Forest Industry Head calls on Parliament to Undertake Forest Products Industry Study

    OTTAWA, Dec. 5 /CNW/ - Even though global demand for forest products is
strong and Canada has the resources to meet this need, Canadians are losing
out as mills shut down in the face of unprecedented competitive stresses for
the forestry industry. As a result, the head of the Forest Products
Association of Canada (FPAC) has called on MPs to follow the lead set by the
House of Commons Standing Committee on Industry, Science and Technology and
launch an intensive study that focuses on the unique opportunities and
challenges facing the forest products industry, which is Canada's largest
exporter of goods.
    "Complacency is not an option," Avrim Lazar, FPAC president and chief
executive, said Wednesday, prior to an appearance before the Industry
Committee to discuss the impact of the robust Canadian dollar. Mr. Lazar said
it is time for the federal government to develop a market-based action plan
that would set the groundwork for a vibrant forestry industry, a sector that
represents 3% of the national GDP. Work on such a plan is essential given the
sharp appreciation in the Canadian dollar relative to the U.S. currency;
persistent weakness in the U.S. economy, in particular the housing market;
structural changes in key product markets, such as newsprint; and growing
competition from emerging markets.
    Mr. Lazar said MPs could use the Industry Committee's ground-breaking
analysis on manufacturing, delivered earlier this year with all-party
endorsement, and FPAC's recent report from its competitiveness task force -
Industry at a Crossroads: Choosing the Path to Renewal - as the base from
which it can build a long-term strategy. "We need a coherent action plan to
re-establish our dominance in the global marketplace," Mr. Lazar said.
    The Industry Committee's report had 22 recommendations aimed at improving
the state of manufacturing. But to date, only one of those recommendations, an
accelerated capital cost write-off, has been adopted. But the dollar's
appreciation since the write-off's introduction has in essence wiped out the
advantage the initiative was meant to offer. That is why FPAC has called on
the federal government to extend the write-off provision beyond the two-year
timeframe as outlined in the last federal budget, as well as adopt the other
21 recommendations in the Industry Committee's report, particularly the
recommendation of making Scientific Research and Experimental Development
(SR&ED) tax credits refundable.
    The recent drop in the value of the Canadian currency from its recent
US$1.10 high and the Bank of Canada's move to cut its overnight rate this week
by 25 basis points - first such cut to its benchmark lending rate in more than
three years - is welcome news. Nevertheless, it will do little to mitigate the
damage done by the dollar's 54% rise in the past five years, especially in the
wake of softness in the U.S. economy.
    The dollar's climb has placed enormous pressure on Canada's forest
products industry and Canada's manufacturing sector more broadly. Since 2002,
nearly 280,000 jobs have been lost in Canada's manufacturing sector, including
almost 55,000 jobs in the forest sector. Correspondingly, Canada's overall
business sector productivity growth has slowed markedly over the past nine to
12 months, as forest products mills and other high productivity sectors of our
economy have been driven out of business. With only a month remaining this
calendar year, Canadian mills have announced 60 instances of capacity
reductions, resulting in the loss of over 8,000 jobs.

    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),; Laura
Ballance, Curve Communications, (604) 684-3170, (604) 771-5176 (cell),; Paul Vieira, Director of Communications, Forest
Products Association of Canada, (613) 563-1441 x: 323,

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