Forestry

The Peace Country region is the province’s second largest producer of forest products, such as lumber, oriented strand board (OSB) and wood pulp.  It is also the province’s largest producer of OSB.  In 2009, the region accounted for 26.1% of all the wood fiber processed in the province.  As a result, two of the region’s largest manufacturing sectors are wood products (mainly lumber and OSB) and pulp and paper.  

Of the 5.5 million cubic metres of logs consumed by these two manufacturing sectors in the Peace Country region in 2009, 44% was used to produce lumber, 37% to produce pulp and paper, and 19% to produce OSB.  OSB production tumbled by 55% between 2005 and 2009.  Over the same period, lumber production rose 2% and pulp and paper production fell by 5%. 

In 2009, forestry accounted for about 5,900 jobs (direct plus indirect and induced jobs) in the region, down from 9,250 jobs in 2005. About 2,100 of these jobs are direct jobs (processing jobs), a 35% decline from 2005.  In Census year 2006, total employment in the region was 68,235.  As the forestry sector accounted for an estimated 8,300 jobs (direct plus indirect and induced) in the same year, about 12% of the region’s jobs were directly or indirectly related to the forestry industry.  The loss of more than one-third of forestry employment between 2005 and 2009 would have a serious impact on the entire region.

Over the past four years, the value of shipments by Alberta’s wood products sector fell by one-half, mainly because of the precipitous decline of the U.S. housing market.  Between the first quarter of 2006 and the first quarter of 2009, U.S. housing starts fell from more than two million starts (on an annual basis) to fewer than 600,000 starts.  During the past 18 months starts have remained in the 500,000 to 600,000 range.  Canadian housing starts fell by one-half between mid-2008 and mid-2009, but have recovered most of their losses since then.  Alberta housing starts also peaked in 2006, and fell by more than one-half between 2006 and 2009.  Since then they have recovered strongly, but are not expected to return to 2006 levels over the near future.

The value of shipments by the Peace Country region’s wood products and pulp and paper sectors totaled about $720 million in 2009, a 38% decline from 2005.  The region also produces about $25 million of secondary wood products, such as cabinetry and millwork.

The global economic and U.S. housing crises have had a profound impact on forest product prices.  Prices for lumber had dropped by more than one-half between early 2006 and the early of 2009.  However, these prices have increased sharply by about one-third since then.  OSB prices peaked in early 2004 at nearly US$500 per thousand square feet, and bottomed out in the first half of 2009 at US$120.  Since then, they have risen to about US$200.  Pulp prices dropped by less than 30% between mid-2008 and the second quarter of 2009 and reached new highs by mid-2010.

Date Updated:
RDP-2434