STRONG EXPORTS TO LIFT PLASTICS IN CANADA

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TORONTO — Canada's plastics industry can expect 1997 to be a healthy year, according to officials and processors.

``Optimism is the word in Canada and in the plastics industry,'' noted Faris Shammas, Ontario regional director of the Canadian Plastics Industry Association. He forecasts that the industry will benefit from strong export shipments and a 3 percent hike in the country's gross national product. Low interest rates will help drive Canada's GNP increase by stimulating consumer spending.

Shammas predicted Canada's total plastics industry shipments will reach C$19.7 billion (US$14.6 billion) this year. This figure is about 7 percent higher than 1996's total shipments of plastic products, resins and machinery. The industry will employ about 108,000, he estimated.

Auto parts and construction components, two cyclical industries, should be strong this year, Shammas said. Both sectors consume large amounts of processed plastics. Packaging, a less cyclical industry, will grow moderately, he predicted in a telephone interview from CPIA's head office in Mississauga, Ontario.

``I believe we will have a continued growth situation,'' said Jean-Yves Bacle, vice president of marketing for custom injection molder IPL Inc. of St.-Damien, Quebec.

He expects IPL will do well in transportation, materials handling and its other markets.

Bacle said IPL's exports to the United States, which account for about 45 percent of sales, will grow a bit more than its domestic sales, despite a slight increase in the value of the Canadian dollar vs. its U.S. counterpart. A higher Canadian dollar ``will put a squeeze on margins'' for IPL's exports. Bacle said his firm plans to establish U.S. production to offset long-term strengthening of the Canadian dollar.

Bacle said resin prices are the ``main question mark'' in 1997. Some markets, such as packaging, are especially sensitive to resin hikes.

Packaging producer Winpak Ltd. expects 3 percent growth this year. U.S. sales will slightly outperform domestic sales, said Winpak President J. Robert Lavery.

Modified atmosphere packaging should turn out to be Winpak's strongest market as consumers purchase more fresh, perishable foods, Lavery said. Thermoformed dairy creamers, however, is a no-growth market, despite popularity of specialty coffee shops. Lavery claimed the Winnipeg, Manitoba, firm holds more than two-thirds of North America's creamer container market.

Weather patterns could hurt some processors, according to an official at a proprietary lawn, garden and consumer products molder. A cool spring in 1996 hurt patio furniture sales and a mild early winter was painful for snow sled and snow shovel producers, the official recalled. Depending on weather, 1997 should be ``as good as 1996 or better.''

Shammas said Canada has gained a cost advantage in manufacturing because its inflation rate has been lower than the rate in the United States for several years. This advantage should counter a forecast 5.5 percent rise in the value of the Canadian dollar in 1997 from its 73-cent level at the end of 1996.

Canada's trade deficit in finished plastics products is shrinking, Shammas said. Last year processors exported C$4 billion (US$3 billion) worth of finished goods while end-users imported C$4.8 billion (US$3.6 billion) worth.

Shammas said government attitudes toward plastics could help spur more foreign investment in the country. He cited as one example the Ontario government's recent recognition of plastics as a ``winning industry.'' Officials designing the new Greater Toronto Area municipality also zeroed in on plastics as one of the region's five preferred industries.