As B.C.’s forestry sector continues to hemorrhage jobs and investment, it is easy to assign blame for the current crisis.
Since 2023, it is estimated 15,000 forest sector jobs and 21 mills have been lost.
The two primary suspects for this bloodbath are Donald Trump and David Eby.
Trump for his tariffs, layered onto softwood lumber duties, which makes B.C. lumber more expensive, and Eby for environmental and land use policies that have essentially made B.C.’s working forests unworkable.
But there is, I think, another force at play that needs to be part of the outlook for B.C.’s forestry sector.
The North American housing market, upon which B.C.’s lumber industry was largely built, has begun a long, slow decline, due to demographics.
This explains why the NDP government has been pushing diversification not only of markets, but of products as well, like mass timber.
“We can no longer be a dimensional lumber sector that produces commodity lumber for Americans,” B.C. Forests Minister Ravi Parmar recently told me. “We have to be so much more than that.”
The bigger the boom, the bigger the bust
Resource industries like forestry are accustomed to boom and bust cycles. But the bust that is coming over the next decade promises to be unparalleled because the boom was unparalleled.
The great Baby Boom generation drove new home construction cycles in North America from about the 1970s to the mid-2000s. B.C.’s forest industry grew in parallel to that generational boom.
In 1972, new home construction in the U.S. peaked at 2.4 million new homes. Annual new home construction in the U.S. peaked again in 2006 at 2 million. The last high-water mark was 2021, when U.S. housing starts hit 1.6 million.
But demographic trends in the U.S. suggest the American home construction market will never again be what it was over that four-decade period..
Harvard’s Joint Center for Housing Studies projects a long-term decline in new home construction in the U.S. over the next two decades, as a result of demographic changes.
It estimates 11.3 million new housing units will be built between 2025 and 2035. That works out to 1.13 million new housing starts per year – half what it was during the peaks of 1973 and 2006.
“This would be less household growth than in any of the past three decades, when growth ranged from a low of 10.1 million households in the 2010s to a high of 13.5 million in the 1990s,” the study says.
“In the following 10-year period after 2035, the pace of household growth is projected to slow even further, with the number of households projected to rise by only 5.1 million between 2035 and 2045.
“This would be the lowest rate of growth in any decade in at least 100 years.”
The Harvard study attributes this slowdown to slowing population growth and aging.
“In the coming decade, rising mortality and fewer births among an aging population are expected to first slow and then turn negative the growth in the native population, leaving future population growth entirely dependent on future immigration.”
Can market diversification save forestry?
The B.C. government has been frantically trying to grow markets for B.C. wood products in other countries, including China, India and Japan.
But China and Japan have an even worse demographic trajectory than the U.S. Both have large aging and declining populations. The biggest markets in those countries may be nursing homes.
“Market diversification must happen, in our view,” Claire Huxtable, analyst for ERA Forest Products Research, said at a panel discussion Friday at the Council of Forest Industry’s annual conference.
But she cautioned that there is a very big hole to fill. Canadian lumber exports to the U.S. in 2024 — before Trump’s tariffs were layered onto duties — were 12 billion board feet, she said.
As of the last fourth quarter, exports were down 25%, leaving 3 billion board feet of lumber “that needs to find a new home,” she said.
Huxtable noted that China took 3.5 billion board feet of Canadian lumber in 2013. Last year, it took just 500 million board feet.
“This mirrors what’s been happening in China’s residential market,” Huxtable said.
As for Japan, its rapidly aging population is expected to shrink from 124 million to just 100 million by 2050.
Last year, Japan took about 400 million board feet of Canadian lumber, and other Asian countries (other than China) took about 200 million board feet, Huxtable said.
“So doubling that over the next 10 years is possible,” she said. “There are targeted opportunities. But if I add China, Japan and ‘other Asia’ together, we’re at 1.1 billion board feet.”
That is one-third of the current 3 billion board feet shortfall that has occurred just since 2024.
B.C. no longer the last one standing in downcycles
The recent average price for Western Canadian SPF lumber has been $460 per thousand board feet, which is below the break-even point for some lumber mills.
Some sawmills in the U.S. have shut down and taken curtailments as a result of lower demand and prices, but B.C. has far surpassed any other jurisdiction when it comes to mill closures.
Whereas B.C. sawmills were always the last ones standing in previous down cycles, they are now the first to go down.
“All the change you are seeing, pretty much, over the last five years is happening in one province,” said David Elstone, a professional forester with the Spar Tree Group.
The decline in lumber production in Canada over the last decade has come mostly from B.C.
Whereas B.C. produced 12.6 billion board feet of lumber in 2014, it produced just 6.7 billion board feet in 2024, while production levels in other parts of Canada remained consistent.
A combination of low lumber prices, American softwood lumber duties and tariffs, and lack of affordable fibre has resulted in waves of sawmill and pulp mill closures in B.C.
On a State of the Forest Economy panel at Friday’s COFI convention, panelists were asked what a recovery looks like.
Hamir Patel, paper and forest products analyst for CIBC Capital Markets, was blunt in his pessimism.
“I don’t think there’s a recovery,” he said. “I think we’re probably going to lose, maybe, another at least one or two pulp mills here in the province. Perhaps for at least the next three years, maybe another billion board feet of production drops out.
“In the absence of a major change in policy from the government, I don’t see a recovery. It’s more how you mitigate the further decline.”
Critical to mitigating that decline is access to fibre.
The provincial government has pledged to make 45 million cubic metres of timber available for harvest. So far, it’s not coming even close to seeing that level of harvest occurring.
Parmar told me that, even when cutting permits are issued, they are not being used, because low lumber prices, duties and tariffs are making it uneconomic to harvest.
“We have over 45 million cubic metres that is permitted — part of our standing timber inventory — and in many parts of the province, it’s not moving,” Parmar said.
The Eby government can’t be blamed for, and can do nothing about, low American lumber prices and high American duties and tariffs.
But it can be blamed for, and can do something about, the fundamental lack of fibre that is putting B.C. forestry companies at further risk.
“We can’t do much about the U.S. right now, but we can do stuff that’s within our back yard,” said Canfor CEO Susan Yurkovich.
“We need secure, predictable access to fiber at a reasonable cost, and we have the ability to bring mills back online.”
At a closing address at last week’s COFI conference, Eby listed tariffs, wildfires and the Mountain pine beetle infestation of the early 2000s as some of the causes of the current crisis in forestry.
“I also want to recognize that the provincial government policies have had an impact on the industry,” he added.
“We need to do a better job of consolidating and then getting out of the way to ensure the fibre supply that you need usable to be delivered.”
Nelson Bennett’s column appears weekly at Resource Works News. Contact him at [email protected]
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