A Bright Future for Canadian Manufacturing?

by admin on January 31, 2013

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As with its neighbor to the south, Canada has experienced some significant contraction in its manufacturing sector. According to Statistics Canada, the manufacturing sector shed some 322,000 jobs even before the current economic downturn in 2008. Since then, there have been even more losses, and the events of 2012 certainly don’t seem to bode well for Canadian manufacturing.

The Death of an Industrial Ecosystem

One of the major news stories was the closing of Ford’s plant in St. Thomas, Ontario, which Maclean’s reported “could bring the death of an entire industrial ecosystem,” according to experts. That certainly sounds bleak. Earlier in the year, the closure of the Mabe appliance manufacturing plant in Montreal was a smaller blow in terms of job losses—about 700 people are employed at the plant—but it may be indicative of a larger pattern in appliance manufacturing in Canada, and a similarly bleak threat to this industrial ecosystem.

As Mabe was making plans to close its doors, Canadian brand Danby, which doesn’t manufacture its products, but rebrands products by other manufacturers, sought to develop closer ties to manufacturers in China by establishing an office in the port city of Guangzhou. And mid-year the closure of the Canadian Appliance Manufacturers Association (CAMA) seemed like a sign the industry might be in decline.

Inexplicable Optimism?

Despite this seemingly bleak outlook, major auditing firm KPMG found that most people in the Canadian manufacturing sector were optimistic. KPMG surveyed executives from 150 companies across Canada and found that 85% of them were optimistic about the future of their business in the next two years, a significant increase from the 74% who felt similar last year.

What accounts for this optimistic outlook? People inside the manufacturing sector see the industry changing, not going away. Competition from lower-priced goods offshore has led to a decline in traditional manufacturing, but the future may see an increase in jobs and revenue with specialty manufacturing aimed mostly at the US market. Most of the executives surveyed saw the U.S. as being responsible for the majority of their growth.

This pattern is even reflected in the closure of CAMA. One reason CAMA closed was because Washington, D.C.-based Association of Home Appliance Manufacturers (AHAM) opened a branch in Canada. According to AHAM, “This step follows interest shown over the past several years by appliance manufacturers who wish to benefit from fuller integration of home appliance industry representation in Canada and the United States.” In the AHAM release, the decision sounds like a mutual one. The CAMA release sounds less rosy about the transition, but increased integration between the US and Canadian manufacturing industries seems desired by all parties.

Current Figures and Future Projections

The optimism of industry executives seems to be borne out by the current economic figures. According to Statistics Canada, despite some mid-year declines, the manufacturing sector ended strong in 2012. Manufacturing sales rose 1.7% in November, the last month for which figures are available. Growth was seen in two-thirds of sectors and five provinces. Ontario led manufacturing sales growth with an uptick of 3.8%. Job growth in the sector is up as well. According to Statistics Canada, the manufacturing sector actually added nearly 54,000 jobs in 2012, an overall increase of more than 3%.

Despite these reasons for optimism, many analysts see 2013 as a potentially dark year for the Canadian economy as uncertainty from the global markets begins to put a damper on domestic growth. Whether this overall gloomy forecast comes true or not, manufacturing seems well-positioned to remain a bright spot.

Matthew Candaleria wrote this article for PartSelect, a Canadian company that sells replacement appliance parts. Matthew earned his PhD in English in 2006, and works full time as a writer and researcher.

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