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DAILY NEWS May 21, 2014 9:17 AM - 0 comments

Canadian forest sector shows strong productivity gains

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2014-05-21

The Canadian forest products industry has achieved strong advances in labour productivity even while facing one of its worse downturns. But productivity in paper mills lags behind the performance of the rest of the sector.

A detailed analysis of productivity trends in the Canadian forest products sector was undertaken by the Centre for the Study of Living Standards (CSLS) for the Forest Products Association of Canada (FPAC). The independent study shows that between 2000 and 2012 the labour productivity of the Canadian forest products industry grew at a compound annual rate of 2.5%, well above the overall Canadian business sector growth of 0.7%. The industry had the second highest labour productivity growth rate from 2000-2012 of all Canadian industry sectors.  

“It is remarkable to see this excellent productivity performance considering the jolts that hit our industry since the beginning of the 21st century," says the president and CEO of FPAC, David Lindsay. Lindsay refers to the confluence of near-term shocks such as the higher dollar and sluggish U.S. economy, and structural changes such as the precipitous drop in paper use in the wake of the digital revolution.

“These positive results speak to the resilience of our industry and the creativity and sound business decisions made by companies in the sector both pre and post-recession," says Lindsay. “This study underscores how our companies weathered a difficult economic storm leaving them well positioned to grow and seize opportunities in the days ahead."

FPAC is recommending a renewed focus on investing in both human and physical capital as well as strong spending on research and development.

A closer look at the productivity data shows that productivity in paper manufacturing lagged behind that of other activities in the forest products sector. FPAC’s 2014 Productivity Report Card, a summary of the aforementioned study by CSLS, states:

“Labour productivity growth in the forest products industry between 2000 and 2008 was largely driven by wood product manufacturing, which saw posted average annual gains of 5.9%. Forestry and logging also benefited from strong annual labour productivity gains of 3.6%.”

“The labour productivity performance of paper manufacturing lagged but was still in line with overall labour productivity gains in Canada’s business sector growth of about 0.8% per year,” the report continues.

The recession slowed labour productivity gains in the Canadian forest products industry to just 0.3%, but some segments continued to stand out, according to the Productivity Report Card. “From 2008 to 2012, forestry and logging outstripped labour productivity gains in the broader economy by a wide margin, with annual average gains of 2.6%. Meanwhile, labour productivity in wood product manufacturing grew at an annual average rate of 1.7%. But labour productivity losses in paper manufacturing, at -2.3% per year, held the overall sector back.”

FPAC believes that a renewed focus on leveraging productivity gains through investment and innovation is the key to the industry's future as the sector moves from an established commodity industry to a nimble green industry serving wider markets and driven by the opportunities of the emerging bio-age.



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