Canadian Budget Measures Seen as Boost to Capital Investment

Ottawa, Canada, 19 March 2007 -- The Forest Products Association of Canada (FPAC) today welcomed initiatives in today's federal budget that will enhance the competitiveness of Canada's manufacturing sector through an accelerated capital cost allowance (CCA).

"The government has sent a strong signal that it understands the need to encourage investment and innovation to keep jobs in Canada," said Avrim Lazar, president and CEO of FPAC. "New intense global competition has had demonstrable effects on Canada's forest products industry where nearly 16,000 jobs have been lost in the past two years as the industry has rationalized and reduced overcapacity. The story is repeated throughout Canada's manufacturing sector, which has lost tens of thousands of jobs in the past year alone."

Canada's forest products industry has faced a series of unprecedented market challenges over the last few years. It is the most exposed of any Canadian industry to a high Canadian dollar and rapidly rising energy costs, and has faced changing markets and emerging global competition. The industry has responded to these challenges by adjusting quickly in cutting costs, investing in productivity enhancements, and looking for new market opportunities. Like all Canadian manufacturers, the industry has had to make far-reaching and sometimes difficult changes to renew itself and improve its competitiveness in a very challenging environment.

"A competitive business climate that attracts capital investment is absolutely essential to the future of this and other Canadian manufacturers," continued Lazar. "Perhaps the single most important economic policy lever to improve the business climate or 'hosting conditions' is the tax system. The changes to the CCA announced today will enable manufacturers across Canada to respond to the higher value of the Canadian dollar and other challenges by encouraging investment in capital renewal and innovation. This is good news for the hundreds of thousands of Canadians who work in the manufacturing sector and the hundreds of communities across the country in which they live. "

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 represents 3% of Canada's GDP and exports over CAD 40 billion of wood, pulp and paper annually. The industry is one of Canada's largest employers, operating in hundreds of Canadian communities and providing nearly 900,000 direct and indirect jobs across the country.