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

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especially in the east, has received considerable federal governmentfinancial support, notably from the former Department of RegionalIndustrial Expansion (ORIE) and its predecessor, the Department ofRegional Economic Expansion (OREE). Funds from these departmentswere available to all firms to maintain old mills in old locations and,less recently, to generate new capacity in new locations. Primarilyconcerned with employment, federal subsidies were not guided by acomprehensive strategy for forest industries and have supported afragmented approach to investment decision-making within theindustry.'!The Scandinavian approach to modernization differs from theCanadian approach in several respects. In particular, in Scandinaviadomestically manufactured and designed technology is given highpriority so that, for example, a typical mill modernization programwould buy well over 90 per cent of its equipment from local sources.The close ties between forest-product firms and equipment suppliersalso encourage innovation in, for example, new pulping processes andhigher value papers. Moreover, the Scandinavians are more willingthan Canadians to look at long-term consequences and marketingconsiderations. Compared to the case in Canada, debt-equity ratiosare often higher and more firms favour entire mill replacement.Government support of modernization programs is also less constrainedby short-run direct employment effects and tends to selectivelyfavour stronger proposals.In Canada, in contrast, despite a cumulatively high level of investmentour mills are not equipped with the latest technology. Only afew of the larger firms seem to incorporate R&D into. their thinkingregarding investment strategies. Canadian firms lack explicit andaggressive technological policies. Technological efforts have beenpartial and increasingly threatened by short-run financial considerations.In addition, although both federal and provincial governmentshave "intervened" considerably they have no clear design forthe industry with respect to the generation and diffusion of technology.There are no Canadian government goals to raise the forestindustry's technological capability, to be a technological leader, oreven to be a net exporter of forest-product technology. Is a philosophyof laisser-faire in this regard in Canada's interests? It is hightime to formulate an innovation policy for the Canadian forestproductindustries.98
Chapter 6Promoting In-House R&Din the CanadianForest-Product IndustriesFree trade is almost a sideshow. The central issues of internationaltrade policy now concern the relative speed at which nationaleconomies are evolving to higher value production.'The argument that we should let "the market" ease us out ofdeclining industries is unconvincing, because the very same nonmarketpressures are operating right across the industrial spectrum.'If the Canadian forest-product industries are to maintain, let aloneenhance, their competitive position in global trade a commitment totechnological innovation and excellence is essential. They need innovationsthat will help them use forests more effectively, that meet theexigencies of local conditions, that improve labour productivity and,most important, that permit rapid penetration of a wider range ofgeographical and industrial markets, especially higher value markets.The Canadian forest-product industries estimate that during thenext five years at least $20 billion in new investment will be necessarysimply to remain competitive and that more capital would be requiredto establish Canadian companies in a position of leadership.' Inadequateprofits have often prevented such investment; yet a morediversified industrial structure in which value maximization is givengreater priority would enhance rates of return on investment andincrease profits. Moreover, the enormous cost of modernization is agood reason for industry and government to develop a coherent innovationpolicy for the forest-product industries. Demands for newplant and equipment offer a massive opportunity to strengthen thesupply industries.The Constraints of an Export Staples MentalityIt will not be easy to convince Canadian forest-product firms (andsupplying firms) to innovate more. Since their beginnings, when firmsexploited Canadian forests on behalf of the British Admiralty, theCanadian forest-product industries have been dominated by an99
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Science Council of Canada100 Metcal
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ContentsForewordAcknowledgments1113
Page 7 and 8:
In-House R&D by Equipment Suppliers
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Table 2.5: R&D Employment in 10 Can
Page 11 and 12:
ForewordTechnological innovation an
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adapted sufficiently rapidly to the
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Finally, the author interviewed sen
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Table 1.3: Degree of Foreign Contro
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Figure 1.1: Innovation Patterns and
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Since 1945 the pace of technologica
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Toward Reliance on Research rather
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science occurred between 1900 and 1
Page 28 and 29:
Forestry Sector R&D SystemIn Canada
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up its forestry research group at N
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and one other that was strongly ori
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closely involved in the establishme
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to vet and control research priorit
Page 38 and 39:
In-House R&D by Equipment Suppliers
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product. One, by no means atypical,
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only internal source of dissolving
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of which only 18 per cent came from
Page 46 and 47: New information can be generated by
Page 48 and 49: Chapter 3The R&D System andHow It W
Page 50 and 51: Table 3.2: Summary Characteristics
Page 52 and 53: Sixteen firms provided details on s
Page 54 and 55: The Opco Process: A Case Study of I
Page 56 and 57: however, within the last two decade
Page 58 and 59: in 1959, and a full-scale experimen
Page 60 and 61: Papritection was developed as follo
Page 62 and 63: Further tests were conducted in 198
Page 64 and 65: fully automatic machines, and its s
Page 66 and 67: Chapter 4Technological Capability a
Page 68 and 69: Table 4.2 provides measurements of
Page 70 and 71: forest-product equipment patents, w
Page 72 and 73: Foreign-Ownership and In-House R&DT
Page 74 and 75: Technological Liaisons: Forest-Prod
Page 76 and 77: for this deficiency the federal gov
Page 78 and 79: On the other hand, three of the lea
Page 80 and 81: one of Sweden's forest-products gia
Page 82 and 83: Capital Investments in the Canadian
Page 84 and 85: and Quebec accounted for 33.9 per c
Page 86 and 87: Table 5.5: Canadian Forest-Product
Page 88 and 89: Scandinavian manufacturers are in t
Page 90 and 91: was implemented smoothly and manage
Page 92 and 93: the foundations were poured, until
Page 94 and 95: inherent capabilities were never fu
Page 98 and 99: "export staples mentality." The bel
Page 100 and 101: size of the conglomerates would cer
Page 102 and 103: the concept of flexibility explicit
Page 104 and 105: This author therefore recommends th
Page 106 and 107: with respect to technology transfer
Page 108 and 109: of the R&D system and influence the
Page 110 and 111: operations, attitudes toward innova
Page 112 and 113: limited R&D base, but they do empha
Page 114 and 115: The small size and non-innovative n
Page 116 and 117: Promoting In-House R&D in the Fores
Page 118 and 119: Notes1. The Technological Challenge
Page 120 and 121: 7. For example, nj. Daly, "Weak Lin
Page 122 and 123: 7. P.G. Mellgren and E. Heidersdorf
Page 124 and 125: this R&D facility has become even s
Page 126 and 127: 3. K. Noble, "Forest Industry Urged
Page 128 and 129: Publications of the ScienceCouncil
Page 130 and 131: Reports on Matters Referred by the
Page 132 and 133: No. 40. Government Regulation of th
Page 134 and 135: 1981An Engineer's View of Science E
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