FPAC calls on governments to develop world-class business climate

    OTTAWA, Feb. 7 /CNW Telbec/ - Federal and provincial governments must
commit now to working with the Canadian forest products industry to create a
world-class business culture in which the sector can thrive and ensure
prosperity for the 300,000 people it employs and 300 communities it supports,
said Avrim Lazar, President and Chief Executive of the Forest Products
Association of Canada, in Montreal Thursday as part of an executive panel
discussion about the sector's future.
    "Policy makers have shown a remarkable degree of complacency about the
state of our economy in this country," Lazar said. "Although the government
has taken a number of positive steps in terms of tax relief and the like,
there are many more things governments can and should be doing, not just to
help struggling communities and industries now but also to strengthen our
productivity and competitiveness over time."
    Of all the challenges facing the industry, the unprecedented surge in the
Canadian currency stands out as the most significant. Yet as the dollar soared
toward parity with the U.S. and beyond last year, policy makers did little to
constrain its rise or address the fallout from the resulting economic shock.
    Lazar said he hopes the pending federal budget will represent the first
step toward creating favourable market conditions that can boost the forestry
sector's fortunes. But he also called on provincial governments to refrain
from micromanaging the industry and allow the sector to restructure and
consolidate. While bailouts may be tempting, they will not work in this new
global economic era and are detrimental, Lazar warned.
    "There is little doubt that the long-term fundamentals driving global
demand for forest and paper products are strong. The only real question is
whether Canada can position itself to serve the growing global market," Lazar
said. "The answer depends on us - industry, governments, labour and other
stakeholders - working together."
    The forestry industry represents 3% of Canada's GDP, directly employs
over 300,000 Canadians and is the economic backbone of rural Canada. For the
better part of almost two years, the sector has struggled in the face of
myriad challenges, such as the rise in the Canadian dollar; persistent
weakness in the U.S. housing market; structural changes in key product
markets; and growing competition from emerging markets that do not impose the
same regulatory requirements as Canada does. These factors forced forest
product companies to shut down operations at over 100 mills and shed
12,000 workers in 2007.
    Public policy initiatives that could help the industry emerge from this
economic restructuring include: an extended accelerated capital cost allowance
for investment in machinery and equipment, from two years as outlined in the
last budget to five years; making tax credits linked to R&D refundable for
companies, regardless if they are posting a profit; harmonization of the GST
and provincial sales taxes, which would reduce taxes on business inputs; rapid
elimination of provincial capital taxes; and investments in market leadership
and development, and transformative R&D.

    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 300 Canadian communities and providing nearly 900,000 direct and indirect
jobs across the country.

For further information:

For further information: Paul Vieira, Director of Communications, Forest
Products Association of Canada, (613) 563-1441 x: 323, (613) 884-3312 (cell),
pvieira@fpac.ca; Jeremy Dunn, Curve Communications, (604) 684-3170, (604)
726-8350 (cell), jeremy@curvecommunications.com; Laura Ballance, Curve
Communications, (604) 684-3170, (604) 771-5176 (cell),

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