It was a strange year for chemicals in 2001, with the worldwide economic slump ignoring Canada for the first six months and then taking a healthy bite out of the industry after the slowdown in the U.S. crept north across the border.
Until about mid-2001 many companies continued to show healthy sales and profits despite the massive drops in U.S. firms' bottom lines. The trend caught up to Canadian companies by July, when the U.S. troubles deepened and the ripples began cause sales in Canada to drop. After September 11, the overall economic climate soured completely and the last four months of the year brought tough times to the industry.
According to Industry Canada, there were 1,200 chemical establishments operating in Canada in 2000, employing approximately 72,500 workers who produced $30.2 billion of shipments.
"It wasn't like 1992 where the bottom completely fell out and it was terrible all over the place. 2001 was full of mixed messages, says Richard Paton, chief executive officer of the Canadian Chemical Producers' Association. "Some companies were definitely working hard everyday on selling and dealing with their costs the industry has always been slim and trim, so while it was a challenge for some of the companies, others haven't seen much of an impact."
Leading the recovery early this year was chemical products with a 6.3 per cent increase in January 2002, as shipments responded to increased demand and rose to $3 billion their highest levels since May 2001.
As the second half of 2002 began, industry analysts agree that the worst is over, with dropping inventories helping sales to pick up and bringing a more positive mood to the industry. Most analysts are convinced that the economy has already begun to show signs of recovery.
Dupont Canada's first quarter results seem to confirm that the recovery is underway. It reported record sales of $574 million for its first quarter of 2002, up $36 million or seven per cent from the same period last year.
This is quite a turnaround considering its fourth quarter sales last year dropped 11 per cent or $58 million from $541 million in 2000 to $483 million for the quarter ended December 31, 2001. Overall in 2001, Dupont Canada's revenues were down almost $100 million from the previous year.
But like the old saying goes: There's no place to go from here but up. Key to the recovery is a long awaited drop in energy and feedstock prices, which remained high in the first half of the year after climbing in late in 2000, says Kim Dhaliwal, president of Edmonton-based Kim Dhaliwal Associates, a market strategist who provides stock analysis and advice to institutional clients.
