Friday, June 12, 2009

Canadian Paper Industry Struggles To Survive

Ottawa, June 11 — Canada’s paper industry is expected to lose money for the seventh consecutive year in 2009, with losses totaling $513 million, according to the Conference Board’s Canadian Industrial Outlook: Canada’s Paper Products Industry – Spring 2009.

“The Canadian paper industry was already in the midst of significant restructuring, but it is now struggling to survive during the current recession,” said Valerie Poulin, Economist. “With increased foreign competition and demand for paper declining quickly in North America, more companies are expected to go out of business and those that survive will have to curtail their production and keep finding ways to boost productivity.”

Paper production is expected to fall by 13 per cent this year. Since 2005, production has declined by almost 40 per cent in Canada. Another drop in production is forecast in 2010, before it returns to growth in 2011.

Employment in the paper industry peaked in 1989 and has been declining ever since. The industry is expected to shed more than 8,000 jobs in 2009 and 2010.

An alternative fuels subsidy in the U.S. is further jeopardizing the Canadian industry’s competitiveness. By using a mixture of diesel and “black liquor”—a by-product of the papermaking process that can be used as a biofuel—U.S. paper mills can qualify for a tax credit and reduce their costs drastically. Pulp prices have fallen in recent months as more U.S. producers sign up for the credit and flood the global market with low-cost products.

The paper industry is expected to return to modest profitability starting in 2011, due to a healthier U.S. economy.

allvoices

No comments:

Post a Comment

Your comment will appear after moderation before publishing,

Thank you for your comments.Any comment that could be considered slanderous or includes unacceptable language will be removed.

Thank you for participating and making your opinions known.

Note: only a member of this blog may post a comment.