Canadian Industrial Outlook: Wood Products—Winter 2020

The razor’s edge—The wood products industry is teetering on the razor’s edge with historically low profit margins due to weaker output prices and tumbling exports. With no relief in sight for the U.S. tariffs, and only limited price growth, the production outlook for sawmills remains bleak.

Costly supplies—Supplies of timber are decreasing, particularly in British Columbia, where two years of record forest fires and the lingering impact of the mountain pine beetle are taking their toll. Lower timber availability is driving costs of logs up for mills, in turn squeezing firm profitability.

Working in the woods—Canada’s labour market continues to tighten, fuelled by increased retirements among baby boomers. Recent sawmill closures are also reducing the attractiveness of the industry to new workers. As a result, wood product manufacturers will have difficulty meeting their workforce requirements.