Canada is in (technical) recession again, and not just because of the crash in oil prices. In fact, part of Canada’s broader, slow-growth problem comes from weakness in the manufacturing sector. Compared with 2000, manufacturing output is down 11 per cent. Employment in manufacturing has declined almost 24 per cent. But is Canadian manufacturing down for the count, or can new strategies for competitive advantage re-energize our manufacturing sector?
Let’s begin by looking at the causes of our manufacturing decline. Manufacturing has been buffeted by both cyclical events and longer-term trends. The 2009 financial meltdown and deep recession hit our biggest customer hard. The U.S. path to recovery has been a long one, although recent signs are encouraging. The length and depth of the recession led not only to declines in sales, but also to the loss of a number of manufacturing firms.
Longer-term trends are also at play. With many of our manufactured goods sold in the United States, we are missing out on the rise of emerging markets, where the number of new businesses and consumers is growing rapidly. With manufacturing productivity outpacing sales globally, firms are experiencing a worldwide decline in employment, even as sales grow.