While other industries are feeling the pinch of non-essential service shutdowns, forestry has experienced setbacks but is doing well so far.

The pandemic has given rise to a new reality, one that’s still changing and has yet to hit some industries in full force. This is certainly true for the forest industry, which is benefiting from increased demand and, as a result, higher prices for consumers.

However, the industry has also experienced setbacks. Some of the forestry sector’s key issues predate the crisis, but have been exacerbated by it. Like the vast majority of industries, adjustments are needed.

Short on supply, high on demand

A number factors have led to increased demand for wood products. Last March’s business shutdowns resulted in a supply shortage, which pushed up prices. The shortage was then exacerbated by increases in:

  • Home renovation projects;
  • Support for the buy-local movement;
  • Online shopping, which has ramped up demand for packaging and pallets needed for shipping.

Plants have responded by significantly stepping up production, but the increased activity has come at a cost. That’s because running at full capacity while implementing new safety measures has left business owners with little time to invest in innovation.

Innovating to future-proof operations

As demand spikes in Quebec, businesses have less need to export wood to other markets. But will local demand falter when the crisis is over? Will Quebecers still need as much wood as they did during the first few months of the pandemic? There are no sure answers to these questions—and that’s precisely why the industry needs to make innovation a top priority.

Attracting and retaining workers

The value chain has also been affected significantly, with direct impacts on forest workers. While they typically spend several days away from their families every month, the spring lockdown allowed them, like many other Quebecers, to stay home for weeks. When businesses reopened, returning to the forest was difficult for many of these workers and their families—especially those with young children. This, in turn, made it harder for businesses to find and keep skilled personnel. Employers don’t just need to recruit young talent, they also have to entice them into staying. This is a widespread challenge that could affect the vitality of the entire industry.

The COVID-19 crisis has deepened concerns about the future of paper, accelerating the decline in demand by approximately 5 years. This is forcing pulp and paper mills to adjust quickly.

Innovation success stories

Groupe Lignarex Inc. is one company that understands the challenges that lie ahead. They’ve already revised their entire production line and consolidated their value chain in order to strengthen ties with clients and suppliers. Meanwhile, Granules LG Inc. has innovated by using biomass, an environmentally friendly and locally sourced product, to optimize output and increase profitability. These are two great examples of companies preparing for the future!

There’s no question that the forest industry is being redefined. Now’s the time to strengthen the industry and position Quebec as a leader. We’re lucky to have this high-value renewable resource. It’s up to us to make the most of it.

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The Grant Thornton International IFRS team has published Hyperinflationary countries, a reminder of the accounting implications of applying IAS 29 Financial Reporting in Hyperinflationary Economies.

IAS 29 requires the financial statements of any entity whose functional currency is that of a hyperinflationary economy to be restated for changes in the general purchasing power of that currency, so that the financial information provided is more meaningful. The Standard lists factors that indicate an economy is hyperinflationary.

In addition to providing a reminder of the accounting implications of applying IAS 29, the publication Hyperinflationary countries provides Grant Thornton International’s view that, until further notice, IAS 29 should be applied by entities whose functional currency is that of the following countries:

  • Argentina;
  • Sudan (and South Sudan);
  • Zimbabwe;
  • Venezuela;
  • Iran;
  • Lebanon.

Entities whose functional currency is that of Iran and Lebanon should be applying IAS 29 for the first time in 2020.

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The Grant Thornton International IFRS team has published Insights into IFRS 16 – Lease incentives.

The document Insights into IFRS 16 – Lease incentives provides guidance on the accounting for lease incentives under IFRS 16 Leases from a lessee perspective.

Granting lease incentives is a common way to encourage a new lessee to sign up to a new lease contract and fill vacant premises. Lease incentives may take various forms depending on the negotiation between the lessee and the lessor.

When accounting for lease incentives in accordance with IFRS 16 Leases from a lessee perspective, questions may arise in how to identify a lease incentive and when the accounting treatment changes depending on how the lease incentive is granted.

The document Insights into IFRS 16 – Lease incentives aims to resolve these lessee accounting questions.

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Katy Langlais
Manager | CRHA, MBA | Human resources consulting

The pandemic has forced businesses and workers to be flexible. In these challenging times, there’s nothing more valuable than positive leadership.

Reviewing business models. Forecasting new customer needs. Positioning your business in the market. All this requires a lot of thought and frequent adjustments from senior management. Many entrepreneurs compare the challenge to playing Tetris. You have to be agile in order to fit everything in, without missing any pieces, even when your circumstances are constantly changing. Unpredictability has become the norm.

Meanwhile, everyone is talking about agility. The word pops up everywhere, but what does is it really mean? And how can companies promote it?

What is agility?

The dictionary definition associates agility with nimble dancers and quick thinkers. For businesses, being agile involves continually questioning your work while developing products and services.

In the current climate of uncertainty, business leaders need to anticipate what’s around the corner and stay attuned to changes and cues from within their organizations and the market more broadly. Entrepreneurs need to make quick decisions to help their companies adapt in the face of events and the new reality. Leaders and teams need to find new points of reference and ensure they’re still aligned with the core values of their organization and workforce.

Tracking trends and focusing on development

To protect their long-term prospects, businesses need to keep their eyes and ears open while focusing on major development projects, such as those targeting strategic priorities or with high growth potential. It’s critical to be able to get these projects off the ground quickly. And that’s where the agile approach comes in.

By involving employees early in the ideation and execution phases, managers can effectively mobilize teams and increase their engagement in the company’s activities.

Of course, staying on top of new social trends is also important, as it can help leaders decide how to adjust their product lines and practices. For example, the buy local movement has never had so much traction in government and public discourse. The same can be said of self-sufficiency and sustainable development.

Employees, partners and customers will respond favourably to businesses that successfully adjust their position in response to emerging trends and recent events.

Pairing positive leadership and agility

What’s needed is agile, positive leadership. This means turning stumbling blocks into stepping stones that ultimately lead to business growth and stronger team spirit. It’s a practice that should emanate from all organizations and the managers they employ.

When looking at facts, leaders should take a step back and consider different points of view. Asking employees for their perspectives can help you get a better big-picture understanding of the situation. In addition, a crisis or period of change can be an opportunity for some workers to shine. You never know, they might reveal a rainbow of solutions to cut through the dark clouds cast by the pandemic. Take the time to get your workforce involved and listen to what they have to say. It’s true what they say: together, we’re better.

Slowing down before bouncing back

Practicing positive agility also means knowing when to stop, reconnecting with your business’ values and making sure your decisions are aligned with these principles.

  • Do your words reflect your values? Do you pass your values on to your team on a day-to-day basis?
  • Are your work methods and actions consistent and ethical?

When going after agility, it’s easy to get off track. If you’re not careful, your judgement can become clouded as you rush to act quickly.

In order to stay on course despite the occasional sea change, keep your organization’s mission in mind and remind yourself why you invested so much time into building your business. Now more than ever, the key to staying afloat is to keep your focus on your organization’s brand identity and make sure it’s effectively conveyed to customers and employees. Otherwise, your company’s image could take a hit, leaving scars that last.

Developing positive agility starts with springing into action, spotting opportunities and responding quickly. At the same time, keep in mind that your teams need to move in step with you, with the same drive and skill.

If you’d like to discuss strategies for getting your business back on track, contact our team of experts. We’ll be happy to help you implement effective best practices for today’s turbulent times.


02 Nov 2020  |  Written by :

Katy Langlais is a recruiting and human resources consulting at Raymond Chabot Grant Thornton.

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