Forest Products Industry Calls for Swift Government Action in Response to Dollar's Rise

    OTTAWA, May 28 /CNW Telbec/ - The head of the Forest Products Association
of Canada (FPAC) today called on the Government and Bank of Canada to take
swift action to mitigate the damage that the rapid appreciation of the
Canadian dollar is doing to Canada's forest products industry.
    Over the past 5 years, the Canadian dollar has appreciated by 42% against
its U.S. counterpart. This has placed enormous pressure on Canada's forest
products industry and the more than 300 communities from Newfoundland to
British Columbia that depend on the industry for their economic well-being.
Since 2002, 110,000 jobs having been lost in Canada's manufacturing sector,
including 32,000 jobs in the forest sector. Despite recent capacity closures
and job losses, Canada's forest products industry remains one of the country's
leading industrial sectors, accounting for 60% of Canada's merchandise trade
surplus and a larger share of GDP than the automotive or oil and gas sectors.
The industry employs over 300,000 Canadians in high wage jobs, located
disproportionately in rural and remote communities across Canada.
    "The unprecedented appreciation in the value of the Canadian dollar has
served to exacerbate other challenges facing the sector, including the entry
of low-cost, overseas rivals into global markets and the sharp downturn in the
U.S. housing market," said Avrim Lazar, President and CEO of FPAC. "In
realizing its long track record of success in global markets, Canada's forest
products industry has proven time and again that it can overcome tough
challenges. While the industry can adjust to a stronger currency, the
unprecedented rate of appreciation in the dollar is causing severe
dislocations in the industry and many of our host communities, particularly
when combined with the other headwinds facing the forest sector."
    FPAC recently released, Industry at a Crossroads: Choosing the Path to
Renewal, the report of the Forest Products Industry Competitiveness Task
Force. The Task Force, composed of leading industry executives and other
thought leaders from Canada's forest products sector, concluded that a
changing global marketplace offers unprecedented opportunities as well as
challenges to Canada's forest products industry and that the industry can- and
should-remain a vital part of Canada's social and economic fabric for decades
to come. Key to realizing the sector's future potential is attracting the
capital investment needed to renew Canadian production facilities, a process
that the appreciation in the dollar is inhibiting.
    "Canada's forest products industry has a strong productivity record,
relative both to our U.S. competitors and the Canadian economy as a whole,"
added Lazar. "But we need to attract more capital so we can do even better in
the future. Not only does the uncontrolled appreciation of the dollar
undermine our cost competitiveness, it also diminishes the attractiveness of
investing in Canada."
    While recognizing that many factors beyond Canadian control influence
currency values, FPAC calls on Canadian monetary authorities to use what
discretion they have to manage the appreciation of our currency and the impact
it is having on large regions of the country. In addition, rapid action by
governments in such areas as tax reform, mergers policy and a more competitive
rail transport sector can also play an important role in enabling industry
renewal and in assisting the forest sector to adapt to a higher Canadian
dollar.
    The full copy of the Report, Industry at a Crossroads: Choosing the Path
to Renewal, is available from the FPAC website at www.fpac.ca.

    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: Isabelle Des Chênes, Director, Communications,
Forest Products Association of Canada, (613) 563-1441 ext: 323,
ideschenes@fpac.ca