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Economic Contribution of the Primary Forest Products Industry to Northwestern Ontario



The Northwest Forest Network

The Northwest Forest Network is a non-profit association of Northwestern Ontario forest workers and companies representing the full range of timber harvesting, transportation, processing, manufacturing, and reforestation and tending activities carried out within the region. The network also includes supporting companies, labour organizations, community representatives and groups, and other interested individuals. The Network's main purpose is to promote understanding of the industry's role in the regional economy and of the underlying issues and trends affecting its viability by coordinating  the  collection and dissemination of factual and relevant information to the industry, government, educational authorities, and the public.

Northwest MapThe Northwest Forest Network covers the Northwestern region of Ontario,  comprising  the Territorial Districts of Kenora, Rainy River and Thunder Bay.

This region covers about 523,000 square kilometres or approximately 57% of the total area of Ontario.  The productive  forest is generally located south of latitude 51-1/2 degrees North.

In 1997 the Northwest Forest Network commissioned William L. Lees and Associates to prepare the first report defining The Economic Contribution of the Primary Forest Products Industry to Northwestern Ontario. This report represented the first time that a comprehensive analysis was done on the economic contribution of the forest industry in the Northwest.  The report was released in February of 1998 during the Lands for Life process and provided factual, relevant, and current information for businesses, regional organizations, communities, government, and the forest industry to use not only with regards to the Lands for Life process but for a variety of other purposes Two years later the Network still receives requests for this report.

The implementation of Ontario's Living Legacy and the establishment of the Ontario Forest Accord, which were the outcomes of the Lands for Life process, have been initiated over the second half of 1999. During this period the Network, recognizing the value of the first report and the opportunity to provide baseline economic data to the Province's commitment for no net job losses in the forest sector, commissioned William L. Lees and Associates to prepare a 1999/2000 edition of The Economic Contribution of the Primary Forest Products Industry to Northwestern Ontario.

This report once again enables the Network to meet its mandate of providing factual and relevant information to the people, businesses, and communities of Northwestern Ontario.

The report confirms the stable, healthy state of the pulp and paper sector, and indicates growth in the solid wood and panel board industries in the region. The economic contribution to the Northwest of the industry has been sustained over the last two years, despite uncertainty during the Lands for Life process.

The members of the Northwest Forest Network are pleased to have been able to facilitate this update of the regional industry's contribution to our economic and social welfare.  The Network looks forward to the  report being useful as both an educational tool and as a source of general information reflecting the vital importance of this renewable resource-based industry to the people and communities of Northwestern Ontario.

Regional Forest Products Industry

The Northwestern Ontario forest products industry is the major primary economic contributor  to the region. The thirty major mills (sixteen sawmills, ten pulp/paper mills, and four panelboard plants)  and related woodlands harvesting, reforestation and tending, and transportation operations are dispersed throughout the region, sustaining high-paying jobs and economic activity in virtually all communities.  This is a true "export industry" which processes a renewable natural resource into commodities which are consumed outside the area of production, thus bringing revenue into the region from beyond. Industry Canada estimated that in 1996 the Ontario forest products industry generated a positive trade balance of $4.7 billion, a figure exceeded only by the auto parts industry.

Industry Regional Economic Contribution

The industry continues to employ about 14,900 people directly in mills, harvesting, reforestation, tending and transportation activities within the region, and together with government staff engaged in related forest protection activities (firefighting and pest control) and administration, it is estimated that the total direct employment generated within the region (including contracted wood harvesting and delivery activities) is in the order of 15,300 full-time equivalent jobs. The total estimated direct payroll, including benefits, is currently about $1.00 billion annually.

The industry is a major purchaser of regional goods and services. These include such items as electrical power and fuels, office supplies, equipment parts and repairs, local hotel accommodation, etc., and a broad range of professional engineering, legal and accounting services.  While detailed data are not available, an analysis of average costs of production suggests that the industry presently spends in the order of $800 million annually on these types of goods and services within the region.  In addition, roughly $250 million was spent annually by the regional industry on capital improvements over the past three years, of which about $50 million annually was retained by the regional economy. Altogether, the industry directly injects about $1.85 billion annually into the regional economy, in expenditures on labour, operational goods and services, and capital improvements.

The effect of these direct industry expenditures is to generate indirect and induced employment within the regional economy. It is estimated that for every direct job, 1.25 additional jobs will be indirectly created and induced by the spin-off effects within the region. On that basis, the 15,300 direct jobs would be supplemented by an additional 19,100 full-time equivalent jobs, for a total of nearly 34,400 direct, indirect and induced jobs, representing about one-third of the total employment available within the region. The total payroll for these jobs is estimated to represent 40 - 45% of the total regional employment income.

Many regional communities are much more heavily dependent upon the employment and employment income generated by the industry than these average and overall figures would suggest. The actual level of dependency in these terms is estimated to run as high as about 70-85% in some cases.

Payments to Governments

The industry makes substantial contributions to federal, provincial and municipal governments, through employment and sales taxes, income tax deductions on behalf of employees, stumpage and royalties, and property taxes. While no precise estimate of the total regional industry contribution is available, PriceWaterhouseCoopers estimated that in 1996 the Ontario industry contributed about $1.3 billion to government coffers. As the regional industry is approximately 40-45% of the provincial total, the regional contribution may be expected to be roughly in the same proportion, i.e. about $600 million. The breakdown between the three levels of government would be approximately:

Federal Government:

Provincial Government:

Municipal Governments:   

$320 million

$230 million

$50 million

Donations to Communities & Local Organizations

The industry presently contributes over $650,000 annually to community projects and local non-profit organizations etc.

Other Resource-dependent Industries

Other regional primary industries dependent on access to crown lands and public resources include mining, and resource-based tourism. The table following provides a comparison of  employment and direct payroll generated by the forest products, prospecting, mining and resource-based tourism sectors within Northwestern Ontario.

  Regional Contribution

Industry Sector


Annual Direct
(including benefits)

Total Direct, Indirect & Induced Employment

Forest Products


$1,004 million




$282 million


Resource-based Tourism


$55 million






The forest products sector generates directly, indirectly and in spin-off roughly five times as much regional employment as the mining sector, and about eleven times as much as resource-based tourism.

The estimated current average pay per person-year, including benefits, for those directly employed, is approximately:

Forest products (Mill):


Resource-based tourism:   


$88,000 million


"Value Added" Observations

Ministry of Natural Resources data indicate that the regional industry utilizes, on average, about 11 million cubic metres of wood fibre annually, of which about 90% is harvested from regional crown lands, the remainder coming from private lands and from beyond the regional boundaries.  As noted above, this quantity of wood throughput generates about 34,400 direct, indirect and induced person years of employment, and results in the injection of about $1.8 billion in annual industry expenditures for labour, goods and services into the regional economy.  A significant proportion of the region's communities are more than half dependent in employment and employment income terms on the continued viability of the industry.

These numbers are absolutely and relatively very large, and it is perhaps useful to try to express them in more easily recognizable terms.   

Consider, for example, the average effect on the regional economy of harvesting, and processing 1,000 cubic metres (about 400 cords) of wood in a regional mill. One thousand cubic metres is the amount of round wood that would be harvested from between 5 and 8 hectares (12 to 20 acres) of typical production forest. It is the amount that would be transported by 15 to 18 typical logging trucks.

Each 1,000 cubic metres of wood thus utilized regionally now generates within the region about:
  • 3.1 person-years of employment

  • $164,000 in industry expenditures for labour, goods and services

  • $55,000 in industry contributions to government

Please refer to body of report for sources of data and basis of analysis.

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