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Wood products sector on 'road to recovery'

Canada's wood products sector should be back in the black in 2010 after losing about $250-million this year, says a Conference Board of Canada study.

"After years plagued by bad news, the wood products industry is on the road to recovery," Michael Burt, associate director of the board's Canadian Industrial Outlook, said in a news release Thursday.

"Housing starts in both the U.S. and Canada are improving, which is increasing demand for Canadian wood products. The revival of the U.S. and Canadian housing markets will provide a major boost to the industry."

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Production is set to increase by close to 10 per cent in 2010, according to the Conference Board's report.

And the industry experienced growth in the third quarter of 2009, after 13 consecutive quarters of production declines, says the Conference Board.

Cost-cutting measures implemented this year will help wood producers post a profit of over $600-million in 2010, according to the board.

The forest products sector - divided into two categories, wood and paper - has been devastated by the global recession, with a dramatic drop in demand for most of its products.

Mr. Burt said in an interview that the wood products industry is expected to recover faster than the paper products sector, which is not slated to return to profitability until 2011.

"The outlook for wood products is considerably brighter," he said. The recovery in housing is a major demand driver for wood products, including lumber. But the paper sector continues to suffer from the impact of low demand and low prices, especially in newsprint, Mr. Burt said.

The paper industry's losses in 2009 are forecast to top $1-billion.

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