Ottawa's forestry money is large, but it arrives after mills need it

OTTAWA The federal government's new budget includes $6.5 billion for the forestry industry, a sum that industry leaders call historic. They also say it will not rescue struggling mills quickly, because the money is not expected to start moving until 2027-28.

For British Columbia, where the Howe Sound pulp mill at Port Mellon is already idled, that timing is the central issue. The Canadian Press reported the details of the plan and the reaction to it on Tuesday, Nov. 10.

What the budget contains

The spending is spread over six years and is meant to help modernize aging mills, raise productivity and develop new products. It has three parts:

The first is $500 million for wood fibre supply chains and forest management. The second is $2 billion that companies can use to upgrade mills and make higher-value products. The third is $4 billion of financing delivered by Export Development Canada, aimed at major investments in forestry facilities. The three amounts add up to the $6.5 billion headline figure.

The budget says the industry employed nearly 200,000 people and added $29.7 billion to the country's gross domestic product in 2025. It describes the sector as a key driver of the economy in rural, remote and Indigenous communities.

Mills under pressure now

The industry has faced years of closures and layoffs, with pressure mounting in recent months as pulp and paper operations across the country have shut down or paused, citing market conditions.

AV Group NB Inc. recently put its Nackawic, New Brunswick, pulp operation on a temporary halt, which affects about 350 workers. Rayonier Advanced Materials stopped production at its Témiscaming, Que., plant, affecting more than 300 jobs. The Canadian Press versions differ slightly on the second case: one describes the jobs as unionized, while others do not use that word.

In August, Domtar said it would idle its Bayview Fibre chipping facility and its pulp mill at Howe Sound, in Port Mellon, B.C., for an indefinite period. About 400 employees are affected.

The backdrop is a set of familiar pressures. Derek Nighbor, who leads the Forest Products Association of Canada as its president and chief executive, said the commitment is "precedent setting." He also warned that 2027 will probably be another hard year, because new home construction is still weak and American tariffs persist.

Reaction from industry and labour

Nighbor said the budget money is aimed at long-term change, not immediate relief. "There's no magic moment or magic bullet for the federal government just to turn this thing on a dime and everything is fine," he said. He added that the most urgent task is helping the industry get through the current downturn.

Ken Farr heads the Canadian Institute of Forestry and worries the funding may reach some mills too late. "The issue is now, and the problem is now," Farr said. He described a combination of U.S. tariffs, aging facilities and shrinking access to affordable timber as a "perfect storm." Even so, he said earlier funding is better than later, because it will help firms upgrade equipment and move into higher-value products.

Lana Payne, the national president of Unifor, said in a statement that the money brings "urgently needed stability for the sector and its workers." She said the industry still needs a broad strategy, and that Unifor hopes it includes more detailed measures to support workers and communities through the transition.

What happens next

Ottawa is also preparing a strategy for the forest sector, which it says should strengthen the industry over the long run. It draws on advice from an industry task force, and its release is expected by the end of the year.

Nighbor said regulatory certainty is a top priority for that strategy. He said companies can spend years preparing harvesting plans and securing provincial approvals, only to face added federal restrictions that disrupt operations. The industry wants closer co-ordination between Ottawa and the provinces on access to timber supply. Anyone investing in a mill, he said, needs confidence that the land base will stay available for 20 to 30 years.

For workers in forest towns, the sequence matters. The strategy is due by year's end, the budget money is due in 2027-28, and mills such as those in Nackawic, Témiscaming and Port Mellon are idle today. Industry leaders agree on the size of the commitment. Their concern is how long it will take to reach the mills that need it.

The same Canadian Press report was also published in the National Observer, which included accounts of the mill closures and comments from Farr and Nighbor.