Profits rising for Canada's wood products manufacturers

Pulp & Paper Canada
December 04, 2012
By Pulp & Paper Canada

Canada's wood products manufacturing industry is set to earn $381 million in pre-tax profits this year, marking its third consecutive year in the black, according to The Conference Board of Canada's Industrial Outlook-Autumn 2012.

With industry profits forecast to quadruple this year, Canada's wood products manufacturers are reaping some of the benefits of their restructuring during the past decade. Profits are forecast to double in 2013 to $787 million and exceed $1 billion annually beginning in 2014.

“The recovery in the U.S. housing market will more than offset the combination of slackening demand from China in the near term and a cooling domestic housing market over the next two years," said Lin Ai, economist. “Higher industry prices and production levels have boosted revenues to the highest level since 2008. At the same time, the industry continues to reap the benefits of the cost-cutting measures they undertook even before the 2008-2009 recession."

Canadian wood product manufacturers are also making innovative products that are stronger, lighter, and more fibre-efficient, in response to the rising environmental demand for “green" building designs and construction materials.

One area of weakness is exports to China, which has grown to become the second-largest export market for Canadian wood products. The Conference Board notes that exports  have declined by 11% through the first eight months of this year, as construction activity there decelerated. Nevertheless, demand for wood products in China is expected to remain strong in the coming years.

While mills across the country have ramped up production to meet the higher demand, some 3,000 workers are expected to be added to payrolls in 2012, the Board reports. However, to put the industry's employment picture into broader perspective, close to 70,000 jobs have been lost since 2004.

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