While 2007 was bad for Canada's forestry sector, 2008 is likely to be worse, according to a report by the Conference Board of Canada.
Canada's wood products industry is expected to lose another $750 million after a second challenging year for a sector heavily dependent in the U.S. housing market.
Between 80% and 90% of Canada's wood exports go to the U.S., but with an 18.2% decline in U.S. residential construction expected, Canada's forestry sector will continue to be hard hit.
The report suggested a partial recovery in the U.S. housing market is expected in late 2009 or early 2010 and should trigger a modest increase in production.
Combined with improved labour productivity, the industry should return to profitability sometime in 2009, according to the report.