Canada Wood Group Impact Report 2018-2020

CANADA WOOD GROUP IMPACT REPORT 2018-2020 Expanding exporting opportunities for Canadian wood products

Image: Suzhou 2nd Worker’s Aquatic Centre | Zhongheng Design Institute

Messages from the Board Chair Since its inception in 2003, Canada Wood has been the designated Bart Bender export market diversification lead for the Canadian forest sector and Board Chair, its stakeholders. Supplying diverse foreign customers with a broad Canada Wood Group array of products has enabled the Canadian forest industry to survive challenging times. Today we enjoy active markets and demand, but Senior Vice President, Sales and markets are cyclical and it’s essential to maintain broad market Marketing access for the next economic downturn.

Interfor Corporation Canada Wood is a good investment of industry money, which is leveraged through a shared funding agreement between Canada Wood and its government partners, including BC’s Forestry Innovation Investment, Alberta and NRCan. According to an independent 3rd party study, between 2015-2019 there was a $28 return on investment for every $1 invested in programming.

Canada Wood’s strategies are determined by the industry itself, ensuring the time and money we’re allocated are utilized in the areas that deliver the greatest return. In China, our focus is on increasing export value, via the marketing of structural grades for construction and shop grades for furniture. In Japan, Canada Wood works to maintain existing markets and create new markets and applications that counteract shrinking demographics and housing starts. In Korea, our focus is on capturing market share in new (and developing) energy-efficient building systems that are a natural fit for wood products.

Market diversification is critical to the ongoing evolution of the Canadian forest industry, whether efforts are focused on mills dedicated to export markets or on moving developing items from North American-based programs. As you read through this report, we hope you'll appreciate the activities we put in place to diversify markets that, in turn, support the Canadian forest industry and its communities.

“Canada Wood has helped build the offshore market foundation that allows Canadian companies to diversify their markets. Canada Wood refines its strategies and programming to meet the needs of the Canadian industry and grow consistent long-term demand for Canadian forest products.”

Messages from the President At Canada Wood we realize the importance of communica�ng with our stakeholders and partners, including upda�ng them on the ac�vi�es and changes we've undertaken over the last two years. We value the financial support we receive from our partners and we’re focused on delivering the kind of results that generate returns. Based on your feedback, we’ve adjusted our programming and repor�ng in order to best meet our stakeholders' needs. To ensure consistency across all markets, our repor�ng is done in a standardized format.

In 2018, our first ini�a�ve introduced meaningful, targeted metrics that accurately measured our ac�vi�es’ outcomes. We installed a Customer Rela�onship Management (CRM) system in every Canada Wood office, and later expanded to BC’s Forestry Innova�on Investment‘s offices in both India and Vietnam. This CRM allows us to systema�cally track our strategies and ac�vi�es, then produce meaningful data and report on this data. The new system lets us measure and communicate our outcomes, which can validate our programs’ benefits. Another way we validate our programs is by surveying par�cipants directly a�er each event, then one and three years later, in order to best understand what we did well and how we might improve.

A�er a period of review, Canada Wood has developed several new communica�ons ini�a�ves. This includes a social media strategy encompassing LinkedIn, Twi�er and Instagram, and upda�ng our websites to best u�lize the latest technology and provide our stakeholders with meaningful informa�on and resources. We’ve also updated the Canada Wood blog by categorizing content into four story pillars, each of which are consistent across all markets. In Japan, we have launched a communica�on and branding campaign targeted at Japanese stakeholders to enhance our industry’s reputa�on. We are proud to introduce the culmina�on of this communica�ons revamp: The inaugural Impact Report.

We know programming efficiency is essen�al to our stakeholders, so over the past two years we’ve reduced our costs and ensured that every dollar is spent prudently. By standardizing processes, procedures and systems across our offices, we have reduced our expenses. We had to make some difficult decisions on staffing, and our employees have stepped up to share responsibili�es in order to reduce our overhead costs. We also reviewed and �ghtened up our programming in order to refine targeted strategies and u�lize our funding efficiently.

In the last two years, Canada Wood focused on improving our programming and cost picture, thus improving our ROI. We will con�nue to focus on enhancing our outcomes. Our inten�on with this Impact Report is to give you the depth of informa�on that allows you to fully understand the work we've done during this �me period, as well as what we’re focusing on in the future.

Bruce St.John President Canada Wood Group

Nearly Net Zero Woodframe Demo House Changzhou, China

The Chitose Aviation Academy Hokkaido, Japan

Sancheong-gun Government Building South Gyeongsang Province, South Korea

CANADIAN FOREST INDUSTRIES:

KEY SECTOR TO THE ECONOMY 210,600

300

7%

$2.9billion

$25.8billion

people employed across the country (2018)

municipali�es supported across Canada as a main source of jobs and revenues

of Canada’s total exports in 2018

of total revenue generated for governments in 2017

contributed to Canada’s economy in 2018.

Source: The State of Canada's forests report 2019 | Natural Resources Canada

CANADA WOOD PROGRAM HAS helped support Canadian lumber prices by an average of

$72/mmfb generate demand for addi�onal offshore shipments annually by

350 mmfb

MARKET DIVERSIFICATION: SUSTAINS THE HEALTH OF CANADIAN FORESTRY INDUSTRY The share of Canadian forest product exports to the U.S. dropped from 81% in 2005, to 66% in 2018. During that �me, Canada increased exports to Asian markets. With unresolved trade disputes between Canada and the U.S., increasing trade with offshore export markets is of cri�cal importance to the economic health of Canadian lumber producers and the Canadian economy. The substan�al share of offshore exports has directly affected the North American lumber market.

Without this market shi�, significantly more Canadian lumber would have had to enter the North American market.

had an annual economic benefit of

$250 million *mmfb: million board feet

$1=$28 Total Canada Wood expenditures vs. return: for each $1 invested there is $28.3 return*

WHAT WOULD HAPPEN IF CANADA SHIFTED ALL OFFSHORE LUMBER EXPORTS BACK INTO THE NORTH AMERICA MARKET?

$12billion

19,300 jobs

revenue loss for Canadian lumber industries *

dependent on offshore shipments annually would be lost (approximately) *

$11.3billion

$412million

in GDP would be impacted *

in produc�on taxes would be impacted *

* Extrapolated from economic impact simula�on models, developed by a 3rd party economist, based on 10% a�ribu�on scenarios in the �me period between 2015-2019.

CHINA

CHINA MARKET STRATEGIES Establish wood building as a preferred solution for China’s fast-growing resort and tourism sector Leverage the government’s push toward building industrialization to increase the capacity for, and awareness of, prefabricated wood building systems such as infill wall and mass timber construction Develop new markets for Canadian wood use in the furniture and remanufacturing sectors

DEVELOPING NEW HYBRID TECHNOLOGIES FOR INDUSTRIALIZED CONSTRUCTION During this �me period, China’s prefabrica�on market grew at a tremendous pace. In 2019, prefabricated construc�on grew to 4.2 billion �2, an annual increase of 55% from the previous four years, while 26 million �2 prefabricated wood construc�on was built.

By leveraging the country’s new industrialized construc�on policies, Canada Wood China was able to posi�on infill walls as prefabricated systems designed specifically for concrete/wood and steel/wood hybrid structures.

In line with this target, we collaborated with Matechstone (MTS), one of the largest precast concrete manufacturers, to accelerate the development of wood infill wall systems to be used in China’s local construc�on industries. The concept progressed from a test project in Changzhou to the Taixing R & D center installa�on employing Prefabricated Energy-saving Cladding (PEC) system 1.0, to development of a wall with higher prefabrica�on rates and redesigned connec�ons marketed as PEC system 2.0 and applied in the Rugao Intelligent Manufacturing Center. MTS patented the PEC system in 2020. The PEC infill wall systems have been successfully commercialized in key markets, with many opportuni�es for applica�ons in non-residen�al and industrial building segments.

The infill wall showcases how Canadian wood construc�on technologies are transferable to China’s hybrid construc�on industry, opening new opportuni�es for Canadian wood in China’s mainstream building sector.

PEC 2.0 Infill Wall Installed on Matechstone Rugao factory

Registered Trademark of PEC system

PEC 2.0 Infill Wall Installed on Matechstone Rugao factory

“Wood construc�on is an integral part of China’s building industrializa�on revolu�on. Matechstone worked with Canada Wood to localize the wood infill system for the China market. It is a promising solu�on for the advent of the “industrialized construc�on era” that fits well within this market.”

Mr. LinFan, CEO and President, Matechstone

BANNER IMAGE: Sino-Canada Tianjin Eco-District Demonstration | Canada Wood China

Infill Wall hoisted on CMaRs office building

“Supported by the government's overall development strategy, China’s booming rural tourism market poses great opportuni�es for wood construc�on.

China’s reliance on imported �mber will con�nue, and a sustainable and stable supply of wood materials is key to the success of wood construc�on market development. I think China’s demand for structural �mber, as well as engineered wood products, has significant poten�al for future growth.”

URBAN ESCAPE, WOOD USE GROWING THE RESORT SECTOR China's rapidly growing tourism sector is becoming a significant part of the country’s economy. In 2018, tourism's contribu�on to China's GDP was CAD $ 1.92 trillion, accoun�ng for 11.04% of the country’s total GDP. To promote cultural and health experiences, the Chinese government is also pursuing a strategy to promote domes�c travel, which includes revitalizing rural areas to restore ecological zones, diversifying rural economies, and crea�ng new jobs while retaining local workers. This na�onal ini�a�ve has led to the explosive growth of domes�c travel, with resorts, rental units and leisure facili�es now in high demand. According to a report from TripVivid, as of 2020, 57% of China's top 100 real estate enterprises have established themselves in the field of culture and tourism. To advance market development in the wood resort segment, Canada Wood China developed marke�ng materials and carried out promo�onal campaigns aiming to influence, and convert, developers toward building with wood.

Mr. Ni Jun, CEO, Crown Homes Builders

Click to explore the winning projects of 2020 Canada Wood China Wood Construction Awards, or visit: https://canadawood.smugmug.com/China-Wood-Construction-Awards

Image (left): Liyang Ling Lake resort homes, Jiangsu Province, China Image (right): Boat house on the Fuchun River, Zhejiang Province, China

CANADA WOOD CHINA 2019-2020 BUSINESS DEVELOPMENT ACTIVITIES SUMMARY

46,978

PROSPECTS Awareness Building

46,978 captured prospects from webinars, social media and trade shows

5,320

QUALIFIED LEADS Knowledge Transfer

5,320 qualified leads a�ending seminars/workshops, training programs, voca�onal school and university courses, in-bound mission events

262

OPPORTUNITY ENGAGEMENT Project Negotiation

262 prospect opportuni�es pursued in wood-frame construc�on and/or wood in manufacturing

CONVERSIONS Client/Project Conversions

47 commercial/demonstra�on projects, building prefabrica�on companies and furniture manufacturers converted

47

1. Summary results for Business Development activities only. Results do not include Canada Wood market access program (e.g., addressing regulatory barriers to Canadian wood products/systems through codes and standards), government relations program and other related efforts that provide a foundation for the market development program in China.

2. The number of “Prospects” are cumulative over the history of the program. Numbers reported for “Qualified Leads”, “Opportunity Engagement”, and “Conversions” are for 2019/20.

3. Conversions directly or indirectly influenced through technical support provided by Canada Wood. Conversions include non-wood projects converted to wood; and projects using non-Canadian wood converted to Canadian wood.

4. The above note applies to funnel models for Japan and Korea.

ONE-YEAR FOLLOW-UP SURVEY FOR 2018-2019 After 12 months, the surveyed participants of events, workshops, and seminars responded:

70% plan to do wood projects within the next year.

93% stated their interest in wood construction has increased because of Canada Wood activities.

Technical support on matechstone infill wall project site

60% plan to use Canadian wood products in the furniture manufacturing sector within the next year.

KEY ACHIEVEMENTS CHINA MARKET

REVIVE THE CHINESE CULTURE IN TIMBER ARCHITECTURE

32.3

million ft2

Estimated annual wood construction starts

Equivalent to 25,000 woodframe homes Source: MOHURD 2019 National Survey

52

wood projects converted

Toward the use of Canadian wood, representing a total area of 2.47 million ft2 since 2018

$2.5

million

THANKS TO OUR PARTNERS Ministry of Housing and Urban-Rural Development

demand generated

For Hemlock and SPF lumber from the Wood in Manufacturing Program

125

应急管理部天津消防研究所 Tianjin Fire Research Institute of MEM

codes, standards & policies influenced and supported Since the launch of Canada Wood Program XIONGAN GREEN DEVELOPMENT RESEARCH INSTITUTE

22

wood demo projects completed

2nd

largest export market

Since the inception of the Canada Wood program

For Canadian forest products by volume Updated date: September 2020

JAPAN

JAPAN MARKET STRATEGIES Develop the non-residential building segment where potential for growth is significant Safeguard the existing single family housing market for traditional 2x4 residential markets Catalyze the use of mass timber and engineered wood assembly by influencing building codes and policy development Within the medical, social-welfare and eldercare sectors, Canada Wood achieved ini�al success with market penetra�on of more than 50%. In a joint promo�onal effort with Japan Wood Truss Council and Japan 2x4 Home Builders Associa�on, we are currently pursuing new opportuni�es within educa�on and agricultural building.

BEYOND HOUSING: OPPORTUNITIES IN NON-RESIDENTIAL CONSTRUCTION The Japanese non-residen�al construc�on sector offers substan�al market poten�al for Canadian wood products. Government efforts to promote the country's tourism sector, as well as policy measures encouraging wood use in public and commercial applica�ons, will further s�mulate non-residen�al market growth in the coming years.

During this �me period, Canada Wood Japan has par�cipated closely with Japanese industry associa�ons, academics and code officials in the development of codes and standards. This work contributed to laying the founda�on for the applica�on of wood use in large-scale construc�on such as educa�on, eldercare, hotel, and agricultural facili�es. Our research and development programs resulted in securing numerous approvals from the Ministry of Land, Infrastructure and Transporta�on (MLIT) on fireproofing non-residen�al buildings. Other approvals have accredited Canadian wood products for use in non-residen�al construc�on wood components: Midply and nail laminated �mber (NLT). In fact, Japan’s leading builders now recognize Midply as one of the most effec�ve seismic solu�ons for both mid-rise and large-scale wooden structures.

ONE-YEAR FOLLOW-UP SURVEY FOR 2018-2019 After 12 months, the surveyed participants of events, workshops, and seminars responded:

80% agreed Canada Wood Japan activities have improved their client service

Since the establishment of The Act to Promote Wood in Public Structures in 2010, the number of mid to large-scale wooden buildings has been on the rise. In recent years, simplifica�on of wooden-building codes and technological innova�ons are advancing, so we believe the number of mid- to large-scale wooden buildings will con�nue to increase in the future.

Mr. Kenichi Sato Medox Co.,Ltd.

CANADA WOOD JAPAN 2019-2020 BUSINESS DEVELOPMENT ACTIVITIES SUMMARY

PROSPECTS

5,143

Awareness Building

5143 captured prospects from email campaigns, social media and trade shows 754 leads a�ending workshops, training programs, and seminars

754

QUALIFIED LEADS

104

OPPORTUNITY ENGAGEMENT

104 specific opportuni�es pursued in woodframe construc�on

CONVERSIONS

69 converted non-residen�al and commercial/demonstra� on projects

69

Knowledge Transfer

Project Negotiation

Client/Project Conversions

90% said their knowledge of 2x4/OSB systems improved

50% started working on 2x4 construction projects using Canadian OSB after participating in the Canada Wood seminars

KEY ACHIEVEMENTS JAPAN MARKET

3,000,000 2x4 houses built As of March 2020, market share has increased by 480% since the inception of Canada Wood programs

GROWING BY ADAPTING TO THE CHANGING MARKET

207

2x4-wooden social, elder-care, and medical facilities influenced

53

From Ministry of Land, Infrastructure and Transportation (MLIT) for wood construction

THANKS TO OUR PARTNERS

NON-RESIDENTIAL

日本ＣＬＴ協会

Ministerial approvals acquired

fireproof wood 3,947 2x4 projects built Using MLIT joint ministerial approvals acquired through Canada Wood Japan technical programs

13

Mid-ply manufacturers enrolled in Canada Wood Japan mid-ply dealer network largest export market nd (by value)

2

For Canadian high-grade SPF and OSB products Updated date: September 2020

SOUTH KOREA SOUTH KOREA STRATEGIES Grow the well-established single- and multifamily residential housing market Address the need for high-performance and quality building by promoting Super-E® technology Generate market awareness and support the evolution of wood prefabrication “Super-E® Housing in Korea has become affordable as Korea’s Standard for Energy Conserva�on Design of Buildings has been upgraded, with the goal of reaching Net Zero Energy, and the addi�onal investment in efficient mechanical systems has become a necessity. The Korea Super-E® House Cer�fica�on Program, in combina�on with KWCA’s 5 Star construc�on quality cer�fica�on, offers peace of mind to homeowners who not only desire energy-efficient, healthy and quality homes but who are nervous about choosing the right builder. I appreciate the sustained training opportuni�es offered by Canada Wood Korea and Energy Efficient Exporters Alliance, which enable builders like us to sign onto the program without hesita�on. Now we have become an advocate of the Super-E® House program.”

ADAPTING HIGH PERFORMANCE WOOD FRAME METHODOLOGY TO CONSTRUCTION IN KOREA

Gap Bang KIM CEO of Stuga Wood Construction

CANADA WOOD KOREA 2019-2020 BUSINESS DEVELOPMENT ACTIVITIES SUMMARY

As Korea’s housing mix evolves, sophis�cated consumers are expressing growing interest in homes that are healthier, energy-efficient and environmentally responsible. The use of wood both structurally and decora�vely can help builders achieve a high standard of energy efficiency and contribute to good indoor air quality.

Canadian Super-E® building technology, a standard originally developed by Natural Resources Canada for interna�onal markets, is gaining recogni�on and is now commercially enabled by the Korea Wood Construc�on Associa�on (with support from Canada Wood).

In order to achieve net-zero levels of performance, work is currently underway to merge Super-E® methodology with the zero-energy housing goals in Korea. Super-E® housing is a great example of how high energy efficiency technology can be a plaform for Canadian design features and healthy building materials.

ONE-YEAR FOLLOW-UP SURVEY FOR 2018-2019 After 12 months, the surveyed participants of events, workshops, and seminars responded:

16,446

PROSPECTS

Awareness Building

664

QUALIFIED LEADS

106

OPPORTUNITY ENGAGEMENT

34

Knowledge Transfer

Project Negotiation

CONVERSIONS

Client/Project Conversions

16,446 captured prospects from email campaigns, social media and trade shows

106 prospect opportuni�es pursued in wood-frame construc�on

664 qualified leads a�ending workshops, training programs, seminars and missions

34 converted commercial/demonstra�on projects and 5-Star cer�fied wood home projects

Final Approved Logo

69%

75%

SuperE

®

Fonts - SuperE- Gogobig/Reg E- Arial/Bold Italic No Drop Shadows/Tradmark added

60%

SuperE

®

Fonts - SuperE- Gogobig/Reg E- Arial/Bold Italic B/W logo/No Drop Shadows/Tradmark added

will apply what they learned from Canada Wood Korea seminars and training in their upcoming projects.

now plan to build 2x4 construction after participating in the activities.

plan to build a Super-E® house in the near future.

KEY ACHIEVEMENTS KOREA MARKET

128,600

ALIGNING

2x4 houses built

From 2006 to August 2020

STRATEGY WITH MARKET

15%

PRIORITIES AND

of single-family home market is 2x4 construction

Up from 2% in 2001

CHANGING BUILDING CODES

Final Approved Logo

SuperE

®

Fonts - SuperE- Gogobig/Reg E- Arial/Bold Italic No Drop Shadows/Tradmark added

SuperE Fonts - SuperE- Gogobig/Reg E- Arial/Bold Italic B/W logo/No Drop Shadows/Tradmark added

THANKS TO OUR PARTNERS

13

Super-E® certified projects completed

®

254

Five-Star certified 2x4 houses built

Meeting the highest building quality standard in Korea

Building code now allows timber building up to 한국목재보존협회 Korea Wood Preserving Assocation

5

Stories

98% of B.C. lumber Shipped to South Korea is on-grade (No. 2 & btr) used in construction

8 Updated date: September 2020

Certified Super-E® builders

OUR MEMBER ASSOCIATIONS

ABOUT CANADA WOOD GROUP Funded by Canada’s federal and provincial governments as well as the forestry industries, Canada Wood Group supports the diversifica�on of global markets (especially in Asia) by promo�ng Canadian wood products and wood construc�on systems through advancing technologies.

HOW CANADA WOOD’S PROGRAMS WORK Market Access

Address code constraints and remove barriers blocking the use of wood in construction Codes & Standards | Technical Support | R&D |Education

Market Development

Create demand in new segments for innovative and sustainable Canadian wood solutions Business Development | Marketing & Promotion

Government Relations

GOVERNMENT PARTNERS Demo Projects

Maintain strategic alignment with government stakeholders, and influence policies Government Affairs | Policy Issues

Showcase the possibilities for, and foster the uptake of, commercialization Demonstration | Research & Testing

Image: Midply wall Courtesy: Canada Wood Japan

Vancouver Office 1220 - 595 Howe Street Vancouver, B.C., V6C 2T5 info@canadawood.org www.canadawood.org

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