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Profits rise for wood products industry

Another 9,700 jobs forecast in 2011


December 17, 2010
by Purchasing b2b staff

OTTAWA: Canada’s wood products industry got a boost this year thanks to a mini-boom in the domestic housing market, a slight jump in US demand and growing exports to China.

That’s according to Canada’s Wood Products Industry: Industrial Outlook Autumn 2010, a report from the Conference Board of Canada providing a five-year industry forecast.

“After three years of losses, a surge in prices and demand lined up favourably early this year for the industry,” said conference board economist Jacqueline Palladini. “The industry’s rebound will continue in 2011, but the pace of growth will slow. The uncertain short-term outlook for the US housing market remains a key concern for the Canadian industry.”

The report says that to meet rising demand, Canadian production of wood products is expected to increase 10.6 percent this year. Canadian exports to China have increased by 3,300 percent since 2000, and Canada has surpassed Russia this year as the biggest exporter of softwood lumber to China.

Demand could also be affected by a correction in the Canadian housing market in 2011 following the mini-boom through late 2009 and early 2010. According to the report, Canadian housing starts will decline by 8.2 percent in 2011 compared to this year. Despite concerns about North American housing markets, overall production of wood products in Canada is expected to increase by 3.7 percent in 2011.

Industry revenues are increasing for the first time since 2004, and although costs are also on the rise, the wood products industry is expected to post a profit of $476 million in 2010.

Profits are expected to increase again in 2011, the report says. There are also promising signs on the employment front next year, as an additional 9,700 jobs are forecast for 2011.