The export of British Columbia lumber products to Japan in the coming decade : cracking a hard nut

The recent downturn in the American lumber market, a market that consumed no less than 60.6% of total B.C. lumber production in 1979, has led to large layoffs and production curtailment in the B.C. lumber industry. As a consequence, increasing lumber exports overseas has again become a matter of serious concern to B.C. lumbermen. Japan is one country which, because of of its strong economy and large population, holds the potential of becoming an increasingly large alternative market to the U.S. There is also the possibility that, if a more sophisticated marketing approach can be taken towards Japan, Canada can improve its anemic record of exporting manufactured products to that country through an expansion of manufactured lumber exports, i.e. prefabricated houses, kitchen cabinets etc. The purpose of this study is to examine the factors which govern the market for B.C. lumber in Japan and make recommendations to better exploit the potential of the Japanese lumber market. The first part of the study estimates Japan's lumber demand to the year 1990 by projecting the course of housing starts - the major determinant of lumber consumption. Sources of housing finance, rate of household formation, disposable income, as well as the general Japanese economic and political situation were taken into consideration in making the projection. This is followed by an evaluation of Japan's domestic and international sources of softwood lumber supply. This provides the basis -for an assessment of B.C.'s position as a lumber supplier to Japan from an international perspective and thus enables a better understanding of the course that B.C. lumber exports to Japan will take in the 1980's. An analysis of the B.C. supply outlook suggests that while Japan's demand for imported lumber will grow, B.C. will not greatly expand lumber exports to Japan primarily because of timber supply shortages. Increasing exports to Japan would require the shifting of export volumes from the U.S. to Japan. This is unlikely not only because neglecting American markets is hazardous, but also because the supply limitations make the Japanese uneasy about allowing B.C. to assume a greater role as lumber supplier. The internationally tight lumber supply situation, however, coupled with Japan's growing lumber demand presents an opportunity for increasing manufactured lumber product exports to Japan. This would enable B.C. to boost the value of its exported lumber, without shifting or expanding export volumes, by encouraging the trade of more fully processed lumber products. The identification of these possibilities leads to an examination of possible means of alleviating the problems of engaging in the trade of manufactured products in Japan. The obstacles to be overcome in marketing products in Japan run the gamut from language and cultural difficulties, tariff barriers, lack of Canadian marketing expertise to the indifference of the Japanese trading firms towards importing foreign manufactured goods. It is recommended in this study that a permanent marketing structure be supported in Japan, under Canadian auspices,to develop the necessary expertise, and in general, handle the marketing of Canadian manufactured products in Japan. The manufactured lumber products industry possesses the potential to expand markets in Japan if it is properly fostered. This industry can benefit from international shortages of lumber and the high quality of the raw material in B.C. to produce valued products for export. Successes have already been registered by the pre-fabicated housing industry. Further success seems possible if production and marketing assistance are provided. Production assistance could be in the form of increased investment in R&D to aid product and technological improvements. The establishment of an institution for creative wood design should also be investigated. The marketing of manufactured lumber products in Japan could be improved by the establishment of a Canadian Trading Corporation, but this is not likely the best course of action to follow. More feasible alternatives include providing assistance to existing Canadian trading agencies operating in Japan, especially those already dealing with lumber, to encourage the marketing of more manufactured lumber products in that country. Also, the large Canadian lumber exporters could be induced to expand their handling of manufactured lumber goods through government subsidization of their efforts and/or through government regulation of the forest industry (in a manner similar to that which helped expand B.C.'s pulping capacity) by tying timber harvesting rights to the export of more manufactured lumber products.Applied Science, Faculty ofCommunity and Regional Planning (SCARP), School ofGraduat