Chemistry Industry Association of Canada

December 20, 2007 12:24 ET

Storm Clouds on the Horizon-Strong Exports Offset Canadian Decline in Manufacturing for Chemical Producers

OTTAWA, ONTARIO--(Marketwire - Dec. 20, 2007) - Strong export sales are offsetting a diminishing domestic demand for basic chemicals and resins, according to a Canadian Chemical Producers' Association (CCPA) 2007 year-end business survey of its members. A dramatic 50% decline in sales to Canadian customers may signal fundamental changes to North American manufacturing with production shifting to offshore locations, primarily Asia.

In contrast to the Canadian market, export sales were up by 13% in 2007 to $20 billion and now represent over 80% of total industry sales. Sales to US markets were down by 3% and now account for only about two-thirds the industry's business outside of Canada, while exports to offshore markets were up 66%.

Despite weaker sales, operating profits before interest, taxes and special write-offs in 2007 were $2.0 billion, up 18% from 2006 and virtually at the peak set in 2005. Profits have been particularly strong in Canada's gas-based petrochemical sector. Canada's chemical producers continue to be profitable; their operating profit ratio remains significantly higher than its US counterpart, averaging 7.3% since 1999 (vs. 4.6% in the U.S. over that period).

"The Canadian manufacturing sector continues to weather a perfect storm - so far," said Richard Paton, CCPA President and CEO. "The high dollar and its rapid appreciation in value, impacted on both Canadian chemical production costs and the costs for key chemical industry customers in Canada. High energy costs - including electricity in Ontario and high oil prices - have also had a negative impact on Canadian manufacturing, particularly to the segment of the chemical industry that upgrades fossil fuels into value added products."

"Greater harmonization of energy, environmental and tax policies between the federal and provincial governments would help Canadian manufacturers' competitiveness and help attract new investments to Canada," Paton concluded.

Contact Information

  • CCPA
    Julien Lavoie
    Public Affairs
    613-237-6215 x 239
    www.ccpa.ca