Canada's plastics processors can expect a rebound in 2010, according to the Canadian Plastics Industry Association.
“I believe there will be meaningful recovery,” said CPIA President and CEO Mark Badger. Mississauga, Ontario-based CPIA estimated Canada's plastics industry output fell about 20 percent in 2009.
The association said at Canada's Resin Outlook Conference 2009, held last fall in Toronto, that Canada's plastics processors shipped C$24.7 billion (US$23.3 billion) worth of goods in 2008.
“I see signs of stability in 2010,” Badger said by phone. “But the industry still faces headwinds.”
Packaging, which accounts for about 34 percent of the processing sector, is facing slight contraction due to cutbacks in bag usage at the retail level. Rigid packaging, however, is gaining as a result of consumers taking home more ready-to-eat meals.
Construction, equaling about 26 percent of shipments, has faced tougher export markets, partly due to buy-American policies in U.S. infrastructure programs.
Transportation — about 18 percent of processors' volume — was hurt by the slowdown in vehicle production in 2009 but had begun to stabilize in summer.
Badger said innovation is a key driver for the industry to get back on track. Canada also has a strong machinery and tooling sector that will help fuel future growth, he said. The country is a good place for entrepreneurs to start businesses. Also, smaller-scale operations can be hotbeds of customization in product lines.
One economist doesn't expect the plastics industry to regain its peak of 2006-07 for several years.
2010 will be a transition to a period of recovery, said Bill Empey, an economist with Prism Economics and Analysis of Toronto.
Recovery of construction products will be slow but pipe and insulation will benefit from government-stimulated infrastructure buildup.
In automotive, “it will be many years before plastics get back to 2006-07 levels,” Empey said. Surviving processors stand to gain big in any rebound.
Plastic packaging will improve from a low level in 2009 but no major expansion is expected, partly a result of material substitution to conventional packaging.
Among the industries that will drive growth are medical and those making new composite building products, Empey said.
Positive economic signs proliferated as 2009 drew to a close.
Consumer confidence grew strongly compared with late 2008, according to a survey by the Canadian arm of Harris/Decima-Investors Group of Rochester, N.Y. Canadians were were considerably more optimistic about their financial future than U.S. consumers, the survey found. The optimism was expressed in high retail sales during the holiday season.
Bank of Canada governor Mark Carney said consumer demand will be a big factor in how quickly Canada recovers from the recession. Late-2009 sales of automobiles, furniture and other big-ticket items were especially strong. Housing-related purchases began an upswing in late 2009 with housing starts in November at an 11-month high. Canada Mortgage and Housing Corp. predicts housing activity will continue to be strong in 2010.
Manufacturers also showed renewed optimism in late 2009, according to a Canadian Manufacturers & Exporter survey. It found that 43 percent of the firms surveyed expect new orders to increase in the first quarter; 16 percent think they will decline.
Manufacturers began rehiring in the third quarter, indicate data from Statistics Canada.
Canada's gross domestic product is forecast to rise 2.9 percent in 2010, according to the Conference Board of Canada. Last year it slipped about 2.5 percent and began to return to positive numbers in the third quarter.
The country's exchange rate could be a drag on its export performance. The Conference Board predicts the Canadian dollar will be valued, on average, at 0.955 of the U.S. dollar, well up from 2009's average exchange rate of 0.88.
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