June 24, 2010
After losing more than $5 billion over the past seven years, Canada’s battered paper industry will return to profitability by 2011.
The Conference Board of Canada made this prediction late last month. The Conference Board predicted the industry will lose $139 million in 2010—a much smaller figure than the $1 billion lost in 2009. Next year, it is set to post a profit of $366 million.
“The paper industry’s outlook is gradually improving, thanks to price increases and a modest recovery in demand,” said Michael Burt, the Conference Board’s associate director of industrial economic trends. “However, a robust recovery is not expected and industry revenues will be smaller in the future than they were at their peak in 2000.”
By the numbers, industry production is expected to increase by three percent this year—the first uptick since 2005. After that, production will continue to grow modestly, but a strong Canadian dollar and competition from Asia and South America will keep it from returning to its previous peak in the next four years.
This optimistic outlook comes on the heels of several very lean years for the industry. In 2009, paper companies cut costs by 15 percent. And between 2008 and the end of this year, the industry’s job losses are expected to tally 20,000.