The industry, which exports a vast majority of its products to the US, has been hit by a number of setbacks.These include the escalation in the value of the US dollar, US duties on its timber exports, rising energy costs, declining newsprint consumption and competition.

In the last two years, a number of pulp, paper and timber mills have closed, especially in the provinces of Ontario, Quebec and Atlantic.

In addition, exports of newsprint over the past decade have fallen by 1.7bn, and some 9,500 jobs were cut in the forest industry alone during 2004.

463m of the package will be made available as loan guarantees and this will be based on the duty firms have had to pay on their timber exports to the US.

The five-year conditional part of the package includes: 87m of support to the affected communities, 124m for technology support, 29m for bio-energy support and 52m for product innovation.

Around 38m will also be provided to develop new markets and a further 6m to set up a human resources council for the industry.

Canadian paper manufacturing
- Between 1995 and 2004, 18,100 jobs were cut from the sector

- Newsprint output in 2004 was down 3.4% on 2003 to 8.2m tonnes, with exports falling by 3.2% to 7.1m tonnes

- Over the past decade, the export value of Canadian newsprint has fallen by 1.7bn