You can't blame most British Columbians or B.C.'s export market customers for thinking that the province's wood products industry is only about lumber and oriented strand board. They are the high visibility products that catch the headlines.

Most of the more than $1 billion of capital spending flowing into the wood products manufacturing sector in the past several years has been directed at capacity expansions in these products.

That might be good news for shareholders, community stability, new job creation and export earnings, but the investments increase the province's dependence on a narrow range of primary products.

B.C.'s insidious and worsening pine beetle epidemic, along with punitive softwood lumber trade wars, further reinforce the public image of B.C.'s forest industry as being little more than hewers of wood.

Not only does B.C. concentrate today on fewer product groups, the U.S. market dominates B.C.'s forest industry more than ever. Today, it accounts for 88 per cent of B.C.'s wood products exports. Add Japan, and the total is 95 per cent.

The huge potential for geographical diversification in developing markets such as China is still a long way off.

Meanwhile, B.C. is continuing to lose global market share in value-added manufacturing to suppliers with plants in China, the U.S. and South America. In B.C., value-added manufacturing by smaller independent firms consists mostly of batch-production customized consumer products, such as wood furniture, kitchen cabinets and mouldings.

Some prize-winning B.C. firms have carved out global markets in these high-value end uses and niche markets. But in large volume production runs, B.C. simply isn't competitive.

In contrast, Canadians as makers of construction materials have a significant global competitive advantage. B.C.'s main customer, the U.S. homebuilding industry, wants more building components and packages of construction materials and less traditional two-by-four framing lumber. B.C. has yet to see increased investment in this sub-sector, but through channel partnerships in the U.S., it's starting to happen.

In the NDP years, there was a strong focus on stimulating value-added processing, but overall there was too much government intervention in the private sector. Subsequent policy on value-added manufacturing under the BC Liberals has been "hands-off."

That's unlikely to change after the May 17 election. The general view seems to be a resolution of the softwood lumber impasse followed by the repatriation of the $4 billion in Canadian industry export duties.

Ironically, having too much timber might impede progress. In contrast to B.C.'s expanding timber harvest, Quebec and Ontario have reached or exceeded peak softwood harvest volumes. In these provinces, and in Alberta, there is much greater policy emphasis on attracting value-added wood products investments.

While Quebec and Ontario's wood products export mix is more than 50-per-cent value-added, the percentage of value-added manufacturing in B.C.'s wood products exports dropped to only 8.5 per cent in 2003, down from 10 per cent a year earlier. That includes wood furniture, cabinets and appearance-grade consumer products.

There is everything right about the B.C. wood product manufacturing industry's focus on primary wood products. Thanks to industry consolidation and new investments, the province is home to many of the world's largest and technologically best producers of softwood lumber and OSB. Global low-cost producers such as West Fraser, Canfor, Dunkley and Tolko are now well set to be long-term survivors. They have the distribution relationships needed to be global competitors.

With only two per cent of global inbound foreign direct investment coming into Canada every year, a much more aggressive approach is needed to attract substantial investments into advanced processing of wood products. There is little evidence that this new school of thinking has emerged among B.C. public policy-makers. Yet, if anything, Ontario and Quebec have become even more aggressive in attracting this type of investment.

If B.C.'s forest products manufacturing industry is to be a key long-term participant in B.C.'s "Golden Decade," policy-makers in Victoria need to think hard about how to attract into B.C. substantial domestic and foreign direct investment in value-added wood products processing.

That means establishing B.C. as the global top spot for value-added manufacturing investment funds, creative designers and knowledge-based manufacturing entrepreneurs.

But there's little evidence of that happening today.

Over the next few years, cash-rich B.C. wood products firms are going to be looking around the globe and deciding the best location for their value-added manufacturing plants.

Already lower down the site selection list than it should be, B.C. has its work cut out to catch up with Quebec, Ontario and Alberta. For the province to move ahead of the pack, value-added investment attraction is going to have to feature much larger in the B.C. government's post-election plans.

Action is needed now, not when B.C.'s post-beetle-epidemic era of harvest decline is upon us.

Peter Woodbridge (pw@woodbridgeassociates.com) is president of Woodbridge Associates Inc.