Technology and the Canadian Forest-Product Industries ... - ArtSites

Chapter 5Modernization and theChoice of Machinery andEquipmentForest-product corporations always have technology strategies,although they may be largely implicit. Every decision to purchasea large item of equipment, to modernize a mill, whether in whole orin part, or to build a new mill invariably involves the evaluationof emerging technology and the selection of equipment new to thefirm.' Technology strategies reflect long-term corporate investmentstrategies.During the 1950s and 1960s the forest industry invested in theconstruction of new mills to exploit new sources of timber. Most ofthese new mills were built in western Canada, especially BritishColumbia, and by the end of the 1960s the western industry wasmuch more up-to-date and efficient than the eastern industry. Since1973, however, there have been few new mills, especially in the pulpand paper industry, and the industry has invested in modernizingand streamlining its operations. The only new pulp and paper millsbuilt at new sites in Canada since then have been at Port Cartier in1975 (mothballed in 1979), Amos in 1981, and Quesnel in 1983. Capitalexpenditures, however, have been massive throughout this periodnotwithstanding the sharp decline that occurred in 1981. Over thepast 10-15 years the Canadian forest-product industry has concentratedon "modernization" at existing sites.Investments in plant and equipment reveal a demand for technology.The first part of this chapter reviews investment trends on thebasis of the crude aggregate data available for 1971-83 and commentson the basic purpose of the investment decisions. Next it examinesseveral case studies in the wood-processing and pulp and paperindustries to determine whether firms are buying off-the-shelf technologyor modifying existing technology and whether they are purchasingtechnology new to the Canadian industry or new globally. Itidentifies the factors that influence a firm's choice of equipment. It isessential that technology policy for the forest industry be consideredas part of a broad investment strategy.83