US housing recovery and lower loonie are leading growth, report says.
July 9, 2015
MONTREAL — Canada’s wood products industry will continue to see a turnaround as it benefits from a recovery in the US housing construction and a weaker loonie, according to a study published by the Conference Board of Canada.
The Ottawa-based economic think-tank says revenues should reach $27 billion this year and continue to grow through 2019. They are forecast to reach nearly $32 billion in four years, a 73% increase from about $18 billion in 2011.
However, the study says producers will look for cost-cutting initiatives to stem the impact of an expected 8.7% increase in costs in 2015.
Pre-tax profits are forecast to fall 0.2% to $1.4 billion in 2015, before rising over the next four years to reach nearly $2 billion.
That’s a big turnaround from 2007 to 2009 when the industry endured annual financial losses approaching $1 billion and the elimination of thousands of jobs.
The Conference Board says production should eventually slow because of softer demand in China and timber shortages in Canada caused by the mountain pine beetle that could lead to additional plant closures in BC’s interior.
Some producers will look to operations in the US South to make up for lost Canadian production and to hedge against uncertainty about the Canada-US softwood lumber agreement that is set to expire in October.
© 2015 The Canadian Press