TORONTO - Analysts predict Canada's economy will grow moderately in 1996 but the key to the country's plastics industry will continue to be the U.S. economy. ``Exports to the United States are a large proportion of shipments,'' said Faris Shammas, vice president of Society of the Plastics Industry of Canada in Mississauga, Ontario.
Shammas predicts Canada's dollar will remain relatively low for most of the year, which should help exports to its NAFTA trading partner. He said he expects the Canadian dollar to average about 72 cents in U.S. currency.
The Bank of Montreal predicts Canada's real gross national product will increase 2.8 percent in 1996, better than an estimated 2.3 percent for 1995 but well below the 4.6 percent gain of 1994. It envisions GNP growth led by British Columbia, at 3.5 percent; and Ontario, at 3 percent.
Shammas said 1995 plastics statistics are unavailable but preliminary figures indicate the industry's output strengthened in the last quarter. The middle two quarters were slow after a strong January-to-March period. When high resin prices are taken into account, real value of plastic product shipments may have grown only as much as GNP last year, according to Shammas. For several years, the plastics industry grew at twice the rate of Canada's overall economy. SPI Canada earlier pegged Canadian processors' shipments at C$15.3 billion (US$11.3 billion) in 1994. Shipments of materials, machinery and molds totaled about C$5.3 billion (US$3.9 billion).
Packaging producer Winpak Ltd. expects a slight improvement in Canadian sales this year. Customer inventories are lower than a year ago, when firms built their inventories in anticipation of resin price hikes.
Winpak President J. Robert Lavery said his firm's U.S. sales have grown faster than sales in Canada, partly because ``there is more room to grow in the United States.'' About 70 percent of Winpak's sales are in the United States, Lavery noted in a telephone interview from the firm's head office in Winnipeg, Manitoba. Most of its production is geared to food and dairy packaging.
Lavery said he expects more stable resin prices this year. Profit margins were squeezed in 1995 because it was difficult to pass on resin hikes to customers, he said.
Custom injection molder Horn Plastics Inc. expects a good year if engineering resin prices and supply stabilize, said its president, Ernest Gourley.
``The polycarbonate shortage threw our 1995 forecast off,'' Gourley said from Horn's Pickering, Ontario, plant. ``The shortage drove [custom molders] crazy.''
Gourley said he foresees continued growth in business machines, electrical and consumer goods, and medical products, which are Horn's three major markets. He stressed that Canadian molders need to rely on value added as an important growth component.
The Toronto-based Canadian Manufacturers Association predicts Canada's economy will grow 1.6 percent this year but the country's manufacturing sector will boost shipments by 2.8 percent, led by gains in automo-tive, electronics, metals and machinery.
Exports will gain ground as Canadian demand remains sluggish because of weak consumer activity, cutbacks in government spending and slow industrial investment.