Canada’s Wood Product Manufacturing Industry: Industrial Outlook Autumn 2006

Profits in the wood products sector are set to fall to $2 billion this year, mainly because of weak prices and the end of the U.S. housing boom.

Prices have fallen from their high in mid-2004, when the North American housing boom led to shortages for some products. Production is now dropping as a result of declining prices and slowing demand. Profits will decline to $1.6 billion in 2007 but gradually improve thereafter, rising to $1.8 billion by 2010—still considerably higher than during the beginning of this decade.

Not included in the forecasted profit numbers is the US$4.4 billion in duties to be returned to producers over the next few months under the new softwood lumber agreement, as this refund will be recorded as an extraordinary item and not in general revenue. The refund will provide the sector with much needed resources for reinvestment and help companies adjust to the slowdown in residential construction.