FPAC Calls on First Ministers to Invest in Future of the Forestry Industry
January 10 2008, Ottawa, ON
Following today’s announcement by the Prime Minister, the head of the Forest Products Association of Canada (FPAC) called on the First Ministers to use their meeting Friday to develop a plan to invest in the future of the forest products industry, and the over 300,000 jobs and 300 communities that it supports. While FPAC welcomed the government’s assistance to workers and communities who have been harmed by the high dollar, it noted that a vibrant and competitive industry is the best path to economic prosperity for workers and communities.
“We have presented the government with a vision and strategy for a strong and competitive Canadian forest products industry. That strategy requires both industry and government action,” said Avrim Lazar, FPAC’s President and Chief Executive. “Although the industry is facing serious challenges and is undergoing a significant restructuring, it is important to remember that forestry continues to represent 3% of Canada’s GDP, directly employ over 300,000 Canadians and be the economic backbone of rural Canada.”
Over the past 18 months, the sector has struggled in the face of myriad challenges, among them: the 60% appreciation in the Canadian dollar relative to the U.S. currency; persistent weakness in the U.S. housing market, which appears to be pushing the United States — the sector’s largest customer — closer to recession; structural changes in key product markets, such as newsprint; and growing competition from emerging markets that do not impose the same regulatory requirements as Canada does. These factors forced forest product companies to shut down operations at over 50 mills and shed 6,500 workers in the first nine months of 2007.
Despite the current difficulties facing the industry, the longer term outlook is one of opportunity. Forecasts have projected that global demand for forest products is expected to grow at 3% annually as demand continues to increase in economies such as those of India and China. Canada, with its vast natural resources, must be ready to take advantage of new demand while continuing to thrive in the North American market.
“Clearly, there is enormous opportunity available to the industry and the Canadian economy more broadly,” Lazar said. “But the industry needs a business policy climate that will allow it to seize this opportunity. In this context, we certainly hope that the Prime Minister and the Premiers will emerge from their meeting on Friday with concrete measures to support the industry over the immediate period ahead.”
Public policy initiatives that could help the industry emerge from this economic restructuring include: an extended accelerated capital cost allowance for investment in machinery and equipment, from two years as outlined in the last budget to five years; making tax credits linked to R&D refundable for companies, regardless if they are posting a profit; harmonization of the GST and provincial sales taxes, which would reduce taxes on business inputs; and investments in market leadership and development, and transformative R&D.
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 an $80-billion dollar a year industry that represents 3% of Canada’s GDP. The industry is one of Canada’s largest employers, operating in over 300 Canadian communities and providing nearly 900,000 direct and indirect jobs across the country.
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For more information, contact:
Laura Ballance
Curve Communications
604-684 3170
laura@curvecommunications.com
Jeremy Dunn
Curve Communications
604-684 3170
jeremy@curvecommunications.com
Paul Vieira
Director of Communications
Forest Products Association of Canada
(613) 563-1441 ext: 323
pvieira@fpac.ca
