Biological Diversity Ecosystem Condition and Productivity Soil and Water Role in Global Ecological Cycles Economic and Social Benefits Society's Responsibility
Economic and Social Benefits Distribution of Benefits Sustainability of Benefits
Indicator 5.1.1 - Contribution of timber products to the gross domestic product Indicator 5.1.2 - Value of secondary manufacturing of timber products per volume harvested Indicator 5.1.3 - Production, consumption, imports, and exports of timber products Indicator 5.1.4 - Contribution of nontimber forest products and forest-based services to the gross domestic product Indicator 5.1.5 - Value of unmarketed nontimber forest products and forest-based services
Indicator 5.1.2 - Value of secondary manufacturing of timber products per volume harvested
supporting indicator


An increase in domestic manufacturing of raw materials will also cause an increase in domestic employment and revenues related to this resource. Several provinces have legislated that roundwood cut on crown land must be manufactured at least once in the province. Following primary manufacturing into lumber, wood panels, paper pulp, or paper, the forest product is generally exported.

However, lumber is sometimes further manufactured to make building structures or wood pallets, wood panels are sometimes made into kitchen cabinets, and paper and cardboard are transformed into bags or boxes. This secondary manufacturing generates additional employment and revenue, with a corresponding increase in the contribution made by the forest industry to the Canadian economy. This is often seen as a means by which to increase the domestic economic impact of the forest industry without increasing the harvest.

Although secondary manufacturing of the resource is desirable from the standpoint of its economic impact, it is not always possible to implement. Fundamentally, there has to be a market for the secondary manufacturing product and the Canadian industry has to be able to access that market competitively.

To examine the changes in shipments of secondary manufacturing products (SMP) over time, the value of these shipments was adjusted for inflation by using the index implicit in GDP prices. The value of secondary manufacturing shipments was then divided by the volume of the roundwood harvest in Canada to establish trends in the value of shipments per harvested cubic metre of wood. For the purposes of this indicator, the secondary manufacturing subsectors of the forest industry are the wood industries, and paper and allied industries that use the primary manufacturing products (PMP) to make other products.

However, due to a major revision of Statistics Canada's industrial classification system, the data for this analysis came from two different data series. The first series is based on Statistics Canada's Standard Industrial Classification System (SIC), while the second is based on the North American Industry Classification System (NAICS), and it became apparent that too much information was missing to reconcile the two data sets. The components that make up the forest industry under each of these systems are somewhat different. For instance, under the NAICS, the kitchen cabinet component is not a component of the forest industry, as it was under the SIC.

Under the SIC classification of economic activities, the value of shipments varied between $59/m3 and $76/m3 (Figure 5.1d). The adoption of the NAICS industry classification system reduced the value of shipments of forest SMP because some components, like kitchen cabinets, are no longer considered part of the forest industry. The value of shipments of SMP under NAICS are on average $12/m3 lower than those under the SIC. However, the value of shipments of SMP has increased so significantly in recent years that they have exceeded the highest levels reached under the former classification system.

Figure 5.1d

Figure 5.1d Canadian shipments of secondary manufacturing products per volume harvested. (Source: Statistics Canada 2004)
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Another way to look at this issue is to determine the relative share of the value added in the primary and secondary manufacturing products of the forest industry. The value added is the value of shipments minus the cost of intermediate inputs (materials and energy). This type of analysis avoids the double accounting of the PMP that are turned into SMP.

PMP are at the heart of the Canadian forest industry, but the share of the value added from secondary manufacturing has been increasing gradually since 1995 (Figure 5.1e). This share accounted for 31% of the total value added by the industry in 2003, up from only 16% in 1995.

Figure 5.1e

Figure 5.1e Share of the value added by the primary and secondary manufacturing industries in Canada. (Source: Statistics Canada 2004)
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Secondary manufacturing industries are not distributed equally throughout Canada and are often located closer to the consumer than to the resource. Ontario, where more than 40% of the Canadian population lives and where about 50% of housing starts occur, has the most secondary manufacturing industries. In 2003, a little more than 46% of the overall value added by Canadian secondary manufacturing industries was generated in Ontario, followed by Quebec with 32%, and British Columbia with 8%. The other provinces and territories accounted for the remaining 13% of the value added through secondary manufacturing in Canada (Figure 5.1f).

Figure 5.1f

Figure 5.1f Jurisdictional share of the value added by the secondary manufacturing industries in Canada (Source: Statistics Canada 2004)
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The contribution of secondary manufacturing to the value added has grown in each province over the last decade. In Ontario, secondary manufacturing industries now almost rival primary manufacturing industries in terms of value added, accounting for 49% of the total value added in the province in 2003. Similarly in Quebec, secondary manufacturing industries accounted for 33% of the province's value added in 2003. In British Columbia and other provinces and territories, secondary manufacturing industries accounted for 12% and 20%, respectively, in 2003 (Figure 5.1g).

Figure 5.1g

Figure 5.1g Share of the value added by the primary and secondary manufacturing industries within jurisdictions in 2003 (Source: Statistics Canada 2004)
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The recent growth of secondary manufacturing in the forest products industry has been impressive, with secondary manufacturing industries expanding more quickly than primary manufacturing industries between 1995 and 2003 in all provinces for which data are available. The rise of the secondary manufacturing industries is making it possible to increase the contribution of the forest industry in terms of gross domestic product, revenue, and employment, without increasing harvesting levels.