1. Knowledge Centres in Times of Change October 4, 2006 S OLUTIONS f or W OOD Forintek Canada Corp. Jean Cook and Jim Dangerfield

2. S OLUTIONS f or W OOD Today’s Presentation Changing World About Forintek What do we need from you? Changing World About Forintek What do we need from you?

3. S OLUTIONS f or W OOD WAL-MART accounts for 12% of all Chinese imports to US Europe has replaced Canada as biggest inter- regional lumber exporter Russia has replaced US as biggest log exporter China has replaced Japan as biggest log importer China has replaced Canada as largest exporter of furniture to the US WAL-MART accounts for 12% of all Chinese imports to US Europe has replaced Canada as biggest inter- regional lumber exporter Russia has replaced US as biggest log exporter China has replaced Japan as biggest log importer China has replaced Canada as largest exporter of furniture to the US The Changing World

4. S OLUTIONS f or W OOD The Changing World Fall of Communism Demographics Income Spread Globalization Environment Customer Expectations Information Technology Fall of Communism Demographics Income Spread Globalization Environment Customer Expectations Information Technology

5. S OLUTIONS f or W OOD INFORMATION & COMMUNICATIONSREVOLUTION The Changing World “New Rules & New Business Models”

6. S OLUTIONS f or W OOD The Old China The New China The Old China The New China

7. S OLUTIONS f or W OOD Population – 1.5 Billion World’s 3rd Largest R&D Investor 26 Million Ph.D’s 1 Million Post Graduate Students per Year Train Outside China Population – 1.5 Billion World’s 3rd Largest R&D Investor 26 Million Ph.D’s 1 Million Post Graduate Students per Year Train Outside China ChinaChina

8. S OLUTIONS f or W OOD Dell Computers

9. S OLUTIONS f or W OOD FFFF 1. Inventory 2. Cash cycle 3. Learning 4. Data sales 1. Inventory 2. Cash cycle 3. Learning 4. Data sales BankBank Technology and the Marketplace

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11. “Paradigms Lost & Gained” Sources of Value Source of Economic Authority Principle of Economic Constraint Land Energy Materials Land Energy Materials Producers Capital Information Knowledge Information Knowledge Consumers Creativity

12. S OLUTIONS f or W OOD Amazon Books fights Wal-mart Wal-Mart brought low prices to small cities, but its creator also changed the way Big Business is run

13. S OLUTIONS f or W OOD Just as mass production defined the industrial Era, mass customization will define the age of Innovation.

14. S OLUTIONS f or W OOD The North American consumer is more value-oriented (price vs. function) than consumers in other regions. Consumers have an ever-increasing number of alternatives.

15. S OLUTIONS f or W OOD Adopted from David Cawood Weight and Value $.002 /lb $6 /lb … this one $900 /lb Prozac – need one? $46K /lb Sand Cars Computers Drugs 23 million ratio

16. S OLUTIONS f or W OOD... Business has Changed It is global. It is knowledge-based. It requires products with attributes valued by the customer. It is global. It is knowledge-based. It requires products with attributes valued by the customer. Adding Knowledge is Adding Value

17. S OLUTIONS f or W OOD Today’s Presentation Changing World About Forintek What do we need from you? Changing World About Forintek What do we need from you?

18. S OLUTIONS f or W OOD British Columbia Alberta Saskatchewan Manitoba Ontario Québec New Brunswick Nova Scotia Newfoundland & Labrador Yukon British Columbia Alberta Saskatchewan Manitoba Ontario Québec New Brunswick Nova Scotia Newfoundland & Labrador Yukon Federal Government Industry – 350+ Companies Provincial Governments Industry – 350+ Companies Provincial Governments Shared Priorities, Shared Risks, Shared Benefits, and Shared Costs Shared Priorities, Shared Risks, Shared Benefits, and Shared Costs Forintek Partnership “A National Organization Headquartered in Vancouver” Forintek Partnership “A National Organization Headquartered in Vancouver”

19. S OLUTIONS f or W OOD Forintek Mission Forintek’s Mission is to develop scientific and technical knowledge and applications that will enhance the ongoing competitiveness of its members and the Canadian wood products sector.

20. S OLUTIONS f or W OOD Forintek will be a global leader in wood products research and technology transfer and the knowledge center of choice for the Canadian wood products sector. Forintek Vision

21. S OLUTIONS f or W OOD A Technology Vision Driven from the Marketplace Technology for Cost Minimization Technology to Create Value in the Marketplace Driven from the Marketplace Technology for Cost Minimization Technology to Create Value in the Marketplace

22. S OLUTIONS f or W OOD Data Information Solutions Developing Solutions

23. S OLUTIONS f or W OOD Provides International Connectivity… S OLUTIONS f or W OOD Staff from 29 countries

24. S OLUTIONS f or W OOD University of Concordia University of Concordia Laval University Laval University University of Carleton University of Carleton University of Toronto University of Toronto University of British Columbia University of British Columbia Alberta Research Council Alberta Research Council CNRC CMHC SHQ Industrial Associations Industrial Associations Korea Canadian Wood Council Canadian Wood Council CSA QWEB CRIQ Equipment Manufacturers Equipment Manufacturers University of New Brunswick University of New Brunswick Japan Member Mills Member Mills China Taiwan Hydro Québec Hydro Québec NLGA

25. S OLUTIONS f or W OOD Today’s Presentation Changing World About Forintek What do we need from you? Changing World About Forintek What do we need from you?

26. S OLUTIONS f or W OOD Data Information Solutions Developing Solutions

27. S OLUTIONS f or W OOD The Power of Partnerships

28. S OLUTIONS f or W OOD Integrated systems Integrated systems Roof systems Wall systems Floor systems Interior systems Exterior systems Roof systems Wall systems Floor systems Interior systems Exterior systems Sawn timberPlywood OSB I-joist Interior cladding Fencing Gluelam Exterior cladding Decking LVL I-joist Interior cladding Fencing Gluelam Exterior cladding Decking LVL Raw Materials SolutionsSolutions SystemsSystems ComponentsComponents Production & Distribution Distribution Production & Distribution Distribution EngineeringEngineering Design Engineering Support Design & Engineering Knowledge Requirements The Product and Service Pyramid: From wood products to building solutions Adapted from Lars Sandberg, Timwood

29. S OLUTIONS f or W OOD RequirementsRequirements You must be: Good (quantitative results) Seen to be Good (customer’s perception) You must be: Good (quantitative results) Seen to be Good (customer’s perception)

30. S OLUTIONS f or W OOD Excellence Efficiency Timely Continuous Improvement Excellence Efficiency Timely Continuous Improvement PrioritiesPriorities

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32. 21st Century Resumé Experience – Multinational, foreign, start-up Education – Economics, psychology, philosophy, and form of graduate studies Extra-curricular – Debating, sports, volunteer work, travel 80% of US giants have knowledge management projects under way to share knowledge – demanding teamwork, and Microsoft has 300 scouts to interview 25,000 applicants for 500 jobs Leadership will be based on teaming, coaching and genuine inspiration Experience – Multinational, foreign, start-up Education – Economics, psychology, philosophy, and form of graduate studies Extra-curricular – Debating, sports, volunteer work, travel 80% of US giants have knowledge management projects under way to share knowledge – demanding teamwork, and Microsoft has 300 scouts to interview 25,000 applicants for 500 jobs Leadership will be based on teaming, coaching and genuine inspiration

33. S OLUTIONS f or W OOD Frontiers in Research Award: Dr. Luciana Duranti, Professor, School of Library, Archival and Information Studies, UBC Recognized as a worldwide leader in the field of archival studies, Dr. Luciana Duranti's work involves the complex and important problem of ensuring, assessing, maintaining and preserving the authenticity of digital materials over the long-term. For her leadership in opening up new innovative approaches to the field of archival studies, BC Innovation Council awards Dr. Duranti the 2006 Frontiers in Research Award.

34. S OLUTIONS f or W OOD OUR WEBSITE ADDRESS : Thank You!

35. S OLUTIONS f or W OOD 1998 value $43 Billion 2003 value Forecast Nov 99 $1.3/2.3 trillion 2003 value Forecast Nov 99 $1.3/2.3 trillion The Economist National Geographic Mar 2000 - Gartner Group Conflicting Views: But it’s huge Inter-company trade of goods over the internet in hyper- growth 2003 now $4 trillion 2004 now $7 trillion 2003 now $4 trillion 2004 now $7 trillion WhoopsWhoops But wait... But

36. S OLUTIONS f or W OOD China as a Competitor

37. S OLUTIONS f or W OOD Increasing Value Added Compete on raw material, energy, labor, market access. Compete on raw material, energy, labor, market access. Cost Minimizing R&D < 1% Cost Minimizing R&D < 1% Compete on promotion, branding and distribution. Compete on promotion, branding and distribution. Sales Maximizing R&D > 2% Sales Maximizing R&D > 2% Performance Maximizing R&D < 10% (of Sales) Performance Maximizing R&D < 10% (of Sales) Compete on R&D, knowledge and people. Compete on R&D, knowledge and people. BusinessStrategies & R&D InvestmentBusinessStrategies Investment Adapted from Binkley and Forgacs

38. S OLUTIONS f or W OOD ECONOMIC Consolidation along the Supply Chain Forintek Canada Corp. “Research for the Wood Products Industry” K N O W L E D G E WOOD FIBRE SUPPLY Natural Forests Plantation Recycled MARKETS Retailer Builder Consumer MANUFACTURING Capital Labour ENVIRONMENTAL SOCIAL

39. S OLUTIONS f or W OOD Global trade agreements will force innovative NTB to restrict trade Regional trading blocks (EC) Phytosanitary regulations (pinewood nem.) Environmental restrictions (certification) Labour & “fair” trade (union initiatives) Dumping actions (US-Canada SL) Safeguard action (Japan) The New Protectionism “Research for the Wood Products Industry”

40. S OLUTIONS f or W OOD TIME GROWTH RESOURCES GLOBAL NATURAL Industrial Revolution Industrial Revolution Electronic Revolution Electronic Revolution Agriculture & Domestication Agriculture & Domestication Hunter & Gatherer Hunter & Gatherer Knowledge Revolution Knowledge Revolution GLOBAL POPULATION

41. S OLUTIONS f or W OOD A: Do Nothing C: Launch B: Stop & Fix The Curve of Change...

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