B.C.'s pulp and paper sector in need of renewal - Study

    -   B.C.'s pulp and paper industry is facing increased global
        competition, growing concerns about fibre availability and
        affordability, and pressures from the rising Canadian dollar
    -   Poor market conditions have resulted in a return on capital employed
        of only four percent over the past 15 years; far below the 12 per
        cent minimum for a healthy industry
    -   Global markets offer significant opportunities
    -   Policies are required that can enable the pulp and paper sector to
        benefit from opportunities in the growing demand for biomass-based

    VANCOUVER, Jan. 10 /CNW/ - A new report released today by the B.C. Pulp
and Paper Task Force warns that B.C.'s pulp and paper industry is falling
behind its competitors in other regions and requires strategic reinvestments
and sound public policy if it is to be renewed.
    The task force, which includes representatives from all 20 pulp and paper
mills in B.C., commissioned Poyry Forest Industry Consulting to conduct an
assessment of the industry's competitive position and its future economic
    The Poyry report found the industry's major challenges include increased
global competition, growing concerns about fibre availability and
affordability - particularly with the pine beetle epidemic - and rising
pressures from the strong Canadian dollar.
    "The pulp and paper sector has suffered from poor returns on investment
for a prolonged period of time due to poor market conditions," said David
Gandossi, chair of the B.C. Pulp and Paper Task Force. "The result is that the
industry has not made the kinds of capital investments required for a
sustainable industry; clearly, this has to change."
    According to the report, due to poor market conditions, capital assets in
B.C.'s pulp and paper sector are older than in competing jurisdictions and the
reinvestment rate is below the level required to sustain their already weak
competitive position. In addition, the industry has achieved only a four per
cent return on capital employed over the past 15 years, which is far below the
minimum 12 per cent return expected for a healthy industry.
    On the positive side, B.C.'s pulp and paper sector is well established,
it has experienced personnel and global markets continue to offer significant
opportunity for companies in B.C. In addition, the industry benefits from a
large and high quality fibre basket that can continue to supply a viable pulp
and paper sector; particularly if policies are developed that enable the pulp
and paper industry to benefit from opportunities in the growing demand for
biomass-based energy.
    "Competing jurisdictions have transitioned to a green economy by
developing new policies that recognize pulp and paper operations for their
renewable electricity, carbon credits, liquid bio-fuels and green specialty
chemicals," said Gandossi. "Government policies in these jurisdictions
recognized pulp and paper for its green economy strengths, which resulted in
significant industry reinvestment."

    According to the Poyry report, significant capital investments in B.C.'s
pulp and paper sector can be encouraged by:

    -   developing and supporting energy policies that provide revenue
        incentives for biomass-based energy produced by the pulp and paper
    -   establishing a tax structure - particularly municipal property tax
        rates - that is more in line with competing jurisdictions;
    -   supporting employee training and development at all levels, including
        apprenticeships, technical training, and management training; and
    -   funding research that encourages knowledge-creation and innovation,
        while supporting the sawmill sector in making the transition to
        post-pine beetle forest conditions.

    The report, Future Development of BC's Pulp and Paper Industry, is
available online at www.PulpandPaperBC.ca.
    Today's report is the second in a series of competitiveness studies
conducted for the Task Force. Last month, an economic impact study conducted
by PricewaterhouseCoopers LLP found that B.C.'s pulp and paper industry
contributes $4 billion in economic benefits to B.C. and provides jobs for
30,000 British Columbians. The PwC report also found that, since 1990, the
industry has reduced its greenhouse gas emissions by 62 per cent, which is
equivalent to removing 600,000 vehicles from our roads.

    About the BC Pulp and Paper Task Force

    The Pulp and Paper Task Force is a co-operative made up of
representatives of industry, labour and government. It members include all
20 pulp and paper mills located across B.C. As a group, the task force works
to present an understanding of the value of this sector to the province of
British Columbia. As one of B.C.'s largest industrial employers and single
largest consumer of electricity, the sector is the backbone of many
communities and contributes extensively to the provincial economy.
    Task Force member companies include: Abitibi Consolidated; Canfor
Corporation; Canfor Pulp Limited Partnership; Catalyst Paper; Cariboo Pulp;
Communications, Energy and Paperworkers Union of Canada; Domtar; Government of
British Columbia; Howe Sound Pulp and Paper; Mercer International; Neucel
Specialty Cellulose; Pope and Talbot; Pulp, Paper and Woodworkers of Canada;
Tembec; and West Fraser.

For further information:

For further information: B.C. Pulp and Paper Task Force, Craig
Fitzsimmons, NATIONAL Public Relations, Tel: (604) 375-3677, Email:

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