Ladies and gentlemen, members of the committee, Cascades is a multinational specialized in the production and processing of packaging products and tissue paper made mainly of recycled fibres. The company has over 100 production and logging units in Canada, the United States and Europe. Founded in 1964, the company employs over 14,000 men and women, and generates business on the order of $4 billion Canadian a year.
The relative increase in the value of the Canadian dollar compared to its US counterpart has become very significant for Cascades and the sector it does business in. I would like to thank the members of the committee, which is holding pre-budget consultations on the Canadian dollar, for giving us the opportunity to explain the scope of the impact of the high dollar on our activities, but also and especially to present solutions which may help us address this situation.
Given the fact that 90% of our sales are affected by the fluctuating value of the dollar, that 40% of Cascades' production is in the United States and 50% in Canada, that its labour costs in Canada compared to those south of the border are not competitive anymore, it is clear that Cascades has been struck hard by the stronger dollar.
The increase in the value of the Canadian dollar alone, which occurred between 2002 and 2007, has cost us over $300 million annually. The sudden rise of the dollar has forced us to close three manufacturing units in Canada, in Ontario and in Quebec, and two other plants temporarily. These closing alone have led to the loss of over 1,000 jobs in outlying areas. Whereas under the Cascades business model we have always tried to help struggling businesses, the recent decision to close plants was very difficult for my brothers and myself, our management team and our employees.
Furthermore, the price we pay for raw materials has gone up because of increased demand for waste paper from Asia, where the paper is sorted by hand by a much cheaper labour force. If we hadn't refocused some of our activities and if we hadn't reduced our costs, our company would not be profitable anymore, which is what happened to several other companies in our sector which had to considerably reduce their operations or merge with American companies.
If the loonie remains strong, Cascades will have no choice but to shut more plants in Canada and shift more of its production to the United States, if it is to remain as competitive as it was before. In fact, we will from now on make our strategic investments in the United States or in other countries where costs are lower. This is a market change for a company which 40 years ago began when it bought out a bankrupt company which exported all of its products to the United States.
The US greenback will remain the benchmark for the basic reasons we are all familiar with. And because our asset base in Canada is still significant, we still want to continue to export to the US. I am not an expert in monetary policy, but a businessman and a manufacturer of packaging products and tissue paper. I cannot tell you what to do, but I will make some suggestions.
Yes, it is possible to live with a Canadian dollar at par. Cascades has adapted and will continue to do so. No, it is not possible to live with the current direction and volatility of the dollar, and to plan for investments in Canada. We therefore have to make Canadian companies more competitive by making available better, faster and refundable incentives for our sector, including in the areas of research, development and innovation, infrastructure and labour support, as well as accelerated depreciation programs, as my colleague has suggested. In Scandinavia, the depreciation period is very short, and this has helped the pulp and paper industry to modernize and remain competitive. We would like the federal government to acknowledge the impact the sudden rise in the Canadian dollar will have on the Canadian manufacturing sector in the medium and long term, especially in sectors like ours, where we are trying to do things differently while protecting the environment.
As for the environment, a final measure could really help us, and that would be the creation of a carbon exchange. As do other companies operating in Europe, Cascades has greatly benefited from the European carbon exchange, and it still does. On this side of the Atlantic, for the fiscal year ending December 31, 2006, we have reduced our 125,000 tonnes of greenhouse gas emissions by 10%. That represents a fair amount of money which unfortunately is not credited to us in North America.
We need to quickly create a carbon exchange in Canada. This could easily be achieved with the Montreal Stock Exchange, which is in the best position to accommodate this type of exchange. This kind of system is recognized as being potentially the most effective one to fight climate change, and it would be a strong incentive for companies, as they would also benefit financially.
It is also imperative that the creation of a carbon exchange use 1990 as its base year, because we should not penalize the companies which first chose to become environmentally friendly before the environment became a concern for all of us.
Finally, such a system won't work within a reasonable timeline unless mandatory caps are imposed on each industrial sector based on yet-to-be-determined conditions.
Thank you for giving me the opportunity to speak. I remain available to take your questions.