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Paper and Wood Products Cluster

October 2004

Paper and Wood Products ClusterPulp and PaperPrintingFurnitureConstruction Timber

(French edition ISBN 2-923013-24-7 )

Legal deposit: March 2005Bibliothèque nationale du QuébecNational library of Canada

ISBN 2-923013-25-5

All rights reserved for all countries.The content may not be copied in any way or translated in whole or in part without the permission of the Communauté métropolitaine de Montréal.

ISBN 2-923013-60-3(French edition ISBN 2-923013-48-4)

Legal deposit : March 2005Biblliothèque nationale du QuébecNational Library of Canada

All rights reserved for all countries.The content may not be copied in any way or translated in whole or in part without the permission of the Communauté métropolitaine de Montréal

•� Paper and Wood Products

Note to the readerThrough its Economic Development Plan, the Communauté métropolitaine de Montréal (CMM), has adopted a competitiveness strategy centred on dynamic and innovative business clusters. In the fall 2003, the CMM launched a cluster identification program for metropolitan Montreal. This marked the first phase of a process leading to the development and launch of an integrated economic development and innovation strategy.

For each of the sectors studied, the CMM wishes to join forces with all the territorial bodies and economic stakeholders concerned. It means to concentrate its efforts on its own role of planning and coordination and does not intend to take the place of existing players and decision-makers in the field, whose role it is to agree on a development plan under the supervision of a relay organization representing their sector.

This document is divided into two distinct sections:

• The first section presents a configuration of the paper and wood products cluster; • The second section groups together the ideas of the main players of that particular cluster and their thoughts on future development.

The cluster configuration was based on documentary research confirmed by stakeholders in the cluster itself. Comments were then made by industry officials in the ministries concerned. This first section describes the value chain of the cluster and goes on to identify the organizations or infrastructure contributing to its development. Finally, as economic development transcends administrative or political borders, potential links with other regions of Quebec are indicated, taking into account the niches of excellence developed by certain regions under the ACCORD (Action concertée régionale de développement) program.

While the first section of the document is inherently factual, the second is more subjective, since it reflects the perceptions of the main players in each cluster. These thoughts were gathered in the strictest confidence so as to produce a maximum amount of data. They are focused on two main themes, the state of relational assets and growth strategies. Since we know that relationships between stakeholders are the first source of innovation, it is necessary to identify the relational flow between the various components of the cluster. In the same way, in order to set priorities, we need to know which strategies for growth are favoured by the players in the field.

This document is thus intended as a catalyst for priority actions aiming to energize the strategic process of the cluster and to give direction to its innovative thrust. The process will be carried out in a spirit of openness and dialogue which will eventually enable the Montreal metropolitan area to assert its distinctive capabilities among the world’s most innovative and prosperous cities.

Michel LefèvreConsultant – Economic DevelopmentCommunauté métropolitaine de Montréal


Paper and Wood Products

Towards Niche Markets 7 Pulp and Paper / Large presence in CMM 16 Industrial Chain Pulp, Paper and Paperboard Manufacturing 19 Converted Paper Product Manufacturing 20 Development Factors Research, Financing 22 Training, Structural Organizations 23 Printing / From the Very Large to the Very Small 25 Industrial Chain Printing 27 Publishing 28 Development Factors Research, Training 30 Financing, Financial Assistance 31 Associations 32 Furniture / A Growing Industry 34 Industrial Chain Furniture 36 Development Factors Research, Training, Financing 38 Associations, Structural Organizations 39 Construction Timber / A Difficult Situation 41 Industrial Chain Construction Timber 43 Development Factors Research, Financing 45 Training, Associations 46 Interregional Links Elsewhere in Quebec 49Relational Assets Going Beyond Traditional Impulses 56 Strategic Elements Product Differentiation and Innovation 60 Avenues for Growth Niche Market or Delocalization? 64 Appendices Sources 67 Individuals Consulted 69 Credits 71

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Towards Niche MarketsThe wood-based industries, namely pulp and paper, printing and publishing, furniture and construction timber are all represented in Quebec, providing 10% of all jobs throughout the province. More than half of those jobs are located in the Communauté métropolitaine de Montréal (CMM).

The CMM is a major player in these mature sectors, involving 40% of Quebec businesses, most of which are large companies. In the paper and paperboard sector alone, the area is home not only to major producers such as Abitibi-Consolidated, Domtar and Norampac, but also to large manufacturers such as Johnson & Johnson and Emballages Standard Paper Box.

Almost all major printing and publishing groups have offices in the city: Quebecor Média, Transcontinental, Relizon Canada, Southam Publications and Bell ActiMédia. In the furniture industry, there are El Ran, Bestar and Dorel. And finally, the construction industry is represented by large companies such as Uniboard, Maax and EMCO Building Products.

Pulp and paper — Pulp and paper companies mainly focus on paperboard, packaging and sanitary paper products – all of which are sold locally. Like stationery items, these products are closely related to the printing industry and, despite the presence of large players, these two sub-clusters are mainly composed of SMBs.

Printing — The local printing industry is being increasingly modernized. For example, a number of major city newspapers have redesigned their looks, thanks to their new digital presses. Certain niches such as catalogue and label printing are also growing steadily. In the magazine and book publishing world, computer technology is enabling more and more SMBs to delve into the risky pre-press industry.

Furniture — The furniture industry is also well represented locally. This third sub-cluster is also mainly composed of SMBs, producing mostly added-value niche products in response to the American furniture that has been flooding the market since the Free Trade Agreement was signed.

Construction timber — Finally, construction timber is not as strongly represented in the metropolitan area, but still carries significant weight, as construction is a major sector. Construction material is mainly destined for use in the city, which is where the distribution mechanisms are located.

In these highly competitive sectors, improvements in product quality and production technology are key factors for success. Sectors that can are gradually turning towards niche markets by strengthening their added value. More than 75% of patents handed out in Quebec for these four sectors have gone to businesses in Montreal. It is fair to say that these businesses are quite competitive.


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Montreal Island East End 1,090 Laurentians 620 Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est 630 Blainville 10 Anjou 215 Boisbriand 10 Montréal-Nord 100 Mirabel 10 Saint-Léonard 145 Sainte-Thérèse 10 Saint-Eustache 20 Montreal Island – Central Core 3,270 Saint-Jérôme (outside the CMM) 570 Mercier/Hochelaga-Maisonneuve 1,270 Ahuntsic/Cartierville 125 Lanaudière 275 Plateau Mont-Royal 210 Repentigny 95 Rosemont/Petite-Patrie 170 Terrebonne 170 Ville-Marie 900 Villeray/Saint-Michel/Parc-Extension 85 North Shore 895 Sud-Ouest 390 Côte-des-Neiges/Notre-Dame-de-Grâce 120 Montérégie – South Shore 1,430 Beauharnois 115 Montreal Island – West End 1,400 Boucherville 110 Mont-Royal 305 Candiac 335 Saint-Laurent 1,095 Chambly 85 Châteauguay 45 Montreal Island – South West 835 Delson 10 Lachine 260 La Prairie 25 LaSalle 540 Léry 10 Verdun 35 L’Île-Perrot 20 Longueuil 125 Montreal West Island 460 Mont-Saint-Hilaire 10 Pointe-Claire 130 Saint-Bruno-de-Montarville 15 Dollard-des-Ormeaux/Roxboro 30 Saint-Constant 10 Dorval/L’Île-Dorval 55 Sainte-Catherine 35 Kirkland 10 Saint-Hubert 20 Beaconsfield/Baie-d’Urfé 235 Saint-Mathieu 10 Varennes 15 Montreal Island 7,055 Vaudreuil-Dorion 425 Laval 350 Montreal Metropolitan Area 9,730 Quebec 34,265 Canada 98,400

Employment1 by Borough and City, 2001 — Paper Manufacturing

1. Individuals 15 years of age or older who have a regular workplace or who work from home. People who have no fixed address are not included. N.B.: Figures were rounded to the closest multiple of 5; they may therefore not add up exactly to the sum of the components.

Source: Statistics Canada, Employment by Place of Work, 2001 Census – Figures on Paper Manufacturing represent NAICS code 322.

•10 Paper and Wood Products

Montreal Island East End 2,995 Laurentians 440 Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est 960 Blainville 45 Anjou 940 Boisbriand 65 Montréal-Nord 305 Bois-des-Filion 10 Saint-Léonard 790 Deux-Montagnes 15 Mirabel 30 Montreal Island – Central Core 4,030 Sainte-Marthe-sur-le-Lac 10 Mercier/Hochelaga-Maisonneuve 570 Sainte-Thérèse 35 Ahuntsic/Cartierville 340 Saint-Eustache 90 Outremont 50 Saint-Jérôme (outside the CMM) 145 Plateau Mont-Royal 405 Rosemont/Petite-Patrie 400 Lanaudière 280 Ville-Marie 880 L’Assomption 10 Villeray/Saint-Michel/Parc-Extension 550 Mascouche 30 Sud-Ouest 575 Repentigny 80 Westmount 35 Terrebonne 160 Côte-des-Neiges/Notre-Dame-de-Grâce 225 North Shore 720 Montreal Island – West End 2,515 Montérégie – South Shore 3,640 Mont-Royal 245 Beauharnois 20 Côte-Saint-Luc/Hampstead/Montréal-Ouest 15 Beloeil 40 Saint-Laurent 2255 Boucherville 1,250 Brossard 25 Montreal Island – South West 1,360 Candiac 225 Lachine 475 Châteauguay 35 LaSalle 820 Delson 55 Verdun 65 La Prairie 20 Longueuil 1,050 Montreal West Island 710 Mont-Saint-Hilaire 10 Dollard-des-Ormeaux/Roxboro 45 Pincourt 10 Dorval/L’Île-Dorval 215 Richelieu 10 Pointe-Claire 280 Saint-Basile-le-Grand 25 Kirkland 30 Saint-Bruno-de-Montarville 95 Beaconsfield/Baie-d’Urfé 105 Saint-Constant 30 L’Île-Bizard/Ste-Geneviève/Ste-Anne-de-Bellevue 10 Sainte-Catherine 10 Pierrefonds/Senneville 25 Sainte-Julie 160 Saint-Hubert 375 Montreal Island 11,625 Saint-Lambert 55 Saint-Lazare 10 Laval 1,470 Saint-Mathieu-de-Beloeil 20 Varennes 20 Vaudreuil-Dorion 65

Montreal Metropolitan Area 17,460

Quebec 27,770

Canada 89,145

Employment1 by Borough and City, 2001 — Printing


Source: Statistics Canada, Employment by Place of Work, 2001 Census – Figures on Printing represent NAICS code 323.


Employment1 by Borough and City, 2001 — Publishers


Source: Statistics Canada, Employment by Place of Work, 2001 Census – Figures on Publishers represent NAICS code 5111, specifically Newspaper, Periodical, Book, and Database Publishers.

Montreal Island East End 385 Laurentians 260Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est 50 Blainville 25Anjou 155 Lorraine 10Montréal-Nord 60 Sainte-Thérèse 35Saint-Léonard 120 Saint-Eustache 90 Saint-Jérôme (outside the CMM) 100Montreal Island – Central Core 7,415Mercier/Hochelaga-Maisonneuve 50 Lanaudière 165Ahuntsic/Cartierville 155 L’Assomption 25Outremont 185 Repentigny 30Plateau Mont-Royal 1,385 Terrebonne 100Rosemont/Petite-Patrie 240 Ville-Marie 4,895 North Shore 430Villeray/Saint-Michel/Parc-Extension 115 Sud-Ouest 125 Montérégie – South Shore 830Westmount 60 Belœil 35Côte-des-Neiges/Notre-Dame-de-Grâce 205 Boucherville 110 Brossard 90Montreal Island – West End 505 Candiac 10Mont-Royal 85 Chambly 20Côte-Saint-Luc/Hampstead/Montréal-Ouest 60 Châteauguay 90Saint-Laurent 360 Delson 20 Léry 10Montreal Island – South West 120 Longueuil 170Lachine 30 Mont-Saint-Hilaire 10LaSalle 45 Notre-Dame-de-l’Île-Perrot 10Verdun 45 Saint-Amable 10 Saint-Basile-le-Grand 35Montreal West Island 295 Saint-Bruno-de-Montarville 30Dollard-des-Ormeaux/Roxboro 15 Sainte-Julie 30Dorval/L’Île-Dorval 95 Saint-Hubert 35Pointe-Claire 105 Saint-Lambert 55Kirkland 30 Saint-Lazare 10Beaconsfield/Baie-d’Urfé 10 Vaudreuil-Dorion 40L’Île-Bizard/Ste-Geneviève/Ste-Anne-de-Bellevue 20Pierrefonds/Senneville 30 Montreal Metropolitan Area 10,465Montreal Island 8,705 Quebec 15,135

Laval 505 Canada 72,285


Montreal Island East End 3,260 Laurentians 1,320Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est 960 Blainville 55Anjou 895 Boisbriand 275Montréal-Nord 670 Deux-Montagnes 10Saint-Léonard 735 Mirabel 160 Oka 15Montreal Island – Central Core 1,720 Rosemère 25Mercier/Hochelaga-Maisonneuve 460 Sainte-Anne-des-Plaines 15Ahuntsic/Cartierville 135 Sainte-Marthe-sur-le-Lac 10Outremont 10 Sainte-Thérèse 55Plateau Mont-Royal 225 Saint-Eustache 95Rosemont/Petite-Patrie 145 Saint-Joseph-du-Lac 10Ville-Marie 165 Saint-Jérôme (outside the CMM) 585Villeray/Saint-Michel/Parc-Extension 180 Saint-Placide (outside the CMM) 10Sud-Ouest 250Westmount 10 Lanaudière 1,040Côte-des-Neiges/Notre-Dame-de-Grâce 140 Charlemagne 10 L’Assomption 90Montreal Island – West End 900 Mascouche 50Mont-Royal 175 Repentigny 150Côte-Saint-Luc/Hampstead/Montréal-Ouest 30 Terrebonne 700Saint-Laurent 695 Lavaltrie (outside the CMM) 35 North Shore 2,355Montreal Island – South West 735Lachine 190 Montérégie – South Shore 1,450LaSalle 535 Boucherville 340Verdun 10 Brossard 25 Chambly 50Montreal West Island 945 Châteauguay 40Dorval/L’Île-Dorval 265 Delson 15Pointe-Claire 505 La Prairie 30Kirkland 95 Les Cèdres 10Beaconsfield/Baie-d’Urfé 30 L’Île-Perrot 15L’Île-Bizard/Ste-Geneviève/Ste-Anne-de-Bellevue 35 Longueuil 245Pierrefonds/Senneville 15 Mont-Saint-Hilaire 35 Notre-Dame-de-l’Île-Perrot 10Montreal Island 7,550 Saint-Bruno-de-Montarville 105 Saint-Constant 40Laval 1,850 Sainte-Catherine 10 Sainte-Julie 70 Saint-Hubert 230 Saint-Isidore 10 Saint-Lambert 35 Saint-Lazare 10 Saint-Mathias-sur-Richelieu 10 Saint-Mathieu 20 Saint-Mathieu-de-Belœil 35 Varennes 10 Vaudreuil-Dorion 25 Montreal Metropolitan Area 13,210 Quebec 34,905

Canada 98,785

Employment1 by Borough and City, 2001 — Furniture


Source: Statistics Canada, Employment by Place of Work, 2001 Census – Figures on Furniture represent NAICS code 337.


Employment1 by Borough and City, 2001 — Wood Products


Source: Statistics Canada, Employment by Place of Work, 2001 Census – Figures on Wood Products represent NAICS code 321

Montreal Island East End 305 Laurentians 1,245Rivière-des-Prairies/Pointe-aux-Trembles/Montréal-Est 160 Blainville 190Anjou 50 Boisbriand 315Montréal-Nord 35 Mirabel 135Saint-Léonard 60 Pointe-Calumet 10 Sainte-Anne-des-Plaines 20Montreal Island – Central Core 630 Sainte-Thérèse 225Mercier/Hochelaga-Maisonneuve 50 Saint-Eustache 170Ahuntsic/Cartierville 30 Saint-Joseph-du-Lac 15Outremont 10 Saint-Jérôme (outside the CMM) 145Plateau Mont-Royal 20 Rosemont/Petite-Patrie 60 Lanaudière 380Ville-Marie 105 L’Assomption 40Villeray/Saint-Michel/Parc-Extension 75 Mascouche 90Sud-Ouest 100 Repentigny 10Westmount 30 Terrebonne 220Côte-des-Neiges/Notre-Dame-de-Grâce 150 Lavaltrie (outside the CMM) 10

Montreal Island – West End 425 North Shore 1,620Mont-Royal 45 Saint-Laurent 370 Montérégie – South Shore 1,755 Beauharnois 45Montreal Island – South West 160 Beloeil 140Lachine 45 Boucherville 75LaSalle 75 Brossard 80Verdun 40 Candiac 35 Carignan 30Montreal West Island 135 Chambly 110Dorval/L’Île-Dorval 50 Châteauguay 45Pointe-Claire 55 Delson 370Kirkland 20 Greenfield Park 10 La Prairie 10Montreal Island 1,655 Longueuil 330 Mont-Saint-Hilaire 60Laval 405 Saint-Amable 45 Saint-Bruno-de-Montarville 55 Sainte-Catherine 60 Sainte-Julie 25 Saint-Hubert 15 Saint-Isidore 70 Saint-Lambert 10 Saint-Mathieu 10 Saint-Mathieu-de-Beloeil 60 Varennes 25 Vaudreuil-Dorion 50 Montreal Metropolitan Area 5,440 Quebec 43,010 Canada 140,075


Configuration

•1� Paper and Wood Products

Pulp and Paper

Sub-Cluster


Large Presence in CMMIt may surprise some to learn that there are quite a number of pulp and paper companies located in the CMM. Major producers such as Abitibi-Consolidated, Domtar, Kruger and Norampac all have their head offices in Montreal. And with the Paprican Institute, the area’s research infrastructure is the envy of many other major paper producing countries such as Finland, Sweden and Japan. The pulp and paper industry is a mature and cyclical one, and highly competitive.

Canada remains a leader in pulp and paper and the top producer for newsprint, but its position is threatened by growing capacity in South America and the Orient. There are few newsprint plants in the city itself, as plants that have become outdated are closing and being relocated to countries with low wages. The sector’s growth rate is estimated at 3.2% per year between now and 2015.

In the field of converted paper product manufacturing, Quebec has 10,200 jobs in some 175 businesses. The number of jobs in the sector increased at a constant rate by 80% between 1985 and 2001. With booming growth of 191% between 1985 and 2001, the sector’s production factor was 9.4% of the gross domestic product (GDP) for Quebec’s entire manufacturing sector in 2001. However, commodities exports are not high, mainly due to high transport costs.

Consumer products are mainly sold on the local market, except for Johnson & Johnson products (sanitary napkins). The company employs a staff of 1,000 in Montreal’s East End and exports its products to five continents. The sector’s base market is the Greater Montreal Area. In the long term, sales of these commodities (toilet paper, napkins, etc.) tend to match demographic charts, growing along with the population.

The paperboard and packaging sector more closely follows economic cycles, and is more dependent on the strength of the economy in general. The outlook for growth is by far better for added-value paper manufacturers, which find niche markets for their products both here and abroad. As with consumer products, rigid paperboard and packaging is mainly produced for regional markets.

Innovation – The key issueIn order to stand out in a more mature industry, companies need to find new ways to minimize costs. As a result, R&D tends to focus on processes, automation and sales rather than on new products. Canada’s traditional advantages of access to energy resources and costs have, over time, lost their lustre. Today’s environmental laws also add costs. Access to virgin wood fibre has become more difficult and industry use of recycled fibre is growing. Liberalization of global trade has facilitated exports but also increased the production capacities of developing countries.

Montreal plants therefore enjoy a highly innovation-friendly environment, especially seeing as it is absolutely crucial to the survival of the industry, with close to 80% of patents awarded to sector businesses in Quebec going to companies based in the city, particularly Domtar, Johnson & Johnson and Paprican.


In terms of technical innovations (with respect to product, function and appearance), the paperboard and packaging industry is much more dynamic than expected. In the long term, the growth of imports, as well as the relocation of a portion of industry activities to developing countries, could weaken this sector.

Technological innovation, even with regard to simple products, also plays an important role. Carrousel, in Boucherville, is an excellent example of this. The company has been manufacturing paper bread bags since 1993 (main clients include Première Moisson, Cousins, etc). Towards the end of 2002, the business purchased a press in France and another in Germany to produce better quality products faster, and increase its client base in Canada and the United States.

Great need for consolidation In the 1990s, an extensive consolidation movement began in forest products. Undoubtedly a historic step in this cluster’s development, it was not a unique phenomenon, as other industry sectors such as aeronautics, pharmaceuticals, textiles, communications, printing and publishing, also began showing significant consolidation activities during the same period.

Various commercial, financial and structural factors helped spur along the movement. Among the most important factors were low to nearly non-existent growth in newsprint, the drop in kraft packaging paper consumption, the arrival of more high-performing products in certain paper and paperboard categories, the import of products from low-cost producers pushing prices down, lower profitability of manufacturing businesses, etc.

Many pulp and paper sub-cluster links were still fragmented in Canada as well as throughout North America, which gave the competitive advantage to certain countries or regions elsewhere where these industries were more focused. This often resulted in returns on investment being too low to make up for the capital costs and financial risks. Consolidation remains on the agenda for this now mature sector.

The Ten Largest Paper and Paperboard Producers in Europe and Worldwide in 2001

Production Capacity (000 MTA)

1. Stora Enso (Finland) 15,2002. International Paper (U.S.) 15,0003. UPM – Kymmene (Finland) 11,6004. Georgia Pacific (U.S.) 9,4005. Weyerhaeuser (U.S.) 8,7006. Smurfit Stone Container (U.S.) 8,7007. Nippon Unipac (Japan) 8,6008. Mead/Westvaco (U.S.) 7,7009. Abitibi-Consolidated (Canada) 7,60010. M. Real (Finland) 6,500

Source: Finnish Forest Industries Federation – February 2002


Industrial Chain


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in Pulp, Paper and Paperboard ManufacturingThe paper manufacturing sector is divided into two major categories. The first includes pulp, paper and paperboard mills, while the second comprises converted paper product manufacturing businesses.

Pulp and paper — Pulp and paper mills are divided into mechanical and chemical pulp. There are no market pulp plants in Montreal. There are seven chemical pulp mills in Quebec, the largest being Domtar in Windsor (1,000 employees), Fraser Papers in Thurso (450 employees) and SFK Pulp in Saint-Félicien (350 employees). Tembec in Temiscaming (350 employees) is the only mechanical pulp mill in Quebec. It is important to note that together, Tembec, Canfor and Domtar’s Canadian mills cover 21% of the North-American production market.

Paper and paperboard — There are 12 major paper and paperboard mills in Montreal. Many of these plants have a diversified line of utility products such as toilet paper, paper towels, napkins, etc. But most mainly produce various paperboard and containers: fibre-board, corrugated paperboard, linerboard, tubes, rolls, cups. Norampac, with eight plants in Quebec, is one of the top ten manufacturers of corrugated paperboard, linerboards and recycled paperboard in North America.

The main plants generally belong to major conglomerates such as Cascades. With three mills in Candiac (215 employees), Laval (100 employees) and Île-Perrot (43 employees), it is the largest kraft or packaging paper producer in Quebec. Kruger has two mills in the city, one in Lasalle (230 employees), and the other in Montreal proper (190 employees), as does Norampac, with one in Montreal proper (215 employees), and a second in Lasalle (165 employees) as well. There are also Smurfit-MBI (420 employees) in Saint-Laurent and Abitibi-Consolidated (115 employees) in Senneterre.

But local businesses are not left out of the loop. EMCO in LaSalle produces paperboard for building linings. In Chambly, Bennet Fleet (155 employees) produces consumer fibre-board and packaging. And with only six employees, Montreal’s Papeterie Saint-Armand hand-produces specialty paper. Spexel used to produce fine paper, but its mill in Beauharnois closed and has yet to find a buyer.

In their field of uncoated fine paper, Domtar is third on North America’s top-ten list, with nearly 16% of the North American production. The company by far outstrips its main rivals, which together make up barely 5% of North America’s production capacity.

Newsprint — Abitibi-Consolidated remains the main newsprint producer in North America, with close to 34% of the market’s existing production capacity in 2001. If we add the other Canadian businesses, headed by Kruger (7%) and Tembec (3%), this figure reaches nearly 47%. Note that in terms of volume, North American production capacity for uncoated fine paper is almost as high as that of newsprint.


Converted Paper Product ManufacturingIn the second major category — Converted Paper Product Manufacturing — the NAICS lists two separate sub-categories. The first is Paperboard Container Manufacturing, which includes coated paper bag and stationery product manufacturing. The second is the Other Converted Paper Product Manufacturing category, which covers sanitary paper products and all other converted paper products. The entire sector is considered competitive, although it should be noted that the challenged faced by stationery and paperboard manufacturers often differ.

Paperboard containers — Most sector businesses located in the CMM are in paperboard packaging. About a dozen companies manufacture corrugated and solid fibre boxes, only one of which is active in other sectors as well. Among the largest are Mitchel-Lincoln (350 employees) in Saint-Laurent and Norampac (220 employees) in Montreal. Approximately twenty businesses produce folding paperboard boxes, with the largest being Alcan Packaging in Baie d’Urfé, with 460 employees. There are also four other businesses with payrolls exceeding 100 people: Champion (230 employees) in Baie-d’Urfé, Wilco (220 employees) in Candiac, Cascades Boxboard Inc (205 employees) in Montreal and the previously mentioned Carrousel (100 employees) in Boucherville. The “Other Paperboard Container” category involves around a dozen businesses, of which the largest is Ross-Ellis Printing (230 employees) in Montreal, which manufactures blister-packing.

Paper bags and coated paper — Some twenty Montreal businesses are active in the production of paper bags and coated and treated paper. Four of them have over 100 employees, namely De Luxe paper products, Canadian Technical Tape Ltd., Jonergin Division of Invesprint, Vibac Canada and Smurfit-Stone Packaging. Domtar is the largest Canadian manufacturer of fine coated paper products, with slightly more than 6% of the North American production capacity.

Stationery products — There are about a dozen companies in the CMM operating in stationery product manufacturing. Most have no other activities. Of these, four have over 100 employees: Centre de Transition Le Sextant, Innova Envelope (a division of Supremex), Centis and Supreme Envelope (a division of Supremex).

Sanitary paper products — There are seven companies manufacturing sanitary paper products in the CMM area. The largest is the Johnson & Johnson plant in Montreal, which employs 800 people. It is important to note that Cascades, with a plant in Candiac on the South Shore (200 employees) and another in Laval (100 employees), and Scott Paper, which has a plant in Crabtree, in the Lanaudière region (600 employees) and another in Gatineau, are the two largest Canadian manufacturers, respectively covering 6% and 4% of the North American production capacity. Kimberley Clark’s plant in Saint-Hyacinthe is the fourth-largest producer in Quebec, with some 260 employees.

All other products — The “All Other Converted Paper Product Manufacturing” category comprises some thirty businesses, most of which are active in several sectors. The only one with more than 100 employees and focusing solely on one activity is Winpak Heat Seal Packaging, in Vaudreuil-Dorion.

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Development Factors


ResearchThere are several players in the CMM who are actively seeking solutions to the problems facing paper manufacturers. At the top of the list is the Paprican Institute (Pulp and Paper Research Institute of Canada) which operates research laboratories and pilot plants in Pointe-Claire and Vancouver, as well as a technology transfer centre in Prince George, B.C. Most of the major pulp and paper businesses are members of the institute which, with its 340 researchers, is one of the largest in the world.

The McGill University Pulp and Paper Research Centre, which is currently undergoing a transition period, and the École Polytechnique de Montréal both participate in Paprican’s activities, which have slowed down recently with these two institutions as well as in Pointe-Claire. The Pulp and Paper Research Institute of Canada is also an educational institute that has developed training programs for both McGill and Polytechnique.

Meanwhile, the interuniversity Groupe de recherche en écologie forestière (Forest ecology research group – GREF) at the Université du Québec à Montréal focuses on forest ecosystems, particularly the planting of new species. The GREF is the largest forest ecology research group in Canada and one of the largest in the world.

While the paperboard and packaging industry is highly active in the CMM, it is not well represented among these research organizations. The reason is that researchers are not sufficiently interested studying recycled fibre, which would more closely meets the needs of this industry.

FinancingPrivate venture capital firms interested in pulp and paper are few and far between, while large companies are usually financed via more traditional methods. Quebec’s Société générale de financement (General financing corporation – SGF) is active in development capital and invests in structuring projects carried out in partnership with the private sector, under the usual terms for profitability. The Fonds de solidarité FTQ has a dedicated team in Montreal for the wood products sector.

Meanwhile, Investissement Québec also awards grants under its FAIRE (Fonds pour l’accroissement de l’investissement privé et la relance de l’emploi) private investment growth and employment fund program. Recently, the new sawmill in Bowater, at Maniwaki, received up to $1.2 million. The program was however replaced by the Strategic Support for Investment Program (PASI), the terms of which will be made public shortly. Other grants are also available through industrial recovery programs such as those in the so-called “Resource Regions” or in Gaspésie.

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TrainingThere are no specialized Cégep–level training programs in pulp and paper in the Montreal area. Interested students need to go to Jonquière, Sainte-Foy or Trois-Rivières.

At the university level, the Université du Québec à Montréal (UQAM) offers graduate programs in natural sciences, including a graduate diploma in sustainable forest resource management in conjunction with the Université du Québec à Trois-Rivières. The École Polytechnique also offers graduate degrees in mechanical, chemical and industrial engineering and the Université de Montréal offers graduate studies in natural sciences.

McGill University offers undergraduate and graduate programs in biology, chemistry, chemical engineering and mechanical engineering at its downtown campus. Its Macdonald College campus in Sainte-Anne-de-Bellevue also offers a Master’s degree in Natural Resource Sciences. Finally, Concordia University offers programs in natural sciences as well as mechanical and environmental engineering.

Structural OrganizationsThe main structural organizations are located in Ottawa, Quebec City or Toronto. However, each ministry has an office in Montreal. Surprisingly, there is no specific Pulp and Paper Sectoral Workforce Committee, which is extremely highly useful in defining the training needs for a given sector. The needs of the paperboard and packaging businesses are covered instead by the Graphics Communications Sectoral Workforce Committee.

The head offices of several major associations are however located in Montreal: the Pulp and Paper Products Council (PPPC), the Canadian Pulp and Paper Association, Pulp and Paper Technical Association of Canada (PAPTAC). Every year, these groups, which target mainly large companies, organize the World Pulp and Paper Week as well as the world’s largest annual exhibition of industry technology (EXFOR).

It is astonishing that there is no provincial paperboard and packaging association in Quebec. Meanwhile, the Packaging Association of Canada has its head office in Ottawa, with a secondary office in Montreal. The Forest Products Association of Canada also has its head office in Ottawa.

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Printing

Sub-cluster


From the Very Large to the Very SmallPrinting and publishing is the seventh largest manufacturing industry in Canada, with close to 5,500 establishments employing over 135,000 in 2002.

In Quebec in 2001, there were 1,429 businesses in Printing and Related Support Activities (NAICS code 3231), employing 28,620 people, with a production value estimated at $3.2 billion. The Ontario market (close to $6 billion) is twice as large. Only 2% of industry businesses are not Canadian-owned.

The printing industry is dominated by a small number of large players (Québecor, Transcontinental). Only 4% of companies are medium or large businesses with at least 100 employees. In 1996, these firms represented over half of the jobs in the sector (52.9%). Of the remaining 96% with fewer than 100 employees, 75% have fewer than 20, representing 26.6% of all jobs in Quebec.

According to a 2002 study, one third of printing and publishing businesses had sales of $1 to $10 million, while 40% had less than $500,000. Most companies therefore do not generate enough business to compete with the major players, whose clients are located in many large Canadian and American cities.

Local and international markets Small businesses distribute locally and cannot compete with the big companies for printing large quantities of newspapers, flyers and magazines. However, many succeed in carving out a niche in certain sub-sectors, such as pre-press activities, where the democratizing effect of the computer age makes it possible to prepare visual or textual content with little initial investment, making start-up that much easier.

Pre-press includes all activities prior to printing, such as data entry (text and images), page layout, image handling, imposition, film and proof production and plate engraving. With changing technologies, some of these activities – such as plate engraving – are in sharp decline.

Within the CMM, Montreal and Laval are responsible for 34% of employment in Quebec’s printing industry (8,055 jobs), while Montérégie holds 24% (5,670 jobs). Not surprisingly, the industry is highly linked to the media and communications sector, which is very well represented in the city.

It is also important to note that the development of new technologies has not halted the use of paper and printed materials.


Industrial Chain


PrintingThe printing industry can be divided into three business sectors: 1) Commercial forms, 2) Newspapers, magazines, periodicals and books, 3) Other commercial printing.

The commercial forms sector represents 41% of the total and comprises businesses whose main activity is printing sales receipt booklets, commercial forms, accounting books and other similar printed products. The use of computers has not slowed consumption of this type of printed documents.

Newspaper, magazine, periodical and book printing represents only 20% of the sector and includes businesses whose main activity is printing (with or without publishing) of brochures, catalogues, circulars, flyers, directories, newspapers, books, periodicals and magazines. Brochures and catalogues are on the rise, while newspaper printing is stagnating or slightly on the decline.

Other commercial printing includes the 39% of businesses whose main activity does not fall into the other two categories, i.e. cardboard packaging, calendars, greeting cards, labels, cheques, money orders, painting reproductions and other prints and printed material.

Printing processes include offset lithograph printing (sheet-fed or rotary), flexography, silk screen and digital printing. Flexography, which is mainly used for packaging, is on the rise. Silk screen printing, mainly used for posters, clothing, displays, panels and kiosks, is also a growing field. Digital printing, mainly used for micro publishing and variable content is growing steadily as well.

Few businesses are specialized and the integration of several different steps in the production chain varies considerably from one company to the next. The notion of sub-contracting is therefore fairly hard to define. Businesses tend to integrate the various printing activities to differing degrees. There have always been small local printers with high social value but little long-term viability. The industry as a whole has become more complex, relying increasingly on the latest technologies, with demanding professional standards, and the sector is highly competitive.

High urban concentration The bulk of the printing industry is mainly concentrated in Montreal, which houses 60% of the approximately 400 companies in Quebec. Next is Laval with some 50 businesses and the South Shore with 13. The network consists mainly of SMBs, with two giants among them: Quebecor World and Transcontinental Printing.

Quebecor World has 164 printing plants worldwide, 10 of which are in Quebec, with three located in the CMM: one in Montreal (430 employees), one in LaSalle (300 employees) and one in Laval (235 employees). In 2002, it posted income of $9.8 billion CAD. Its main challenges are high competition and excess capacity. Although the company’s head office is in Chicago, it is currently managed from Montreal.

Transcontinental Printing is one of the top ten commercial printers in North America and the largest printer of flyers, books and newspapers in Canada. Of its 45 plants, 20 are located in

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Quebec, 5 of which are in the Montreal area: one in Saint-Léonard (390 employees), one in Boucherville (300 employees), one in Montreal (180 employees), one in Anjou (160 employees) and one in Lachine (150 employees). The company posted income of $1.26 billion in 2002. In 2000, the Group signed a contract to print the daily newspaper, La Presse. A new plant was built in Montreal’s East End, where production began in October 2003. Transcontinental plans to offer its “turnkey” outsourcing service to several major dailies across Canada and the United States.

Quebecor World and Transcontinental are both aiming for strong vertical integration to become the “one-stop shop” for all their clients’ needs. For them, as well as for industry SMBs, market development is based on technological development.

There are many major local printers worthy of mention. Relizon Canada, of Boucherville, employs 1,100 people in its form printing plant. Emballages Standard Paper Box employs 500 people, a number of which work in printing paperboard produced onsite. There is also Datamark Systems (tickets, bar codes, etc.) which employs 530 people in its two LaSalle plants and its plants in Laval and Boucherville. In Longueuil, Interchèques (Davis & Henderson) employs 160 people for its cheque printing business.

PublishingThe metropolitan area has more than forty publishing companies issuing journals, newspapers, magazines and other publications. Among the largest players are newspaper publishers: Gesca (La Presse: 800 employees), CanWest Global Communications (The Gazette: 800 employees), Quebecor (Le Journal de Montréal: 560 employees) and Transcontinental Média (Les Affaires: 350 employees).

Among the major magazine publishers there are Reader’s Digest (300 employees), TVA Publications (Clin d’œil, Le Lundi. TV Hebdo, etc.: 150 employees), Rogers Media Publishing (L’Actualité, Chatelaine: 150 employees) and Saint-Joseph’s Oratory (150 employees). As well, Bell ActiMedia (800 employees) publishes telephone directories and CEDROM-SNi (100 employees) publishes online directories and archives.

Major book publishers include Sogides, which employs 425 people through its various publishing and distribution (Messageries ADP) companies and Chenelière-McGraw Hill which, together with Graficor, has a staff of 300. Meanwhile, Transcontinental Publications has 165 employees while Quebecor Communications employs 150.

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Development Factors


ResearchPrinters generally assign very little importance to research and development. As a whole, the Canadian industry posts very few expenses in R&D as compared to other manufacturing industries, coming in 26th out of 27 sectors. However, the industry does benefit from the innovations of companies that provide its manufacturing input.

Since 1996, Montreal’s QIGC (Quebec Institute of Graphic Communications) has been carrying out advanced research, in particular on inks and paper printability. Techcom, the QIGC’s technical department, offers printers complete printability expertise. Acting as an integrated printshop from prepress to finishing, the Institute features a range of machines complemented by ink, paper, printability and color laboratories equipped with latest generation technology.

The Institute also locates, collects, analyses and distributes technical, technological and economic information through its watchdog, Vigicom. This information is disseminated in a number of ways, such as conferences, press reviews, technological monitoring, market research and publications for both technical specialists and managers.

TrainingProfessional training centres (PFC) offer various specialized programs at the high school level. For example, the Calixa-Lavallée PFC in Montreal offers vocational diplomas (DEP) in printing and computer graphics processes. The Verdun PFC offers a vocational diploma in computer graphics processes and the Centre de formation Compétences 2000 offers vocational diplomas in printing and finishing as well as in computer graphics processes. The Jacques Rousseau PFC in Longueuil and Rosemount Technical PFC in Montreal also offer vocational diplomas in Printing.

Collège Ahuntsic offers complete programs in administration, design, pre-press and printing, while Vieux-Montréal and Marie-Victorin Cégeps also offer collegiate level diplomas (DEC) in graphic design.

At the university level, the École de technologie supérieure (ÉTS) offers an undergraduate certificate in industrial production and graphic communications, and UQAM’s École de design offers a Bachelor’s degree in graphic design.

Also, the Quebec Institute of Graphic Communications (QIGC) is a private establishment offering additional training for graphics communications professionals. The QIGC is active in graphic design, pre-press and printing, and also organizes public seminars in these fields.

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FinancingAs the printing industry generally involves large companies, financing is often achieved through traditional methods, such as the stock market and banks.

In the written media sector, the Société de développement des entreprises culturelles du Québec (Quebec cultural business development corporation – Sodec) offers a tax credit for book publishers other written media operators aiming to increase press runs. Sodec also offers working capital solutions for Quebec businesses that have been in operation for at least one year and that can demonstrate commercial success for products with significant cultural content (magazines, periodicals, weeklies, etc.). These funds cover financial risks related to activities aimed at improving their positioning (larger press runs, increased subscriptions, advertising sales, etc.) on target markets.

The Fonds d’investissement de la culture et des communications provides venture capital (in the form of capital stock, debentures, investisments) to cultural businesses, including the written press and publishers. Investments do not exceed 49% of the partnership and generally include a share repurchase formula after five to seven years. The Société de développement des périodiques culturels québécois (Quebec cultural periodical development corporation – SODEP) also provides financial support for over sixty Quebec magazines.

Financial AssistanceFederally, the Department of Canadian Heritage has created three financial assistance programs. The first is the Canada Magazine Fund, which has four components to it: Support for Editorial Content (SEC), Support for Industry Development (SID), Support for Business Development for Small Magazine Publishers (SBDSMP) and Support for Arts and Literary Magazines (SALM).

The second is the Book Publishing Industry Development Program (BPIDP), the objective of which is to ensure choice of and access to Canadian-authored books that reflect Canada’s cultural diversity and linguistic duality in Canada and abroad. This program also has four components: Aid to Publishers, Aid to Industry and Associations, Supply Chain Initiative and International Marketing Assistance.

Finally, the Publications Assistance Program (PAP) enables Canadian journals to be distributed across the country at affordable cost. The program supports a variety of periodicals including community newspapers and publications serving ethno-cultural, aboriginal and minority official language communities.

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AssociationsThe Association des arts graphiques du Québec (Quebec Graphic Arts Association – AAGQ), located in Montreal, is affiliated with the Canadian Printing Industries Association. The provincial-status AAGQ comprises manufacturing and service companies operating in the graphic arts industrial chain and related sectors, oversees the promotion of the graphic arts industry and offers member businesses informational and management services.

The mission of Quebec’s Comité sectoriel de main-d’œuvre des communications graphiques (graphics communications workforce sectoral committee) is to encourage businesses to work together in order to pinpoint training needs and determine the best tools to meet those needs. Its website provides information on the job market as well as the committee’s action plan.

The CMM is also home to the Association des artisans d’art graphique de Montréal (Montreal Association of Graphic Artists), which offers professional services to its members and organizes events such as the Gutenberg Gala and the Semaine de l’imprimerie (Printers’ Week). The Association des enseignants en imprimerie du Québec (Quebec Association of Printing Instructors) offers links to technical and high school training programs.

The Ottawa-based Canadian Printing Industries Association is the national voice of the pre-press, press and finishing sectors.

For magazines, there is the Montreal-based Association québécoise des éditeurs de magazines (Quebec Association of Magazine Publishers) which, since its foundation in 1991, is dedicated to promoting industry development as a whole and defending the interests of its members. There is also the Canadian Magazine Publishers Association in Toronto.

For the past 10 years, the Annuaire des médias de la publicité au Québec (AMPQ – Directory of Quebec Advertising Media) in Laval has offered networking services to its members, in addition to publishing a magazine and daily online information. Finally, there is also the InfoPresse magazine in Montreal.

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Furniture

Sub-cluster


A Booming IndustryDespite the fact that most industry raw materials come from outlying regions, close to 40% of all furniture manufacturing companies in Quebec, or just over 370 businesses, are located in the CMM.

For industries upstream of furniture, the situation is similar to that of many traditional sectors: many small- and medium-sized businesses working on a small scale, serving local markets. Larger businesses with higher productivity levels use new technologies (computers, digitally-operated machinery) that help to increase their output.

The trend towards consolidation The furniture industry, which is highly sensitive to economic cycles, went through two recessions in the past twenty years, leading to sector consolidation. In Quebec, the last recession in the early 1990s nearly halved the number of businesses in the sector (from 937 in 1990 to 519 in 1995). With the 1993 abolition of U.S. trade tariffs on furniture, the industry began to redevelop into what we see today: an increase in Quebec exports to the United States and greater specialization towards mid- and high-range products.

In 2001, Quebec’s exports reached $1,782 million, as opposed to $270 million in 1992, representing a growth of over 23% per year. In 2001, nearly 98% of Quebec furniture exports were destined for the United States. Export markets now account for over 40% of Quebec’s furniture industry shipments.

American manufacturers meanwhile saw their Canadian market share grow from 8.8% to 14.5% over this ten-year period. These figures are not as high in Quebec, as the province’s furniture industry is very strong in residential furniture, while the focus of American manufacturers is mainly on office furniture, which in Canada is based mainly in Ontario.

The creativity advantage Furniture manufacturers have seen positive development by specializing both in niche markets and custom products. The sector is in a favourable position thanks to its long history and solid know-how. The Montreal urban community provides a large market base, while its proximity to the U.S. is good for exports.

Quebec’s industry players have a highly-developed sense of design and creativity that gives them an edge at a time when the economy is moving more towards one of “choice” in which intangibles — fashion, design, taste and customer behaviour — are increasingly important factors.


Industrial Chain


Furniture

The largest employers are almost all located in Montreal’s suburbs. EL RAN Furniture, located in Pointe-Claire, employs 650 people for its upholstered chairs and sofas. Dorel in Westmount, and Meubles D&F in Saint-Léonard both have 350 employees. After that, the size of businesses drops quickly as nearly 300 companies in the city employ fewer than 100 people.

The five major product categories for this sector are represented within the CMM: household furniture, kitchen cabinets, upholstered household furniture, office furniture and institutional furniture.

Wood Household Furniture — This sector exports close to half of its output. Although the main leaders are located in the Mauricie region (Canadel, Dinec), the sector’s businesses are considered competitive. Meubles D&F in Saint-Léonard employ a staff of 299 while Woodcraft National Canada has 160 employees.

Wood Kitchen Cabinets and Counter Tops — The three largest manufacturers for this sector are medium-sized businesses: Cuisine Expert, a subsidiary of Maax, located in Laval, (390 employees), Bélanger Laminés in Boucherville (190 employees) and Cuisine Crotone in Montreal (130 employees). The others have fewer than 100 employees.

Upholstered Household Furniture — Almost all production for this sector is concentrated on the Island of Montreal. The sector is considered an industry leader, with strong development potential. Besides EL RAN in Pointe-Claire, the largest include Jaymar Furniture in Terrebonne (300 employees), Berkline in Anjou (185 employees), Woodcraft National in Saint-Léonard (160 employees) and Rodi Design in Longueuil (150 employees). All other companies have fewer than 75 employees.

Office Furniture — The bulk of the Canadian officer furniture industry is located in Ontario and faces tough competition by American manufacturers. The CMM is however home to Patella Manufacturing, with 180 employees in LaSalle and Standard Desk Exception (100 employees) in Laval.

Institutional Furniture — This is the sector with the largest number of businesses in the CMM. The sector serves hotels and restaurants, banks, head offices, businesses and various communities. The largest employer is located in Laval – The Corcan division of the Correctional Service of Canada, which employs 550 people. In addition to wood furniture, the company also manufactures metal filing cabinets and prints t-shirts and other products.

Next is Artitalia in Montreal (245 employees), Suss Woodcraft International in LaSalle (200 employees), R-2000 Ebénisterie architecturale in Montreal (180 employees), Norclair Woodworking in Boucherville (125 employees) and Delta Furniture in Saint-Léonard (125 employees). All others fall below the 100 job mark.

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Development Factors


ResearchThere are no research organizations dedicated solely to furniture in the CMM area. The main innovations in the sector focus chiefly on mechanics. However, there is a Centre de recherche industrielle du meuble et du bois oeuvré (Industrial research centre for furniture and milled wood) at the Victoriaville Cégep. And the industry is looking forward to the 2005 opening of a milled wood processing centre at Laval University’s Faculty of Forestry and Geomatics.

Meanwhile, the Centre de recherche industrielle du Québec (Quebec industrial research centre – CRIQ) has a team dedicated to studying wood properties and issues surrounding endurance, resistance, veneer and particleboard, overlay and finishing for the development of equipment for primary and secondary wood processing plants.

TrainingIn Montreal, Cégep du Vieux-Montréal offers a diploma in cabinetry. The École québécoise du meuble et du bois ouvré (Quebec school of furniture and milled wood – EQMBO), based in Victoriaville, has a branch in Montreal, with around 150 students. The school offers courses in all basic aspects of production, as well as everything related to wood product finishing. It has the equipment to allow students to work on private furniture projects as well as so-called “architectural” furniture.

UQAM’s École de design offers a Bachelor’s degree in Environmental Design which trains students in industrial design, which is often used in the manufacture of products for the home, such as furniture. As yet, Quebec has no engineering programs in the field of furniture, but Laval University is expected to fill this gap in the coming years.

FinancingBesides traditional sources of financing, furniture manufacturers are eligible for tax credits in industrial design. Specialists in industrial design may be hired (or sub-contracted) to design new products or processes. Manufacturers seeking to expand or to increase their export volume also have access to Investissement Québec programs for SMBs, such as loan and line of credit guarantees. Finally, the SGF may invest development capital in partnership with the private sector.

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AssociationsThe Montreal-based Quebec Furniture Manufacturers Association (QFMA) is quite active, with close to 200 furniture and furniture parts manufacturers, covering over 85% of Quebec’s production in the home, office and institutional furniture sectors. The Association provides its members with assistance in promotional marketing, exports, credit information and continuous education, and also finances sectoral studies. In 2003, the QFMA organized an industrial efficiency diagnostic program with the participation of 25 businesses.

Quebec City is home to the Association des fabricants et distributeurs d’armoires de cuisine du Québec (Quebec association of kitchen cabinet manufacturers and distributors – AFDICQ). Founded in 1981, the AFDICQ is an association of approximately one hundred manufacturers and distributors of kitchen and bathroom cabinets, whose combined production volume represents 75% of the industry’s annual shipments.

Structural OrganizationsThe Comité sectoriel de main-d’œuvre des industries des portes et fenêtres, du meuble et des armoires de cuisine (workforce sector committee for the doors and windows, furniture and kitchen cabinet industries) has its offices in Montreal. Its mission is to analyse job market trends in order to direct strategies for balancing labour supply and demand in the sector.

Meanwhile, the Centre d’information et de valorisation du meuble de Louiseville (Louiseville furniture business information centre), carries out technology watch activities on behalf of manufacturers in the Mauricie region.

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Construction Timber

Sub-cluster


A Difficult SituationOf the nearly 1,700 businesses in Quebec, the Montreal metropolitan area represents one tenth of the construction timber industry. Most milling and primary processing activities are located outside city centres, although there are several large sawmills within the CMM, such as Goodfellow, General Woods & Veneers Ltd. and Simon Lussier, as well as veneer manufacturers such as Commonwealth Plywood and Kott Lumber.

These businesses are experiencing increasing difficulties as resource-rich regions are actively developing value-added products at lower cost, while urban manufacturers have to deal with higher overhead costs.

While there is an increasing trend towards plastic and metal products in building construction, construction timber is still a high priority. For example, installing an aluminium or vinyl overlay still requires a wood frame. And even if the structure is made of concrete, wood is needed for pouring it. Any time the metals industry is tapped, the timber industry is also an indirect beneficiary.

The real estate market has been highly active in the metropolitan area for the past five years at least, and the industry has benefited. The CMM is home to almost half of the 1000 Quebec businesses operating in the sale and distribution of construction material, which also includes plastics, brick and metal parts.

The construction industryThe construction industry has been flying high for the past few years. The Montreal metropolitan area provided 61,178 jobs in 2003, up 8% from 2002. The area represents over 55% of all construction in the province. Approximately 22,000 individuals work in Montérégie and 24,000 in the North Shore area (Laval, Lanaudière, Laurentides).

The area’s major construction projects are demonstrable proof of the strength of the industry and of the economy in general. That strength should continue in 2005, with the completion of the international finger at Montreal’s Trudeau Airport ($350 million), the renovations made to the Montreal Metro system installations ($342 million), the upgrades done at the Petro-Canada refinery ($245 million), the expansion of the Port of Montreal ($224 million) and the construction of Concordia University’s new engineering complex ($172 million).

In all, residential, commercial and industrial construction activities generated sales of $11.3 billion in 2002, which works out to close to 5% of the provincial GDP. That same year, construction provided work for 170,000 people, an increase of 28.1% over 1999. However, it is important not to forget that the industry is highly cyclical.

Construction is also an SMB industry, where only a minority (4%) of businesses have incomes that exceed one million dollars. Most (80%) companies have incomes of less than $250,000. In the long term, the ones that remain make up a key group of skilled workers.


Industrial Chain


Construction TimberConstruction timber is used in various forms, depending on the phase of the building construction. Lumber is used for building the frames and formwork that serves as the skeleton of a house. Veneer and plywood is used for carpentry and woodwork, floors and other items that add to the usefulness and comfort of a home. These latter are increasingly factory pre-assembled (millwork), which considerably speeds up construction of the building.

Lumber — Lumber is one of Quebec’s best resources. Its production doubled between 1990 and 2000, going from 3.69 to 7.70 billion foot board measure (fbm). The industry has however little representation within the CMM, which has only 14 businesses that fit fall under NAICS code 3211, which covers sawmills as well as shingle, shake and wood preservation mills.

The largest mill in the CMM is Goodfellow (350 employees). Located in Delson, it is the third largest mill in Quebec. General Woods & Veneers, the seventh largest, is located in Longueuil and has 285 employees. In Blainville, there are 125 employees working at Simon Lussier.

Veneer and plywood — The field of Veneer, Plywood and Engineered Wood Products (NAICS code 321210) also has little representation in the CMM. There are however a few major players, such as Commonwealth Plywood, in Sainte-Thérèse, with 235 employees and Kott Lumber in Boisbriand (140 employees), which manufactures wood frames. There are also Bois Expansion which employs 65 in Montreal and Seatply Products with a staff of 60 in Saint-Laurent.

Millwork — The situation is not much different for millwork and prefabricated wood homes and buildings, which fall under “Other Wood Product Manufacturing”. There are 58 companies operating within the CMM, most of which have fewer than fifty employees.

There are four millwork companies in the CMM that stand out with over 100 employees each. Groleau in Belœil has a staff of 325 employees manufacturing hardwood flooring and Uniboard Surfaces (200 employees) in Laval, a subsidiary of Uniboard Canada, manufactures laminated flooring. Next is Sefina Industries (160 employees), in Saint-Laurent, which manufactures doors and windows as well as interior wood trim and Colonial Elegance in Montreal (100 employees), which manufactures stairs.

Prefabricated homes and buildings — In the prefabricated wood homes and buildings sector, only one company has more than 100 employees: Industries Bonneville, in Belœil, with a staff of 120.

Other construction products — There are two companies that stand out within the CMM: Industries Hamelin in Boisbriand, with 120 employees manufacturing wooden spools and reels, and Seatply Products in Saint-Laurent, with 100 employees, which manufactures moulded plywood as well as seats and backs for chairs and sofas.

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Development Factors


ResearchForintek, Canada’s Wood Products Research Institute, has two centres – one in Quebec City and one in Vancouver. Forintek was established in Montreal in 1914 in temporary quarters at McGill University. At the time, it was known as Forest Products Laboratories. The Quebec government, which has been a partner of Forintek since 1986, has recently awarded the institute a $720,000 grant to continue its research in improving wood product manufacturing processes, such as wood seasoning (drying), sawmilling and protection.

Other researchers are not as interested in sawmill efficiency as in developing new, less energy-consuming construction technologies. In Montreal, there is Concordia University’s Centre for Building Studies – the only one of its kind in Canada. The Centre carries out research on acoustics, light, air quality, heating, natural ventilation, renewable energy sources as well as wind load on buildings.

Sadly, the Centre d’études et de recherche pour l’avancement de la construction au Québec (Quebec research centre for advancements in construction – CÉRACQ), an issues table that also performed experiments and R&D, closed its doors at the turn of the 21st century.

FinancingAside from traditional sources of financing, GE Capital Canada Equipment Financing also offers targeted loans for construction companies seeking to purchase equipment or real estate.

Alter Moneta is a financial institution created as a result of a partnership between the Caisse de dépôt et placement du Québec and the National Bank of Canada. The company specializes in industrial loans through lease financing. The company’s head office is in Longueuil, and has additional offices in Ontario and New York State. It mainly deals with purchases of concrete mixers, tractors, bulldozers and other heavy construction equipment.

The insurance brokerage firm, Willis Canada, which has an office in Montreal, offers risk management services to construction contractors. Tools offered by the firm include advisory services on how to find more flexible financing solutions and on better managing the company’s human and physical resources.

Finally, the Fonds de solidarité FTQ, financial partner of several projects in Quebec, is also very present in Montreal, with a Vice President responsible for the construction and real estate sector. And the SGF may invest in development capital in partnership with the private sector.

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TrainingIn Montreal, the Centre technique de Montréal technical centre offers courses in architecture and industrial design. At the Cégep level, Vieux-Montréal offers a diploma in interior design and another in building renovation and supervision. Collège Ahuntsic offers attestations of collegial studies (ACS) in building construction, buildings and structures, as well as in building renovation and supervision.

Bois-de-Boulogne and Lévis-Lauzon Cégeps offer training courses in residential construction management for people seeking to obtain a permit as a general contractor, and André-Laurendeau Cégep offers an ACS in building construction.

At the university level, McGill, Concordia and École Polytechnique all have civil engineering programs, while the École des technologies supérieures (ÉTS) offers programs in construction engineering.

Forintek also offers training resources to member businesses, as well as a correspondence course on sawmilling.

AssociationsThe main wood processing industry associations have their head offices in Quebec City. However, the Quebec Pallet and Container Manufacturers Association is located in Laval and the head office of the Association provinciale des constructeurs d’habitation du Québec (Provincial association of home builders) is in Anjou. In Montreal, we have the Association de la construction du Québec (Quebec construction association) and the Commission de la construction du Québec (Quebec construction commission).

Industry Canada has also created the Trade Team Canada Building Products, whose mission is to share information on target markets, business opportunities, trade missions, trade shows and matching events with business members of the Team Canada network. The federal ministry also has a business service centre in downtown Montreal.

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Interregional Links


Elsewhere in QuebecThe wood products industry, in particular the pulp and paper, printing, publishing, furniture and construction timber sectors, represent 10% of all jobs in Quebec. The CMM is home to more than half of these jobs, and over 40% of all industry businesses, the main one being Abitibi-Consolidated, Domtar and Norampac in production, Johnson & Johnson and Emballages Standard Paper Box in manufacturing and Quebecor World in printing. The other regions in Quebec have productive and innovative primary and secondary sectors, thereby contributing to the industry’s competitive edge.

Pulp and paper – An extensive sector Mills in the rest of Quebec generally produce pulp and certain paperboard products in forest areas such as the Laurentians, Outaouais, Abitibi-Témiscamingue, Mauricie, Saguenay–Lac-Saint-Jean and Côte-Nord regions. Primary wood processing is most often performed close to the primary resource, which is quite far from the CMM.

Over two-thirds of towns in the corridor that exists along the Saint Lawrence River have at least one mill, while 8 out of 11 towns have several (Hull, Lachute, Montreal, Drummondville, Kingsey Falls, Trois-Rivières, Quebec City and Matane).

Along the north shore of the river, there are mills in the Outaouais region (Masson, Thurso, Lachute), in the North Shore area of the CMM (Saint-Jérôme), in Lanaudière (Crabtree, Joliette), in Mauricie (Louiseville, Trois-Rivières, Shawinigan, Grand-Mère), near Quebec City (Portneuf, Saint-Raymond, Pont-Rouge, Quebec City, Donnaconna, Limoilou, Beaupré) and in Eastern Quebec (Clermont, Baie-Comeau, Port-Cartier).

On the river’s south shore, mills are found in Montérégie (Vaudreuil, Beauharnois, Candiac, Chambly), in the CMM itself (Montreal, Laval), in Bois-Francs (Drummondville, Victoriaville, Kingsey Falls) and in the Lower Saint Lawrence region and the Gaspé Peninsula (Cabano, Rivière-du-Loup, Matane).

As part of a larger $80-million project, the province is currently trying to consolidate all pulp and paper research and training activities offered by the Université du Québec à Trois-Rivières (UQTR) and Cégep de Trois-Rivières. Besides transferring the assets the two institutions, the new Centre intégré en pâtes et papiers (Integrated centre for pulp and paper – CIPP) in Trois-Rivières will also receive equipment from Groupe Laperrière Verrault and a $23 million grant from the Quebec government.

The future of paper in Mauricie — The region is quite active in the “added value paper and associated technologies” niche, which has enabled it to develop products based on new fibres, to manufacture a type of paper with high added-value and to transfer new technologies for commercial use. Mauricie has world-class prime contractors and a large number of sub-contractors. The region also benefits from the presence of the Centre de recherche en pâtes et papiers (Pulp and paper research centre – CRPP), the UQTR’s Centre d’excellence sur l’utilisation optimale des copeaux de bois dans les procédés papetiers (Centre for excellence in the optimal use of wood chips in paper production processes), which also has a Chair on value-added paper, the Centre international de couchage (International coating centre – CIC) in Trois-Rivières

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•�0 Paper and Wood Products

and the Laboratoire des technologies électrochimiques et des électrotechnologies (Laboratory of electrochemical and electrotechnological technologies – LTEE) in Shawinigan. With the Accord program, Mauricie is well set to become a “leader” in the field.

The Accord (Action concertée de coopération régionale de développement) program was created jointly by the Société générale de financement (SGF) and the Ministry of Economic and Regional Development and Research (MDERR). The program aims to establish a regional production system that is competitive in both North American and world markets, by identifying and developing preferred markets of excellence in each region that can become those regions’ mark of distinction.

Centre-du-Québec opts for specialized products — Under the Accord program, the Central Quebec region intends to explore the “emerging niche” of “decor paper and specialized paper.” Decor paper is mainly produced for the furniture and reconstituted wood, while specialized paper is used for specific technical applications, such as photography paper and paper used for digital imaging.

Drummondville is one of the main centres of the North American décor paper industry. The region has also developed substantial expertise in specialized paper thanks to the previously mentioned modern infrastructures in Mauricie.

Laurentides: Wide diversity of tree stands to be developed — The Laurentians is considered to be a “key partner” in the “mixed forest use and processing — value-added products” niche under the Accord program. The area focuses its strengths on the development and integration of forest management R&D, marketing, distribution and primary processing activities, as well as workforce training and regional business networking. The region enjoys a wide diversity of tree stands as well as a well-developed road system providing access to major U.S. and Ontario-bound highways.

Outaouais – Leader in hardwood processing — This region is considered a “leader” in the field of “hardwood production and processing” under the Accord program. The region stands out in this field for its well-developed forest industry, the availability and quality of its natural resources and the presence of a large labour pool. It ranks fourth in North America in terms of location quotient in its industry.

The region also benefits from the presence of organizations promoting the sector, such as the Plan d’action Forêt Outaouais (Outaouais forest action plan), the Agence régionale de mise en valeur des forêts privées de l’Outaouais (Outaouais regional agency for private forest development), the Corporation de gestion des forêts du Pontiac (Pontiac forest management corporation) and the Institut québécois d’aménagement de la forêt feuillue (Quebec institute for hardwood forest management).

Côte-Nord – A solid base and sought-after product — Under the Accord program, the Côte-Nord region is considered a “key partner” in the “Boreal forest use and processing” niche. It has ten major sawmills (representing 11.29% of Quebec’s softwood lumber production), 32 small sawmills, several secondary processing mills, businesses specializing in the development and management of forest resources and one pulp and paper mill. Black spruce and balsam fir, found locally, have highly sought-after characteristics.

Research is carried out by the Centre d’enseignement et de recherche en foresterie de la Côte-Nord (Côte-Nord centre for forestry research and teaching) and the Carrefour de recherche et de

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développement forestier de la Côte-Nord (Côte-Nord forum forestry research and development). There are also several high school and Cégep-level programs offered in forestry.

Nord-du-Québec promotes cogeneration — The Northern Quebec region is considered a “leader” in the “cogeneration, reuse of forest waste and primary wood processing” niche. Cogeneration is defined as the simultaneous production of electricity and other useful thermal energy (such as steam, hot water or combustion gas) from the same fuel source (e.g. natural gas, wood chips). The area contains twenty sawmills, two cogeneration plants (steam and electricity), one pulp and paper mill and one engineered lumber mill, providing employment for nearly 2,200 people.

Although it does not have an R&D centre, the region is home to one of the most technologically advanced sawmills in Canada. Furthermore, the proximity, quantity and specific characteristics of its resources make the Northern Quebec region highly attractive in terms of forest development.

Furniture – An export sector The Montreal region is home to 27.3% of all furniture industry businesses in Quebec (which includes 38.7% of Quebec shipments and an even higher proportion of large businesses). This percentage is considerably lower than its demographic weight would imply.

Regions that stand out are Montérégie (14.8%), Chaudière-Appalaches (12.5%) and Centre-du-Québec (9%). The Chaudière-Appalaches region produces 19.8% of Quebec shipments and Montérégie produces 13.29%. With two industry leaders – Dutailier for residential furniture and Lacasse for office furniture – the town of Saint-Pie de Bagot, near Saint-Hyacinthe, is a classic example of this highly decentralized sector, which is focused on exports to the United States. The CMM has 39 businesses operating in the upholstered furniture segment, which is not as well represented in neighbouring regions, where Central Quebec and Montérégie each have about ten, while Mauricie, Lanaudière and the Laurentians have about two or three each.

Lanaudière – Furniture export champion — Located close to Montreal, the Lanaudière region has plenty of ports and airports as well as major roads that make it easy to export furniture. This is a key activity for the region, as 74% of its production is sold elsewhere in Canada or to the United States. The region’s flagship store, Jaymar Furniture (Shermag), has 305 employees.

The region is home to the Cité industrielle et internationale de Terrebonne (Terrebonne international industrial park) and four industrial parks in the Joliette regional county municipality. Training is provided by École polyvalente Pierre-de-Lestage comprehensive high school, the Centre professionnel des Moulins (Des Moulins professional training centre) and the Lanaudière regional Cégep. Under the Accord program, Lanaudière is therefore considered to be a “key partner” of the Montreal region in the “Furniture — Secondary and tertiary processing” niche.

Chaudière-Appalaches – Furniture and upholstery of all kinds — Along with Central Quebec and Lanaudière, the Chaudière-Appalaches region is seen as a “key partner” of Montreal in the furniture niche. The region produces mostly residential and institutional furniture (for schools, hotels, restaurants and other public institutions) as well as office furniture and accessories. There are 71 furniture companies, of which 75% have fewer than 50 employees (approximately 3860 employees in all, or 2% of the region’s employment).

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The main businesses are AP Industries (330 employees), South Shore Industries (515), Meuble Idéal (255), Le Meuble Villageois (234), Meubles Morigeau (216), Scotstown Div. of Shermag (204), Laurier Furniture (170), Teknion Roy & Breton (123) and Meubles Beaucerons (120). The region benefits from a skilled labour pool, a good transportation network, a strong capacity for innovation and proximity to the American market.

Under the Accord program, the Chaudière-Appalaches region is perceived as a “leader” in the “Wood Finish and Imitation Wood Products” niche. This includes treated wood for outside use, siding, decorative elements, mouldings, door and window components, floor covering and furniture. The region is home to about 200 businesses in the field, of which 71% have fewer than 50 employees.

The largest companies are: Bonneville Windows & Doors (509 employees), Donat Flamand (440), Maibec Industries (403), Boa-Franc (350), Laflamme Doors and Windows (335), Daaquam lumber manufacturer (275) and Matériaux Blanchet (220). The industry represents 4.4% of regional employment or close to 8,600 jobs.

Construction timber – A major sector outside the CMM Abitibi-Consolidated, the largest company in the industry, operates 24 mills in Quebec, all outside the CMM. Of these, 17 are sawmills, which makes it the sixth-largest lumber producer in North America. Tembec ranks tenth, with seven mills in Quebec, six of which are sawmills.

Uniboard Canada, with four particle board mills in Quebec, is the fourth-largest producer of medium-density fiberboard (MDF) panels in North America. Tafisa (325 employees), in Lac-Mégantic, is the sixth-largest particle board producer and Norbord (Tembec), with four mills in Abitibi, is the ninth-largest MDF panel producer in North America.

The only private wood products research centre is Forintek, in Quebec City. Its mission is to help the forest products industry optimize manufacturing processes, extract the maximum value from available raw materials and meet the expectations of clients in terms of product performance, durability and cost.

The leader in the processed wood and sawmills niche is Saguenay–Lac-Saint-Jean, thanks to its accessibility to the required resources and the presence of businesses specializing in the manufacture of wood processing equipment. The region has a well-developed training network, with the Université du Québec à Chicoutimi, two Cégeps and a professional training centre.

Centre-du-Québec opts for milled wood — The Centre-du-Québec region is also considered to be a “key partner” of the Montreal region in the “Furniture and Milled Wood” niche, which accounts for 100 businesses and close to 6,000 jobs in the area. Region specialities include products such as veneers, mouldings and wood components, coffins and cabinetry. The region’s proximity to a specialized industrial pool and the presence of the École du meuble et du bois ouvré (Quebec school of furniture and milled wood – EQMBO) and the Victoriaville Centre d’aide technique et technologique EQMBO-Entreprises (EQMBO business centre for technical and technological assistance) also help strengthen the region’s position.

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Abitibi-Témiscamingue captures the market in self-help housing — Under the Accord program, the region is considered to be “leader” in the “Wood Construction Systems” niche, as a result of the convergence of the engineered wood, panels, prefabricated systems and lumber sub-sectors. This is because of the growing trends in self-help housing and the increasing demand for engineered wood. Businesses such as Tembec and Norbord in part help ensure the secondary and tertiary product distribution system.

Estrie – A privileged position in an integrated industry — Estrie considers itself a “leader” in the “Imitation Wood and Composites” niche. That said, at the time of writing, there has been no agreement made under the Accord program.

The region benefits from its geographic proximity to the United States and is less affected by the surtax on softwood lumber, due to the large number of border companies that are jointly run by both Canadian and American nationals. This is the only region with mills in all activity sectors, which demonstrates to what extent the local industry is truly integrated.

Printing and publishing – A divided sector As mentioned, the printing and publishing sector is extremely fragmented, with only 3% of businesses having 100 employees or more, leaving synergies considerably reduced. This allows two groups – Quebecor World and Transcontinental Printing – to carry out approximately 50% of Quebec’s production in this field. These large groups are also responsible for the nearly constant mergers and acquisitions that characterize the sector.

The sector’s SMBs rarely have the means to grow by purchasing other businesses. The more active among them try to solidify their position through specialization and technological innovation. Businesses in the CMM and – to a lesser extent – those in the Quebec City area tend to dominate the market.

In terms of training, the Beauce-Appalaches Cégep offers a diploma in Printshop Management Techniques. Meanwhile, the Sainte-Foy, Sherbrooke and Rivière-du-Loup Cégeps offer a diploma in Graphic Design. Laval University also offers a Bachelor’s degree in Graphic Communication.

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Relational Assets


Going Beyond Traditional ImpulsesThe entire cluster of wood and wood derivative products is characterized by the coexistence of two very different groups of stakeholders in each sub-cluster: a few large companies and numerous SMBs. The latter generally demonstrate a substantial amount of individualism. Encouraging intra-sectoral relations would be a good starting point in trying to bring the advantages of industrial cluster processes to these mature sectors.

Encouraging dialogue on all levels Below are several concrete examples of areas where improved dialogue between the various cluster stakeholders appears to be needed. In all the sub-sectors, comments from the various professionals and experts interviewed displayed considerable overlap. They spoke of “a tradition of individualism,” “a culture of every man for himself ” and “a fairly closed environment, where members jealously guard their strategic plans and vision.”

Enough said. The players remain unconvinced and even unaware of the advantages of stronger intra-sectoral relations. While businesses are now being passed on to the next generation, with some early positive signs of change as a result, the sector remains ripe for advocates of business networking and strategic alliances to do their work.

Promoting the creation of professional pulp and paper associations There is no professional association for paperboard or converted paper manufacturers (such as paper bags, cups, etc.), although their production has become a major link in the city’s industrial chain.

The success and excellent organizational skills of market leaders such as Cascades merely serve to hide the disparity among sector players, who are confident in their individual strengths as entrepreneurs but who would benefit from the creation of a network for meetings and dialogue – a necessary ingredient in establishing a group dynamic.

These professional associations could promote a strategic reflection process adapted to each sub-sector. As the paperboard and packaging industries often include printing activities, the highly active Comité sectoriel de main-d’œuvre des communications graphiques du Québec (Quebec graphic communications Sectoral Workforce Committee) would gladly assist in employment and training activities for these two fields.

However, the industrial logistics of the paperboard and packaging sectors is not the same as that of printing in general. Encouraging the creation of a professional association encompassing these two sectors would make it possible to provide them with economic analyses tailored to their own needs.

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Keeping SMBs informed The existence of major paper mills and printing giants tends to make people forget that the sector is first and foremost a world of SMBs. While the major players have the size and the means to easily stay afloat, small businesses, determined as they are to survive, lack potentially useful information – often without even knowing it. To improve their performance and survive in the long term, we will need to make it a goal to provide them as much information as possible.

As noted by the Canadian Printing Industries, while the printing sector may be the top manufacturing employer in the country, it is still dominated by SMBs, with 75% of its businesses having fewer than 20 employees. Among paperboard and converted paper manufacturers, there are proportionally fewer small businesses, but there also appear to be fewer opportunities for dialogue and exchange than in the printing sector.

Fostering meetings and exchanges Many people interviewed who had had the opportunity to observe Accord project meetings, mentioned the positive aspects of this approach, where people from the same sector, who had previously not been in contact with each other, met and discussed various issues and points of view – often for the first time. The dynamic discussions led by some, especially those of the younger generation and other natural leaders had a positive effect on the group and its motivating drivers.

Opening up new fields of research Developing research on recycled fibres and paperboard – Traditionally, the main research efforts in Canada focus on softwood fibres and its uses. The hardwood, recycled fibre and paperboard sectors are under-represented or not represented at all in research led by institutional organizations. With respect to paperboard, Cascades dominates the sector and conducts its own mixed research activities ranging from fundamentals to products, leaving other paperboard and packaging industry players with no research support to help them remain competitive.

Developing research on furniture – This is a field that has not, up until now, interested researchers. Given the overall strength of the furniture sector, developing research on its primary input factors would be a useful investment. Sector stakeholders would also like to see the development of a design-oriented reflection process, even if that is not what is usually meant by “research” in the industrial world.

Improving dialogue between businesses and researchers Everyone interviewed stressed, to varying degrees, the difficulties involved in maintaining dialogue between businesses and researchers. Business leaders criticised university research centres for being cut off from the realities of the business world.

Business people often use the term “research” when what they are really thinking of is “innovation.” If they are seeking to improve their processes, they are often tempted to “shop around” for new technologies that are already available rather than support a project from start to finish, which means waiting until it is ready to market. Most often, however, they prefer to find a new product that they can market quickly.

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Small and medium-sized businesses have little or no means to devote to research. Meanwhile, large companies – and this is particularly true for pulp and paper businesses – are doing less and less research in-house.

In this context, universities appear to be in a privileged position, as research is a natural part of their function. However, universities have a tradition of fundamental research, and even though they have made great strides in bringing themselves closer to businesses (as they are constantly seeking private funds to support their projects) there is still a gap between the two visions, which inevitably leads to a sense of mutual dissatisfaction.

Managing an image problem The various sectors of the cluster all suffer from an image problem. Except for a few sectors of the printing industry (e.g. graphic design software, digitization), which have attracted the interest of many young people, most of them feel that jobs in these industries involve hard labour in a noisy, dirty environment.

The fact that this image is no longer accurate, given the changing technology in the various sectors (widespread computerization, precision monitoring, etc.), does not make much difference. The cluster has not succeeded in creating the necessary “relational assets” that would enable it to attract young people, which seriously affects employment (see Strategic Elements).

Promoting better relations between suppliers and product manufacturers Dialogue between forest managers, sawmills and fibre producers on the one hand and converted product manufacturers – either paperboard or furniture – on the other, has never been easy. However, these relationships are considerably better today than they have been in the past.

It would be worthwhile to continue along this vein. Dialogue between the various sectoral players — from furniture manufacturers to forest managers — would make it possible to ensure supply stability and synchronization with industry needs. Rapid development in certain Asian countries is already affecting access to fibres, especially with respect to recycled paper, where China has cornered a growing part of the market. As time goes on, the need for joint action can only increase.

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Strategic Elements


Product Differentiation and InnovationThis portion of our analysis reveals the same division into two very distinct groups: large companies and SMBs. However, even industry giants, which operate on a volume scale, have their own product differentiation policies and try to stay ahead of their competitors through innovation.

Working towards product differentiation The various specialists interviewed are relatively unanimous in their descriptions of the major strategic orientations for the sector. They differentiate between the larger players and the other stakeholders. The former are able to influence prices and ration their operating costs as much as possible in order to strengthen their margins. Those who are restricted to following market prices also curb their costs as much as they can, and try to gain on volumes.

The entire sector aims to develop value-added products. This trend extends even to newsprint, among other items, with noticeable developments in specialized paper production, and paperboard and converted paper manufacturers continually coming out with new products.

Maintaining a level of constant innovation Of course, there is only so far that paper mills can go in terms of innovation, as they often have no choice but to maintain the status quo. However, comments from this sector echo those of many in the other sectors: innovations in manufacturing processes are welcomed for improving productivity, while product innovations (as we will see in the next section) are perceived as the main avenue for growth.

Developing the “Just-in-time” approach This is where those interviewed demonstrated varying positions. Those for whom it was commonplace tended to consider the approach old hat, and that it was no longer a problem. Others saw the value in it, but were afraid of not having the means to get into it. It appeared that, given the wide diversity among the sector’s SMBs, a “Just-in-time” approach and a reorganization of production processes should continue to be on the front burner of concerns among those in charge of increasing the vitality of the cluster, if they wanted to improve its productivity.

Developing management and marketing know-how Many people contacted indicated that business leaders often had better manufacturing skills than management or marketing know-how. This was mainly the case with small family businesses. However, observers agreed managers were generally better today than twenty years ago.

Supporting specialized training While the training available today is fairly solid overall in the pulp and paper and printing sectors, there is a lack of training programs especially designed for paperboard and converted product manufacturers in general.

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Similarly, the furniture industry complains that there is still not engineering training available to them. It would also like to see design integrated into furniture education as it contributes to the series renewals by heightening the fashion effect. Furniture is the sub-cluster most subject to complaints by entrepreneurs having difficulty finding qualified workers. Rightly or wrongly, they feel that training establishments still focus too much attention on churning out cabinet makers, rather than the specialized technicians they need.

Preparing the next generation Massive retirements have not yet hit businesses, but they have caused concern with respect to difficulties in ensuring future replacements. These concerns are linked to the sector’s image problems, which have an effect on the training programs that young people are attracted to.

Upgrading and modernizing paper mills Major pulp and paper mills grew up in the “resource region” mentality, applying the classic “Cash Cow” model popularized by the Boston Consulting Group in the 1960s. Today, this is generally considered an out-dated industrial tool. Upgrading these mills to continue with traditional production output – which has often become just another commodity that can be manufactured more cheaply elsewhere in the world – is not necessarily an attractive option for paper mills.

It is possible, however, to modify a mill’s production facilities to produce value-added paper. That is what Kruger did for its Wayagamack mill, with the final results being doubled daily production and an increase in the number of employees. Public watchdogs could encourage this type of conversion wherever possible, thereby helping to protect the local economic fabric.

Attracting paper production equipment suppliers Although it is the fourth largest producer of pulp and paper in the world, Canada has only one major industry equipment supplier, G&LV. Attracting and supporting the activities of equipment manufacturers and suppliers could be a good move, strategically, as a main source of innovation (along with the chemicals industry) in pulp and paper mills.

Creating a Sectoral Workforce Committee for pulp and paperIt may seem surprising, but there is no Sectoral Workforce Committee for the pulp and paper, paperboard and converted paper product manufacturing industries.

Helping SMBs work with paper mills SMBs that could provide equipment and innovations to pulp and paper mills need to have one obstacle in particular to overcome. The innovation cycle for this sector is extremely long, occasionally up to ten years. Most SMBs do not have the means to wait for their products to go through all the intermediate stages before becoming marketable, which is a barrier to the development of sub-contractors. Some equipment suppliers – speaking naturally for the benefit of their field – would like to see government assistance offered to pulp and paper mills, so that they would be more amenable to stopping a machine or two to allow testing to be carried out.

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Acquiring cutting-edge printing technologies and equipment Innovation and research fall not so much under the responsibility of printers but rather machinery and ink suppliers. Every four years, they gather in Düsseldorf to attend an, enormous trade fair that will determine industry trends for the next four to eight years.

The most recent fair was held in May 2004. The most active innovation occurs in the field of pre-press. There is little change in terms of rotary printing, but the growth of offset sheet-fed printing shows no signs of slowing down.

According to industry experts, digital printing will be a major factor in the next twenty years. Market “newcomers” such as Xerox and HP are joining the field alongside traditional manufacturers such as Heidelberg.

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Niche Market or Delocalization?Niche markets are the logical next step in a product differentiation policy. All cluster stakeholders are working to secure their business relations as much as possible, by offering specialized products to specialized markets. This market policy inevitably leads these businesses to the problem of delocalization, which has become a major obstacle to growth.

Melding niche markets and innovation Innovations in the product field, as mentioned earlier, affects the vitality of businesses in their markets. Paperboard and converted product manufacturers operate on regional markets (which may include a portion of the United States), while furniture producers often ship to far-off and more diversified destinations.

Without a professional association or a Sectoral Workforce Committee, there can be no “collective discourse” on the importance of innovation in the pulp and paper and converted product industries. Meanwhile, the reflection and debate processes are well entrenched in the furniture sector, mainly thanks to the work of the Quebec Furniture Manufacturers’ Association.

The growth conditions that the QFMA insists upon seem to be applicable to a large number of SMBs within the cluster. The Association would like to focus on the ability of businesses to pursue its niches of excellence, while targeting higher-end products. SMBs need to take advantage of the flexibility that their size and organizational structure affords them to gain rapid turnaround. They need to stand out from products currently available on the market and to free themselves from having to compete over price. “The key,” says Jean-François Michaud, QFMA President and CEO, “is innovation on all fronts, in design as well as in production.”

Delocalizing where necessary Delocalization of a portion of a business’ activities is the result of the arrival of products from other countries – mainly China – on the market, and the attraction of cheap skilled labour in developing countries (such as India for IT and call centres).

Those interviewed were eager to address the issue of China as a threat. Many repeated several times that we were underestimating the impact China would have in the future. Furniture industry stakeholders have travelled to Asia to gauge what to expect. According to some, what they found completely changed the way they saw their industry. They were however more discrete about the activities they sub-contract to Asian and Latin American countries. The threat to Canadian jobs – and loss thereof – as a result of delocalization makes it a delicate subject.

A third category of business owners decided to take the idea of delocalization to its fullest extent. An excellent example of this is Touch Industries. Although its head office is in Sherbrooke, the company manufactures its paper matches in China. For company President, Gervais Morier (Les Affaires, August 21, 2004), the strategy of choosing which activities to sub-contract to developing countries may be somewhat passé. He says that sub-contracting a portion of his production to China enabled his company to remain at the same level as his competitors. However, in order

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to get ahead of the competition, he decided to have everything manufactured there. Touch toothpicks, coffee stirrers and skewers are all made in two Chinese plants that together employ 300 people. The company’s sixteen other employees work in Sherbrooke, at the head office and in the warehouses.

These are three possible approaches to the issues of delocalization and competition, but all have a major impact on the vitality of the clusters. If this trend continues, geographical factors will have to be revised. Paradoxically, the agents of the knowledge economy – i.e. the brains behind the works – are those who remain here, dependent on the cluster’s physical environment, advantageous or otherwise. With Touch Industries, its production activities no longer depend on it at all.

Banking on exports A similar logic can be applied to all cluster activities as a whole. With the exception of commodities aimed at the local market and protected from imports by their value or volume (such as toilet paper), the cluster’s industries are all turning towards value-added products, for which the local market does not always offer a sufficiently large outlet.

The more companies continue to seek a competitive advantage in product quality or originality, the more important it will be to find markets outside the CMM or even the province. Encouraging companies to innovate therefore means we also have to help them export.

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Appendices


Appe

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es Sources Studies L’industrie des produits forestiers au Québec, Gros plan sur les forêts. [The Forest products industry in Quebec: Highlights on the Forests] MRNFP, 2003.

Gros plan sur Montréal : Les forêts. [Highlights on Montreal: Forests] MRNFP, 2003.

Canada’s Paper Product Industry: Industrial Outlook. Conference Board of Canada, August 2004.

Forestry and Sawmilling

Le marché de l’emploi dans l’industrie forestière. [The Forest Industry Job Market] Emploi-Québec, Outlook 2003 to 2007.

Profil des produits forestiers, deuxième transformation. [Profile of Secondary Forest Products] CRIQ Report, November 2003.

“Un souffle nouveau” [A New Wind]. Quebec Forest Industry Council. Fibre expression, Vol. 1, No. 1, 2003.

“L’industrie forestière et les régions du Québec” [The Forest Industry and Regions of Quebec]. Fibre expression, Vol. 1, No. 3, 2003.

Guide : Cycle de vie des produits forestiers, [Guide: Life Cycle of Forest Products] MRNFP, May 2003.

The Forest Industry in Canada. Forest Products Association of Canada, 2002.

Pulp and Paper

Profil de l’industrie Pâtes et papiers en Mauricie [Profile of the Pulp and Paper Industry in Mauricie], Emploi-Québec. Mauricie, François Hallé, 2000

L’industrie des pâtes et papiers : bilan et perspectives [The Pulp and Paper Industry: Overview and Outlook]. Pulp and Paper Products Council, 2004

Tendances de l’industrie des équipements pâtes et papiers [Industry Trends in Pulp and Paper Facilities]. Samson Bélair Deloitte & Touche, 2003.

The Outlook for the Canadian Pulp and Paper Industry in 2000. FPAC, January 2000.

Map of Quebec’s Pulp and Paper Mills. Pulp and Paper Technical Association of Canada, 2004


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es Taking Pulp and Paper Further: What we make, how we make it, and where we sell it. FPAC, 2004.

Printing

Diagnostic de main-d’œuvre et de développement industriel [Labour and Industrial Development Diagnostic]. Comité sectoriel de main-d’œuvre des communications graphiques du Québec, Mars 2004

Répertoire des formations au Québec [Directory of Training in Quebec]. Comité sectoriel de main-d’œuvre des communications graphiques du Québec, 2003

Profile 2002, Industry Canada (Innovation), Commercial Printing Industry

Profile of the printing industry in Canada, CPIA, 2003

Furniture

Portrait de la fabrication du meuble au Québec et Stratégie de développement [Portrait of Furniture manufacturing in Quebec and Development Strategy]. UQAM, 2002

Diagnostic des besoins de main-d’œuvre dans le secteur des portes et fenêtres, du meuble et des armoires de cuisine, 2002-2003 [Diagnostic on labour needs in the doors and windows, furniture and kitchen cabinets sector]. Comité sectoriel. August 2003

Eléments de problématique de la main d’œuvre en emploi, Meubles et articles d’ameublement [Workforce Issue Factors in Furniture and Furnishings Employment]. Emploi-Québec, 2004-2005 Update.

The Residential Furniture Industry in Canada, Industry Canada, March 2004

L’industrie québécoise du meuble depuis l’entrée en vigueur de l’ALÉ [The Quebec Furniture Industry Since the Start of the FTA], MDERR, September 2000.


Websites

Canadian Printing Industries Association – http://www.cpia-aci.ca

Association des arts graphiques du Québec (AAGQ) – http://www.aagq.qc.ca

Pulp and Paper Technical Association of Canada – http://www.paptac.ca/english/layout/index.htm

Quebec Forest Industry Council – http://www.cifq.qc.ca/html/english/index.php

Centre de recherche en pâtes et papiers (CRPP), UQTR – http://www.uqtr.ca/crpp

Wood Manufacturing Council (WMC) – http://www.wmc-cfb.ca

Centre d’information et de valorisation du meuble (CIVAM) – http://www.civam.qc.ca/Sites/Comite

Pulp and Paper Products Council (PPPC) – http://www.pppc.org/en/1_0/index.html

École québécoise du Meuble (EQMBO) – http://www.ecolenationaledumeuble.ca

Forintek Canada – http://www.forintek.ca

Ministère des Ressources naturelles de la faune et des parcs – http://www.mrn.gouv.qc.ca/english/home.jsp

Paprican – http://www.paprican.ca/engl/index.htm

Technical Support from the Ministries Involved

François Rouleau, Department of Forest Products Industry Development, MRNFP

Individuals Consulted

Roger Gaudreault, Director, Research and Development, Cascades.

Hugues Simard, Vice President, Development and Planning. Quebecor World.

Martin Frappier, Project Manager, Comité sectoriel de main d’œuvre des communications graphiques.

W. Robert Wood, Executive Director. Pulp and paper technical association of Canada.

Robert Légaré, Department of Forest Products Development. Ministère des Ressources naturelles.

Jean-François Michaud, President and CEO, Quebec Association of Furniture Manufacturers.

Appe

ndic

es


Denise Julien, CSRE Forêt, Hautes Laurentides

Michel Vincent, Directeur du service Economie et marchés. Conseil de l’industrie forestière du Québec.

Pierre Gélinas, Vice-Président Technologie du papier. GL&V.

Patrice Gervais, Président. Meubles Dinec.

Gilles Dontigny, Vice-président Fabrication. Kruger.

Claude Daneault, Directeur. UQTR, centre de recherche sur le papier

Michel Deveault, Président. Canadel.

Stéphane Deveault, Coordinateur, veilleur. CIVAM.

René Réjean, Directeur. Ecole Québécoise du Meuble et du bois ouvré.

Claude Laperrière, Directeur général. CIPP.

Appe

ndic

es


Appe

ndic

es CreditsEditorial Director

Research and Copywriting

Research Assistants

Language Editing

Graphic Design

Michel Lefèvre

Alain-Marie Carron

Jean-Pilippe MelocheCharles-Albert Ramsay Julie Ranger Frédéric Simmonot Dominique Chichera

Pascale Detandt

Metropolitan Cluster Technical Committee

Michel-Marie Bellemare Economist – Regional Policy,

Ministère du Développement économique et régional et de la Recherche

Daniel-Joseph Chapdelaine Advisor – City Planning and Institutional Relations,

Ministère des Affaires municipales, du Sport et du Loisir

Yves Charette Coordinator – Economic Development,

Communauté métropolitaine de Montréal

André Gagnon Advisor – Industrial File Development,

Ministère du Développement économique et régional et de la Recherche

Michel Lefèvre Advisor – Economic Development,

Communauté métropolitaine de Montréal

Christine Phaneuf Advisor – Local and Regional Development,


Ramata Sanogo Economist – City Planning and Institutional Relations,


Francine Rivard Director – Regional Development Coordination,

Société générale de financement du Québec

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