The election of Donald Trump as US President has brought with it jitters in the world of trade, and in particular lumber trade with the United States as Trump has said he either wants to open up the North American Free Trade Agreement, or just tweek the agreement as far as Canada is concerned.
Tom Sundher, life-long lumberman, from the Alberni Valley, President of the Sundher Group of Companies is an aggressive proponent of opening new markets, such as India, while maintaining and growing the ones we already have.
To Sundher, the American market with its threats of tariffs by American lumber producers is just self-serving “more of the same” and there are other very big markets we should be developing so we’re more flexible and less dependent on what happens in the US.
Tom Sundher spoke with Ray Hudson, who asked how the Indian market has been shaping up over the past decade?
Tom Sundher: Ten years ago we had no support from the BC Government for the Indian Market. There was no agency here to support it, and absolutely zero interest from industry in it. But after years of lobbying, the Province of BC set up a marketing agency, Forestry Innovation Investment Ltd (FII), a BC Crown Corporation formed to work with industry and the federal government to help maintain, create and diversify markets for B.C. forest products. FII operates all over the world to develop markets for BC. Three years ago Forests Minister Steve Thomson, said it was time we took some of the government money out of China and let the private forest interests handle that, and began looking at India as the next place to invest. They asked me for a presentation on India because I was the most interested. After submitting my input, and the government doing their due diligence, they identified interior wood finishing products, furnishings, doors, and windows as the sector where BC could become active immediately while wider markets were being developed.
Our coastal species of Douglas Fir, Hemlock and Western Red Cedar were ideal to compete against their traditional hardwoods which were becoming logged out. India has devastated their own forests and their government has passed a law protecting sixty percent of the forest land against any further logging. Other countries in Africa and Asia, Malaysia, the Ivory Coast and others, who were supplying the Indian market, have also run out first growth timber, and are now going to second growth timber which isn’t as good. So India is now looking for an alternative source and we’re asking, ‘why not Canadian?’ That’s why we’re there.
Increased marketing presence
FII and the BC Government have invested some money and opened an office over there. They hired qualified people and now our potential in the three years has grown.
In 2014 my companies had sales in the half million dollars range. In 2015, sales were $1.5 million. This past year we will have done $3 million, and I’m predicting that in five years, my company alone will be at $10 million in India. That’s because the government took the initiative to invest in India through FII. Still, when Premier Clark spoke at the Truck Loggers Convention earlier this month, and brought up India, China and South East Asia, the reaction was one of surprise. Most of the guys here are blank on India. I’ve been selling into India for twenty years and still few are paying attention. They know China, they know Japan, they know Europe but it took a hundred years to develop. Now they have to educate the BC industry.
Awareness of India still lacking
Tom Sundher: India is the second biggest country in the world and one of the youngest. The average age of the 1.3 billion Indians is twenty-four years, China’s average age is 37 years and rising, Japan’s average is way up (46.9), as is Europe at 43 years. The second world war is over, and that was the impetus for moving our industry forward. Their major building is done and they don’t need as much of our product, Those are all factors.
When I go to India the planes are full of Japanese, and Chinese and when I get to London or Amsterdam, it fills up with Europeans heading to India to do business. I don’t see many Canadians on the flights. I also see lots of Russians, Germans, Romanians, Italians, you name it. They’re doing business there and we are not!
I went to an India-Canada meeting and there was a call that India needs infrastructure; building bridges, roads, railways, everything, yet no Canadian companies are bidding. The British are! The speaker there said if companies don’t have the wherewithal to bid on the big projects, why not fit in somewhere; provide parts or components. Still you have to go there and talk to people. Canadians are not doing that. They seem uninterested in India because, either they aren’t aware of it, or they think ‘if you’re already selling all of your wood why do you need India?’ That’s what they said!
US tariff game is on again
Now Canada’s back is up against the wall because the US has said they’re going to put a tariff on our lumber. We’ve been fighting this issue for a hundred years. It’s not going away, so why don’t we find new markets?
China is a big market for our wood, but they’re not buying high-grade because they’re only building construction forms for concrete instead of houses. After the concrete sets, it’s either burned or remanufactured into packaging material. They’re not buying high grade from the Japanese or European high-grade either, but India is. As our other markets diminish we need to be developing India.
Ray Hudson: With the new American President whose stated goal is to create more jobs in the States, what do you see the impact will be on us?
Tom Sundher: I believe there should be no impact if you want to look at it in real terms, because their domestic shortfall is 35%. They have to import timber because they don’t have the logs. They want cheap access to our logs. That’s why they keep yelling about stumpage fees and so on. When we ship logs down to the US, we don’t put a duty on them like the Americans do. I think it’s because the Canadian Government has higher interests in selling beef and all sorts of other products to the United States, they’re afraid a tariff from us will affect sales of those other commodities. Do you think that’s right? I don’t! It’s a political game of trade-off and I’m saying that they need our lumber, so at the end of the day they’re either going to pay for it or get rid of the tariff, and in the meantime we should be finding alternate markets for the wood, like India or
Vietnam, Korea, and all of the other Southeast Asian countries. Go after them, and keep developing our traditional markets. China, Europe and Japan aren’t going away. But again I say, it seems the companies don’t want to put the effort into developing new markets. Our guys would rather just write orders. They have to get busy and do a marketing program, which costs money.
I do compliment the FII which is doing a very good job, and I compliment the BC Government for committing another three million dollars to the FII budget (one million dollars per year to bring it to five million dollars). This increased funding has also allowed them to increase their staff by four more marketing development people who will assist all our companies. This is a good thing.
Again, I say we have to put the effort into developing new markets where we think there is potential and not worry so much about the markets that are declining.
New policy needed for new times
Our forest policy has to be changed to conform to the current requirements, our government has to change its policies so there’s infrastructure spending done in BC. In the 1940’s and 1950’s it was the tree farm license system, that encouraged the industry to build their plywood plants, pulp mills and all that, because the timber supply was assured. That has changed and we need to develop new policy for the new reality of today. That’s all I’m saying to the government: figure out how to invigorate Powell River, Port Alberni and all those cities formerly built around the industry, by taking product we have and turning it into a finished product the world wants. Don’t cry over the business we’re losing, go out and replace it. That’s what I’m saying!