TORONTO — Canada's plastics processors will ship record amounts of goods in 1999 if global events don't backfire on the country's performance.
Exports are increasingly important to Canadian processors. Canada's weak dollar in 1998 helped firms boost market share in U.S. and other markets, fueling an 8 percent hike in plastic processor shipments to an estimated C$21.7 billion (US$14.3 billion). Canada's dollar was worth 70 cents in U.S. currency at the start of 1998 but only about 65 cents by the end of the year.
Processors will ship about 6 percent more finished products this year, predicts Faris Shammas, executive director for the Ontario region of the Canadian Plastics Industry Association and CPIA's chief economist.
The slower growth rate reflects an overall rise in Canada's gross national product of 2-2.5 percent, down from 3 percent in 1998.
Shammas said high growth occurred in 1998 for Canada's foam and expanded plastics, pipe and bag shipments. Film and sheet shipments were flat in dollar value and automotive parts were down for much of the year because of the prolonged General Motors Corp. strike. Shammas said processor investments in equipment jumped 16 percent last year, which should bode well for productivity in 1999 and beyond. Employment at processors' plants also grew. Shammas estimated 7 percent more jobs were created, leading to 130,000 employees at processor plants.
Shammas and other economists point out several risks in 1999. One big unknown is the strength of the U.S. market, the main destination of Canadian exports.
Canada's federal Export Development Corp. predicts the country's exports overall will rise 4 percent this year, about half the 1998 increase. Exporters will face challenges such as overcapacity in many markets, which will squeeze profit margins, and continued volatility in Asian and South American economies.
Shammas said Canada's dollar will be stronger this year, but not so strong as to hurt exports seriously. The emergence of Europe's euro will help float Canada's dollar in the year's first half. Recovery in Asia late in 1999 will boost Canada's total exports to the region and give strength to the currency during that period, he predicts.