Canada's forestry sector CEOs say the coming year will be "bumpy," but expect business to improve in the next three years thereafter, according to a new PwC report.
PwC's 16th annual Global CEO Survey found Canada's forest, paper and packaging CEOs circumspect about 2013, but optimistic for the years beyond.
"The CEOs of forest, paper and packaging companies are a resilient bunch," said Bruce McIntyre, PwC's leader of forest, paper and packing in Canada.
"Recently they've faced challenges such as shifting demand and markets, a bumpy economy, over-capacity, environmental issues and rising costs."
The report found CEOs in the forestry and pulp and packaging sectors are currently focused on trimming fat from their operations, with 18% of CEOs saying they planned to cut their workforces by more than 8% this year.
About 92% said they have already implemented cost-reductions initiatives in the past year, and another 89% plan to do so in the coming year. That is higher than the 70% average across other business sectors.
In B.C., diversified forestry companies have found their interior sawmill operations performing better than their pulp and paper operations, whereas coastal mills saw slower growth.
Interior mills have had access to an abundance of cheap pine, as a result of the mountain pine beetle infestation. But as the supply becomes exhausted and these constraints dovetail with increased demand for lumber in a recovering U.S. housing market, B.C. forestry industry executives are predicting a coming supercycle of high lumber prices.
But it will come at a cost. As reported in Business in Vancouver, at least half a dozen mills are expected to close in B.C. by mid-decade, as the industry goes through a rationalization.
CEOs interviewed for the recent PwC annual survey said their top three priorities will be enhancing operational effectiveness, investing in innovation and research and development and developing new business models.
