Strong chemical and resin exports offset domestic decline: CCPA

Strong export sales are offsetting a diminished domestic demand for basic chemicals and resins, according to the Canadian Chemical Producers’ Association (CCPA) 2007 year-end business survey.

Respondents reported a 50 per cent decline in sales to Canadian clientele, but export sales were up by 13 per cent in 2007 to $20 billion. Export sales now represent over 80 per cent of total industry sales, according to the report.

The survey also found that sales to U.S. markets were down by three per cent, and exports to offshore markets were up by 66 per cent for the year.

However, the weaker sales have left profits virtually unaffected: operating profits before interest, taxes and special write-offs were $2 billion in 2007, up 18 per cent from 2006 and close to the peak set in 2005.

“The Canadian manufacturing sector continues to weather a perfect storm — so far,” said CCPA president and CEO Richard Paton. “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,” he continued.

According to Paton, harmonization of energy, environmental and tax policies between the different levels of government would enhance Canadian competitiveness and attract new investments to Canada.