Canadian Occupational Projection System (COPS)

NAICS 3221; 3222

This industry comprises establishments primarily engaged in manufacturing pulp and paper as well as converted paper products (such as paperboard boxes, corrugated boxes, fibre boxes and sanitary food containers). Pulp and paper is the most important of the two segments, accounting for 55% of production in 2021. Overall, the industry is export intensive with about 60% of its revenues coming from foreign markets, largely from the United States. The two segments, however, do not face the same degree of exposure to domestic and foreign economic conditions. Converted paper is highly dependent on domestic demand, with 70% of its production sold within the country. In contrast, pulp and paper is far more sensitive to foreign demand, with exports accounting for about 80% of its production, largely shipped to the United States (55% of exports) and China (25%). The industry employed 67,800 workers in 2021 (3.9% of total manufacturing employment), with 59% in pulp and paper and 41% in converted paper products. Employment is mainly concentrated in Quebec (33%), Ontario (31%) and British Columbia (19%), and the workforce is primarily composed of men (83%). Key occupations (4-digit NOC) include:^[1]

• Paper converting machine operators (9435)
• Labourers in wood, pulp and paper processing (9614)
• Papermaking and finishing machine operators (9433)
• Power engineers and power systems operators (9241)
• Supervisors, forest products processing (9215)
• Pulp mill machine operators (9432)
• Plateless printing equipment operators (9471)
• Chemical engineers (2134)
• Pulping, papermaking and
• coating control operators (9235)

The industry has been through difficult times since the early 2000s as the rapid increase in the digitization of information and media has led to a long-term structural decline in demand for various paper grades, including newsprint. Moreover, stronger competition from abroad, notably from emerging countries such as Brazil and Indonesia, combined with the significant appreciation of the Canadian dollar (prior to 2014), left many pulp and paper mills facing competitiveness challenges. These problems were compounded by the collapse of the U.S. housing market and the global recession of 2008-2009, which led to numerous closures in domestic sawmills. Sawmill closures damaged supply chains further downstream, hampering the ability of many pulp and paper mills to gain a steady supply of key inputs into their own production processes. These factors forced firms to undertake major restructuring by consolidating and upgrading facilities and closing less efficient plants through mergers and acquisitions. After falling almost continuously from 2007 to 2013, real GDP in the industry slightly rebounded in 2014-2015, before returning to its downward trend in subsequent years despite the gradual re-orientation of production toward segments that have stronger demand profiles, such as paperboard, paperboard containers and sanitary paper products. Unsurprisingly, the output continued to contract in 2020, during the first year of the COVID-19 pandemic, as shutdowns affected production. And the marginal rebound recorded in 2021 left production below its pre-pandemic level of 2019. Employment fluctuated a lot over the past decade, but the net result was additional job losses. Productivity also contracted as a result of low investment in machinery and equipment, with the industry spending more on repairs than on new capital in recent years. On average, real GDP and employment fell at annual rates of 1.9% and 0.9% respectively over the period 2012-2021, while productivity contracted by 1.0% per year.

Production and employment in the paper manufacturing industry are projected to keep declining over the period 2022-2031, albeit at a slower pace than the previous ten years. Most of the small decline in production is expected to occur in 2022 as output returns to its long-term downward trend after a temporary increase in 2021. Thereafter, production is expected to remain relatively stable, as exports should continue to benefit from a relatively low Canadian dollar and further expansion into niche market opportunities. Since most of paper products are priced in U.S. dollars, a weaker currency tends to increase the effective price Canadian firms receive for their products, boosting revenues and profitability. Beyond the U.S. market, exports could benefit from growing opportunities in Asian markets, although declining trade relations with China could temper growth. The predominance of electronic media will continue to reduce demand for traditional paper and newsprint, but the rise in retail e-commerce sales, both globally and in Canada, is expected to boost demand for packaging materials, supporting the production of paperboard and paperboard containers. The outlook for sanitary paper products also remains positive, supported by rising demand in both emerging and mature markets, while efforts to reduce the prevalence of single-use plastics present opportunities for the paper manufacturing industry to grow by offering sustainable alternatives (for example, paper instead of plastic bags).

On the negative side, growing production from competing suppliers in South America and Asia will keep putting pressures on Canadian manufacturers to consolidate operations, as firms in these regions are able to produce at lower costs and can also benefit from their closer proximity to key emerging markets. Moreover, timber supply constraints in Canada and the continuation of U.S. tariffs on Canadian exports of softwood lumber are expected to hurt domestic lumber production and boost the price of this key input for paper manufacturing. Lastly, carbon pricing policies and the phase-out of fossil fuels in the electricity sector are expected to drive up energy costs and restrain the global competitiveness of the Canadian paper industry, which is six times more energy intensive than the manufacturing average. On average, real GDP in paper manufacturing is projected to decline marginally from 2022 to 2031, down by 0.4% annually, a notable improvement relative to the previous ten years. This should help mitigate the severity of future employment declines to an annual rate of 0.6%, with most of the losses occurring in 2022 as employment is expected to remain relatively stable for the remainder of the projection period. Retirements and automation will continue to put downward pressure on the size of the industry’s workforce. Indeed, an aging workforce is expected to result in an increasing number of retirements, while jobs consisting of repetitive and routine tasks, such as those performed by labourers and operators, should continue to be replaced by machinery. As a result, productivity growth is expected to resume marginally, averaging 0.2% annually, with most of the increase occurring in 2022. Smaller gains in productivity are expected for the remainder of the forecast horizon, as producers facing lower sales volumes may be reluctant to invest massively in machinery and equipment.

Real GDP and Employment Growth Rates in Paper Manufacturing

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

^[1]Key occupations for manufacturing industries in general also include: Manufacturing managers (0911); Construction millwrights and industrial mechanics (7311); Material handlers (7452); Shippers and receivers (1521); Transport truck drivers (7511); Industrial engineering and manufacturing technologists and technicians (2233); Industrial electricians (7242); and Industrial and manufacturing engineers (2141).Back to text.