10/08/2013 05:54 EDT | Updated 01/23/2014 06:58 EST

"Wood First" Should Make Way for Canada First

In recent months, some members of the concrete and steel industry have taken exception to the "Wood First" movement that has been growing across Canada.

The Canadian Concrete Masonry Producers Association published a stinging advertisement that ridicules the wood first campaign. Two weeks ago, they published another attack on the wood industry.

Such tactics, obviously borne out of frustration, miss the real target. But the underlying concerns are not only understandable; they are perfectly valid.

In Canada, the "Wood First" concept originated in British Columbia as a cleaver public relations idea designed to prop-up a lumber industry in deep distress. In 2009, without any serious debate or legislative scrutiny, the B.C. Legislative Assembly passed the single page Bill 9, the "Wood First Act." This law requires the use of wood as the primary building material in all new provincially funded buildings.

There was no meaningful investigation, no rigorous analysis of the impacts, and no accompanying regulatory regime. Yet, through this "Wood First" preferential policy, the "free enterprise" B.C. Liberal government of British Columbia, launched an unprecedented attack on free and fair markets. At the time, no one seemed to notice or even care. In fact, most believed that this was a good idea.

The Canadian forest industry was decimated through much of the 1990s and most of the first decade of the new millennium. In retrospect, the decline and fall was inevitable.

The epicentre of the carnage to come was in British Columbia. Trade unions had been notoriously militant, inflexible, and had the richest compensation packages in the world. Lumber, pulp and paper mills all ranked at the very top of global cost curves. That eroding competitiveness was uncompetitive. Japan -- a relatively new but important market for B.C. lumber -- was heading into its period of prolonged stagnation. Productivity was low, and against the backdrop of poor economic fundamentals, capital investment dried up, which accelerated decline.

What assured it was the regulatory nightmare called the B.C. Forest Practices Code. In response to global outrage over the size and practice of clear-cutting on Vancouver Island, particularly near Clayquot Sound, the NDP governments of Mike Harcourt and Glen Clark instituted changed to the Forest Act. Changes went much further, however. New regulations imposed new and massive costs on the industry and directed the flow of timber based on where bureaucrats thought the wood should go to keep sawmills operating.

This meant that operating sawmills had no relationship to what made economic or financial sense, but what would maintain as many jobs as possible. Well intentioned, perhaps, but the dustbin of history is replete with examples of where centrally directed industries die a slow death, good intentions notwithstanding.

With the election of Gordon Campbell in 2001, the industry found a friend, someone who understood the damage that had been created and was committed to fixing it. Campbell tried to reverse the decline and remove the shackles from the industry. The Forest Act was reformed and the worst of the NDP's experiments in social engineering eradicated. But by 2007, the damage was too great, the culture of entitlement too entrenched, and the regulatory fix highly complex. The world economy had gone through massive and repeated shocks, the competitive landscape of the forest industry had been inexorably altered, and the devastating consequences of the Pine Beetle pandemic ravaging B.C.'s timber supply.

"Wood First" had understandably become a clarion call to a proud industry and the communities in Canada's heartland that depend on it. And because of that, it also became a slogan that politicians can easily digest and run with.

The problem with all of that is that by definition, "Wood First" means that governments are picking one industry over another, one workers job and livelihood over another. If I am an employee reliant on the steel or concrete industry, what am I to think that my government treats me as a second-class citizen? Why should wood get preference over steel or concrete?

There can be no winners in an all-out war between industrial sectors. Wood, concrete, and steel literally form the backbone of our national economy. They are indispensable to each other and their future success depends on enlightened leadership, dialogue and cooperation. Rather than fighting each other, they should be focused on working with federal and provincial governments to develop coherent building standards and codes that are sensible, safe, and sustainable.

The wood industry is not an "enemy" to the steel and concrete sector. Quite the contrary. The real enemy is not working together to create a world-class building materials and construction sector. And of course, it is the ignorance and resentments that results from playing alone in our individual sandboxes for far too long.

Daniel D. Veniez is Chairman of EMR Capital Corp. He is speaking at "Converge 2013" a national building materials conference in Vancouver October 15.