Canadian Forest Products Industry Calls for Swift Government Action to Offset Dollar's Rise
Ottawa, British Columbia, Canada, 28 May 2007 -- The head of the Forest Products Association of Canada (FPAC) today called on the government and Bank of Canada to take swift action to mitigate the damage that the rapid appreciation of the Canadian dollar is doing to Canada's forest products industry.
Over the past 5 years, the Canadian dollar has appreciated by 42% against its U.S. counterpart. This has placed enormous pressure on Canada's forest products industry and the more than 300 communities from Newfoundland to British Columbia that depend on the industry for their economic well-being.
Since 2002, 110,000 jobs having been lost in Canada's manufacturing sector, including 32,000 jobs in the forest sector. Despite recent capacity closures and job losses, Canada's forest products industry remains one of the country's leading industrial sectors, accounting for 60% of Canada's merchandise trade surplus and a larger share of GDP than the automotive or oil and gas sectors. The industry employs more than 300,000 Canadians in high wage jobs, located disproportionately in rural and remote communities across Canada.
"The unprecedented appreciation in the value of the Canadian dollar has served to exacerbate other challenges facing the sector, including the entry of low-cost, overseas rivals into global markets and the sharp downturn in the U.S. housing market," said Avrim Lazar, president and CEO of FPAC. "In realizing its long track record of success in global markets, Canada's forest products industry has proven time and again that it can overcome tough challenges. While the industry can adjust to a stronger currency, the unprecedented rate of appreciation in the dollar is causing severe dislocations in the industry and many of our host communities, particularly when combined with the other headwinds facing the forest sector."
FPAC recently released, "Industry at a Crossroads: Choosing the Path to Renewal," the report of the Forest Products Industry Competitiveness Task Force. The Task Force, composed of leading industry executives and other thought leaders from Canada's forest products sector, concluded that a changing global marketplace offers unprecedented opportunities as well as challenges to Canada's forest products industry and that the industry can and should remain a vital part of Canada's social and economic fabric for decades to come. Key to realizing the sector's future potential is attracting the capital investment needed to renew Canadian production facilities, a process that the appreciation in the dollar is inhibiting.
"Canada's forest products industry has a strong productivity record, relative both to our U.S. competitors and the Canadian economy as a whole," added Lazar. "But we need to attract more capital so we can do even better in the future. Not only does the uncontrolled appreciation of the dollar undermine our cost competitiveness, it also diminishes the attractiveness of investing in Canada."
While recognizing that many factors beyond Canadian control influence currency values, FPAC calls on Canadian monetary authorities to use what discretion they have to manage the appreciation of our currency and the impact it is having on large regions of the country. In addition, rapid action by governments in such areas as tax reform, mergers policy, and a more competitive rail transport sector can also play an important role in enabling industry renewal and in assisting the forest sector to adapt to a higher Canadian dollar.
The full copy of the report, "Industry at a Crossroads: Choosing the Path to Renewal," is available on the FPAC Web site at www.fpac.ca.
FPAC is the voice of Canada's wood, pulp, and paper producers nationally and internationally in government, trade and environmental affairs. Canada's forest industry is a CAD 80 billion dollar a year industry that represents 3% of Canada's GDP. The industry is one of Canada's largest employers, operating in more than 320 Canadian communities and providing nearly 900,000 direct and indirect jobs across the country.