OTTAWA, Nov. 2 /CNW Telbec/ - Reacting to the Canadian dollar's record
setting flight to over $1.06 U.S., the head of the Forest Products Association
of Canada (FPAC) urged the federal government and Bank of Canada to show
strong leadership in addressing the unprecedented and unchecked rise of the
The dollar has risen 64% in the past 5 years placing enormous pressure on
Canada's forest products industry and Canada's manufacturing sector more
broadly. Since 2002, nearly 280,000 jobs having been lost in Canada's
manufacturing sector, including 32,000 jobs in the forest sector. It is
perhaps not surprising therefore that Canada's overall business sector
productivity growth has slowed markedly over the past 9 to 12 months, as
forest products mills and other high productivity sectors of our economy have
been driven out of business. This year to date, Canadian mills have announced
54 instances capacity closure, resulting in the loss of over 6500 jobs.
"It is becoming increasingly clear that the uncontrolled appreciation of
the loonie has little to do with strength in the Canadian economy but rather
is driven by economic problems south of the border," said Avrim Lazar,
President and CEO of FPAC. "Some argue that a strong currency will prove to be
good for Canada in the long run because it will ultimately drive us toward the
economists' holy grail of faster productivity growth. Whatever the textbook
merits of this argument, the textbooks clearly weren't written with the
current situation of the Canadian economy in mind: our currency has
appreciated by 64% in over 5 years and by 22% this year alone against that of
the country that buys 30% of our GDP. It doesn't add up."
The evidence so far paints a very different picture and has been anything
but positive for productivity in Canada. Canada's forest industry has had a
very strong productivity record in relation to its U.S. counterparts and the
Canadian economy as a whole. For example, the wood products sector in Canada
had led all Canadian industrial sectors in labour productivity growth over the
past 6 years, recording a rate of growth more than double that of its U.S.
counterpart. However, it has not been enough to counter the appreciation of
the Canadian dollar. Propelled by the loonie's rise, the wood fibre costs of
Quebec' lumber industry have gone from being the lowest in North America
5 years ago to being the highest of any major producing region today. Across
Canada, even world-class forest products facilities are struggling to survive
while the Canadian dollar is a gift to less efficient operations in the U.S.
Clearly, the value of the Canadian dollar is influenced by many factors
beyond the control of government or monetary authorities. The industry also
appreciates that it needs to be ready to do its part to adjust to a higher
Canadian dollar. "We don't expect government to make everything right for us,"
continued Lazar. "We do expect though that they think carefully about what the
long-term implications of a dollar at parity and beyond are for our economy
and show some leadership in working with affected industries and regions."
"Around the world, policy-makers seem to understand that centrality of
exchange rates to economic and competitive strength- except, until recently at
least, in Canada. Despite the weakness of the U.S. dollar, exchange rates with
trading partners like China remain a key political issue in Washington for the
Administration and Congressional leaders alike," added Lazar. "In Europe,
political and financial leaders have been very vocal in regard to the problems
that the strengthening Euro is causing for Airbus and other industries of
strategic importance to their economy. While the Euro is a at historic highs
against the U.S. dollar, Germany has seen its currency appreciate by only
about 10% in trade weighted terms over the course of this decade. In Canada,
we have seen our trade-weighted exchange rate increase by over 40% with little
discussion or debate about what it means for our economic future."
"With there being little apparent risk of anyone actually doing something
about it, it is little wonder that currency traders have kept driving the
dollar ever higher in recent weeks," concluded Lazar. "We are encouraged,
however, by Minister Flaherty's acknowledgement earlier this week of the
difficulties the dollar's rise is and look forward to working with the
government on this issue."
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 320 Canadian communities and providing nearly 900,000 direct and indirect
jobs across the country.
For further information:
For further information: Jeremy Dunn, Curve Communications, (604)
684-3170, (604) 726-8350 (cell), email@example.com; Laura
Ballance, Curve Communications, (604) 684-3170, (604) 771-5176 (cell),
firstname.lastname@example.org; Isabelle Des Chênes, Director, Communications,
Forest Products Association of Canada, (613) 563-1441, ext: 323,