British Columbia Poised for Upturn in Paper, Forest Industry

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An article this past week in the Nanaimo News Bulletin, Nanaimo, B.C., Canada, reported that years of losses for Vancouver Island's beleaguered forest industry could be at an end, if Conference Board of Canada predictions prove correct. The board analyzed six of Canada's key industrial sectors including the pulp and paper industry and the wood products sector. While Canadian paper producers lost about $3 billion in the past two years, the research organization forecasts an end to losses in 2011.

According to the article by Jenn McGarrigle, the board also forecasts that major losses in the wood products industry are at an end and profits country-wide could reach $1 billion as early as 2012. A bright spot for both industries, said Michael Burt, the board's associate director of industrial economic trends. is the growing demand for pulp, paper, and wood products in China. "China is becoming a major producer of wood and paper products, but they don't have a lot of fiber domestically," he said. But both industries also face significant challenges, Burt added. Demand for newsprint and other communication papers is expected to continue to decline due to the trend towards online reading and advertising, he pointed out.

In the article, Levi Sampson, president of Nanaimo Forest Products, which owns Harmac mill, said while there are signs of a turnaround, things could change quickly. "Our biggest challenge will probably be staying competitive in a global market," he said. "You need to lower your costs, increase efficiencies, reinvest back into the mill." Harmac has operated in the black for about a year, Sampson said. He attributes that partly to finding new markets for pulp and paper products other than newsprint and a growing market in China, and partly to the mill's shift to an employee-owned model, which lowered operating costs.

While the Conference Board expects modest growth in the pulp and paper industry, Burt said the wood products industry might see significant growth in the next four years. China is a growing market and Canadian companies need to start adapting wood products to match that country's needs, he said, such as producing lumber in metric instead of imperial units.