Paper industry struggling to survive during current recession



    OTTAWA, June 11 /CNW Telbec/ - Canada's paper industry is expected to
lose money for the seventh consecutive year in 2009, with losses totaling $513
million, according to the Conference Board's Canadian Industrial Outlook:
Canada's Paper Products Industry - Spring 2009.
    "The Canadian paper industry was already in the midst of significant
restructuring, but it is now struggling to survive during the current
recession," said Valerie Poulin, Economist. "With increased foreign
competition and demand for paper declining quickly in North America, more
companies are expected to go out of business and those that survive will have
to curtail their production and keep finding ways to boost productivity."
    Paper production is expected to fall by 13 per cent this year. Since
2005, production has declined by almost 40 per cent in Canada. Another drop in
production is forecast in 2010, before it returns to growth in 2011.
    Employment in the paper industry peaked in 1989 and has been declining
ever since. The industry is expected to shed more than 8,000 jobs in 2009 and
2010.
    An alternative fuels subsidy in the U.S. is further jeopardizing the
Canadian industry's competitiveness. By using a mixture of diesel and "black
liquor" - a by-product of the papermaking process that can be used as a
biofuel - U.S. paper mills can qualify for a tax credit and reduce their costs
drastically. Pulp prices have fallen in recent months as more U.S. producers
sign up for the credit and flood the global market with low-cost products.
    The paper industry is expected to return to modest profitability starting
in 2011, due to a healthier U.S. economy.




For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca


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