So, how bad is the situation for Canada’s manufacturing industry? After all, it seems like we can’t go more than a few days without noticing a dire headline about job cuts or factory closings from Canada’s portion of the Rust Belt. And the data at first glance supports taking a negative view of how things stand for manufacturers in Canada. Over the last 10 years, Canada’s high-level manufacturing industry (NAICS 31-33) has declined precipitously, shedding a catastrophic 439,000 jobs. That’s almost a quarter of the industry’s entire workforce.
To give you a sense of just how badly manufacturing has done in Canada since 2002, this graph charts overall job growth in the sector nationwide. The drop-off is startling:
What industries are at fault for this? There are a few main culprits; these are the five fastest-declining manufacturing sectors in Canada:
- Cut and sew clothing manufacturing – 43,774 jobs lost, 72% of the industry
- Motor vehicle parts manufacturing – 32,460 jobs lost, 34%
- Household furniture and kitchen cabinet manufacturing – 24,158 jobs lost, 38%
- Plastic product manufacturing – 18,494 jobs lost, 19%
- Motor vehicle manufacturing – 14,845 jobs lost, 29%
Those five have lost a combined 130,000 jobs since 2002, more than half of all the Ontario manufacturing job losses. Unsurprisingly, Ontario’s economy has suffered the most of the provinces’ from manufacturing’s decline over the last decade, losing 27% of its manufacturing jobs. Of those 439,000 lost jobs across Canada, more than half — 245,000, in fact — were in Ontario. So, it’s not surprising to see some similarity between the subsectors of the manufacturing industry that fared the worst in Ontario and in Canada as a whole:
- Motor vehicle parts manufacturing – 29,325 jobs lost, 34%
- Plastic product manufacturing – 16,092, 28%
- Motor vehicle manufacturing – 11,828, 26%
- Cut and sew clothing manufacturing – 11,198, 73%
- Iron and steel mills and ferro-alloy manufacturing – 9,254, 42%
Four of the five on that list are the same industries as the national ranking, and the similarities are eerie. Cut and sew clothing – Canada’s most decimated manufacturing industry – lost almost exactly the same percentage of its jobs in Ontario as in the nation (72% vs. 73%). Motor vehicle related manufacturing and plastics were also severely hurt over the last decade. Ontario’s reputation as the engine of the Canadian economy appears to be well-earned. Unfortunately, that engine looks like it’s been driving in reverse.
The same 10-year trends are apparent in other provinces too, though. Quebec and British Columbia – the number two and three provinces for manufacturing – lost jobs at similar rates: 25% in Quebec and 16% in British Columbia. There, too, cut and sew clothing manufacturing was suffering (down 71% in Quebec and 68% in BC). Quebec and BC, however, didn’t lose jobs from vehicle manufacturing like Ontario did – their losses were in technology and wood product manufacturing, which isn’t surprising given the make-up of their economies.
This looks like a pretty comprehensive set of bad news across the board for Canada’s major manufacturing industries, like clothing, motor vehicles, and wood products. Where, then, is the good news? Well, for one thing, take a look at that same chart of nationwide manufacturing jobs from the top of the article. Yes, there’s a steep decline from 2002 to 2009. But since the worst of the recession, manufacturing as a whole has leveled out. In fact, it’s even begun to recover and add new jobs – especially in Alberta, as this graph shows:
So where are the new jobs coming from?
The answer lies in specialization. We blogged recently about the growth of small manufacturers in the US economy. There isn’t the specific establishment data in Canada that there is in the US, but the kinds of manufacturing industries that have spurred that uptick we saw on the graph suggest a similar development in Canada. For example, consider the five manufacturing industries that have added the most jobs since 2009:
- Agricultural, construction, and mining machinery (+7,198, 27%)
- Machine shops, turned product, and screw, nut and bolt manufacturing (+4,303, 15%)
- Petroleum and coal product manufacturing (+3,692, 23%)
- Architectural and structural metals manufacturing (+3,585, 7%)
- Beverage manufacturing (3,444, 13%)
There are a couple of naratives to notice here. First off, of course, is the impetus that the oil boom has had on manufacturing, pushing mining machinery and petroleum production up by over 20%. But more interesting are the less-prestigious industries putting up great numbers; screw manufacturing, for example, or beverages. There are plenty of other examples of smaller manufacturing industries that are growing, too. Pesticide manufacturing is up 49% in the last two years, adding 2,341 jobs (mostly in Saskatchewan). Soap manufacturing has added over a thousand jobs.
The new jobs in manufacturing are there. They’re just not in the traditional industries. The Canadian motor vehicle industry may never rebound to where it was 10 years ago. But, nurtured properly, there may be other manufacturing industries that can take up the slack to revitalize Canada’s economy.
Data for this post came from the 2013.1 Beta dataset in Analyst for Canada, EMSI’s web-based labour market tool. Follow us on Twitter @desktopecon. Email Fraser Martens if you have any questions or comments, or would like to see further data.