Canadian Occupational Projection System (COPS)
Industrial Summary
Forestry and Logging
NAICS 1131; 1132; 1133; 1153
This industry comprises establishments primarily engaged in logging; timber tract operations; forest nurseries; and related support activities such as transportation, reforestation, pest control and firefighting services. Logging and support activities are the two largest segments, accounting for most of production and employment. While direct exports represent a small portion of total revenues, the forestry industry strongly relies on sales from the wood products and paper manufacturing industries which export a large share of their production, mainly to the United States. The industry employed 50,700 workers in 2021, largely concentrated in British Columbia (38%), Quebec (30%) and Ontario (12%), with a workforce primarily composed of men (82%). Key occupations (4-digit NOC) include:
- Logging machinery operators (8241)
- Chain saw and skidder operators (8421) Supervisors, logging and forestry (8211)
- Forestry technologists and technicians (2223)
- Logging and forestry labourers (8616)
- Silviculture and forestry workers (8422)
- Transport truck drivers (7511)
- Conservation and fishery officers (2224)
- Managers in natural resources production and fishing (0811)
- Heavy-duty equipment mechanics (7312)
- Forestry professionals (2122)
The Canadian forestry and logging industry experienced negative real GDP growth over the period 2012-2021, as it was hit by cyclical challenges and structural changes in demand for wood and related products. After being severely affected by the fallout of the U.S. housing market prior and during the recession of 2008-2009, production partly recovered from 2010 to 2015 before trending down again from 2015 to 2020. The industry faced numerous challenges in the past several years, including lower demand for paper products due to the digital transition; the worst-ever fire seasons of 2017 and 2018 in British Columbia; the return of U.S. tariffs on Canadian exports of softwood lumber; and the significant decline in Canada’s housing starts in 2018 and 2019. Unsurprisingly, the COVID-19 pandemic resulted in another negative year in 2020 before production straightened in 2021 in response to strong housing demand and renovation spending, which sent lumber prices skyrocketing. Indeed, with the increase in disposable income (arising from government support programs and a large accumulation of savings) and the continuation of home confinement and telework policies, many households searched for a bigger house or a new house away from urban areas or turned to home improvements. But the rebound in forestry’s output was not strong enough to offset the downward trend observed prior to 2021, resulting in a contraction of 0.6% per year on average in real GDP for the entire period 2012-2021. Despite the decline in production, employment expanded by 0.7% annually during the same period. This situation can be explained by a decrease in productivity, largely attributable to the mountain pine beetle infestation and devastating forest fires in British Columbia, which have negatively impacted productivity in the industry as the quality and accessibility of commercially viable timber decreased significantly. On average, productivity fell at an annual rate of 1.3% over the past ten years.
Over the projection period, output growth in forestry is expected to return to positive territory, although it will remain relatively weak, constrained by an additional decline in production in 2022 (as lumber prices fall back), the slowdown anticipated in residential investment across North America, lower demand for paper products, and limited supply of merchantable timber. The surge in housing prices and higher mortgage rates are expected to reduce new home construction and resale activity, restraining growth in renovation spending on both sides of the border, particularly in the short to medium term. A bit of cyclical recovery in the demand for housing is expected in Canada over the longer term, in response to higher immigration and stronger pressures on housing supply. On the other hand, housing starts are expected to stagnate in the United States, where builders currently have a huge backlog of unsold homes. Population aging and the resulting shift in the composition of housing starts from single-unit homes toward multiple-dwellings (duplexes, apartments and condominiums), which require less wood by unit of output, will also temper demand for wood products. Moreover, the imposition of U.S. tariffs on Canadian softwood lumber will continue to represent an obstacle for the industry, although the reduction of the tariff announced in the summer of 2022 (from 18% to 12%) will bring some relief to U.S. homebuilders and Canadian producers. At the same time, reduced supplies of merchantable timber caused by the pine beetle infestations and massive wildfires are expected to scale back production when salvage operations begin to wind down and annual allowable cuts (AAC) are reduced. The negative outlook projected in the pulp and paper industry will also inhibit output growth in the forestry industry.
On a positive note, the emergence of the biomass fuel industry and the increasing use of wood as a “greener” alternative in building construction are expected to support demand for forestry products over the long-term horizon. Indeed, mass timber construction represents an important opportunity for Canada’s forestry and logging industry, particularly when considering the underwhelming prospects for North American single-family home construction. Several factors are supporting the growing use of wood in mid- and high-rise buildings, including advances in wood product technology, environmental concerns, and changing building codes. Under this perspective, the industry could benefit from the acceleration anticipated in non-residential building investment over the projection period, alleviating some of the weakness anticipated in residential investment. On average, real GDP in the industry is projected to grow by 0.4% annually from 2022 to 2031. This improvement relative to the past decade is expected to result in employment growth averaging 0.8% per year as productivity is projected to keep declining, albeit at a slower pace than in the past (-0.4% annually). In fact, a large part of the employment gains is expected to occur in 2022 as productivity growth should resume as soon as 2023. But productivity will be slow to return to its pre-pandemic level as the reduced timber supply will change the size and location of available timber stock. Renewed growth in productivity will result in more moderate gains in employment for the rest of the projection period as the exode of youth from rural communities and the growing number of lumbermen in their retirement years will continue to exert pressures on the industry’s workforce.
Real GDP and Employment Growth Rates in Forestry and Logging
Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.
Real GDP | Employment | |
---|---|---|
2012-2021 | -0.6 | 0.7 |
2022-2031 | 0.4 | 0.8 |
Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.