoie. I would ask you if you would introduce your colleagues.
MR. JEAN CLAUDE SAVOIE: This is Jonathan Levesque, he's the manager in Westville, and he's going to be doing the presentation. This is Alain Bossé, the General Manager of Groupe Savoie. I'm the president. John Vautour is the only local guy in the bunch. He's in charge of purchasing logs and the procurement in Nova Scotia, for the Westville mill.
MR. CHAIRMAN: John, if you're going to speak, you'll have to stand at the mike. We don't have a mike for you there. You can start with your presentation, if you would.
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MR. SAVOIE: What I'll do, before Jonathan starts is I'll give a brief summary of how we got here, how Groupe Savoie got to Nova Scotia and why. First of all, I would like to thank the committee for receiving us. The reason we're here is that a few months ago I got a transcript of one of the meetings you had, and some people were not too kind towards Groupe Savoie, so after reading that I said, well, maybe we should go and show these guys our side of the coin. There's always two sides to a coin. That's the reason for our being here today.
In 1995, a few years before that, we had started the value added in hardwood, we were on the upswing, and we were looking for, maybe, more supply and more opportunities. We asked the consultant from New Brunswick to look at Nova Scotia to see if there was potential there for hardwood, and if there was a potential to try to identify where we should establish ourselves.
Mr. Crawford, after going through the province for a few months and meeting a whole bunch of people, came out with a report, giving me a few options. Following these options, I went around myself, too, and met quite a few people, looked at the resource, looked at what was available, and finally settled in the New Glasgow-Westville area. After meeting Mr. Clinton - he was already doing a little bit of hardwood - we saw that the potential was probably the best in that area for a hardwood sawmill. We were looking for maple and birch, not so much soft maple, which was plentiful almost everywhere in the province.
Also, many years before, my father worked for a company that had a mill in that area, Thorburn Lumber. Ralph Scott, who worked for that company, worked with my father, and I knew him, so I went to see him. But I didn't get very encouraging news from Mr. Scott. He said, oh, we cut it all, there's no more hardwood left in this area. I guess he had forgotten to go take a walk in the woods. (Laughter)
The same thing happened in St. Quentin in 1963, when my father built the first mill there. Everybody was saying, oh, there's only a couple of years left here. There's no use building a mill, no use building a hardwood mill in this area, because there's no hardwood left. People forget that wood grows. After you cut a tree down, another one will grow. Anyway, that mill was built in 1963 in St. Quentin, and the first few years they cut 3 million or 4 million feet, and now we're cutting 60 million this year. Of course, they'll always change a little bit. The quality is not the same, but the volume is certainly there.
Anyway, after meeting Mr. Scott and after his discouraging announcement that there was no hardwood left, I still went ahead and investigated further. Finally in 1996, with Mr. Dickson, we came to an agreement that we start a new company, called Savoie Dickson Hardwood; 1997 was spent planning, preparing the financing, preparing the plans for the mill, procuring the equipment, and in January 1998, we sawed our first board. So that's already six years ago.
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Before we built the hardwood mill, what was happening with all that hardwood? Well, there was one event in particular that changed the game in that species, and it was at Sheet Harbour. By chipping all that low-quality hardwood - well, to chip the low-quality, they had to cut trees down, and when they cut those trees down, some logs came out of it, quite a few logs. That was the basis of the mill in Westville. That market for chips secured a volume of logs for us, and that was the opportunity we seized when it presented itself.
Also, before that time, there were quite a few logs being produced in the province, but a lot of them ended up in firewood and a lot of them ended up on trucks going west. We met some, even yesterday, coming in, nice logs going out of the province. There were two markets for logs, there was the export market and there was firewood, and then Sheet Harbour came on. That also created a nice supply of logs for us. That was the basis or the reasoning behind establishing the mill here in Nova Scotia. We felt that we could find enough logs to operate year-round, and most years since we've operated year-round, which is about 10 million, 12 million feet of hardwood lumber produced every year.
That's a short summary, as short as I can make it, how we came about building a mill here in Nova Scotia.
MR. CHAIRMAN: Thank you very much. At this time I will take questions starting with Charlie Parker. (Interruption) I'm really having a difficult problem here today, I'll tell you. I apologize for that. Not that I'm not paying attention, it's just things are very quiet, we're usually a bit more vocal, I guess. So we'll continue with the presentation.
MR. JONATHAN LEVESQUE: Here, under Agenda, is a quick overview of Groupe Savoie. First of all, what is Groupe Savoie? Why is Groupe Savoie in Nova Scotia? What are we doing good for Nova Scotia? What are our challenges in the province and what is our future in Nova Scotia?
First of all, Groupe Savoie started in 1978 - it started before but officially in 1978 - with a small hardwood mill only using quality sawlogs, located in St. Quentin, New Brunswick. Here is a picture of the mill at that time. Today, that same mill operates on three shifts, production is over 30 million fbm annually, and it employs probably over 60 or 70 people.
In 1984, we started the pallet assembly operation and not to be too confusing, but when you saw grade lumber at every Groupe Savoie sawmill, 50 per cent of all that grade lumber is low-quality grade lumber. So you reuse that lumber to make pallets with it. So in 1984, that was one of the first value-added products at the St. Quentin operation. Today, 20 years after, with lots of technology and everything, we can produce up to 2 million pallets annually at that plant in St. Quentin.
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In 1989, we started the first production of pallet wood; basically, it's recovering sawables from chipper wood. This is only sawing pallet wood, pure pallet wood. It's not pallet wood from the grade lumber, it's just specific pallet wood. As you can see from this picture, it's small, crooked stuff that we started using and recovering more and more sawables. Today, that plant is producing over 25 million board feet per year. We go down to a minimum diameter of 4 inches and we market that product all over Canada and the States.
In 1994, it was the startup of the component plant, using the lumber from the grade lumber mill. So the medium-end to high-end lumber quality was being used at that new plant. Also, in 1994 was the acquisition of Pallets Plus in Moncton, New Brunswick. That's another pallet plant in Moncton.
Today, the component plant is producing flooring and furniture material, shipped around the world. So here's a picture of making panels and here's a package of flooring from our company.
Today, if you go back to Pallets Plus, there's a production capacity of over 200,000 pallets annually and also they're recycling over 60,000 pallets per year. So that's another kind of value added too.
[9:15 a.m.]
In 1998, it was the expansion into Nova Scotia to what's called today the Westville Division. It started as a partnership with a local entrepreneur to start Savoie Dickson Hardwood Limited. In 2001 it became Groupe Savoie, Westville Division. Today, the Westville Division is producing great lumber, pallet wood and cut to length pallet wood, producing over 10 million feet per year, only on one shift, though. Overall, there are four plants in St. Quentin, New Brunswick; one plant in Moncton; and one plant in Westville, Nova Scotia, altogether employing over 500 people and in sales it is over $80 million a year. So there's a quick overview of the three plants that we have.
Today's products: lumber, furniture components, flooring, cut to length pallet wood, pallets, wood chips and hog fuel. Our vision is to become an integrated company known globally for the quality of our forest products.
Why is Groupe Savoie Inc. in Nova Scotia? It's a little bit like Jean Claude said, one reason is the workforce: the availability; it is diversified, because we need electricians, millwrights, scalers and a little bit of everything; and also for their quality and knowledge. Those are good assets.
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Availability of the resource. There is as much hardwood in Nova Scotia as in New Brunswick. Before 1998, as Jean Claude said, there was a limited hardwood market. Overall, there is a good fibre quality.
Infrastructure: well-maintained roads, accessibility and customized services. This is like what we were talking about, roads, we need to access not only around the mill, we have to go a certain distance, and it's really accessible. Also, around where we are in Westville, we have machine shops, part retailers and that is really good. As a result, Groupe Savoie saw the potential for a strong and viable hardwood business in this province.
What are we contributing to the Province of Nova Scotia? We have 40 direct employees, over $1.5 million in wages annually. It is at least four times this amount in spinoffs. Just imagine all the logs we're purchasing, parts, everything. It is approximately a $7 million investment so far. Also, we created a steady market for all grades of hardwood sawables. It's not only the nice-looking logs that we're sawing, we're sawing a blend of different grades. I'm going to explain that to you a little later.
The first one, we are using pallet wood and what we call pallet wood is we go down to a 6-inch diameter and it's all hardwood species. If it's 6 inch - and as you can see in this picture, there are even the bigger logs there and they are kind of rough-shape logs - we can do something with it. This is one thing we started at our Westville operation. The other one we call a grade 3 sawlog and it is a minimum of 8 inches in diameter and if we can find one clear face on that log, this is what we call a grade 3 log. Also, there is what we call the grade 2 and better sawlog, it's down to 10 inches in diameter and at least two clear faces on those kinds of logs.
Here is how we distribute that at the mill in Westville: 40 per cent is grade 2 and higher; 13 per cent is pure, red maple sawlogs quality; 20 per cent is grade 3, and it includes birch, oak, sugar maple, ash - the 20 per cent is what we call the pallet wood grade; and 5 per cent aspen. So as you can see, 60 per cent of all we are sawing in Westville is considered low-grade sawables.
Another thing we contribute to the Province of Nova Scotia, we supply value-added facilities within the province. You're going to see in the booklet we provided, at the end, there's a list of all our customers, and also a log price list with the specs and everything.
The production at Westville, how it's being distributed. As you can see, in Nova Scotia, our sales are increasing. So far this year, if you look at the end of September, we sold more lumber within the province than the total for 2003. The year-end forecast is going to be close to double what we sold last year, within the province. We also use some of that lumber that goes through our operation in St. Quentin, but there's also a bunch of that volume that goes to other New Brunswick customers, Quebec, Ontario. It's available. A lot of that volume could stay within the province, if there was more demand for it.
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Also, what are we contributing to the province? Forest management. We have trained foresters and technicians promoting hardwood management, and ongoing training with contractors, both manual and mechanical. Just lately, we started having our own contractor cutting only for Groupe Savoie. It's kind of hard for us because we don't have much land to manage, but it's a slow start. That's another thing to add to it.
Here's another example of a lot in Antigonish County that was selective cutting last year. Here's a picture. That lot was cut. There's still some standing trees on it, and that's what we call selective cutting.
What are our challenges? One of them is the lack of supply. Since we opened in 1999, the mill has been inoperable for several weeks because of a lack of supply. Before, and still today, there are Nova Scotian saw logs leaving the province, purchased by other sawmills and brokers. So, we have a problem in that we can't run year-round, because of a lack of supply, and at the same time there are logs leaving the province, too.
Here's a little bit on where our supply comes from. As you can see in the first column, it's the private supply. This is our major source of supply. After we have the industrial, a little bit of Crown, and importation. If you look at the import, this year close to 20 per cent of all our supply came from out of the province. Our trucks, coming with logs, were meeting other trucks leaving the province with logs, too. Talking about the private suppliers, we have over 300 private suppliers, if not 400. Some of them, it's one load a year, some it's one load a day or one load a week or a couple of loads a month. That represents $3 million, probably, worth of logs.
Industrials, we have partnerships with industrials around us, and Crown, too, but none of that is guaranteed. So that's another challenge that we have, the absence of guaranteed supply. Without the guaranteed supply, long-term planning and investment are difficult to achieve. Without a guaranteed supply, customer satisfaction is harder to achieve, too. How can a customer depend on us for making sure he's getting his load a month or a load a week of lumber, if we can't guarantee, yes, we have the logs coming in, too. That's kind of hard for us to manage, customer satisfaction, production and supply at the same time.
Also, another challenge is foreign competition. Over the past several years, many businesses have shut down because they cannot meet the market expectations, including some former customers of Groupe Savoie. Example, Madawaska Flooring of Ontario, Forest Insight, Nova Scotia, Heritage Flooring, New Brunswick, HTM, New Brunswick and lately Nackawic, New Brunswick. It's not because we're in a business that's an easy business. It's tough sometimes, and that's why some people just can't survive, and we can understand, too.
What is our future in Nova Scotia? By solving these issues, Groupe Savoie Westville can expand, maximize the use of the resource, employ more people, and become a substantial
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economic force in the Province of Nova Scotia. This is Westville today, so what will be tomorrow? Thank you.
MR. CHAIRMAN: Thank you. Any further comments before I open up questioning by the committee?
The honourable member for Pictou West.
MR. CHARLES PARKER: Mr. Chairman, I do appreciate the opportunity to go first because I do have to leave early. I thank you for your presentation and as you know, I had an opportunity to visit your mill, along with our Resources Committee Chairman, John MacDonell - unfortunately, Mr. MacDonell couldn't be here today. Anyway, I was impressed with your mill, it seemed to be efficient and as you say, there is a lot of spinoff to our economy and I think about 45 jobs in Westville. I encourage anybody here on the committee, if they have the opportunity, I'm sure your doors are open to show other folks through as well.
I have a few questions I want to ask. First of all on your woodlands operations, I know you don't own a lot of land here in Nova Scotia, I think you do own a fair amount of land in New Brunswick. Can you tell us a little bit about your sustainable harvesting and how you operate that and what you actually do?
MR. SAVOIE: Can I correct you on your point? We don't own a lot of land. We own 200 or 300 acres in New Brunswick. We operate mainly on Crown land and the rest of our supply comes from the large freeholds like Irving and Frasers, IP, or Bowater, now they're called. So we own a couple of hundred acres, that's all.
MR. PARKER: Do you have plans to own more property in either province and if so, what are your sustainable harvesting plans, how would you operate on your own lands?
MR. SAVOIE: Maybe John could expand on the operation side of it. John looks after the contractors, the cutting and the training of contractors.
MR. JOHN VAUTOUR: Currently, we are practising sustainable forestry. We're doing a lot of selection management. We target what we call intermediate hardwood stands, basically, hardwood stands that have been cut probably 15, 20, 25, or 30 years ago, that are six inches in diameter, breast height or bigger. It's really not high-quality hardwood but what we see is if we can thin these stands out, much like a garden where you don't harvest your tomatoes until they're ripe. You have to prune your garden, too, and weed your garden to get your good growth.
We go in and thin these stands out, according to the Department of Natural Resources specs. Our focus is to get wood 10 years down the road. We're looking 10 years down the
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road all the time. It's very difficult to do because not too many people are willing to commit their land to this type of treatment. As you know, we are a softwood oriented province, softwood is still king here, and trying to convince people that thinning is a good treatment is somewhat difficult. We've been working hard with the Department of Natural Resources to promote this and they've been positive and supportive, but it's a difficult process to get somebody to do this.
Most people who own land are not 20 years old, they're basically up there, and they see it as money in the bank. We have to change the attitude of people that it has to be more of a long-term thing.
MR. PARKER: The vast majority of your product is coming off other peoples' lands, either Crown land or other private land, very little off your own land? Any philosophy to have more property or more land?
MR. SAVOIE: The problem we have when that subject comes up, we've talked about that but in Nova Scotia we bought a little bit of land and we're looking for opportunities, but that ties up a lot of capital that we could use maybe better in our own operation, upgrading the sawmill, newer and more efficient equipment. You know that capital comes from profits and some years they are lean. So if we buy a lot of land then the money is all tied up there. There are lots of owners out there who are probably looking for a better management of their land than what was done in the past. So we are kind of working that angle, because people have seen enough clear-cuts in some areas, like destroying hardwoods for no reason, because a lot of hardwood in the past was just gotten rid of to plant, sometimes softwood or just to make a quick buck. So we're trying to change that attitude towards hardwoods being more of a garden that you go every 10 years to harvest a part of it and let the rest grow and improve that hardwood lot. So we're counting on that aspect of the situation.
[9:30 a.m.]
MR. PARKER: If I could change focus a little bit, Mr. Chairman. I want to ask you, and it's getting away from your own woodlands, but, as you know, your biggest challenge then is getting the product and you're dependent on others, I guess on Crown land or other private people. That's probably your biggest challenge, making sure that you have enough supply, enough product to make your mill go.
MR. SAVOIE: We know the province is working towards a different management system than what they have now and they have looked at New Brunswick and what we hear in the backrooms is that maybe it's going to be that way. That system in New Brunswick has permitted us to grow, because we have a guaranteed supply for at least 50 per cent of our supply and then the rest we get on the market but we have that base. Nova Scotia would probably be more like 20 or 25 per cent maybe because of the land base that the Crown owns here. But that base makes you more secure and then you can build on it.
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MR. PARKER: Do you have an arrangement with Stora on the Crown lands in the seven eastern provinces?
MR. SAVOIE: We were on the verge of doing quite a bit of . . .
MR. LEVESQUE: We have some things but it's not guaranteed.
MR. SAVOIE: Because of Sheet Harbour, it all went down the tubes because they stopped buying pulpwood, so if you can't sell the pulpwood, you don't cut the tree down, because the log is a small portion of the tree, hardwoods it's basically 10 per cent, maybe 20 per cent in good stands, sawlogs and the rest is pulpwood. If you can't sell the pulpwood, you won't cut the trees down.
MR. PARKER: Do you have an arrangement with the Sheet Harbour people?
MR. SAVOIE: Well, the pulpwood from Stora was going there and since they're slowing down their operation that's putting a lot - we were on the verge of starting a second shift in Westville and when that happened, they stopped buying pulpwood, well, that was put on hold.
MR. PARKER: So some uncertainties, I guess, around your supply.
MR. LEVESQUE: Yes.
MR. SAVOIE: A lot of it has to do with the strong Canadian dollar, markets for pulp are weaker than they should be, there are different reasons that we can't do anything about.
MR. PARKER: I have just one final question, Mr. Chairman, if I could. I guess this has been the difficulty and perhaps the reason you're here today has been concern over other smaller mills that, perhaps, also are struggling to get a supply of logs or perhaps green lumber or both, and we've heard that in the past from others who have said they can't get it because it is all going to Savoie. Well, I would just like your comments on that.
MR. SAVOIE: Maybe I can explain what happened there is that a lot of these little mills were using premium grade logs only, the nicest logs and the rest went for firewood or whatever, chips - I don't know where it went - or exported out of the province. Now, if you go to a producer or a person who owns 100 acres and that person is going to cut some hardwood trees down, he wants to sell as much as possible at the highest price. So we're there and we're hoping to buy all of his logs, not just the prime logs but the second grade and the third grade and the pallet logs, down to a 6-inch diameter.
So, yes, you're right, it has created a problem for the smaller sawmill owners but that's a fact of life.
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MR. PARKER: But you're also on the other side willing to sell your green lumber to them?
MR. LEVESQUE: We do, actually, that's why it's increasing every year. The other thing it did is it gave us more money to the private supplier, because now he has a bigger market for lower grade stuff, before it was going to firewood. Now there is at least something he can generate from it.
MR. SAVOIE: Then it was only a few hundred thousand or a few million feet of logs cut per year, now there's 8, 9 or 10 million feet in some years because there is a market for logs, for all the grades of logs.
One thing that I forgot to mention earlier is that in New Brunswick, in our woodlands operation, we are ISO 14,000, that's environment spec for ISO, and we are also SFI certified;
SFI is sustainable forestry initiative. We were the first sub-licensee in New Brunswick to be certified SFI. In New Brunswick you have licensees and sub-licensees. The licensees are the big five or six like Irving, Fraser, Bowater, Miramichi; they manage the land but under these managers there are a whole bunch of players called sub-licensees and we're one of those sub-licensees. We were the first ones to be certified SFI. The environment is important for us and being certified is also important for us.
MR. PARKER: Thanks very much.
MR. CHAIRMAN: Before I recognize Mr. Langille, I would like to introduce Wayne Gaudet, the member for Clare and also still Leader of the Liberal Party.
MR. WAYNE GAUDET: Are you putting a plug in for me now? (Laughter)
MR. CHAIRMAN: The main man of the Liberal Party as of today anyway, for sure. It's nice to have you with us this morning, Wayne.
At this time I recognize Mr. Bill Langille from the PC caucus.
MR. WILLIAM LANGILLE: Thank you, I'm going to talk today and ask some questions. First of all, a week ago or more I was watching the news on television and I see that our largest gypsum mine in the world, right next door to Halifax here, they were celebrating being in Nova Scotia, having the largest mine, and when I was listening to the news, I was thinking, how many value-added jobs are they creating here? I see them on the television with front-end loaders loading hopper cars on the railway and it's all going to Upper Canada and then on that same news broadcast, we supply 30 per cent of all the gyproc east of the Mississippi. We have the largest gypsum mine in the world right next door and yet we don't have value-added jobs. I'm thinking, well, why not? Why are all our resources going out of the province?
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Anyway, it was a good-news story, they were very happy that the press picked up on a good-news story, but how many people do they employ for us? How come we don't have 1,000 employees making gyproc here? I'm told because there would be too much breakage leaving the province, yet they can have gyproc made in Ontario and Quebec and so on shipped all over, where's the breakage? So that doesn't hold water. But I'm just bringing that up for a reason.
Mr. Epstein knows where I live, right in the heart of hardwood country in Earltown, beautiful hills. Right in behind my place we have the highest point in mainland Nova Scotia. Now, awhile ago - last year - the Crown gave a contract out to a manufacturer in Pictou County - by the way, one of your competitors - to cut 525 acres. Included in this 525 acres is where Mr. Epstein's cottage is located, it comes right across that. There is a beautiful sugar loaf mountain. Their intention was to select cut that in strips. Now, I can't tell you how terrible that wood looks. So I stepped in to put a stop to that because you can see this mountain from the road, it's one of the highest peaks there. So what I had to do is, I own the third privately owned tree farm in Nova Scotia, Canadian tree farm, so I had to give them my hardwood, which I have a lot of, by the way, that you can't see from the road, in order to save that hill.
Where I'm going with this is that we have beautiful hardwood hills, we know that softwood grows faster than hardwood, we know that hardwood takes a long time to grow and that hardwood is becoming a high-end commodity. In fact, the acres that I gave to this company, I got over $1,200 an acre, but there's nothing left. It wasn't select cutting, when they cut mine. They cut it. I didn't mind, because I saved that hill. Where I'm going with this, and with your value-added jobs - I see that you have 500 employees in New Brunswick and 45 in Nova Scotia. I also know that in my area, I have had three hardwood value-added industries go out of business. So it is a tough business, there's no question about it.
One thing I am surprised at is the lack of land that you people own. I would have thought you would own a lot more and managed your own land. I know it wouldn't be cost effective for you people to do that, because the length of time, once you cut, the time it takes to grow that. So to put all your money into land would not be in your best interest, I would assume. I guess my question to you, we'll go back to when you started your sawmill in Nova Scotia. Now, it's my understanding you didn't get a forgivable loan, but you received loans from ACOA.
MR. SAVOIE: Yes.
MR. LANGILLE: How much money are we talking about?
MR. SAVOIE: It's $0.5 million, which we're repaying, and we're probably almost finished, I think.
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MR. LANGILLE: That's great, to be able to pay off the loan. At least ACOA is getting paid. (Interruptions) I guess where I'm going with this, with 500 jobs in your company, which is a good success story, by the way, there's 45 in Nova Scotia. What value-added products are you doing for Nova Scotians?
MR. SAVOIE: When we started in New Brunswick 25, 26 years ago, we had 11 employees and we grew on that. We took 10 years to double that, maybe. A couple of years after we started, the bank came in and wanted the keys, so we resisted and didn't give them the keys. We managed to pay them back, and restarted again, two years after we started. So we started twice. The first time a little richer than the second time. It took a lot of time to build up to what it is today. It took a lot of effort, a lot of investment and a lot of sleepless nights. To get into value added, you first have to have a product and a customer. Last year, the last six months, those customers have been more difficult to keep because of the strong Canadian dollar.
We're looking hard at finding something to do in value added in Nova Scotia. We've started doing a little bit at the mill. We produce pre-cut hardwood lumber that we sell to pallet plants. That's how we started in New Brunswick, with the low-value stuff, because it doesn't require a lot of investment. It doesn't require a lot of skills to produce. Right now we have a couple of opportunities we're looking at that we can't divulge at this place, at this time, because it's too early. We looked at one last year that by the time we had all the numbers in, they were out of business. It probably wouldn't make sense to restart. We're talking with people; we're looking for opportunities. We're talking with another group right now for a very large project that also involves Nova Scotia Power. We don't know the outcome of that yet, because it involves a lot of jurisdictions, federal, provincial, people from out of the country. We don't know what's going to come out of that, but it could be the start of a very large venture.
We're looking for something. Going into flooring is not a solution, because - it was on the list there - I think there were two that just went bankrupt. There's one right next door to us, about 12 miles from us, that went bankrupt, and it's going to be up for sale in the next few weeks. They're having a lot of problems. Flooring components for Germany, that's going out of style. We're already shipping there, and we're having a hell of a time keeping the prices because of the strong Canadian dollar. So that's difficult.
[9:45 a.m.]
We're looking for something. We're looking hard. We're trying to find a product that, first of all, is viable. If we go into something and go at it for six months or a year or two years, and then have to close it or go bankrupt, that won't help anybody. It's very difficult to find a product that's going to earn its keep. We're looking. If you have any ideas, we're open. It's not easy. We're also open to small shops around the province that are buying small quantities of hardwood to do cabinets, furniture, whatever, custom furniture. We're
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supplying a few of those little operations. We're supplying a lot of wood to Scotia Pallets in Goshen, Herman Long. I don't know if you guys are familiar with his operation. He's had a pallet plant there for at least 20 years. I've known him for 20 years.
MR. LANGILLE: I guess my question to you is . . .
MR. SAVOIE: We're working hard at it, we have just not found the niche yet, what we could do.
MR. LANGILLE: If you have 450 employees in New Brunswick, how much hardwood would you be shipping out of the Province of Nova Scotia to feed your value-added mills in New Brunswick?
MR. SAVOIE: Most of what we produce in Nova Scotia is shipped out of the province, about half of it ends up in Quebec or Ontario, and 40 per cent, I think . . .
MR. ALAIN BOSSÉ: About 45 per cent or 47 per cent.
MR. SAVOIE: . . . goes to St. Quentin. That's mainly maple, because in that plant we have in St. Quentin we can only use maple. We've tried birch many times. We've tried to find a market for components out of birch - we can't find somebody who's willing to pay the dollars we need to process it. Birch is available from Russia at very cheap prices. So when you say the word birch, even if it's yellow birch, over there it's white birch, it's a different birch - the minute you say birch to a customer outside of Canada, he thinks Russia and he gets it for half the price.
MR. LANGILLE: Actually I just purchased flooring for my daughter, for her house; I went to a local company in my area that I know very well, to get hardwood flooring from him. As you know, it's a tough business. Now he has to bring his hardwood in, a lot of it, from the United States, Maine, Quebec, probably as you people do, too. Not only that, but when he brings this hardwood in, he cuts it at his mill and then it has to be shipped out to Quebec for finishing, to get the six coats of lacquer on it, and then it's shipped back here. It's tough. I know we just had one go out of business in Cape Breton, the only place that did that type of work.
But when I see our resources in Nova Scotia, I look for value added, because we can't be shipping raw material out. We have to create jobs in Nova Scotia, if we're going to balance the budget. Anyway, when I see our logs going outside the province, where they make value-added products in another province, then I have a hard time dealing with that. I know how important it is to have value-added jobs. I know that you're good business people, there's no question about that. I appreciate that. With the amount of cutting going on today and the amount of needless cutting going on, especially our hardwoods - because hardwoods are usually in the mountain regions of Nova Scotia. In fact, in Nova Scotia we
[Page 15]
have the best hardwood of anywhere in the world, stretching from Cape Breton right down into Maine, as you know. That's high-quality hardwood.
I'll leave it there. I just want to say that I cut a bunch of hardwood, one-man sawmill, and I've had it drying for a couple of years and I just took it down to have it planed. It's a combination of birch, ash and maple, which makes beautiful flooring. So I'm concerned about our resource, and I'm concerned about our logs, our wood. I'm concerned about the vision that we look at, driving through the countryside. When you look at select cutting - I guess my biggest problem with you people is that you buy all your logs. Like you say, you only own a couple of hundred acres. Do you own any land in Nova Scotia?
MR. VAUTOUR: Yes.
MR. LANGILLE: How many acres? (Interruptions)
MR. VAUTOUR: Around 300 acres.
MR. LANGILLE: Have you purchased any in the last couple of months?
MR. VAUTOUR: No. The latest one would be a year ago, two years ago.
MR. SAVOIE: What we try to do, in that sense, instead of buying land, we try to work with the owners to manage it for them or show them how to manage it properly so they don't clear-cut it and let it grow back into suckers, or whatever.
MR. LANGILLE: I have an understanding of that because I can see in the future what that stand will look like in years to come, where a lot of people just look at it and say, it's terrible looking. I believe we have to go with select cutting. That's the way to go in the future of Nova Scotia.
MR. SAVOIE: We'll vote for you on that one.
MR. LANGILLE: I guess down in Sheet Harbour - I haven't seen it but - they just went in there and, from what I hear, devastated it, just knocked everything down. I would like to go down and see it sometime.
MR. SAVOIE: The problem is, there are so few of us in hardwood and so many in softwood that our voice is not heard.
MR. LANGILLE: Yes.
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MR. SAVOIE: But one thing we must not forget, when you talk about value added, is that we are doing a lot of value added but it's just not recognized. All that firewood that we're turning into lumber - I mean, 10 years ago, all those logs were firewood. That's what everybody was telling me. When I went around the province people were telling me that in Nova Scotia, we have veneer and we have firewood. That's all there was 10 years ago. Now we have at least 10 million feet of that firewood turned into lumber. Some of it goes to our plant in St. Quentin. I agree with you.
MR. LANGILLE: Just one last short one, if I may. You know that hardwood has really increased in price in the last while.
MR. SAVOIE: Faster than lumber.
MR. LANGILLE: The last few years.
MR. SAVOIE: The logs faster than lumber.
MR. LANGILLE: Yes.
MR. SAVOIE: That's one of the problems.
MR. LANGILLE: Yes, the logs are what I'm talking about. Hardwood is becoming a premium now. Like I said, when I cut and they give me over $1,200 in acreages for standing - I still own the property, where a few years ago, you wouldn't get $400. We know that the value of hardwood is going up. The demand on our hardwood is increasing and the supply is dwindling. Thank you.
MR. CHAIRMAN: Thank you, Bill, for your questions.
Joan Massey.
MS. JOAN MASSEY: Thank you for coming in today. I am just going to be a little bit blunt, I guess. We all know the reason that you're in here today is because of the controversy around your company receiving government funding and how there was a proposed effect on other small companies in Nova Scotia that were already here.
MR. SAVOIE: Excuse me, could we get the amounts out because people were talking about millions. In the transcript I saw the other day they were talking millions. I think we got $200,000 or $300,000.
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MS. MASSEY: Well, according to the information I have here, it's $100,000, but this morning, you said $0.5 million.
MR. SAVOIE: Oh, that was a loan.
MS. MASSEY: Okay. So you got a loan for $0.5 million. So it's $100,000.
MR. SAVOIE: ACOA lent us $0.5 million and we got $100,000 for training purposes.
MS. MASSEY: Okay, so $100,000, and $0.5 million.
MR. SAVOIE: Out of a $7 million investment, it is . . .
MS. MASSEY: So $100,000. . .
MR. SAVOIE: For training purposes.
MS. MASSEY: . . .for training and then a $0.5 million loan which you have almost paid back.
MR. SAVOIE: Yes. So the only money we kept was the $100,000. Which is, by the way, in the same line as the call centres and all these things. It's even less.
MS. MASSEY: If we're talking about the effect that this has in giving you what could be a perceived monopoly on the wood supply in Nova Scotia, because of your company's size and just the bulk buying power that that would give you in purchasing wood that you need from MacTara, Kimberly-Clark or whoever you are purchasing it from, to have access to our Crown land, have long leases on these pieces of land - so if we look at that, your company coming in and perhaps - you know, we're not going to be able to prove anything here today, obviously, but it's just a chance for us to talk about this issue. If you've got 500 employees but the majority of those are not here in Nova Scotia, if there are only 45 or so employees here in Nova Scotia and the majority of the work that is being spread out is somewhere else - that is the reason you are in here today - those are the kinds of issues of controversy that we are looking at.
I'm going to ask you a question. You talked about reasons why you came to Nova Scotia and whether or not that had anything to do with the loan or the training money. You said that because there was a supply of wood here, there is accessibility, and of all these other points. I guess my question to you is, if there had been a policy that the Nova Scotia Government had in place that would have made it mandatory for your company to make a certain amount of the wood that you have taken from Crown lands available to other smaller
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Nova Scotia value-added producers and sell that to them at fair market prices, would your company have still come to Nova Scotia?
MR. SAVOIE: We're doing that right now so I don't see why we wouldn't come.
MS. MASSEY: Well, you are doing that but there is no legislation in place that forces you to give access to a certain percentage of wood, so that is the question. Let's throw a number out. Let's say, if 10 per cent of the hardwood that you could take off of Crown land through your access to it, if that had to be made available to other smaller value-added producers . . .
MR. SAVOIE: It's more, at least 50 per cent is already available, no fuss, no questions asked. All we ask is for a good credit reference. That's about it. I mean, we have had a bad experience in the past and we're going to probably have more in the future but the first criteria is, will the guy pay his bill, and that's it. I mean, that's about all the questions we ask.
MS. MASSEY: So you're telling me then that you make available 50 per cent of all the hardwood?
MR. SAVOIE: Well, I say 50. It could be more. I mean, the demand is not there. We get a little bit of demand for hardwood but 10 per cent is a reasonable number. We have no problem with 10 per cent. But every time you legislate the way you operate a business, it makes it more difficult. I don't say it wouldn't work but every time you have a law in place to legislate how you operate your business, it makes another hurdle, it gives you another hurdle to hop over. It depends on how it's worded, I don't know. I would like to see it.
MR. LEVESQUE: And as you can see, we are selling more compared to before too. It is increasing but it's a slow start because we are dealing with smaller guys with small volumes. By the time we gain a customer, it's not going to jump by 10 or 15 per cent, right.
MR. SAVOIE: There are very few customers that buy trailer loads of hardwood lumber for re-working into some product. There are very few around. The lumber is there. If somebody wants to start a business to produce - I don't know what - kitchen cabinets, flooring or whatever - I mean, the wood is there. It's just that people are coming in for wood demands for much smaller volumes than you're talking about.
MR. LEVESQUE: If I just can add quickly, there is an old habit of those smaller guys that need lumber are buying it mill-run. What's called mill-run is, you take a log, you saw it, it's everything and it's all grades. So you have the best quality, the medium one and the low-grade in it. What we are doing at the mill is, everything is graded with certified graders, so we have select lumber, one common, two common, three common.
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The guy, he wants select lumber but it's separate, it's a pure bundle of select lumber but when you say the price that's attached to it, they say, oh, no, that's way too much, right. So it's the old habit of buying mill-run instead of what they really need. Since, maybe two years, some start to realize that, okay, this is really what I need, this is the grade I need because this is a product I'm making and this is the best recovery, I don't have much waste with it. So it's a slow start but I see, maybe, in the future, it's going to - people will start realizing that it's an asset for them.
MR. SAVOIE: Yes. As a matter of fact, I can give you one example. A pallet plant in Goshen, Scotia Pallet, he used to saw a lot of small logs or lower grade logs to produce his own lumber. He has realized that now he can buy already processed lumber from us and come out ahead in the game, so he's doing more and more of that. We're almost up to a million feet with him this year, so he's one of the guys realizing the advantage.
[10:00 a.m.]
MR. BOSSÉ: Excuse me, I just want to add something. As Jonathan was saying, 60 per cent of our log supply is low-quality logs. There is no doubt that there are a couple of guys in that province who are not happy with us. On the other side, as we were saying, there is 300- some private woodlot owners getting more bucks for their logs. Those guys are happy to have us in place, so that's a very important issue, I guess.
MS. MASSEY: How much do you actually charge smaller mills to purchase lumber from you? Is it the same price for everybody for the same grade?
MR. LEVESQUE: It's market value at the time they call. If it's in August, the price of select birch, or sugar maple, or ash, or oak it all depends, and the market is changing too, so that's what we're doing.
MR. SAVOIE: It's a commodity, the price is out there and the market prices change every day, every week, so it's the price of the day, what that is.
MR. LEVESQUE: Some of our customers have a fixed price for a year, too. They only change it every year because they know we supply them. We have a customer not far from us buying sugar maple grade lumber and his price didn't change for the last year and he's getting a steady supply from us.
MS. MASSEY: You lock in prices for . . .
MR. SAVOIE: For some customers we can.
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MR. LEVESQUE: But that one started a while ago, it's not a new customer, he's been with us for a while. After awhile you create all those relationships with customers that makes sense for them, it makes sense for us, why not do it.
MR. SAVOIE: One reason we can do that is that with some of our larger suppliers, we have contracts for a year in advance, the price of the logs is fixed for a year. That way we know what the cost of that lumber is going to be for the next year because the labour won't change, the electricity won't change much, there won't be much change in the cost of that lumber coming out of the mill, if we know the cost of the logs ahead of time. So we can tell that customer, we can sell you that grade of maple for the next six months at this fixed price. That helps him, in turn, quote a price to somebody in Germany, or Finland, that way you can work for six months at a time or a year, it makes it easier.
MR. CHAIRMAN: Thank you, Joan, for your questions. At this time I would like to recognize Gary and first turnaround, we still have Howard and Wayne left for questions.
The honourable member for Waverley-Fall River-Beaver Bank.
MR. GARY HINES: Mr. Chairman, I'm familiar with the free enterprise system because I came from a business background and I realize that the little guy is always standing up and challenging the big guys as being the guy who is trying to put him under. That is not always the case. I competed with the Dexters of the world in the construction business, quite successfully I might add, and then I got into political life. However, you indicated some of your problems with growth and I think they're very similar, it's part of free enterprise.
I would like you to explain the problem that foreign competition causes for you. Is it to do with raw material, the Russian market, Russians putting raw product in or are there other problems with foreign competition that you see?
MR. SAVOIE: China is the big, bad guy, today. In the flooring business they're the cause of a couple of bankruptcies already. We are not very much involved in flooring, we do a little bit for Europe, but our customers who are buying lumber from us to produce flooring are going out of business, so that's one difficult area that I don't know what is going to come out of that.
I suppose, when the Chinese start using their own production for their own internal markets, then the markets are going to improve for everybody. In the meantime, they're still shipping out everything or most of what they're producing. That is one stiff competition for us.
I mentioned Russia. Russia has the potential to do a lot of damage in the hardwood business because they have millions of acres of hardwood they're not using. They have problems with their own government, the way they police their own business, because the
[Page 21]
underworld is very strong over there. If you want to build a mill in Russia you have to pay off somebody, I think, I'm not sure but I don't even want to go there. It is a potential for a big problem but it's not yet, except in some species like birch, they have a lot of birch being processed there. They produce birch plywood that they send here to Canada for very cheap prices. Furniture manufacturers are bringing in all the plywood from Russia now.
The Canadian dollar is the biggest problem for us now because we're shipping a lot of components to Europe and these components are sold no matter if we quote in Canadian dollars, they always convert to U.S. Everybody in Europe, when they're buying from outside, they're buying in U.S. dollars. We're producing the same maple components as they produce in the U.S. but over there, their dollar has become much weaker toward the Euro and we're facing stiff competition from these guys. So there are a few small producers in Nova Scotia who are probably going to have major problems soon because of that. The Canadian dollar is probably the biggest competition we have today. We like it at $1.60, not $1.29.
MR. HINES: In your charts you indicated that you use a very small percentage of aspen. Is that because the products you make from aspen, there's not a demand for aspen, or is there small aspen growth?
MR. SAVOIE: It's mostly pallet wood.
MR. LEVESQUE: It's mostly pallet wood and also we have to compete with other - a good chunk of it goes out of the province at a big price and we can't compete with it, so that's why it's only 5 per cent.
MR. HINES: Your machine shop, is it run as a separate business? Do you do work outside of the mill-type work or as a machine shop . . .
MR. SAVOIE: I think what he meant was we use local machine shops for work. We don't have our own.
MR. HINES: I guess you've answered my other question which is about the companies going out of business because they couldn't meet market expectations but that's been answered . . .
MR. LEVESQUE: If we talk about Great Northern in Nackawic is the eucalyptus supply from South America, New Zealand and all of this, it's getting hard for those mills to compete because they have lots of fibre, it grows really fast, and cheap labour. That is an example why Nackawic went down, they can't compete with the actual market price.
MR. HINES: That's all, Mr. Chairman.
MR. CHAIRMAN: Thank you, Gary.
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MR. PARKER: Mr. Chairman, I'm going to excuse myself now to go to another meeting.
MR. CHAIRMAN: I understand that.
The honourable member for Halifax Chebucto.
MR. HOWARD EPSTEIN: I wonder if you could help me understand something that I heard on the news just recently. I have to apologize because I think I only heard part of this particular news item, I didn't hear it in full, so I may not be reproducing it exactly to you this morning. It seems to me I heard one of the Irving family commenting on the possible future of the lumber industry in New Brunswick. This was within the last few weeks. He was saying, apparently, that unless practices change there is at least some prospect that there may not be a future for the lumber industry for forestry in New Brunswick. The first thing I wonder is, did you hear this story or hear these comments and if any of you did, can you help me understand what they might have been talking about?
MR. SAVOIE: What I suspect it's about, you've heard of the Jaakko Pöyry report in New Brunswick, maybe? Consultants came out with a report saying if we want to have 50 per cent more wood supply in the future, we have to do this, this, and that. The province has not endorsed that idea and what Mr. Irving, I think, was implying is that if we don't do more silviculture to become more competitive, some mills are going to go out of business because of either lack of supply or not being competitive, I think. I've talked a few times with Mr. Irving on these issues and I assume that is what he was talking about.
MR. BOSSÉ: One thing, for 10 years in New Brunswick the supply of softwood went down quite a bit, so that's a very big concern because everybody is fighting for the same trees. They are already importing 13 per cent of softwood logs out of the Province of New Brunswick, so they're very concerned with that and that's probably why. With all the mills up there they could sell more and more and the supply is just not there.
MR. SAVOIE: The Irvings, themselves, regarding softwood and hardwood, they have a lot of their own land that they manage quite differently than DNR or the Crown land is managed. I think they produce four times more fibre per acre on their own land than on Crown land. Even if we just went double on Crown, that would mean twice as much wood. But they're already producing four times more fibre on their own freehold land than is being produced on Crown per acre. They're trying to get the government to put more money into silviculture, and that's where the problem comes, because the budgets and funds are not there to do more silviculture.
MR. EPSTEIN: I take it this is a view you share, that silviculture is important.
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MR. SAVOIE: When you add hardwood to your phrase, I agree with you. People today, when they talk silviculture, everywhere, they only see softwood, softwood. We would like to see a lot more being done in hardwood. That's not being done. I guess we're not pushing hard enough, maybe.
MR. EPSTEIN: Can you help us understand the picture in New Brunswick with respect to hardwoods and silviculture? Is it becoming the practice that there is silviculture applied?
MR. SAVOIE: In hardwood stands, I have to qualify my answer because there's two or three different approaches. When a stand is identified as hardwood - some stands are mixed, softwood/hardwood, they're managed differently - we can only do select cutting. We can't go in there and chop it all down and wait another 100 years for it to grow back. We do it by prescription, the government tells us, you cut a certain type of trees. We cut those trees down and leave the rest to grow.
MR. EPSTEIN: This is, in fact, a legislated requirement, regulations in New Brunswick?
MR. SAVOIE: Yes, it's part of the FMA, the forest management agreement, that companies have with the government.
MR. EPSTEIN: And what about the mixed stands? Many of our forests are typically mixed stands.
MR. SAVOIE: That's where I start to have a little problem. When it's more hardwood than softwood, it's still regarded as a hardwood stand, but when it crosses the 50 per cent line, if there's more than 50 per cent softwood than hardwood, then some of those stands could be clear-cut and replanted as softwood. That's where we lose volumes and we lose part of the future. We're trying hard to reverse that trend, but it's a fact of life. That's the way it's being done today.
MR. EPSTEIN: One of your statements was that there is as much volume of hardwood in Nova Scotia as there is in New Brunswick. Did I understand that correctly?
MR. SAVOIE: Volume-wise, yes.
MR. EPSTEIN: And quality, can you compare the quality?
MR. LEVESQUE: There's a different species, there's more red maple in Nova Scotia.
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MR. SAVOIE: A lot of red maple, and up until now we have not found customers that are willing to pay what it's worth. Soft maple has all kinds of bad reputations, and it's not a very good flooring material because it's soft. Furniture, it's not so good. It's hard to get a good price for that soft maple.
MR. EPSTEIN: What do you use it for, then?
MR. SAVOIE: Mostly pallet wood. Some of the higher grade goes for furniture or even framing furniture. Stuffed furniture, a lot of it is framed with the soft maple.
MR. EPSTEIN: Did I understand that you also take some of the logs that you purchase in Nova Scotia and send them to your plant in New Brunswick?
MR. SAVOIE: It's the other way around. We send some logs from New Brunswick to the mill in Nova Scotia. What we send from Nova Scotia to the plant in St. Quentin is maple lumber for our furniture components.
MR. EPSTEIN: For further processing?
MR. SAVOIE: Yes. All the birch is sold on the market. Most of it ends up in Quebec, because Quebec is the big manufacturer of birch furniture, birch flooring.
MR. EPSTEIN: Is there a reason why that further processing is done at the plant in New Brunswick rather than here?
MR. SAVOIE: Well, that plant was built in 1994, so it's 10 years old this year, and it cost $4 million, $5 million, $6 million, and to build another one here - the supply wouldn't be there anyway.
MR. LEVESQUE: The supply is not there. When we're down for a month, what's going to happen to that value-added facility next to the sawmill? There's no lumber that can go in it because there's no logs being guaranteed to the sawmill. So that's a catch-22 there.
MR. EPSTEIN: So the situation still is, in Nova Scotia, that there's not enough volume of high-quality hardwood that would make it worth your while to make the investment to do that manufacturing?
MR. SAVOIE: It's there, it's just how to reach it. Like I mentioned earlier, we were almost there a few months ago, a month or so ago. With Stora, we started a program. They were going to cut more hardwood, because in the past they have not cut the volumes they could have cut because there was no market for their pulpwood. Sheet Harbour was on-line, doing pretty good, so they had kind of worked in a system that they would cut more hardwood, get more logs to us, and we were on the verge of starting a second shift because
[Page 25]
of that supply, but then Sheet Harbour had all these problems with their Chinese contract for chips. That stopped. So, if they can't sell the pulpwood, they won't cut logs for us. Firewood, there's only so much room for firewood.
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[10:15 a.m.]
MR. EPSTEIN: Can I ask about the prospects for any more value-added opportunities? You were asked about this already, but I wonder if we could focus on a couple of specifics. Did I understand you to mention the possibility of an arrangement with Nova Scotia Power? Would that involve . . .
MR. SAVOIE: Well, somebody is working on a project that's going to use hardwood to produce something that I can't really talk about, because it's too early yet. They mentioned that Nova Scotia Power would be involved in the project, somehow, financially.
MR. EPSTEIN: That's a little vague. One of the things that's being looked at in Nova Scotia, of course, is simply generating electricity from biomass.
MR. SAVOIE: No, it wouldn't be electricity, it's another product.
MR. EPSTEIN: So, it's something else entirely.
MR. SAVOIE: A product that's being manufactured from hardwood, but it requires a lot of money to build. It's a large mass. (Interruptions) Maybe I could tell you what it is, but I would have to talk to these people first, because I don't know where they are with their project. They came to us to see if we were interested in supplying them with hardwood. We said yes, and they said okay, well, we'll go back and do it. They're negotiating with a company from New Zealand for a contract on the patent of the process. I'm not sure what's going to come out of that.
MR. EPSTEIN: That's fine. I won't push anymore on this. The other is, you said that you thought flooring wasn't a good bet.
MR. SAVOIE: Well, not today.
MR. EPSTEIN: This is because, you said, we don't have the quality in the right volume, or is it something else?
MR. SAVOIE: Because of a couple of reasons. The strong dollar is one right now, today. I wouldn't build a flooring plant today. Second, because the Chinese are flooding the market with cheap flooring. Nice quality, very nice - when I say cheap, I don't mean cheap quality, I mean good quality at a cheap price. They're going to be hard to compete with.
MR. EPSTEIN: What about things like . . .
[Page 27]
MR. SAVOIE: Excuse me, I'll tell you a funny story. I'm still laughing about it, because I can't believe it happened. A company in China bought logs in the U.S., walnut logs. They were shipped to China, they were sawn there in a sawmill. Components were produced from that walnut. Some of those components were little components, small sized, short. Once, I don't know who but somebody over there saw that and said, my God, we could produce flooring out of that. They shipped that to St. Quentin in a container. We produced flooring out of it, and shipped it to Germany. That's how crazy the world is getting. It's unbelievable. Logs from the U.S. going to China, coming back here, produced flooring that we shipped to Germany. It's incredible, what's going on? (Interruptions)
MR. EPSTEIN: I agree completely. What about furniture itself? You talked about furniture components, but not finished furniture.
MR. SAVOIE: Well, we say furniture components, actually they're kitchen cabinet components that we're shipping out West. We have three or four large customers out there. Their main line is maple cabinets.
MR. EPSTEIN: I guess it's not clear to me just how far along in the manufacturing . . .
MR. SAVOIE: We produce a panel, 20-inch by 30-inch panel that they're going to put into a kitchen cabinet door. We send them the frame components that they're going to machine and glue and turn into a door, and then also all the face frame for the kitchen cabinet, when you open the door, there's a piece of wood there. We supply them that piece of wood. Also, all the mouldings. We ship them components, and they finish, assemble and sell.
MR. EPSTEIN: And the prospect of doing more of the finishing, manufacturing in Nova Scotia or New Brunswick?
MR. SAVOIE: Well, we're a hell of a long way from where their market is, so shipping built cabinets is almost out of the question because of the shipping constraint. They don't want it more finished than that, because they have maybe 30 or 40 different types of doors, so they want the blank. The lady comes in, she wants that door, well, they take the blank, make that door. The next one wants another door, they take a blank and make a door.
MR. EPSTEIN: What about sporting goods?
MR. SAVOIE: Baseball bats?
MR. EPSTEIN: Yes. (Interruptions)
[Page 28]
MR. SAVOIE: Hockey sticks, well, we were supplying ash components to a plant in Quebec to make hockey stick blades, and also aspen components for the middle of the hockey stick. They went out of business, and I don't know where the sticks come from now. That customer disappeared.
MR. EPSTEIN: Musical instruments?
MR. SAVOIE: We supply lumber to a guy who makes components for musical instruments, but we don't do it ourselves, no.
MR. EPSTEIN: Where is it you're supplying this person?
MR. SAVOIE: He's in Quebec. He's supplying a customer in Japan, I think, with components for piano and guitar. It's a very complex marketplace.
MR. BOSSE: Can I just add something? On the value-added plant, as Jean Claude said previously, we built that plant in 1994. Just to give you a brief idea of how that started, for the four or five years that we had storage full of product, we didn't have any customers. That's the tricky thing. It's easy to produce a product and sell the good pieces of lumber, but the problem is the 70 per cent remaining, the low-quality. For four or five years, well, we even built storage for those products, because we didn't have any market at the time. What I want to say is it is very complex to find that diversification of customers, to make sure you can sell all the product. If you are only selling half of the product, well, I'm sorry, but you won't be in business long. That's a long-run process. We've been in that business for 10, 11 years now, and we are still trying to find new customers for product that we're producing every day. It's quite a challenge.
MR. SAVOIE: Some of those, I'm still burning in my fireplace. (Laughter)
MR. BOSSE: It's expensive firewood.
MR. CHAIRMAN: A quick question before I recognize Wayne Gaudet. Is a consumer able to go to your Westville plant and buy for hobby projects?
MR. LEVESQUE: Yes.
MR. CHAIRMAN: That's nice. For a board foot of maple, one board foot, what would the cost of that be in today's market?
MR. SAVOIE: You have to qualify your question, because there's a grade.
MR. CHAIRMAN: Number one grade.
[Page 29]
MR. LEVESQUE: One common is around $1 . . .
MR. SAVOIE: You mean the top grade?
MR. CHAIRMAN: The top, for furniture.
MR. SAVOIE: Because there's a one common, which is the second grade.
MR. CHAIRMAN: The best.
MR. LEVESQUE: It's $2-something a foot.
MR. CHAIRMAN: A board foot. Thank you.
MR. LEVESQUE: Do you want to build a table?
MR. CHAIRMAN: Yes.
MR. BOSSE: If you were going on the lower grade, you could end up at 25 cents, 26 cents.
MR. CHAIRMAN: The reason I'm asking the question is just to try to clarify the availability of the resource being available for Nova Scotians. I thought that was a very simple form of doing that.
Mr. Gaudet.
MR. GAUDET: Mr. Chairman, I want to start off by thanking the presenters this morning for their presentation. Also, I would like to thank them for their contribution to our provincial economy. I guess my first question, I want to reflect on one of your biggest challenges. In your presentation you've talked about, without a guaranteed supply, it's hard to plan for the future. So I guess I'm trying to understand, how can a company continue to exist? Do you plan day by day or operate day by day, do you have to pay higher prices for supplies? I'm just trying to understand.
MR. SAVOIE: We're all there competing with everybody else for the logs. Every day we have - well, not every day, but very often we have discussions with John, should we raise the price for logs. Like I said earlier, the price of logs has gone up much faster than the price of lumber. It's gotten to a point where we're almost at the limit of what we can pay and still be profitable. So it's everybody for himself. The market is there, the suppliers, there are 300 or 400 of them, so we have to go and visit each one of them and discuss the price and agree on a price, and that's how it goes.
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MR. GAUDET: So looking at your suppliers - private suppliers, of course - if you offer better prices you more than likely get the supplies you need. Looking at the Crown supply that you get, basically looking at 2002-03 and this year, pretty well your supply has been relatively stable. Do you have an agreement with the province, or how does that work?
MR. SAVOIE: I suspect that mostly comes from other companies that have access to Crown. I don't think we have direct access to Crown.
MR. VAUTOUR: No, we don't have any direct access to Crown. This comes off licensees who have Crown allocation in the province. Stora has the lion's share of Crown land. Part of their requirement is that they have to manage this hardwood, for years they've not. Their supply of wood is coming from mixed-wood stands now, where it was coming from pure softwood stands. So they're getting more and more into hardwood stands as the years go on. Therefore, they're producing a percentage of hardwood. This is only recently going on. It has only happened in the last couple of years that they've started this.
MR. GAUDET: You also indicate that you import logs. I know our colleague, the member for Colchester North, I've heard him several times here in committee, talking about the logs leaving our province. I've heard it here again this morning. I'm just curious. I don't want to talk about the other provinces, but should Nova Scotia be looking at some kind of restriction right across the board, not to allow any logs to leave our province? Is that something that this province should consider? I'm just curious if I could get any thoughts on that one. (Interruptions)
MR. SAVOIE: I'm not quite sure, but I think it's already there for Crown wood, that restriction. For private wood, there was a lot of discussion around that in New Brunswick, if I can relate to the same problem in New Brunswick. What came up was that New Brunswick was importing more than exporting. So if you put a gate, a gate works both ways. So if you can't go out, you can't come in. That was one of the reasons why New Brunswick didn't go that route. The other reason is it's private land. Are you going to legislate the use of private land, private lot owners are going to be restricted? That's the question that came up in New Brunswick. I don't have an answer.
MR. CHAIRMAN: On a point of clarification, Mr. Langille would like to clarify, if you don't mind.
MR. LANGILLE: Mr. Chairman, in Nova Scotia you can ship round logs out of Nova Scotia, however, you can't ship round logs off Crown property out of Nova Scotia. There is a way around that, because there's a way around everything. What they do is square up the logs and then ship them out, and that's a way around it, by the way. (Interruptions)
MR. CHAIRMAN: Thank you, Bill, for the clarification.
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MR. GAUDET: My last question, you've indicated that you're recycling over 60,000 pallets a year. Do you mean you just replace . . .
MR. SAVOIE: It's a used pallet that comes in, one broken board or broken stringer, we replace the board, nail a new board on and ship it. Some of them go to Oxford, some of them go to peat moss plants, fish plants, whatever.
MR. CHAIRMAN: It's 10:30 a.m. and everyone has had an opportunity. So we're going to start our second round. (Interruptions) Diana, I'm just missing you today. (Interruptions) I just don't know.
MS. DIANA WHALEN: I have a couple of questions to ask, if I could. I'm finding it very interesting. It's a little bit new for me. I was a previous management consultant so I've had a chance to visit a couple of sawmills and plants. I'm digging back into the recesses of my mind to see what I remember from that. What I'm curious about is particularly the employment. You have one shift now, and I'm sure you were pleased at the point where you might have been moving to two shifts. I'm wondering how stable the one shift is. Are you closing at all through the year? Did you tell me that you're closed for a period of time?
MR. SAVOIE: A month or so per year, I think.
MR. LEVESQUE: It all depends. This year we were closed two, three weeks. The year before was almost two months. We're struggling to keep the first shift operating year-round. The big question is, we know the wood is there, it doesn't need more investment from our part or more loan or whatever, and we could create 30 more jobs tomorrow morning by just getting the wood to the mill. We already have the market there.
[10:30 a.m.]
MR. SAVOIE: The way to do that would be to have a market for the pulpwood. There is no market for pulpwood in Nova Scotia, hardly any, Canexel takes a little bit, Kimberly-Clark is thinking about going out of the hardwood pulp business, so there would be very little market for - there was Sheet Harbour; now, they're slowing down. We're working on a project that may require quite a bit of hardwood pulpwood.
MS. WHALEN: Am I wrong that most pulpwood is softwood? Am I wrong about that completely?
MR. SAVOIE: Well pulpwood is a piece of wood that is going to be turned into pulp. So it could be a piece of veneer but generally when we talk pulpwood, yes, you're right in saying that people think of softwood, but there is also a hardwood pulpwood.
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MS. WHALEN: Okay, because that surprised me. As you said, we have really in our province a dominance of softwood.
MR. SAVOIE: But there is a lot of hardwood pulpwood available in Nova Scotia or low grade, let's call it low grade, because Nackawic was using 100 per cent hardwood, so Nackawic was a hardwood pulpwood user.
MR. LEVESQUE: There is another thing that I would like to add; we're considered a big sawmill, but a big sawmill means a different process in terms of recovery and all that's involved. We separate the mill when we debark the logs, the bark goes one way, the sawdust from the saw goes one way and then we have the chips. If you look at our customer list, we have been getting more and more demands for pure sawdust. As an example, the Shaw Group to make pallets. They're struggling right now to find more volume because they have the market for it. All they need is more sawdust. So that's an advantage for us because we separate everything compared to maybe the smaller guys who won't have the opportunity to maybe separate and put in one location all its sawdust.
MS. WHALEN: I mean using everything right down to the sawdust obviously is a very efficient operation in that regard. We're getting a lot more value from the work you're doing and the resource that we have in the first place, which is important.
I hear you saying that the market is there, if I could go there. So you feel the market is there and it's completely the supply that's causing the disruption?
MR. LEVESQUE: Our biggest problem is the supply. We see the market is there, it all depends on which product also. The hardest one to solve right now is the supply, how to get the wood to the mill and also for us to get rid of our chips generated from the mill. That's maybe one of the biggest challenges we have right now.
MS. WHALEN: On the question of how we manage our forest resources, I am curious again about when we talked about the replanting - when an area is going to be clear-cut and there is replanting - you mentioned about that 50 per cent, if it gets below 50 per cent hardwood. Is that in New Brunswick?
MR. SAVOIE: That's in New Brunswick. I am not sure how it's done in Nova Scotia.
MS. WHALEN: Are we doing any better here?
MR. SAVOIE: Maybe John could clarify, I'm sure.
MR. VAUTOUR: They categorize stands of wood by the percentage of species and 25 per cent hardwood could be considered a mixed-wood stand and 50 per cent could be considered a hardwood stand, depending on how it's treated.
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MS. WHALEN: If there is replanting, do they have to keep to that ratio?
MR. SAVOIE: The only thing we plant is softwood; only softwood is replanted.
MR. VAUTOUR: Only softwood is replanted.
MS. WHALEN: Even if it was a hardwood stand, technically?
MR. VAUTOUR: Yes.
MR. SAVOIE: There is no need to plant hardwood, all you have to do is treat it properly in the first place and it will keep going by itself. Softwood, they grow old, they all die and then something else grows. The hardwood, the young trees come up under the old trees, so they're kind of self-regenerating. Softwood would do that too if you leave them alone, all kinds of stuff would grow.
MR. BOSSE: One thing that we were talking about the pulp market, it is a crucial item because if we want to manage a nice hardwood grade, we need to have the market for the low grade and we don't want to go there and cut only the nice pieces of wood and leave junk for the future. That was one of the problems we had in New Brunswick. In 1988, at one time, we were having 25,000 cords of hardwood pulp piled everywhere, on the roadsides, in the woods, because we didn't have any markets. So at the time what we were doing, it is not nice to say, but we were going and getting the better pieces, the better trees and leaving a lot more poor material. Now, with the market we got, well, we could go and bring the junk and leave the nice pieces to grow for 10 years and get nice quality logs.
MR. VAUTOUR: Because we saw to such a small diameter and such a short log, that allows people to go in and actually do silviculture in these stands of wood. Actually, if you have a stand of wood that's all the same diameter, really it has no value, but what you want to do is you want an economic reason to go in there, a paying reason to go in there and do something. By us buying that small diameter wood it allows people to go in and do silviculture. Because I wouldn't go in and thin a stand of hardwood if I wasn't going to be able to sell the wood. There is no way.
MS. WHALEN: When you say silviculture, this is the idea of selective cutting and sustainable . . .
MR. VAUTOUR: Yes, sustainable cuts. Selection cutting is the proper word.
MS. WHALEN: So it would definitely preclude the idea of just going in and clear-cutting, that's not part of that at all?
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MR. VAUTOUR: The rule of thumb in our business is if you go and clear-cut a hardwood stand, what you gain in your veneer logs and sawlogs, you lose on your pulpwood and firewood.
MS. WHALEN: So, it's not good practice.
MR. VAUTOUR: So, what's the point of doing it?
MS. WHALEN: Exactly. Are there any suggestions you would make for how we could - and I don't know if there are recommendations that can be made, but I heard you say earlier that you didn't think there should be too many legislative things, but at the same time are there better practices that we could be encouraging through regulation or legislation, you know, with a long-term view?
MR. SAVOIE: I'm more familiar with what we're doing in New Brunswick. John works here on the ground in the woods . . .
MS. WHALEN: You may be ahead of us in New Brunswick, I don't know. So we need to learn from each other.
MR. SAVOIE: We think we're doing good because since 1982 we have had legislation in place that we have licensees, sub-licensees and people have allocations and companies sign an agreement with the government, an FMA, a forestry management agreement, and that's been improving with the years. We think we're doing a pretty good job. There is still room for improvement, especially for the hardwood guys. We think they are sometimes treating hardwood too harshly, spraying and whatever, getting rid of it instead of promoting it.
MS. WHALEN: This product Vision kills the hardwood, am I right?
MR. SAVOIE: Oh yes. It kills the competition for the softwood.
MS. WHALEN: That's an interesting strategy.
MR. SAVOIE: That's another way of putting it. In some places, it has been used too much because there were some nice little hardwoods growing but the preferred species was softwood.
MS. WHALEN: I wonder if John has a comment on that, when I said are there some things you can think of that you think we should be doing?
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MR. VAUTOUR: As I said before, in the Province of Nova Scotia, softwood is king and hardwood is almost a different culture. It is a different way of thinking, a different way of managing and that's been my struggle over the last six years, trying to convince people that they have to treat their hardwood stands differently, as compared to softwood stands.
MR. SAVOIE: One thing I learned just recently and it almost knocked me over, they do what they call a regen survey, a regeneration survey in a stand that's growing, a young stand of trees. They don't consider hardwoods, they only consider softwoods in some parts of New Brunswick in some areas. I was totally bowled over, I just couldn't believe it. They go there and they check if there is no softwood growing, they say there is no regeneration. They can bulldoze, spray, whatever and plant softwood. So that one . . .
MS. WHALEN: So that bias is the same in New Brunswick, the bias for the softwood.
MR. SAVOIE: Yes, softwood has been, like you mentioned earlier, pulpwood in your mind is a piece of softwood.
MS. WHALEN: That's what I thought.
MR. SAVOIE: So people are used to thinking . . .
MS. WHALEN: I guess I'm thinking with the price going up for the hardwood now, as you say, at least the logs are more valuable as far as . . .
MR. SAVOIE: The problem is still the pulpwood, the low grade or the pulpwood, there was Sheet Harbour, now they're having problems. There is hardly anybody in Nova Scotia using the low-grade hardwood. That's the big problem.
MS. WHALEN: So we need a cultural shift or something like that.
MR. SAVOIE: Well, you need somebody to come in with a project like OSB or a pulpmill but who needs another pulpmill, I don't know. There are so many having problems right now.
MS. WHALEN: Exactly.
MR. SAVOIE: But there are other uses for that hardwood and we're working on one right now. I'm not sure what's going to come out of it but if that works then . . .
MS. WHALEN: I understand it's a little premature for you to say it today but . . .
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MR. SAVOIE: I don't know exactly where they are but I know they're talking with somebody in government but I don't know who.
MS. WHALEN: I'm sure just for your long-term viability here, you will be continually looking and exploring every avenue because otherwise, with the price pressures on you now, because the cost of the supply logs and your finished product, you have to find other customers . . .
MR. SAVOIE: I think if there's a good value in the pulpwood, then the price of logs doesn't have to be so high, because then you buy land, Mr. Langille mentioned $1,200 an acre. If the pulpwood has a value, then that landowner gets the value for his land, and the guy who operates on that land gets good money out of it, too.
MS. WHALEN: So it's better right down.
MR. VAUTOUR: I'll just make a comment about Mr. Langille's talking about why we don't purchase land. One of our challenges is that every piece of land that comes up for sale, it usually goes up for tender. As soon as the piece of land goes up for tender, we start bidding on a price. The price gets escalated so high that the only treatment that can be done to make it viable is to clear-cut it. We can't bid on them. Actually we refuse to bid on them.
MR. SAVOIE: To go and buy land and to clear-cut it, we don't agree with that, so we don't buy it.
MR. VAUTOUR: It's cutting your nose off to spite your face.
MR. CHAIRMAN: The second round, we'll only have five minutes, because the committee has other business to deal with before we adjourn this morning. Joan Massey.
MS. MASSEY: Just to wrap up some of the thoughts that I'm having when I'm sitting here. We definitely have a pulpwood versus hardwood dilemma here in Nova Scotia. We've got the use of Vision, which is disruptive. We've got new people telling us there's a lack of supply, stores complaining they don't have any supply. Obviously something is desperately wrong in Nova Scotia, as far as our forest industry is concerned. I'm just wondering, how do you lobby the Nova Scotia Government, the Department of Natural Resources on these issues, and how often do you meet with the representatives, and what do they have to say about this? There are a lot of issues here today that we've heard and most of it sounds fairly negative. I'm just wondering what your thoughts are on those.
MR. SAVOIE: If I can go back to my brief history, I didn't mention that I met people from DNR, but I met a few guys. I forget the names, it was so long ago. One of them told me we just don't know where the hardwood here is in Nova Scotia. We have no idea where you
[Page 37]
could go and cut logs. We don't have that information. That was six, seven years ago. I don't know where they are today. That was kind of odd.
MS. MASSEY: Are you telling me that your company does not engage in at least a yearly talk with the Department of Natural Resources? (Interruptions)
MR. SAVOIE: We talk all the time with them. What we're being told is that they had a study a few years ago, they asked consultants to look at how the province's forest is managed, and to come up with solutions. We're being told they're looking at a possible solution, but it's not coming. I don't know when it's coming or if it's coming. We're kind of waiting to see what's going to happen, but we're lobbying to be part of the solution. Hopefully we're going to be part of the solution, but we don't have any . . .
MS. MASSEY: Did you make recommendations, is that what you're saying?
MR. SAVOIE: We talked to a lot of people, I don't know what they're going to do with it.
MR. VAUTOUR: I'm on the hardwood working group of the province. We meet monthly to deal with issues in hardwood, primarily silviculture issues. It's ongoing.
MS. MASSEY: Is there government representation on that?
MR. VAUTOUR: Absolutely.
MR. SAVOIE: We met all the ministers, every time they appoint a new one we try to meet with him, to explain what we need and what we want. We're still waiting.
MR. VAUTOUR: If I can be blunt about this, they don't know what a log is, a hardwood log. (Interruptions)
MR. LEVESQUE: Some people think a log is that big, clear and everything, but as I showed you on my presentation, a log could be six inches, full of knots, as long as it's kind of straight and we can saw lumber, that's what we consider sawable.
MR. SAVOIE: We have a long way to go, because hardwood has not really been considered in the past, in Nova Scotia, from the Crown's perspective. Trees look nice, they like to leave some hardwood areas standing for aesthetic values, but we have a lot of work to do with the department in the way of managing the hardwood forest.
MR. CHAIRMAN: Gary Hines.
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MR. HINES: Again, that's the province being softwood oriented, because of the disconnect between the government. Softwood has been their mainstay, and to get them out of the mould, it's like trying to dislodge a rock. I just wanted to know about labour force. Contrary to popular belief, people in your labour force are professional people, skilled people. Do you have a good labour force that you can draw on, or are you losing good quality forestry people as well, the mill people as well?
[10:45 a.m.]
MR. LEVESQUE: It's pretty stable. We have a little turnover once in a while, it all depends, but we are employing a wide variety of different skills so I don't see any problem. Actually, we don't advertise for work and we have people showing up.
MR. HINES: Yes. Are you unionized?
MR. LEVESQUE: No.
MR. SAVOIE: The biggest challenge is probably in the woodcutters. I don't know, John . . .
MR. HINES: The reason I asked the question is because we had some indication before in a conversation regarding Vision, with using silviculture operations to do the work that Vision would do. We were told that there was a shortage of people doing silviculture, to do the silviculture work. I wondered if that same thing carried over into the mill operations and your operations.
MR. SAVOIE: No, not in the mill operation.
MR. HINES: Thank you.
MR. CHAIRMAN: Okay. Bill, one question, please.
MR. LANGILLE: Just a statement. First of all, on Thursday I will be going into the woods by the way. I will be working there all weekend, yes. Yes, I hope to come back. Anyway, just a comment. My favourite tree is the maple tree. (Interruptions) Yes, stand well back is right. (Laughter) I actually bought my son a chainsaw for Christmas.
Anyway, I just want to personally thank you for coming in. I know you're in a hard business. Nova Scotia, of course, our lumber industry, sawmills and our forest employs a large amount of people. We need this to continue. We need to manage our resources in a proper way. Everything seems to change, you know, especially when I know that I probably planted about 60 acres because I signed up with the Natural Resources management plan, you see. They wanted me to plant Norway spruce which I complied with, which is probably the
[Page 39]
worst thing I ever did because it is a terrible tree. We have to keep with our species which is our red spruce, which is a slower growing tree but it's not susceptible to all the disease that the others get. This is the problem.
Where I'm going with this is that people learn all the time what to do and what not to do, and sometimes they think they're doing great things when they're not. I'm sure that us sitting here today, 10 years from now, something else will come along and devise a way to manage our forests differently. Hopefully, all for the better.
Anyway, you're in a good business. I congratulate you. I am concerned about our valued-added jobs in Nova Scotia. However, by the look of you people, with 500 employees, you must have done something right because you are a success. Thank you.
MR. CHAIRMAN: Any further questions? Not seeing any, I would like to thank you for coming today to clarify a number of issues. We hope that you're prosperous as you meet the future. Thank you and safe journey home for you.
MR. SAVOIE: Thank you very much for allowing us to present our case.
MR. CHAIRMAN: We'll recess for a few minutes.
[10:48 a.m. The committee recessed.]
[10:52 a.m. The committee reconvened.]
MR. CHAIRMAN: Okay, committee, just a few things that we have to address as far as business of the committee is concerned and that is to speak of future witnesses. As you know, I'm only vice-chairman, so I don't want to be too aggressive here this morning, but we should address the issues. Are we going to sit as a committee in December, and after that we have to say that we have two witnesses who are already lined up to come in, and they are the Canadian Council of Professional Fish Harvesters and the Nova Scotia Aquaculture Association.
We have three lists in front of us from all caucuses. You can see the NDP have quite a list, then the Liberals and the Progressive Conservatives. There is no problem picking the PC one because the first one, they're not too eager to come right away, so we will take one of the PC ones and mark that yes and we would ask the NDP caucus to pick their favourite ones, then go over to Wayne to pick his, and then we will pass it over to Mora to deal with them. (Interruptions) We will go with No. 2, because it's the only one. I should go this way, is the committee in agreement that the Offshore Technology Association of Nova Scotia should come in?
MR. GAUDET: Let's pick each one, that's no problem.
[Page 40]
MR. CHAIRMAN: Okay, good stuff. That's the easy, quick way of doing it.
MS. MORA STEVENS (Legislative Committee Coordinator): You're looking at at least January, anyway, with any of the new ones.
MR. CHAIRMAN: Wayne, while the NDP are picking theirs, sort of numbering them so to speak, would you like to pick any of yours?
MR. GAUDET: The one that comes to mind would be lobster poaching, lobster poaching in southwestern Nova Scotia.
MR. CHAIRMAN: I was going to suggest that we should bring them in.
MR. GAUDET: Unfortunately, someone is going to get hurt, this is a real problem and it's a big problem. I'll just speak very briefly on it.
This Summer, every day I'm hearing they're sending a tractor-trailer - every day - to the Boston market, to Toronto, or Montreal. So we're not just talking about catching a few, this is a big operation.
Lobster season opens in southwestern Nova Scotia the end of November. They see these truckers leaving our area, there's no doubt it's going to have an impact on their livelihood. I would be interested in hearing from the experts in the field on how big the problem is, what are we doing to try to bring both sides. Ultimately, we would like to see this business stop, but at the same time try to guarantee that there will be a lobster fishery that will continue.
MR. CHAIRMAN: As I read it, Wayne, it tells us DFO and also our own guys but then it says, plus fishermen. Are you saying we should just bring in our own department plus DFO? (Interruptions) That's what I'm trying to say, is this a split? Howard.
MR. EPSTEIN: Could I just make a comment on this. I think this is an important point and I wonder though - and I know it's going to be an active topic in and of itself, but I see it as a subset of the potential problem with the lobster business here. Poaching is not the only problem, destruction of the habitat is also a problem. It's a very simple piece of business; lobster, if they're going to exist, need something to eat and a place to hide. Mostly they eat sea urchins and whatever else they can find around and sea urchins hang out in the kelp and if the kelp disappears, which it does with dragging of the bottom, then there's a consequence for the lobster industry.
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We're starting to see reports from the Northumberland Strait saying that they're having a problem with the number of lobster. I think we've seen reports elsewhere, and it's not just poaching, so I'm wondering if we look at the lobster business, we can look at sort of the overall picture, certainly including poaching.
MR. CHAIRMAN: That would be up to Wayne. So let's make this as a priority then, let's get these people in as quickly as possible, if that pleases you, Wayne?
MR. GAUDET: Yes.
MS. STEVENS: Do you have a DFO representative that you are thinking of, somebody who is located in the area?
MR. GAUDET: Yes.
MS. STEVENS: Okay, I'll contact your office to get the name for that.
MR. GAUDET: The DFO office in Yarmouth.
MR. CHAIRMAN: That's the Liberal's priority then. The NDP priority and then we'll take your other one.
MS. MASSEY: No. 2.
MR. CHAIRMAN: No. 2, okay. CNSOPB re offshore update. Do you want to give a little explanation of that, please.
MS. MASSEY: Go ahead, Howard.
MR. EPSTEIN: The idea was just to bring us up to date as to where we are with the offshore. As we know, a lot of the wells have been coming up dry, we don't have a lot of activity going on in terms of exploration. I think we need kind of an update from the CNSOPB as to what's . . .
MR. HINES: Did they do a presentation at your caucus? They came in and did one with us and we suggested that they should see the other two caucuses.
MR. EPSTEIN: It may be in the works but it hasn't happened yet.
MR. HINES: I'd like to see them come in as well, I agree with you.
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MR. EPSTEIN: Because really the only operating field we have is the Sable field and everything else hasn't really come to fruition. Recently, some of the companies that did pay for significant discovery licences gave up their licences and decided they weren't going to go ahead with their work. So that's the point, what's the current state of play with our offshore, really.
MR. CHAIRMAN: Yes, Wayne.
MR. GAUDET: Mr. Chairman, you raised the topic of whether or not we would meet in December. I just want to share what I think we should do, it's not book anything for the month of December and delay until January.
MR. CHAIRMAN: It's a request, okay. (Interruptions) Then we'll honour that. (Laughter) Thank you for that, Wayne.
In the absence of the chairman, I don't think I'll go down the list any further. We now have five witnesses and I think that's sufficient until the chairman comes back. I don't want to get into too much trouble.
I do apologize to Diana for missing you on your - actually it was the NDP caucus I included her with earlier on, Howard, before you arrived and Wayne wasn't here. Thank you for your patience.
We are adjourned.
[The committee adjourned at 10:59 a.m.]
