Manufacturing

Manufacturing—turning raw materials into finished or semi-finished products—creates two million jobs for Canadians, adds economic value to many of the natural resources we extract from the land, generates mostof our exports, and helps drive our regional economies.

Over the past decade, one-fifth of Canada’s annual economic output has been generated by our manufacturing industries. In 2004, this totalled about $180 billion of Canada’s gross domestic product.

Of all the goods produced in Canada, over one-half are created by manufacturers; the rest are utilities, construction, or are primary resources such as crops and metals.

Transportation equipment is the largest sector, generating 21% of all manufacturing shipments in 2004. Car and car parts manufacturing dominates the industry, but aircraft, rail and boat equipment production are also significant.

Food processing—meat, fish and seafood, grains and vegetables—accounts for 12% of manufacturing shipments, producing billions of dollars worth of groceries for Canadians and the world.

Manufacturing for home and abroad

Of the other major manufacturing industries, many generate the products used directly by other manufacturers, such as chemicals for making plastics, wood products for construction and furniture, and metal and machinery for use in just about every industry.

Much of what we produce is sold to other countries, especially to the United States. In fact, over half of our export trade is in manufactured goods. Machines, cars and car parts alone have consistently accounted for about half the volume of Canadian merchandise sent abroad over the past five years.

Given Canada’s size and the regional concentration of various industries, internal trade tends to be strongest between neighbours. Ontario and Quebec, for example, are each other’s largest provincial trading partner.

In Atlantic Canada, food processing is the region’s dominant manufacturing industry. Processing fish, seafood and other food products accounts for more than one-third of Newfoundland and Labrador’s manufacturing shipments, and nearly two-thirds of Prince Edward Island’s.

Though also a major food producer, New Brunswick’s forest cover makes wood, pulp and paper production its core industry. Besides food and wood and paper production, manufacturing in Nova Scotia also includes a sizable transportation equipment sector.

Also heavily forested, Quebec is a major wood, pulp and paper products manufacturer. The province is also home to more advanced manufacturing such as aerospace equipment, fabricated metals, machinery, electronics, chemicals and plastics.

Ontario: Driving manufacturing

Ontario, which benefits from its strategic location near the centre of the U.S. automotive industry, accounts for 85% of Canada’s transportation equipment manufacturing, most of it making cars, trucks and vehicle parts. Other major manufacturing in Ontario includes food, machinery, chemicals, plastics and electrical products.

The central role of agriculture in Manitoba and Saskatchewan helps to make food processing the top manufacturing industry in those provinces, although machinery production is also strong due to the demand for agricultural equipment.

Alberta’s beef and oil resources mean that food, petroleum and chemical production together comprise over one-half of all manufacturing shipments in the province. Wood and paper products account for nearly half of British Columbia’s shipments, although food, machinery, computer and electronic equipment production are also strong. Very little is manufactured in Canada’s northern territories.

Producing all these goods is the work of some 2.3 million Canadians—about 14% of the labour force in 2004. In most provinces, between 7% and 10% of all workers make a living producing goods. In industry-intensive Ontario and Quebec, however, 17% of all workers are in manufacturing.

Following economic cycles

Given the sector’s reliance on trade with the United States, American economic cycles tend to have a strong influence on Canadian manufacturing industries.

In 2000, before the recession of 2001/2002, Canadian shipments of manufactured goods totalled $561 billion. Afterward, this dipped to as low as $543 billion in 2001, before it and the U.S. economy picked up steam. In 2004, shipments of manufactured goods hit a value of about $593 billion.

But manufacturers are finding it hard to sustain this growth, and have seen their bottom lines come under pressure from external factors such as foreign demand, the rising costs of raw materials and energy, and the exchange rate.

Demand for our exports has declined in recent years, with unfilled manufacturing orders falling by more than 20% from 2002 to 2004. This decreased export demand was due to factors such as the steady increase in the value of the Canadian dollar that increased the relative cost of our manufactured goods and the broad increase in commodity prices since 2003 that has driven up the costs of production.

Manufacturing jobs have been hard to come by in recent years. Despite minor fluctuations in some industries, there was little net gain in total manufacturing jobs from 2000 to 2004. While total employment in Canada grew by nearly 1.2 million over this period, the number of manufacturing jobs remained stagnant.

However, there were changes in employment in certain manufacturing industries. For example, employment in computer and electronic product manufacturing, after increasing by 25% from 80,000 in 1994 to 102,000 in 2000, shrank back to just 80,000 jobs by 2004, the same level as 10 years earlier.

Employment in clothing manufacturing, petroleum and coal products manufacturing and primary metal manufacturing also suffered major losses from 2000 to 2004.  On the other hand, employment in textile product mills, furniture manufacturing and food manufacturing posted solid job growth from 2000 to 2004.