Lumber business looking up, Conference Board says

Lumber producers will double their profit in 2012 and create more than 6,000 jobs, the Conference Board says.

Lumber producers will double profit, create 6,000 jobs in 2012

Lumber producers will do much better in 2012 because of rising exports, the Conference Board says. (Jonathan Hayward/Canadian Press)

Part of Canada's forest products industry is heading for strong growth in 2012, the Conference Board says.

After a slowdown this year, lumber producers will double their profit in next year and create more than 6,000 jobs.

"A long-awaited recovery in U.S. housing markets and growing demand in China and Japan are responsible for this more promising forecast," the board said in its outlook for the wood products industry, released Wednesday.

Producers have been looking for markets outside the United States after litigation following the 2006 softwood lumber deal led to higher tariffs on Canadian wood, the board said.

Lumber companies' profits
Year Pre-tax profit (loss), millions
2008 ($837)
2009 ($887)
2010 $464
2011 $283
2012 $565
2013 $720
Source: Conference Board

That, and a downturn in the U.S. housing market, prompted producers to look east.

The result: between January and September of this year, 63 per cent of Canadian wood exports went to the U.S., down from 86 per cent in 2006. Meanwhile, exports to China represent 14 per cent of the total this year, up from one per cent in 2006.

China needs wood for building in its rapidly growing economy. Japan needs lumber for rebuilding following the earthquake and tsunami in March.

"Canada has been diversifying its export markets away from the United States for several years, and gains in export sales will be responsible for industry growth in the next few years," said Michael Burt, the board's director, industrial economic trends.

But the U.S. market is still very important, and statistics suggesting the housing market is coming back will help drive double-digit growth in exports over the next two years, the board said.