Although the outlook for Canada’s paper products industry is gradually improving, the industry will lose money again this year, according to the Conference Board of Canada.

“The paper products industry is forecast to lose more than $800 million in 2007, which is still a better financial performance than the previous two years,” said Louis Thériault, director, Canadian Industrial Outlook Service. “The industry is expected to return to the black in 2008, thanks to another year of sharp cost reductions resulting from restructuring and corporate consolidation.

“Still, the financial health of the Canadian paper products industry will remain precarious, because it is highly-sensitive to macroeconomic factors such as oil prices, a strong Canadian dollar, and the rise of foreign competitors with efficient, super-sized mills.”

Industry production is forecast to decline for the fourth consecutive year in 2007, but will start to increase modestly beginning in 2008, due to stronger domestic demand for paper and improved export growth in pulp. In addition to cutting costs, increased industry consolidation has made it easier for companies to reduce excess production capacity and better manage their inventories.