Large stockpiles of wood are seen at the Pope and Talbot sawmill in Grand Forks, B.C. Tuesday's federal budget calls for the forestry sector to get $170 million over the next two years, including $80 million earmarked for new technologies. (Jeff Bassett/Canadian Press)

The Forest Products Association of Canada says the new federal budget embraces its vision.

The budget, introduced Tuesday in the House of Commons, will help the sector maintain its status as the world-leading exporter of sustainable forest products, the association said.

"Access to credit is the number one issue for our industry," Avrim Lazar, CEO of the association, said in a statement. "We are very encouraged by the budget measures aimed at ensuring access to credit for Canadian businesses.

"The government has clearly heard the message, and it understands that in order to get there, Canada needs to attract investment and secure the jobs of nearly 300,000 skilled Canadian forest workers and the communities they work in," he said.

The forestry association never asked for a bailout. But it did want three things in the budget and said it got them all.

Extend an existing international marketing program.

Extend an existing forest-products research-and-development program.

Set up a bioenergy fund to develop and commercialize the use of wood waste as an energy source.

The budget provides a total of $170 million over two years to help forest companies market their products internationally, develop new technologies and find non-traditional uses for wood in domestic markets.

The association had said it would cost $600 million over five years to achieve those goals, and while the Conservative government has committed to only two years, the association said it is otherwise satisfied.

The union representing forestry workers didn't seem to have read the same budget.

"It's a cruel joke to the forestry worker," said Dave Coles, president of the Communications, Energy and Paperworkers Union of Canada. "There is nothing in this budget to stop the spiral. They're not working, and they're about to lose their homes, and they get a tax credit to remodel their sundeck?"

'The reality is we're an exporting nation and we're going to have to wait for global economy to rebound'

—Andrew Casey, Forest Products Association

The CEP represents 60,000 forestry workers across Canada.

“There is no real plan for revitalization of the forest sector, no initiatives to provide older workers with the option of retiring in dignity, and ineffective EI reforms that

will not likely get younger workers through 2009," he said.

"I have nothing against giving bailout money to help out the auto workers. They deserve it," Coles said. "But forestry workers support whole communities as well. There's no stimulus package to work towards restructuring the industry. It's a renewable, green industry that this prime minister has just written off."

Shrinking for 5 years

Canada's forest-products industry has been shrinking since 2003, closing 207 mills and shedding 38,000 jobs. The association said it would have preferred more aggressive action on the taxation front to encourage major investments in capital and innovation.

The problems have worsened in the past year, as the collapse of U.S. home-building has pulled down the price of lumber almost 40 per cent between January 2006 and October 2008. Lumber prices haven't been so low since 1991. Pulp shipments in December were down 9.5 per cent from their year-earlier level, and prices fell 20 per cent.

In its latest summary of global forest and paper industry net earnings, accounting firm PricewaterhouseCoopers found 14 of the 15 Canadian companies in the survey lost money in the fiscal quarter ending in September.

"The U.S. housing market continued to deteriorate in the quarter and companies adjusted production in response to weak demand for North American building products," the report said. "Canadian companies reported a loss of $529 million US in the third quarter. Included were restructuring costs and asset impairment charges of $292 million, compared to $13 million reported in the same period in 2007."

Earlier, Lazar told CBC news: "Americans will continue to live in houses. There will be pent-up demand when the credit crisis is over. And they will continue to build houses using wood."

Green products promise growth

Moreover, Canada's high environmental standards will again make its products a hot commodity, he said.

As world demand rises, buyers will want to know that the paper and lumber they use was produced cleanly. They will reject products from illegal loggers, countries that don't control deforestation and tropical plantations using land that could grow food.

But while workers and communities wait for the green future, there is the problem of today. Across the country, more than 300 rural and remote communities rely on the forest industry, a June 2008 Senate report on rural poverty found.

"The government has been saying, 'It's a sunset industry, good bye, good luck, let the market decide,' " union leader Coles said.

While the union and the industry association may disagree over the benefits of the budget, they do at least agree on one thing. The problems will take a long time to solve.

"The government isn't going to create demand overnight," said Andrew Casey, vice-president of communications for the Forestry Products Association.

"The reality is we're an exporting nation and we're going to have to wait for the global economy to rebound."