Forest Experts Say Two Years Ahead Of Hard Times In Forest Industry
By 250 News
Tuesday, October 23, 2007 04:01 AM
Dave Thompson, a Forest Industry Specialist with Price waterhouse coopers, says there has been significant down sizing taking place all across Canada in the forest industry. Speaking from Edmonton Thompson says all across Canada, mills have been going from multi shifts down to one in the hopes of surviving the existing conditions in the forest industry. "I don’t believe that there is one mill in Canada that is operating in a profitable position” says Thompson.
He says the only bright spot is the pulp industry "Where there has been an increasing demand for tissue and products such as this, while on the other side of the coin there continues to be a decline in the demand for newsprint due to the impact of the internet on the news media There has been a decline in the circulation of newspapers all across Canada, with the result that there has been less advertising going to this venue."
The internet has definitely had an impact on news coverage.
The forest specialist says the problems in the forest industry are not about to turn around soon. "We at Price waterhouse coopers are saying this down turn in the demand will last about two years. Some companies won’t make it, those that do survive will come out much stronger and be in a much better position given that there will be fewer competitors and a decreased supply of wood available creating much more opportunity for them. "
Meantime another Forestry Expert says look forward to a significant announcement from CANFOR, "Their announcement last week that they are looking at taking 74 million board ft off the market was just a yawner in the industry and you can look for some major announcements very soon. "
This expert predicts CANFOR will need to cut the production from its inefficient mills. "That may include shutting down some mills entirely. The reason that many of these mills are operating at all is because of the fear of losing the workforce if the mill shuts down for too long.’
Industry experts he says echo the thoughts of other analysts, like those at Price waterhouse coopers, this down turn will be for a minimum two years. "The USA is teetering on a recession but countries the world over don’t want them to go into one given their country’s exposure."
If the value of the US dollar drops by 25% against other currencies that means instead of the US needing 8 trillion to pay of its debt ,that figure is now reduced to 6 trillion. That is the reduced amount they would need to pay back and no country wants to be in that position, so experts say there is a lot of help on the way to the USA to prevent that from happening.
As for the increasing value of the Canadian dollar against its US counterpart, one forest expert said there is a little part of me that’s says,” Damn that feels good for a change! Suddenly our dollar is worth more than theirs and that must take a bit of wind out of their sails, then common sense takes over and we have to realize that a dollar worth less compared to the American Buck is in the best interests of Canada. "
The value of the Canadian dollar against the US buck is having an effect in Georgia where last week a lumber mill went from one shift to three because of an increasing demand for their product which suddenly has become a cheaper product.
So on this side of the border, it is difficult to fathom that a company with , let’s say, $400 million dollars in assets could end up broke. We asked one mill owner how does a company lose $400 million dollars? He said it’s simple, "You lose it one million at a time."
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Posted by: dgdiggler on October 23 2007 9:20 AM
If that doesn't scare the hell out of B.C.,nothing ever will.
And still the denial goes on...
I wonder what it will take before people see what is coming for the forest industry here in B.C.,never mind the rest of Canada?
Our politicians have nothing to say either,and that should be telling us something right there!
When they have little to say on a touchy issue,there is usually a reason for it!