The high Canadian dollar, rising energy costs, high US duties on lumber exports and government cutbacks to the allowable timber cut have all combined to cause grief to eastern Canadian forest product companies.
Major producers are forecast to report losses for the third quarter, with some resorting to mill closures to soften the financial blow.
Among the casualties is West Fraser Timber which reported a sharp decline in earnings to C$18m compared to a profit of C$78m in the same period in 2004.
West Fraser chief executive officer Hank Ketcham has called on Ottowa to stand firm in its dispute with the US over softwood lumber and its demand that the US return C$3.5bn in duties.
Canadian prime minister Paul Martin supported the industry in his first weekly radio address in which he said the country is prepared to go to court against America to claim what “is rightfully ours”.
Mr Martin told listeners that the US had repeatedly ignored rulings from North American Free Trade Agreement panels.
Meanwhile, US secretary of state Condoleezza Rice refused demands by Mr Martin to return the duties while on an official visit to Ottowa. She said her government wants to negotiate an end to the dispute.
